Wholesaling Clauses You Should and Shouldn’t Use.

We all want to know the rules of a game before we play it. The rules of a game protect both teams and the people involved in the sport. Real Estate Contract Clauses help protect you in the “foul” or “fumbles” of a real estate deal. Think of them as the “referee” if you will.

So the first clause you should have is an Inspection clause.

Inspection Clause: Pretty straightforward, you have xx days to inspect the property. Typically it is 7 days and no it’s not 7 business days just 7 days. It can however be 7, 14 or 21 days.

Effective Date Clause: Simply states the contract is good until xx date. Ours states that we have the right to terminate the agreement prior to the “Effective Date” which is usually 21 days after the contract is signed.

Assignment Clause: I suggest being completely honest with the seller and explain the assignment clause. Usually it will just say “and/or assign’s” by the buyers name which would be myself if I was buying the property. All contracts are assignable unless they say otherwise but again it’s about disclosure and being honest and upfront.

A NCND or Non-Circumvention Non-Disclosure: Really a separate contract altogether but your contract should include a short clause about this. Mine simply states “buyer agrees not to negotiate with prospects I send to the property”.

 

Now for some you shouldn’t use.

Financing Clause: I suggest not using this one and here’s why. If you are ever called into court and you have this clause a judge could make you go through a pre-qualification with a lender and if you can indeed get a loan you could be held liable.

Offer Pending Partner Approval: It may sound like a good clause but it really isn’t. Your clause may say something like “subject to buyers inspection” or “subject to buyer’s property manager’s inspection”. The reason why this isn’t a good clause to use is in court it could be argued that you don’t have the legal authority to execute a contract if you require a partner’s approval. You can use this if you want but use it with caution!