P08-Charges, Prorations, and Taxes

                        

Objective Form:

08.1  Seller shall pay the following charges:
         (i)
        (ii)
       (iii)

08.2  Buyer shall pay the following charges:
         (i)
        (ii)
       (iii)

08.3  All real estate taxes, ad valorem taxes and all rentals due
from lessees on the Premises, if any, shall be prorated between
Buyer and Seller as of the closing date on a per diem basis.  If
the amount of such taxes is unknown or is in the process of reas-
sessment, or where a change thereof may be retroactive to a time
prior to closing, then those taxes and assessments shall be 


estimated at closing, based upon the last prior tax period, and the
actual amount owed respectively by Seller and Buyer shall be re-
adjusted immediately upon determination of the actual amount of
such taxes.  The party having received the benefit of an er-
roneous proration shall, upon such determination of the actual
taxes, promptly remit its pro rata portion thereof to other party.

08.4  All utilities Yon the Premises shall be changed over to the
account of Buyer, effective as of the date of closing and Seller
shall be removed as the customer.  All utility meters shall be
read as of the date of closing and the charges to that date shall
be separately paid by Seller.  Seller agrees to indemnify the
Buyer for all such charges incurred prior to closing.

08.5  The Seller warrants that, as of the date of closing, there
has not been levied any assessment, special or otherwise, against
the property and that, further, no such assessment has been
approved by resolution or other edict of the appropriate
governmental authority, other than such assessments as are
specifically referenced within Exhibit _______ attached hereto


and incorporated by this reference herein.  Seller shall be
accountable for and shall indemnify Buyer against any such
assessments not included within Exhibit ___________.

08.6  With regard to any such assessment included in Exhibit ______
which is payable in installments retroactive to a date prior to
closing, the Seller shall be responsible for any installments
becoming due and payable prior to closing and Buyer shall be
responsible for all installments due andpayable subsequent to
closing.  The amount of such assessment which is due but which is
either unpaid or not billed as of the date of closing, shall
be prorated as of that date and an appropriate credit given to
Buyer which shall pay all such unpaid assessments as they become
due and payable. In the event that the assessment, when billed,
is more or less than that estimated at closing, the assessment
shall be readjusted and the party having benefitted from the erroneous
proration shall promptly remit its pro rata portion to the other party.

08.7  With regard to any such assessment included in Exhibit ______
which is or becomes due and payable in full without installments,


the amount thereof shall be the responsibility of Seller, and
Buyer shall receive a credit thereforein the purchase price.
Where the amount of such assessment is not known as of the
closing date, an escrow shall be created which shall hold and
retain such portion of the purchase price as is reasonable in
order to pay such assessment.  Upon determination of the amount
thereof, the Escrowee shall pay the assessment and shall return
any overate in the escrow to Seller.  Seller agrees to deliver
such additional sums of money as are necessary to pay such
assessment in the event the funds retained in escrow are
insufficient and, further, to indemnify Buyer for the total
amount thereof.

Comment and Alternatives
Items to be Charged:
    The objective form does not attempt to delineate those
specific charges which should be paid, respectively, by Buyer or
Seller.  In the appendix to this publication is contained a list
of the local real estate practices in most major areas of the
United States regarding charges for the most common items.  Items


to be charged may consist of some or all of the following:  cost
of preparation of documents, escrow fees, title work,
commitments, guarantees, policies, searches,  abstracts, surveys,
recording fees, special tax and lien searches, certificates,
transfer taxes, costs of changing over utilities and contracts,
cancellation fees, costs of rezoning or permits and payments of
broker's commissions and the fees of engineers or architects used
in determining condition of the property.
    One should note, however, that although local practice may
dictate that either Buyer or Seller pay certain charges, it is
almost always negotiable.  There are few, if any, instances where
a particular party is required by law to pay a certain charge.

Taxes:
    The objective form follows the generally accepted method of
apportioning taxes and lease payments on a per diem basis to date
of closing.  It is unusual for the Buyer to bear or receive the
benefit of such items accruing prior to closing.  Where, however,
a tenant is paying for all or some portion of the taxes on the
PremYises, it is common to simply have the buyer make the payment


and receive remuneration directly from the Tenant.
         "Regarding the portion of such taxes payable by Tenants
         of the building under the terms of their respective
         leases, which taxes have not been paid by such Tenants
         prior to closing, there shall be no proration of such
         portions of those taxes at closing and Buyer shall
         collect those taxes from such Tenants as tax bills fall
         due under the terms of their respective leases."
    For additional protection against Tenant defaults, a Buyer
may add:
         "Seller shall indemnify Buyer of any loss resulting
         from Tenant's failure to pay such non-prorated taxes."
    A more specific method of estimating tax prorations in
certain geographic areas is as follows:
         "If the closing shall occur before the tax rates for the
         applicable fiscal years are fixed, the apportionment of
         taxes shall be upon the basis of the tax rate for the
         next preceding year applied to the latest assessed valuation."
    Where the Premises are a portion of a larger tax parcel which may 
not be effectively subdivided for tax purposes by the date of closing,


the following may be used:
         "In the event the Premises are included within a larger
         tract for real estate assessment purposes, Seller
         agrees to cause said tract to be divided so that the 
         Premises are separately assessed and, until the occur-
         rence of such division, the Seller shall pay such taxes
         as they become due and the Purchaser shall pay the
         Seller its equitable portion of the real estate tax
         attributable to the Premises on the basis of the pro
         rata assessed valuation of the land and building area
         which the Premises bears to the assessed valuation of
         the land and building area of the entire tract so assessed.
         Such payment by the Purchase shall be made to the Seller
         within thirty (30) days after receipt of written notice of
         the amount due, setting forth the computation thereof."
    Where there is an assumption of the seller's mortgage 
financing which contemplates the presence of a tax and/or
insurance escrow, the following clause may be added:
         "The balance on hand in the reserve account or escrow
         for taxes and insurance maintained under the terms of


         any Deed of Trust or other financing instrument securing
         the Note to be assumed hereunder, shall be transferred
         to Buyer upon closing and, after proration of taxes, and
         insurance, there shall be reimbursed or paid to Seller
         or Buyer, as the case may be, the excess or shortage in
         such fund based upon such proration."

Utilities and Management Items
    Certain utilities, management services or fees and main-
tenance contracts may be difficult or impossible, due to their
nature of contractual terms, to terminate and re-initiate in the
Buyer's name as of the closing date. In such instances the fol-
lowing provision may be added:
         "The following items shall be prorated between Buyer and
         Seller as of the closing date based upon the most reli-
         able information then available.  Upon receipt of
         billings for such items showing the actual amount to be
         prorated, the amount owed, respectively, by Buyer and
         Seller, shall be immediately readjusted.  The party
         having received the benefit of an erroneous proration 


         shall, upon such adjustment, promptly remit its pro rata
         portion thereof to the other party."
    The parties may agree to a cutoff date for any possible ad- 
justment.
         "Such readjustment must be made, if at all, prior to
         _______________________."

Assessments:
    The objective form  compels the Seller (i) to warrant that no
assessments other than those disclosed in an YExhibit, exist or
have been proposed by resolution of an appropriate taxing
authority and (ii) indemnify the Buyer for a breach of that
warranty.
    Alternatively, the Seller could merely warrant that "to the
best of its knowledge" no such assessment exists.  The optimal
position of the Seller is reached where the Buyer simply accepts
the risk of a "hidden" assessment and protects itself by an
extended coverage title policy with a special tax search.
    Regarding assessments which are disclosed, the treatment in
the objective form varies with the type of payment.  For


assessments payable in installments, the treatment is similiar to
that for tax payments--the Buyer and Seller are each responsible
for their pro rata share of the assessment as of the closing
date.  The Buyer is credited for the Seller's portion of the
payment at closing using the best available information as to the
amount of the payment.  If the actual assessment, when later
billed to Buyer, is more or less than that estimated, the party
having benefitted would need to pay its appropriate share.
    An alternative, particularly where the closing is through escrow,
is to leave a sufficient amount of the purchase price in escrow to
cover any erroneous estimate of the assessment or its proration.
         "There shall be retained in escrow such sum as the Escrowee
         determines is reasonably sufficient to cover the Seller's
         share of such assessment proration.  Upon receipt of a 
         billing for such assessment the Buyer shall deliver same to
         the Escrowee which shall re-prorate the assessment payable
         by Seller.  Escrowee shall thereupon deliver to Buyer and
         Seller the appropriate amount from the escrow."
    Where the assessment is payable in full the objective form
would have that payment remain the obligation of Seller.  The


payment could, obviously, be the obligation of Buyer, in which
event Section 08.7 would not need to be used or the following
language inserted for certainty.
         "With regard to any such assessment included within
         Exhibit ___________ which is or becomes due and pay-
         abe in full without installments, the amount thereof
         shall be the responsibility of Buyer."
    Alternatively, the parties might agree to split the
assessment by a specific percentage amount.
         "As to any assessment payable in full without installments,
         Buyer shall pay _______% and Seller shall pay _______% 
	 thereof;  Seller's portion of which shall be credited at 
         closing to Buyer which shall pay the assessment when billed."
    Finally, assessments may be, and often are, treated as any
exceptions to title which would fall under the section on title
objections.  In order for such to be the case, however, the title
evidence must include a special tax search Section 08.5 would be
deleted.  (Refer to sections on title evidence and objection.)