Every Transaction Needs A Superclause To Function?

by David Gerlitz on August 16, 2011

Every transaction needs a superclause to function in today’s buyers market? I would like a chance to put this in perspective for you.

Use of a superclause, we aren’t talking about a super hero version of the famous Jolly ol’ St. Nick with extraordinary super powers to uphold truth justice and the American way… However a superclause can hold some pretty incredible powers of it’s own…

The superclause is an additional layer of protection to a buyer. It is a way to ensure that all of the financial information is shown before the transaction actually takes place. For example on a multi unit property here is a sample of a superclause used on an apartment building.

Every Transaction Needs A Superclause To Function?

Here is the Apartment Investor Purchase Contract “Superclause”:

“Seller to provide the following for buyers examination and approval in the next 15 days:
1) All leases
2) All property management agreements
3) All vendor contracts
4) Current Rent Roll
5) Property Income and Expense History for the last two years
6) Year to date property income and expense history
7) Last two years tax returns as they pertain to the property
8) All units, buildings, grounds and mechanical systems.

Buyer may void this contract at any time during this 15 day period if the information found does not meet buyers approval”

End of clause… Now we have to put in our little disclaimer that we are not attorneys, and we do not portray one on a hit television show either. Rules about real estate investing and contracting vary state to state and sometimes by county. Be certain to contact your CPA or financial adviser to ensure you are able to use a superclause.

Also a single clause or superclause will not entirely protect you during a purchase transaction. You need to use multiple clauses in conjunction with your superclause to ensure you receive the fullest amount of protection during your transaction.

Real estate contracts are long and timely to fill out, the transaction itself is even longer. You always need to have your basic subject to financing & other general clauses placed into every contract you create. The additional benefits of using a more powerful superclause are enhanced security and reduced risk with your transaction. In our book, superclauses are recommended – most investors fail to use them and thus they get burned in the process if they weren’t careful.

Don’t just rely on a contract clause for safety. Complete your own thorough evaluation and due dilligence intel to form an educated opinion of the subject property at hand. Pay attention to the smallest details of your transaction. Nothing is to small to overlook.

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