Selling to a Developer? Charge for extensions in PA!!

Share This

Share on facebook
Share on twitter
Share on linkedin
Most if not all developers take the position: "I will not pay any hard money until I receive my full entitlements. I am conducting tests and adding value to your property. There is no room to add non-refundable money." Well, I can tell you from first hand experience--that is just not true. If a seller has a unique piece of property special to a developer, they will agree in purchase agreement to put up hard money in a strong market.

Table of Contents

Best-PracticeAs a licensed Broker and an Attorney, I have the unique perspective of understanding the art of the deal as well as the power of protective language and funds.  In 2017, there is a lot of redevelopment occurring across Minneapolis St. Paul metro.  In many cases, developers are assembling multiple parcels for purchase that will require them to go through an entitlement process while under contract and prior to closing.

Most if not all developers take the position:  “I will not pay any hard money until I receive my full entitlements. I am conducting tests and adding value to your property.  There is no room to add non-refundable money.”  Well, I can tell you from first hand experience–that is just not true.  If a seller has a unique piece of property special to a developer, they will agree in purchase agreement to put up hard money in a strong market.

Typically, I recommend sellers agree to standard 60 day free looks with refundable earnest money, but tie all time after 60 days to one time transfers of refundable earnest money from the trust account into non-refundable payments to the Seller in increments, say on the 61st day after the effective date and every 30th day after (91, 121, etc.).  Exactly how much depends on the value of the property, etc.  It is important for Sellers to not get too greedy, but to ask for something in the purchase agreement that has a high likelihood of acceptance.

Share:
Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
On Point
Related Posts

Know Your Written Notices!

In 2018, residential rental properties face an environment of increasing regulation at all levels of government: local, state, and federal. After 15 years around multifamily

Join Our Mailing List

Receive helpful content and resources to advance your commercial real estate business goals.

  • This field is for validation purposes and should be left unchanged.

About

Minnesota Landlord Law is the home for all things real estate law, and the law practice of real estate investor/broker and attorney Brad Schaeppi - MMSBA Certified Real Property Law Specialist.

Copyright 2020 © All rights Reserved.

Scroll to Top