Some Contract Questions
I'm putting together a contract that I'll be using to purchase homes which I will be flipping or assigning. I'm going through it, eliminating some of the unnecessary language and portions to turn it into a bonafide "Wholesale Flip" contract. Some questions have arisen as I've been going through the process:
1. TITLE POLICY. Being that I'm only holding the property for a few minutes, or in some cases, not at all, is it necessary to insist on a title policy from the owner. There's also an option for a "continuation of title abstract" Could someone help me with this?
2. PROPERTY CONDITION. Since I'm buying homes that need rehab, should I change the standard language for Property Condition provisions to reflect the more accurate As-is nature of the transaction? I'm thinking this will be more attractive to the seller. What's the best way to word an As-is property condition statement?
Thanks in advance for your help, guys.
[addsig]
Contrary to some of what is being posted elsewhere on TCI on wholesaling, it sounds as if you are defining "wholesaling" as acquiring an equitable ownership interest in the property but not taking title. If that is the case, and just looking at this from a contract point of view, you should retain whatever provisions there are in the contract form requiring the seller to convey to you or your assignee title free and clear of any and all liens, encumbrances or defects. Don't know how your title provision reads, but the contract language I'm familiar with for PA does not require the seller to provide a title policy--just to convey good, marketable title. I would, however, have a title company run title for insurance and keep that open for your assignment. If the title has defects or mega liens, obviously you're not going to find an assignee.
As for property condition, I agree that modifying the provisions so that it's clear you're purchasing the property in its "as is" condition should be appealing to the seller. If that's what you want to do, then also eliminate any provisions for inspections. Just make sure you're willing to forego any inspections and that that's not going to create a problem when you assign your interest in this property to someone else.