What would you do if the house you wanted to buy was a bnak owned foreclosed property, and you had your offer accepted, and then received, after a 3 week delay, a counter P&S with clauses that are impossible to comply with?

It so happens that we have a buyer who has placed an offer on a bank owned property… The offer was accepted, and we drafted a standard Purchase and Sale Agreement, the same as used in all Rhode Island purchases. So far so good, and so far everything is going as usual, yes?

So after three weeks, the bank comes back to the sellers agent with an amendment to the P&S, which deletes more than two thirds of the language there and which then goes on to list a slew of other requirements… I have detailed some of the requirements below:

1) The seller reduced the time frame for the buyer to have an inspection performed, and to notify to the seller of any issues to 7 days from receipt of the modified P&S… that is, the buyer has to have the inspection done, receive the report from the inspector, and mull it over, and respond to the seller in a total of 7 days. If the buyer fails to respond within the time frame, the seller assumes that the buyer has waived the right to inspections, and to notify the seller of any issues, and is then obligated to buy.

2) The title work on the property must be performed by the bank’s own title company, and the buyer will receive a preliminary title report from the seller, which may be inaccurate, and which must be responded to within three days of receipt. Buyer must pay one half of escrow fee, which will be payable to the bank’s escrow company, within 5 days of receipt of the instructions from the Escrow Company. The bank goes on to say that if there are any faults in the title, the bank is not obligated to remedy or cure those faults, even if the buyer notifies them within the specified time frame of 5 days.

3) Title shall be conveyed to buyer from seller by quit claim deed in a form reasonably acceptable to SELLER…

4) Seller reserves all oil, gas, and mineral rights to property.

5) If seller shall not perform any obligation under the contract, the seller is not to be considered in default unless buyer shall have provided seller with written notice describing such failure to perform, and buyer hereby waives all rights to specific performance and waives the right to file a lis pendens on the property for any failure to perform on the part of the seller. Of course, the seller retains all such rights, and the buy is to be considered in default if any deadlines are missed.

6) Seller has unilateral right to terminate the agreement for any cause what so ever.

Besides the date and deadline issues, which are impossible to comply with (the seller wanted the signed P&S returned by 10AM the following morning, when it was only sent to the buyers agent at 5PM the day before, for example), there are just so many issues with this contract.

What do you think? We are thinking we will counter back to the bank, with the original P&S…

Something comes to mind… something about the old adage, having your cake and eating it too… what it gets down to is this: the seller wants to be able to continue to market the property even during the purchase process, and wants to be able to accept any offer that comes in after they accepted yours, with no recourse to you… in other words, if someone else comes later and makes a better offer, they can cancel your contract at will… sound good to you?