AFS ( Agreement for Sale ) Help

[antaynguy]

Hi Gurus,I have a situation here where the seller is willing to sell for what she owes.Fictatious number: Say her mortgage info is:400000 Mortgage balanceRBC4%Monthly PI 1902.07Amortize 30 yearsMature May 31, 2011Let`s say I want the paperwork done by April 30, 2010 and that she will be paying the next three months of mortgage payments, then I will pickup the payment from there. I told her I don`t know when I will be cashing her out, but will cash her out when my tenant buyer cash me out.Assuming that we agreed on a method of payment.What should I be putting in this section 2.1? Is this right?
"

2.1 Other than the Deposits, the Buyer shall pay the Purchase Price by certified cheque, lawyer`s trust cheque, bank draft or other agreed value as follows:



$ 0 Initial Deposit



$ 0 Additional Deposit



$ 0 Unpaid Seller`s Equity



$



$ Other Value



$ 400000 Balance Owing (subject to adjustments)



$ 400000 Purchase Price



Unless otherwise agreed in writing, the Purchase Price includes any applicable Goods and Services Tax (GST). This transaction shall proceed by way of "Agreement For Sale".

"

I am looking at Section 4.1(CLOSING Section) of the modified AREA contract with AFS clause from Barry and it states the possession date of the purchase. My question is what date do I put here if I don`t know when I cashout the seller. I want to cash out the seller my tennat buyer cash me out.

"

4.1 Unless otherwise agreed in writing, this Contract will be completed, the Purchase Price will be fully paid and vacant possession will

be available by noon on the day of , , (the "Completion Day"), subject to the rights of the existing tenants, if any.

"



In section 7.1:
" 7.6 The terms of the Unpaid Seller`s Equity are:

a) Principal Amount: $______400000_________________

b) List of charges permitted to rank ahead of the Agreement For Sale Caveat:

_____RBC_________________________________________________________________________

______________________________________________________________________________

c) Rate of Interest: _____4_____% to be calculated semi-annually, not in advance.

d) Amortization Period: _____35__________, to commence ______________________, 20______

e) Term: ___????____________, to mature _________May 31,_____________, 2011______


f) Payments of $_____dana-->1902.07_________, to be paid:
ð Monthly ð Quarterly ð Semi-Annually ð Annually

And are:

ð Blended Principal & Interest ð Interest Only

And are to be made regularly commencing ______????________________, 20______

g) Interest charges are to be computed from __????____________________, 20______

h) The Agreement For Sale:

ð Is assignable without consent of Seller

 is assignable with consent of Seller, which consent will not be unreasonably withheld

i) Buyer is to provide and maintain on an annual basis to the Seller a series of post-dated cheques or an executed PAC deposit form at the Buyer`s discretion. Buyer may make seller`s payment on existing financing to seller`s bank; seller will cooperate in setting this up with the bank.

j) Prepayment: The Agreement For Sale may be prepaid at any time

a) without notice, bonus or penalty, either in whole or in part. Partial payments must be at least $100.00 OR

b) if buyer pays seller`s payout penalties for permitted charges (as set out in paragraph 7.6(b) above)

k) Buyer will provide form of Agreement For Sale document.

"
Where do I state the part where I will be cash her out only if my tenant cashes me out?

I am assuming that my lawyer will draft up the "Agreement for Sale" Document which outline the underlining mortgage. Since there is no equity, I would imagine that the "AFS" document will mention something to that affect too.

Thanks!

 

[travis]

Hi Antay,I use a standard AREA contract and a seperate (one page) AFS Financing Schedule. I can see you use the AREA contract with the `built in` AFS Financing Schedule- in my opinion this is a little more complicated.I made the changes below to the best of my knowledge and highlighted them red.Call me or message me if you want to walk through this.T




QUOTE (antay @ Apr 7 2010, 04:33 PM) Hi Gurus,

I have a situation here where the seller is willing to sell for what she owes.
Fictatious number: Say her mortgage info is:

400000 Mortgage balance
RBC
4%
Monthly PI 1902.07
Amortize 30 years
Mature May 31, 2011

Let`s say I want the paperwork done by April 30, 2010 and that she will be paying the next three months of mortgage payments, then I will pickup the payment from there. I told her I don`t know when I will be cashing her out, but will cash her out when my tenant buyer cash me out.

Assuming that we agreed on a method of payment.


What should I be putting in this section 2.1? Is this right?
"

2.1 Other than the Deposits, the Buyer shall pay the Purchase Price by certified cheque, lawyer`s trust cheque, bank draft or other agreed value as follows:



$ 0 Initial Deposit



$ 0 Additional Deposit



$ 0 Unpaid Seller`s Equity



$



$ Other Value



$ 0 Balance Owing (subject to adjustments)



$ 400000 Purchase Price



Unless otherwise agreed in writing, the Purchase Price includes any applicable Goods and Services Tax (GST). This transaction shall proceed by way of "Agreement For Sale".

"

I am looking at Section 4.1(CLOSING Section) of the modified AREA contract with AFS clause from Barry and it states the possession date of the purchase. My question is what date do I put here if I don`t know when I cashout the seller. I want to cash out the seller my tennat buyer cash me out.


If you want possession May.1 (for example) put May.1. In the AFS contract this date is more like a possession (file caveat on title) and actual closing is date your tenant buyer gets cashed out. *NOTE* Get possession early so you can fix up the house (if necessary) and market to get your tenant buyer in time for your agreed upon first payment (covered below). This `time spread` is very important.

"

4.1 Unless otherwise agreed in writing, this Contract will be completed, the Purchase Price will be fully paid and vacant possession will be available by noon on the day of , , (the "Completion Day"), subject to the rights of the existing tenants, if any."In section 7.1:" 7.6 The terms of the Unpaid Seller`s Equity are:

a) Principal Amount: $______400000_________________

b) List of charges permitted to rank ahead of the Agreement For Sale Caveat:

_____RBC_________________________________________________________________________

______________________________________________________________________________

c) Rate of Interest: _____4_____% to be calculated semi-annually, not in advance.

d) Amortization Period: _____35__________, to commence ______________________, 20______

e) Term: ___number of months until end of underlying mortgage term____________, to mature _________May 31,_____________, 2011______


f) Payments of $_____1902.07_________, to be paid:

ð Monthly ð Quarterly ð Semi-Annually ð Annually

And are:

ð Blended Principal & Interest ð Interest Only

And are to be made regularly commencing ______Date you agree with seller- say, September. 1, 2010________________, 20______

g) Interest charges are to be computed from __one month prior to above date- August. 1, 2010____________________, 20______

h) The Agreement For Sale:

ð Is assignable without consent of Seller

 is assignable with consent of Seller, which consent will not be unreasonably withheld

i) Buyer is to provide and maintain on an annual basis to the Seller a series of post-dated cheques or an executed PAC deposit form at the Buyer`s discretion. Buyer may make seller`s payment on existing financing to seller`s bank; seller will cooperate in setting this up with the bank.

j) Prepayment: The Agreement For Sale may be prepaid at any time

a) without notice, bonus or penalty, either in whole or in part. Partial payments must be at least $100.00 OR

b) if buyer pays seller`s payout penalties for permitted charges (as set out in paragraph 7.6(b) above)

k) Buyer will provide form of Agreement For Sale document.

"
Where do I state the part where I will be cash her out only if my tenant cashes me out?

It is part of the actual AFS document- akin to a glorified mortgage. Lawyer takes care of this.

I am assuming that my lawyer will draft up the "Agreement for Sale" Document which outline the underlining mortgage. Since there is no equity, I would imagine that the "AFS" document will mention something to that affect too.

Exactly.

Thanks!

 

[antaynguy]

QUOTE (travis @ Apr 8 2010, 12:05 PM) Hi Antay,

I use a standard AREA contract and a seperate (one page) AFS Financing Schedule. I can see you use the AREA contract with the `built in` AFS Financing Schedule- in my opinion this is a little more complicated.

I made the changes below to the best of my knowledge and highlighted them red.

Call me or message me if you want to walk through this.

T

Hi Travis,

Thanks for the clarification. I don`t know how many regular AREA purchase contract I have filled out but this AFS thing really trip me up. I am assuming that the lawyer will draft up the AFS Document based on the information filled out in the contract as per your reply. I am still concern about not mentioning the "cash out" date on the contract. What if the seller and I agreed on a specified date to be cashed out? I would be inclined to state that date somewhere on the contract. do you think it would be appropriate to write that date down as part of the term in Section 7? At least it`s clear and that the lawyers who handles the closing would be able to get the needed information from the contract?

Thanks!

 

[travis]

Hi Antay,

I hear ya, it can be a little tricky.

The "cash out" date is structured to be the same as the term maturity of the underlying mortgage. The mortgage term is specified on your AFS Financing Schedule. That should suffice for your lawyer. If, at that date, your not "cashed out" you could renegotiate. Or some solution would need to be decided on.

If you and the seller have agreed on a different date (if the mortgage renewal is coming up soon?) I`m not sure where/how you would record that. Maybe in section 7 or the actual AFS document drafted by your lawyer. I don`t know.

T





QUOTE (antay @ Apr 8 2010, 02:11 PM) Hi Travis,

Thanks for the clarification. I don`t know how many regular AREA purchase contract I have filled out but this AFS thing really trip me up. I am assuming that the lawyer will draft up the AFS Document based on the information filled out in the contract as per your reply. I am still concern about not mentioning the "cash out" date on the contract. What if the seller and I agreed on a specified date to be cashed out? I would be inclined to state that date somewhere on the contract. do you think it would be appropriate to write that date down as part of the term in Section 7? At least it`s clear and that the lawyers who handles the closing would be able to get the needed information from the contract?

Thanks!