He wants "and/or assigns" in the contract but swears he's taking title

Selling a small rental I've had for nine years, 172k, cash offer, no inspection contingency after day 10. All fine. Then the contract came back with "and/or assigns" after the buyer's name and a 45 day close on a cash deal, which struck me as a long time for someone who isn't waiting on a lender.

I asked. He said he intends to take title in an entity and may resell it the same day to a builder, and that he'd rather be straight with me than have me find out at closing. I appreciated that more than I expected to.

So now I'm reading my own contract properly for the first time. What I've got:

Earnest money 3k, released to me after the inspection period ends.
No proof of funds attached yet, he offered a lender letter from a short term funder.
Nothing in the contract that requires him to close with his own money.
45 days during which I've told my buyer of a replacement property that I'm liquid.

What I'm unsure about is whether his second closing failing is my problem. If his builder walks, does his funder still close with me, or do I get a call on day 44 asking for two more weeks. I've also wondered whether striking "and/or assigns" does anything useful, or whether it just pushes him toward the version where he takes title anyway and I've made him mildly annoyed for nothing.

I'd like the version of this that doesn't produce surprises. I don't need to squeeze him.

Answer

2carlos_nunezActive

I'm the guy on his side of the table most months, so take this as how it works rather than reassurance.

If his end buyer walks, his funder generally will not close, because that funder's payoff comes out of the second closing. Transactional money is not there to help him own your house for a month. So yes, a failed B-C leg is very likely to become your day 44 phone call.

What actually protects you is timing and money, in that order. Shorten the close to 21 days if he genuinely has cash lined up, and make the 3k nonrefundable earlier rather than later. Then ask for the funder's letter plus a bank statement or escrow receipt from the end buyer, since the end buyer's ability to fund is the thing your whole close depends on and you currently have no window into it.

Striking "and/or assigns" mostly changes which route he uses and does not protect you from the failure you're worried about, though whether the clause matters more than that depends on your state's contract law and your closing attorney can tell you in one reading. Ask for a larger deposit instead. That's the lever.

2 replies

1tashaford30PB2APRO7

The line I'd focus on is the one about you telling your replacement seller you're liquid. That's the actual exposure. If his 45 days slips you're either unwinding your own purchase or funding it another way, and neither of those is priced into the 172k.

I'd rather take 168k from someone closing in three weeks with their own money than 172k on a 45 day contingent chain, and I say that as someone who counts every thousand carefully.