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This topic contains 2 replies, has 0 voices, and was last updated by Avatar of cynthiaholiday cynthiaholiday 11 years, 1 month ago.

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  • #5220

    I have an attorney who asking to have item 8. below added to a counter offer.

    My question is: Is there a provision for the minimum amount a SB will recieve in the documents already. If so please point me in the right direction.

    The attorney states that as written the SB will be forced to sell at a lower amount than the MAV if the FMV at termination is lower than the MAV at inception.

    Item 8. Adding the following provision to the end of Paragraph 5 in the the Proposal, and to the end of Paragraph 1.B in the Purchase Offer: “The parties understand and agree that upon the termination of the trust, or at the time of any agreed-upon sale of the property that occurs prior to the end of the term of the trust, the minimum payment due to the Offeree will be $154,000, plus Offeree’s share of (reserves/what is on the net sheet), even if the appraised fair market value of the property at the termination of the trust or at the time of such sale is less than the MAV. Any portion of said minimum payment due to Offeree that is not covered by the proceeds of a sale shall be paid by Offeror at the close of escrow of such sale.”

    #27501

    By adding this language it SEEMS that you are now predetermining a sale price which violates the lender’s Due on Sale Clause and could also be perceived as a disguised or delayed sale.

    The SB is not at anytime “forced” to sell. The sale cannot take place until there is unanimous consent to do so by ALL beneficiaries.

    #27502
    Avatar of homesavers
    NULL
    Member

    @cynthiaholiday wrote:

    …Any portion of said minimum payment due to Offeree that is not covered by the proceeds of a sale shall be paid by Offeror at the close of escrow of such sale.”

    That would get you in a world of hurt if the value is not there at termination. You would have to reach into your pocket. I say on this one if they want the price set at 154K then sell the property for that price right now. You cannot see the future.

    #27503
    Avatar of joecain
    joecain
    Member

    Hi Cynthia -

    The lawyer’s assertion is correct:

    The attorney states that as written the SB will be forced to sell at a lower amount than the MAV if the FMV at termination is lower than the MAV at inception.

    This is kinda the point. There is no sale occurring at the inception of the Trust and no future sale price can be set. Congratulations on finding an attorney who actually read and understood the docs he has been shown so far.

    If, at termination, the value of the property has dropped below the agreed value at inception, then the Seller has a couple of options. They can choose to sell at the lower price, meaning they will likely need to agree to less refundable contribution than is inked in the Trust Docs. Or, they can choose to not agree to sell at that point in time and extend the Trust and the Lease Agreement until such time as their local market bounces back and some appreciation has occurred.

    That is their choice. The good news is that no other parties to the transaction (Trustee included) can force the sale of the property until the Seller agrees in writing to do so. This certainly allows the Seller to have lots of power in the choice of the disposition of their former property.

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