help with agreement for sale

M

Mystique

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Registered
Hello everyone.
I am looking for some help in preparing an offer. I have an interest in buying a commercial property, a senior care facility to be precise. Would anyone be willing to share information on how agreement for sale works? How one does writes such an offer, any safety clauses to include in the offer. Your comments will be very much appreciated. Thank you everyone in anticipation.

Hari Narang
 
Thomas Beyer

Thomas Beyer

0
REIN Member
An agreement for sale (AfS) is essentially a 2nd mortgage .. i.e. the agreement gets wrapped around the existing 1st mortgage .. that`s why an AfS is also referred to as a wrap-mortgage.

The difference to a 2nd mortgage is that the title stays in the seller`s name.

Thus, in the contract where it states "1st mortgage and seller`s financing" you state the amount and state "via AfS".

Example:

Purchase Price: $800,000
Cash: $200,000
$800,000 via AfS as per Appendix C.

Appendix C then would state the terms, such as " The AfS of $800,000 carries a 6% interest, $4000 payable monthly, interest only, until Sept. 30, 2012" ..

Then in Sept. 2012 only you`d re-financed the property and pay the $800,000.

Be aware that most AfS have to be lined up with the existing 1st mortgage.

Also be aware that most lenders deem an AfS like a sale and it may require the lenders approval.
 
MarkTorgerson

MarkTorgerson

0
REIN Member
QUOTE (Mystique @ May 5 2009, 07:03 PM) Hello everyone.
I am looking for some help in preparing an offer. I have an interest in buying a commercial property, a senior care facility to be precise. Would anyone be willing to share information on how agreement for sale works? How one does writes such an offer, any safety clauses to include in the offer. Your comments will be very much appreciated. Thank you everyone in anticipation.

Hari Narang


I was looking for information on this as well a week or so ago. My understanding now is basically how Thomas has explained it. In our case the seller had a 1st mortgage that he couldn`t get out of and the bank would not allow it to be assumed. So we purchased through an Agreement for Sale where we have agreed to make the payments to service the debt on this 1st mortgage until the 1st mortgage is due. The 1st remains under his name but we service the debt through the agreement. We wrote the possession date as couple a months down the road but the close date isn`t until November 2012, which is when then 1st mortgage is due. It is at that point we need to refinance the first under our own name. This format actually worked in our favor as it made the entire process more seemless than having to go through the painful qualification process with the bank. I do strongly suggest that you involve a qualified lawyer in the process.
 
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