Purchase Contracts - Standard Vs Custom. And What To Watch Out For...
I am looking for thoughts on the use of standard purchase contracts (i.e., those created by Realtor associations or other organizations) vs. custom contracts written specifically for you by an attorney. This is more a question of opinion to see what most folks are using and when those of you who are well seasoned feel one is better than the other. Also, I'd like to glean some information on common gotchas to watch out for. Example: I was reading through a purchase contract developed by the Georgia Association of Realtors that had a clause stating that if the buyer failed to perform, that individual was liable for the broker's full commision. Seems that this type of clause, if left in the contract, would make it very expensive to walk away from a purcahse if due dilligence pointed to a bad deal. Other common traps? [ Edited by hueyrescue on Date 04/18/2004 ]
I tend to use the form contracts for reasons that have very little to do with law.
Submitting anything other than the form is like waiving a red flag and gets more scrutiny than you want early on in the deal.
The failure to perform clause you cite is generally subject to the due dilligence provision. In other words failure to close for a reason (especially where that reason is something discovered in due dilligence and which the seller should have revealed up front) is generally not construed as failure to perform.
If the purchase contract contained a contingency giving you the right in your sole discretion to terminate at the expiration of the due diligence period, then your terminating wouldn't be a failure to perform. Likewise with other types of contingencies--if you cannot satisfy the contingency, that's not failure to perform. Sounds like the contract is talking about a buyer default as a "failure to perform". Suggest running the form past your real estate attorney.