Your contracts should evolve
me some great lessons that helped us word our contract better this time.
On the previous deals, the sellers had lots of stuff in the houses and needed time to move. With deal No. 1, the sellers moved out late and left two 30-yard dumpsters of trash. Not only did it cost us more to get the place trashed out, but it put us behind schedule by two weeks.
With deal No. 2, we made the move- out money conditional. They had to have all their stuff out by an agreed- upon time frame, or they lost it all. This backfired. I neglected to put a performance clause in our contract which would reduce the move- out money by $ 100 every day they went past the moveout date. Because we made the money an all or nothing situation, the sellers became unmotivated once they went past the move-out date.
Both of these deals helped me write a better contract this time around.
On this deal, we agreed to a move- out date after closing as well as an amount to hold back. In order to keep everyone motivated, we worded our contract like this:
The seller’s moveout deposit will be returned to the seller as long as:
1) Seller vacates the property on or before the move- out date agreed to by buyer and seller.
2) Seller has removed all trash and made the property broom-swept clean
If the seller does not move from the property by the date seller agreed to, seller agrees to pay the buyer a holding- over fee of $ 100 per day until the seller vacates the property. The seller’s holding- over fee will be deducted from the seller’s move- out deposit and paid to the buyer.
If on the move- out date, seller has not removed all trash and cleaned the property, buyer has the right to hire an appropriate contractor to remove trash and clean the property. All costs for hiring said contractor, rental of dumpsters, and any other costs incurred by buyer for this work will be deducted from the seller’s move- out deposit. Since this was not completed by seller on the moveout date, this will also constitute holdingover, and the holdingover fee will begin to accrue.
On the date the property is cleaned and all trash removed, the move- out deposit will be prorated based off of contractors fees, if any, seller’s holdingover fees, if any, and a cashier’s check of that resulting amount will be delivered to seller.
By wording things this way, we kept the sellers motivated and covered ourselves should they not perform.
Jack Miller voiced it best when he said, “Draft documents by design, not default.” And as you gain more knowledge through the deals you do, your contracts should evolve to become better and better.
Joe and Ashley English buy houses and mobile homes in Northwest Georgia. For more information or to ask a question, go to www. cashflowwithjoe. com or call Joe at 678986- 6813.