Ask an Attorney - Q&A

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The following questions were questions posed to Picket Fence Preview, which were then referred to interested attorneys. Disclaimer: The following answers are not intended as, and cannot be taken as, legal advice on any particular transaction. Seek advice specific to your situation.

 

Q1.  What is a reasonable amount to put down as a deposit?  And whose attorney holds it -- the buyer's or seller's?  

Many people think a reasonable amount for a deposit is 1% of the sales price.  While this is a good benchmark, another way to determine a reasonable amount is to have an amount that the buyer would not want to walk away from, and also that is an amount that would be some compensation to the seller for having to find a new buyer if they deal were to fall through. One percent is often a realistic amount, but more can make a buyer look more serious and qualified, and can give a seller more comfort.  It is traditional for the seller's attorney to hold the deposit, but either attorney may, as the attorney should be acting as a neutral third party in this regard.

Q2. We are downsizing and moving to Florida.  We'd like to sell our house furnished, except for a few pieces, together with our lawn equipment, snow blower, etc. How do we handle this in our asking price?  Should we just sell as furnished, or put a price on the furnishings and sell as a separate deal? Finally, how do people normally handle things like this in the contract -- do we have to itemize every piece of furniture and attach this to the contract? 

Because lenders will not lend money to buy furnishings and lawn equipment (these things are known as "personal property"), the real estate purchase and sale contract should reflect only the price for the land and house (known as "real property").  The personal property should be a separate deal, with a separate contract.  It would be best if you itemize every single piece of furniture and equipment, but because this can be impossible, another way to do write it would be to say that all furnishings and equipment are to be conveyed, except for the following:  and list the items you are not leaving.  Unless you itemize every single thing that is being sold, there must be some level of trust between the parties.

Q3.  What is a reasonable amount of time to give our buyers to sell their home (to buy ours)?  And can I specify that their buyer can't have a house to sell too? I don't want to get into a domino situation... 

A reasonable amount of time mostly depends on your closing date.  Lets say your closing date is in 60 days.  You could give your buyers 15 days to sell their home. A good way to do it is to obligate the buyers to have their house under contract no less than 45 days prior to your closing date and with a closing date on or before your closing date, so that their buyers have enough time to obtain financing and close on your buyers home.  It is unreasonable to ask your buyers to only sell to someone who does not have a house to sell, and may be interfering with their contract and would certainly hurt their ability to sell their home and then buy your house.  You may encourage your buyers to consider whether or not their buyers have a house to sell, but ultimately, your goal is to sell your house.  If your buyers don't sell theirs, then they won't buy yours.  Your buyers want to sell their house as much as you want them to!  Unfortunately, there is some uncertainty when selling your home, even if your buyer is paying all cash!

Q4.  Do sellers ever ask for a non-refundable deposit if they take their home off the market for more than 3 months?  We were thinking of giving our potential buyers the winter to sell their place, since we'll be in our Arizona home anyway until April. 

Sellers can ask for a non-refundable deposit regardless of the length of time they are taking their house off the
market.  If the buyers and sellers agree, a deposit can be non-refundable for any reason, as long as it would be reasonable compensation to the sellers if the deal fell through.  Keep in mind, however, that just because your house is under contract does not mean you cannot still be marketing it and taking back-up offers or names of people who may be interested in buying if your deal falls through.

Q5.  The house we're selling needs a new roof.  We want to sell as is.  Can we specify this in our contract agreement (i.e. not subject to inspection)?

While you can try to sell "as-is" and not allow the buyers to have an inspection, this may put off a lot of buyers.  A better way to do it is to "except" the roof in your purchase and sale contract.  Allow the buyer to have an inspection, but specify that the price already takes into account the condition of the roof, and that it will not be subject to renegotiation or a concession on the price.