P14-Condemnation

                        
Objective Form:
                                          
14.1  If the Premises or any portion thereof are taken or
proposed to be taken by adoption of a resolution thereof by the
applicable authority for any public or quasi-public use in
condemnation proceedings or through right of eminent domain or
deed in lieu thereof, Seller shall, within ______ days of the
receipt of knowledge or notice thereof, notify Buyer in writing.
Buyer shall, within ______ days of delivery of such notice, have
the right to terminate this agreement and have repaid or refunded
all sums paid or deposited, by delivering written notice thereof
to Seller.  If Buyer does not timely deliver such notice then
closing shall proceed and the Buyer shall be entitled to all awards,  
compensation or consideration received through such proceedings.

14.2  Seller agrees to cooperate fully with Buyer in its defense 
of or participation in such proceedings and agrees to execute all 
documents and do all things reasonably required by Buyer in order 
to so defend or participate.


14.3  All costs of such defense or participation shall be borne
by Buyer.

Comments:
    Commonly, condemnation (the taking of land by or through a
public authority for public or quasi-public uses) is dealt with
in the casualty provision.  As in casualty destruction, the buyer
would be deprived of the use of all or a portion of the premises.
Also as in casualty destructing, a third party will, to some
extent, compensate the owner for the value of the use deprived.
Unlike casualty, however, neither Buyer nor Seller can, through
insurance coverage, protect itself from loss in value.  Although
there lies the risk of an unreasonable proceeds settlement with
the insurance company, it is still quite likely (particularly
with appropriate coverage) that sufficient proceeds will be paid
to restore full use of the premises.  Condemnation proceedings,
however, are beset by the difficulty of proving "value," which
may be very different in quantity than that paid by the Buyer.
The risk is significantly higher that protracted condemnation
proceedings will yield the owner less than the purchase price.


Furthermore, whereas casualty destruction is almost always
curable through the payment of money, such may not be the case
with condemnation.  Deprivation of a portion of the physical
premises may substantially hinder or totally destroy the Buyer's
intended use of the entire property.  As an example,
imagine the difficulty of operating a bulk storage terminal if,
through condemnation, access is denied via rail.  Furthermore,
condemnation might result in the introduction of a neighbor whose
business interests are anathematic to the Buyer (i.e. a hospital
construcYted beside a proposed chemical plant).
    For these reasons, the Buyer may be well-advised to negotiate
a condemnation provision allowing for termination at its
discretion.

Objective Form
    The objective form allows the Buyer an unrestricted right to
terminate within a predetermined period of time.  When, however,
the Buyer has determined its best interest to proceed with the
closing, such is done at its own risk of loss in the award, and
at its own expense.


Alternatives
    The Buyer's position is maximized where it may not only
terminate, but also can proceed to close and be protected from
losing its monetary investment if the condemnation award is less
than the price paid.  Here, the objective form may be changed as
follows:
         "If the Buyer does not timely deliver such notice then
         the transaction shall close and, at closing, the Buyer
         shall be credited with a sum of money which bears the
         same ratio to the purchase price as the acreage of the
         premises taken bears to the total acreage being sold
         hereunder.  Such portion of the property taken shall
         remain the property of Seller."
    Occasionally, (particularly where the property is improved) a
straight proration of the purchase price based on percentage of
the acreage being taken, does not fairly compensate the Buyer
where the part which is taken has greater value than the rest of
the property.  Here, fair market value may be used in determining
the credit.



         "Buyer shall be credited with the fair market value of
         the property so taken, as determined by an independent
         fee appraisal thereof."
    From the Seller's perspective, the Buyer's right to terminate
should exist only where there is substantial reduction in the
value of the property to it.  There, the following language may
be utilized:
         "Buyer may not, however, elect to terminate this agree-
         ment where the portion of the property to be taken is 
         less than ______ percent of the total area of the pre-
         mises and comprises less than _______ percent of the
         fair market value of the premises as determined by an
         independent fee appraiser mutually agreeable to the
         parties having a designation of MAI by the American
         Institute of Real Estate Appraisers or S.R.E.A. by the
         Society of Real Estate Appraisers."

         "Buyer may not, however, terminate this transaction
         where the taking would not substantially interfere with
         the use of the premises."


    In the first proviso, the Buyer is partially unprotected in a
situation where, regardless of the percentage of value, the
taking or future use of the property taken deprives the Buyer of
the use of what property remains.  In the second proviso, there
exists the difficulty of proving "substantial" interference.
    Finally, the costs of defense or litigation may split, or the
Seller and Buyer, in effect, split the risk of an award below
value.  In such event, Section 14.1 of the Objective Form might
continue:
         "Prior to closing, the fair market value of that portion
         of the Premises being taken shall be determined by an
         independent fee appraiser mutually agreeable to the par-
         ties and having the designation of MAI from the America 
         Institute of Real Estate Appraisers.  The parties agree
         that where the total award, compensation or considera-
         tion received from such proceedings (together with all
         costs of defense and participation therein, including
         reasonable attorneys' fees) is less than the fair mar-
         ket value as so determined, then Buyer shall be allowed
         as a credit at closing, one-half of the amount of such


         deficiency.  Where such award occurs subsequent to
         closing, the escrowee shall retain in escrow a sum
         reasonably anticipated to be so credited.  Subsequent
         tYo the award, the escrowee shall dispense to Seller all
         sums held in excess of the amount so credited.  If the
         credit exceeds the amount retained, then Seller agrees 
         to pay such amount to Buyer."