The most noteworthy observation in having reviewed the purchase and option agreements
of the collective IDRC membership is the striking similarity in treatment of almost
all major aspects of these contracts. In any sales or option agreement there are
certain clauses which must, almost by necessity, be found. The similarity in treatment
of each of these clauses and the language thereof is noteworthy. In fact, the only
substantial difference in treatment is the alignment of the clauses themselves. Where
some companies would group certain clauses together, others would separate them.
This is more a matter of form than substance. As to the substance of the clauses
themselves, the only real difference was in the negotiated sales price and
the negotiated issue of who is responsible for what. In many instances it would
merely have been necessary to insert the word "Buyer" for "Seller," or vice versa,
in order to describe the salient differences between these provisions.
In this project we have attempted something slightly different from prior IDRC data bases.
(1) Rather than cover the entire clause dealing with the topics, we have only
included those portions of the clause which differ in substance from those in
other agreements. We also include discussion of what those differences are
and what their effect is upon the agreement. This may be useful as a training
aid for sales and sales option agreements.
(2) We have attempted to provide what we are calling an "objective form"
for each provision found within a purchase or option agreement. The term
"objective" is not intended to be judgmental. It is merely a sample of a
provision which, in a majority of instances, may fit the legitimate objectives
of both Buyer and Seller. The "objective form" is merely the basis from which
the other alternative provisions are compared.
In dealing with the option agreement, we chose to show it as alternative to
a purchase agreement, as opposed to a totally separate entity. As an option
agreement commonly includes most of the types of provisions found in sales
or purchase agreements, we felt that this treatment would be most beneficial
to the members. Within each separate clause of the agreement affected by the
option terms, the effect of the option upon that provision is shown as an alternative
to the objective form. Tax free exchanges are likewise covered as a separate
section to the standard purchase agreement. This so-called "objective form"
should never be used without careful review by an experienced real estate
professional or attorney. Although it is internally consistent, many of the
provisions may not be applicable to the transaction at hand.
Allen R. Wood
Edward J. Davidson