PA Agreement of Sale Part 8
Paragraph 21 deals with Maintenance and Risk of Loss. I have actually blogged on this and a good example of this is Why you need to keep your home insured until settlement. There are three parts to this paragraph.
Sub-paragraph A states that seller will maintain the property, grounds and fixtures specifically listed in this agreement in their present condition excepting normal wear and tear. Sub-paragraph B deals with any system or appliance breaks or fails before settlement. The seller has two basic choices. 1) Repair or replace the system before settlement. 2) Provide the buyer with written notice of the sellers decision to credit the buyer at settlement with fair market value of the failed system or appliance, as acceptable to the mortgage lenders or not repair or replace or give any credit to the buyer. If the seller chooses not to make any repair or replace or give any credit or the seller fails to notify the buyer of his choice; the buyer will in writing within 5 days or before settlement whichever is sooner that the buyer will accept the property and agree to the now famous paragraph 27 release, or terminate the agreement with all deposit monies returned to the buyer according to the terms of the equally famous paragraph 30.
Sub-paragraph C states that the seller bears the risk of loss from fire or other casualties until settlement. This means keep the property covered by insurance and if you move out several days before settlement, let your insurance company know in writing. If any property included in this agreement is destroyed and not replaced Buyer may accept the property in its current condition together with any proceeds of any insurance recovery obtainable by the seller or as usual terminate the agreement in writing with all deposit monies returned to the buyer according to the terms of paragraph 30.
Paragraph 22 is only applicable in certain parts of Pennsylvania and it states "where applicable". You cannot transfer rights to coal and rights of support beneath ground and the owners of those rights have the complete legal right to remove all such coal and this may cause damage to the surface of the land and any house or structure on the land. The buyer needs to satisfy himself that there is no mining going on below the surface of his land to know if this paragraph is applicable.
Paragraph 23 deals with taking possession of the property. Possession is to be delivered by deed, signed at the settlement table, keys, given usually at the settlement table and 1) physical possession to vacant property FREE of debris, with all structures broom clean at day and time of settlement. The seller needs to be out of and off of the property and their things need to be out of and off of the property. If the property is being leased this needs to be transferred at settlement to the buyer unless stated otherwise elsewhere in this agreement. Buyer acknowledges any existing leases by initialing the leases at the execution of the agreement of sale unless specified in the agreement of sale. Seller also will not enter into any new leases, extensions of leases without the written consent of the buyer.
Paragraph 24 talks about Recording. The Agreement of Sale is not recorded in the Office of the Recorder of Deeds or in any other public office. If the buyer allows this to happen, the seller can consider this a breach of the agreement.
Paragraph 25 deals with Assignment. The Agreement is binding upon the parties, their heirs, personal representatives etc and to the extent assignable, on the assigns of the parties. Buyer will not transfer or assign the Agreement without the written consent of Seller unless stated in the agreement. If you are conducting a 1031 exchange you need to take legal advice if this paragraph needs to be struck from the agreement to allow you to assign the agreement to the company handling the 1031 exchange for you.
Paragraph 26 addresses the issues of Governing Law, Venue and Personal Jurisdiction. The laws of the Commonwealth of Pennsylvania apply to the rights and duties of the parties and the validity and construction of the agreement. As an example, if you use an agent who works in New Jersey and Pennsylvania make sure they are using a PA Agreement of Sale, not a NJ Agreement of Sale. If there is a dispute under the PA agreement of sale the parties are agreeing that any dispute, controversy or claim arising shall be decided by the state and federal courts of Pennsylvania.
Finally we come to the now famous Paragraph 27 Release. Read this paragraph carefully and if you do not understand it, ask a lawyer. My understanding is the buyer releases, quit claims and forever discharges everyone involved in the transaction, seller, all brokers, their licensees, employees and any officer or partner of any one of them and any other person, firm or corporation who may be liable through them from any and all claims, losses or demands. This relates to just about any damage to the buyer from every contingency stated in the agreement. BUT it does not remove the sellers duties under the terms of the agreement or remove the buyers rights should seller be in default under the terms of the agreement or in violation of any seller disclosure law or regulation to any right to pursue remedies that may be available under law. The release does survive settlement.
If you are buying or selling on or around Tredyffrin Easttown or along the Main Line we can help you, contact us or connect
Feel free to subscribe to our blog to stay up to date with our latest posts and information on the Tredyffrin Easttown and Main Line Real Estate Market.