House Purchase Exclusivity Agreement

Posted on: December 10th, 2020 by localoneway No Comments

Negotiating lockout agreements can take time. As a result, they can sometimes be seen as a distraction from the main transaction. A potential buyer will already have some protection under the rules of professional conduct regarding contractual races, which prevent a seller from sending a sales contract to a second potential buyer without notifying the lawyer who acts for the first potential buyer to whom a draft contract has already been sent. Lockout contracts are more common in the context of a sale and purchase, but may also apply to the granting of a lease or lease as well as other real estate transactions. An exclusivity agreement may allow the buyer to recover his expenses if the seller does not comply with one of his obligations. Similarly, a seller may include a provision in such an agreement to impose a fine or a fee determination if the buyer does not comply with his obligations, when this is more difficult to quantify and implement. An injunction is highly unlikely and damage is limited; Therefore, if a seller receives an increased offer from another person during the exclusivity period, he or she could decide to violate the lockout agreement, sue with the other party and pay the minimum amount of damages for the violation. Home developers use exclusivity agreements to give buyers a fixed exclusive deadline for contract exchange. In return, the buyer pays a non-refundable down payment that can expire if the deadline is not met. Some lockout agreements therefore provide for damages expressly agreed at a certain higher level, in order to make the seller think twice before violating the agreement. A seller`s acceptance of such a provision depends on the bargaining power of the parties and the period of exclusivity.

The amount of damages predetermined should be a reasonable estimate of the damages. If they are too high, they could be considered a “punishment,” which is unworkable. A lockout agreement must not be enforceable in writing and must not comply with the technical requirements for land contracts of the Dasasie Act (Various Provisions) of 1989, as it is not an agreement to sell land. Of course, it is preferable for both parties to have the agreement written down, otherwise there will be more leeway for disputes over agreed terms.

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