Today, high-rise buildings, large office spaces, and acres of real estate properties are up for a sale to individuals who can afford the luxury of managing and owning businesses as well as his own residential location. However, there are also hundreds of forms and documents that a prospective buyer will have to fill out and sign before he will be granted with an ownership title and the rights to manage a property, and one of the most common is known as a buy and sell agreement contract form.
A buy and sell agreement contract form is a legally binding document for two individuals who are business partners or associates in a business company. The form is intended to be layout rules and regulations that are to be mandated if one of the parties in the contract dies or leaves the business. To compare this contract with other legal forms, this is highly similar to a prenuptial agreement since it is constructed before any business partnership will be granted and opened.
There are three types of category for buy and sell agreement contract forms namely cross-purchase, redemption, and hybrid type of agreement. A buy and sell agreement contract in a cross-purchase category, the owner who is left in the company will be able to buy the business at the price stated in the contract. While a contract in a redemption category, the shares and stocks owned by the owner who died or who took a leave will be able to be bought by the company itself wherein the payment is acquired from the company’s insurance policy. On the other hand, the hybrid type agreement involves the deceased owner’s interests to be bought by both the company and the remaining owners.
The importance of having a buy and sell agreement contract is due to the need for business owners to protect and secure a business company. This contract also serves as a last will and testament of the owner with regards to how the company will be shared and sold to another entity. Without the contract, the company can either land to an owner who is not at all interested in achieving success or will be sold at a lower price than it is actually worth.
There are specific buy and sell agreement contracts that are used by realtors and property owners for them to sell out their owned properties. If this is the type of contract that you currently need, then begin creating your own by following the steps below for your basic buy and sell agreement contract form intended for selling properties:
1. Allocate an area for the offer dates as well as the general information of the selling and listing office agencies. The selling broker and the listing broker’s names, email addresses, and their contact information must be stated in this section. The offer date, on the other hand, is the indication or the beginning of when the property was being held on sale for prospective buyers.
2. Have a section allotted for the property’s description. Where the property is located, what are the dimensions of the property, what is the type of property being sold, and what inclusions are held as part of the sale must be detailed in this section. This is to properly inform the buyer of what he will be buying and investing from the seller. You may also see sample buy-sell agreement forms.
3. Add a method of payment area for the pricing and the payment options. Determining the price of a property depends on the property’s price range in the market and the assessments of a legal assessor. In this section, the seller will be able to state his final negotiations with the seller regarding the property’s price and the how he can provide the payments whether through a mortgage or through direct cash payment. Additionally, details about the required earnest money deposit should be stated as well to determine the amount that the seller obtained during the negotiation. You may also see free purchase agreement forms.
4. Enlist the property insurance policies and coverage. The property and title insurance policies must be provided by the seller which is included in the sale. This section must state what exceptions and special provisions will be given to the buyer until the day of the closing. You may also see purchase contract form samples.
5. Indicate a closing and tax clauses. Securing that a property transfer is conducted legally and with full notice to the authorities in a state is the purpose of a property closing. The responsibilities and the obligations of the seller toward providing payments for the closing procedure and property taxes should be stated in this section along with the indication of whether a proration is mandated for the seller or not.
6. Add a miscellaneous fee section. This section should indicate the additional actions and processes to be fulfilled for the execution of the contract. Specifically, fees for the attorneys, assessors, and other associated fees for selling the property must be detailed and determined as to who will be providing the payments and how each of the fees will be paid before the contract’s closing date arrives. You may also see car sale contract.
7. State occupancy, disclosure, and release clauses. An occupancy clause serves as a guide for the buyer to know when he will be able to use the property whether he can immediately move after the contract’s closing or a few days prior to the closing period. On the other hand, a seller disclosure statement must be created by the seller addressed to the buyer. To record the date of when the seller’s statement is necessary to be handed over to the buyer, a section indicating the period of the document’s delivery must be incorporated after the occupancy clause. Lastly, a release clause will complete this section, which is significant for detailing that there are no representatives hired by any of the buyer or the seller to negotiate and complete the contract.
8. Indicate details regarding default, limitations, counterparts, and contract assignments. Terms and conditions to be followed when one of the parties caused a default or a breach of contract is the main focus of this section. Commonly, if a buyer defaults, the seller has the right to terminate the contract and keep the deposit that the buyer paid for, while if the seller defaults, then the buyer will have the right to demand a refund from the payments that he provided and pursue a legal action. You may also see sample real estate agreement forms.
The limitations of the buyer and the seller regarding pursuing a legal action toward brokers and agencies as well as for establishing the contract are stated in this section such as the limited period that both parties must observe when sending notices, sample legal forms, and addenda for the agreement. In addition to this, contract assignments must be indicated as well along with the responsibility of the buyer to inform the seller beforehand if he will be assigning the agreement to one of his heirs and successors.
9. Disclose the date of when the selling offer will be expired. Aside from the date, the exact time of the offer’s expiration should be stated.
10. Incorporate an acknowledgment and receipt section. The purpose of an acknowledgment section is to imply that both parties have read and will acknowledge the terms of the contract. Both of the buyer and the seller must have areas that will gather their signatures, names, and the date of when they will be signing the form. A legal receipt of acceptance must also be signed and agreed by the buyer to complete the contract. You may also see sample car sale contract forms.
Aside from the aforementioned steps and sections that completes a basic real estate buy and sell agreement contract form, a seller can also include additional clauses such as an inspection disclosure clause and a land division act statement. Also, buy and sell agreement contract forms can be used for farms and animal owners. The form must only be addressed and must focus on determining the animal’s price, breed, and the governing law that the seller is obligated to mandate in the agreement.
When creating a buy and sell agreement contract form, all owners of a business must negotiate and decide on the terms with the expertise of an attorney. This ensures that all involved parties have spoken out their suggestions in order to finalize the contract. The conditions and the terms must also be defined properly along with the laws that govern the execution of the contract. You may also see business purchase agreement samples.
Another tip when constructing the contract is to pick an appropriate buyout trigger. A buyout trigger refers to the incident or the situation that will trigger the co-owners of a business to proceed with selling or buying the company. The most common is the incident of a co-owner’s death. You may also see vehicle purchase agreement templates.
However, regardless of the tips and the strategies of a company for their business, picking the right buyer to have the company growing must always be kept in the minds of the owners and management as part of the criteria for determining the buyer’s capabilities for the company. Accompanying the right buyer must be the right setup and venue for agreeing to the terms of the contract along with the right price range for selling the business assets and stocks. You may also see generic purchase agreement forms.