I am making an offer on a repo. The broker representing the bank has a clause in his contract that states that if I do not complete the sale in 2 weeks they keep the 10% down as damages. Is this an acceptable practice? I never sign LD's in our business. I do not think this is a good practice. What do you think.
liquidated damages
- Thread starter jacko
- Start date
BS they are only entitled to damages if you agree they are and IMO only to the extent they can demonstrate an actual expense. This is the broker trying to protect his comission and has nothing to do with the bank.
Just say no and see what happens.
Just say no and see what happens.
Please understand that a liquidated damage clause is usual and customary, though only if it is binding all all parties (owner/seller, buyer, broker). In such event that the broker is a party, it is imperative that the broker (or his legal representative) execute and/or initial that clause that names him specifically.
If the LD clause does not include all parties equally, than (1) it should be 100% deleted or excluded, or (2) some other reference such as suggested below be inserted into the contract.
But, you cannot have it both ways. All are in, or all are not.
Suggested language:
It is understood and hereby agreed by the parties (owner/seller, buyer, broker, any other party that has or may have ownership status) that notwithstanding any reference in the agreement to the contrary, in the event of a failure to perform or complete the transaction by any party for any reason whatsoever, any deposit paid by the buyer is hereby unequivocally fully refundable forthwith to said buyer.
I'm just saying...
If the LD clause does not include all parties equally, than (1) it should be 100% deleted or excluded, or (2) some other reference such as suggested below be inserted into the contract.
But, you cannot have it both ways. All are in, or all are not.
Suggested language:
It is understood and hereby agreed by the parties (owner/seller, buyer, broker, any other party that has or may have ownership status) that notwithstanding any reference in the agreement to the contrary, in the event of a failure to perform or complete the transaction by any party for any reason whatsoever, any deposit paid by the buyer is hereby unequivocally fully refundable forthwith to said buyer.
I'm just saying...
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I'm not sure that would work in NJ where "buyer's remorse" reigns supreme. That is, if you back out, your entire deposit gets refunded.
The entire premise is wrong.
IMO there is no damage if the boat doesn’t sell in two weeks. Each party is back where they started and except the salesman who is unhappy, so what.
I wont agree to pay anything to guarantee his happiness.
IMO there is no damage if the boat doesn’t sell in two weeks. Each party is back where they started and except the salesman who is unhappy, so what.
I wont agree to pay anything to guarantee his happiness.
Great info here. It is the reason I read this forum. If you think the broker has proven himself to be a snake you might want to step back even if this one contractual item is resolved. I would not want someone I am uncomfortable with holding the earnest money.
i would offer an alternative to the broker if he wont agree to discard the language altogether. the alternative being some language that indicates that the sale is to be closed in a specific time frame or the whole contract is void. also warrantee that the purchase will not be made without the brokers fee being paid, ie you wont' go around him/her and buy it directly from the seller.
Since it appears the 10% is really representing more of a deposit, don't a lot of buyers protect themselves by crossing ut the 10% & agreeing only to a much lower non-refundable amount? Say a couple hundred bucks? If you have the funds or full financing for the boat you fully expect to purchase , a non-refundable 10% down payment should be of no concern. If not, it would be silly to commit that kind of money or a purchase agreement,no?
Having a liquidated damage clause in a purchase contract is not unusual, nor is it detrimental to the buyer provided there is accompanying language to protect the buyer in the event that the boat is unacceptable. The additional language should state the cases in which the Buyer is entitled to a full refund of his deposit; such as, subject to Buyers approval of survey, or subject to acceptable financing - very much like a real estate purchase.
Chief Alen
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You can only be takin advantage of if you allow a person to do do.
Good for you if the broker doesn't go for it then f him, twice on sunday.
Good for you if the broker doesn't go for it then f him, twice on sunday.
Frequently we sign "standard" or "boilerplate" contracts or agreements. They are written by attorneys paid to protect the interests of the other party, usually the seller of a product or service. The agreement often has clauses we don't like but just go along and accept. Read the agreement you sign to get the use of a credit card or the one offered by your car dealer's service department. We sign them because we want the service or product and the people across the table don't have the authority to negotiate. Life goes on and the buyer usually doesn't get burned.
Excluding dinghies, I can think of seven boats that I have purchased where there was a negotiation including offers and counter-offers. I hand wrote each offer. In every case my written offer with deposit was presented to the seller and the negotiation process was not negatively effected. A lot of the language was taken from broker's standard contracts, some was mine. I addressed simple and reasonable items like my death or disability, timeliness and a commitment that the broker present my offer to the seller by a certain date. (A 100% guarantee that the broker will present the offer!)
The brokers and sellers want to sell boats and you have an excellant chance of getting the terms you want if they are reasonable and negotiated up-front and in writing.
Good luck!
Excluding dinghies, I can think of seven boats that I have purchased where there was a negotiation including offers and counter-offers. I hand wrote each offer. In every case my written offer with deposit was presented to the seller and the negotiation process was not negatively effected. A lot of the language was taken from broker's standard contracts, some was mine. I addressed simple and reasonable items like my death or disability, timeliness and a commitment that the broker present my offer to the seller by a certain date. (A 100% guarantee that the broker will present the offer!)
The brokers and sellers want to sell boats and you have an excellant chance of getting the terms you want if they are reasonable and negotiated up-front and in writing.
Good luck!