When we left off, my clients had just been informed that the ‘condo of their dreams’ was available.
We hightailed it out there and met with a salesman. This is where things got a little sketchy. When I showed up my client was just finishing signing documents. I knew going into this that this transaction wouldn’t be like the residential resales I was used to. I knew they would have their own contract and that the process would be closer to that of a newly built house. I had even tried to get my hands on a copy of the contract before we went to the original sales day, but had been turned down. Regardless of all of this knowledge, I was not prepared for the total lack of information or control we were given. He was handed a contract and given no time to read it. He signed and then we were taken to the unit. They even tried to get him to sign off on a ‘final walkthru’ right then and there, which we successfully diverted by explaining that we would be having a professional inspection done.
Luckily, in all of this, my client could not obtain a cashier’s check for the earnest money that day because of the short notice, so he made an appointment to come back the next day and drop that off and sign the final paperwork. This gave me time to take home the 40 page contract he had just signed, as well as the Public Report (a document release by the county that gives basic information about the property, utilities and the surrounding area) and review it all to see just what we were getting into.
It turned out what we were getting into was a bit disconcerting. I am used to entering into the Arizona approved residential resale contract, which is meticulously balanced for both sides of the transaction. I understand the rights that are covered and what all of the clauses mean. I feel comfortable in using it, that my clients, regardless of whether they are buying or selling, will get a fair shake by the contract. In the Montecito Montage conversion contract, the buyer has little to no rights. There were several things about the public report and the contract that worried me the most:
1. The condo complex is in an official flood zone. This can affect the ability to get a loan as well as insurance prices.
2. The contract specified that if the close of escrow was delayed by the buyer or the buyer’s mortgage company for any reason, Montage has the right to charge the buyer an extra $100 per day.
3. The contract seemed to indicate that if the buyer decided to use his or her own lender as opposed to a ‘preferred lender’ and that lender could not complete the transaction, the earnest money would not be refunded to the buyer
Part III tomorrow…