Form 4-2

Before completing this form, the attorney should complete the real estate sales contract checklist, form 4-1 in this chapter. Information called for in this form by item numbers corresponds with the same-numbered items on that checklist.

Real Estate Sales Contract

[Checklist item 1]

This Contract to buy and sell real property between [item 2] (“Seller”) and [item 3] (“Buyer”) is effective on the date of the last of the signatures by Seller and Buyer and by the Title Company as escrow agent as defined below to acknowledge receipt of the Contract and the Earnest Money in good funds (“Effective Date”).

A.Purchase and Sale of Property

A.1.Purchase and Sale Agreement.      Subject to the terms and provisions of this Real Estate Sales Contract (the “Contract”), Seller agrees to sell and convey to Buyer and Buyer agrees to buy and pay Seller for the property [item 1] located at [item 4], state of Texas, and more fully described in Exhibit A (“Land”) [include the following phrases that are appli­cable, tailoring punctuation and conjunctions as necessary: , together with improvements to the Land (“Improvements”), the leases associated with the Land and Improvements (“Leases”), and the personal property described in Exhibit A], all collectively referred to as the “Property.”

A.2.Purchase Price.      The purchase price is [item 5] (the “Purchase Price”) to be paid by Buyer to Seller for the sale and conveyance of the Property and will be payable in cash at the Closing.

A.2.Adjusted Purchase Price.      The purchase price is an adjusted purchase price when it is adjusted based on a current Survey as described in paragraph C.3. below. The pur­chase price will be adjusted on the basis of the Survey to equal the product of [item 5] multi­plied by the number of [net/gross] [square feet/acres] of surface area of the Land disclosed by the Survey (the “Purchase Price”) [include if applicable: subject to the following provisions].

A.3.Payment of the Purchase Price.      The Purchase Price will be paid in cash or certified funds, as required by the Title Company.

A.3.Payment of the Purchase Price.      A portion of the Purchase Price will be paid in cash or certified funds as required by the Title Company, and the balance of the Purchase Price will be paid by Seller financing as set forth in Exhibit E—Seller Financing Addendum.

A.4.Performance.      All deadlines in this Contract expire at 5:00 p.m. local time where the Property is located. If a deadline falls on a Saturday, Sunday, or holiday, the dead­line will be extended to the next day that is not a Saturday, Sunday, or holiday. A holiday is a day, other than a Saturday or Sunday, on which state or local governmental agencies and financial institutions are not generally open for business where the Property is located. Time is of the essence.

B.Earnest Money

B.1.Deposit of Earnest Money.      Upon execution of this Contract, Buyer will deposit Earnest Money in good funds in the amount of [item 6], along with this fully executed Contract by Seller and Buyer with [item 7] (the “Title Company”), as escrow agent, located at [item 8], which sum may be invested by the Title Company in a federally insured, interest-bearing account pending disposition thereof in accordance with this Contract (such sum and the interest accrued thereon being hereinafter referred to collectively as the “Earnest Money”) and applied according to the terms of this Contract. The Title Company will acknowledge receipt of the Earnest Money by signing Title Company’s “Receipt for Earnest Money Deposit” at the end of this Contract and send copies thereof to Seller and Buyer.

B.2.Interest on Earnest Money.      Buyer may direct the Title Company to invest the Earnest Money in an interest-bearing account in a federally insured financial institution by giving notice to the Title Company and satisfying the Title Company’s requirements for investing the Earnest Money in an interest-bearing account. Any interest earned on the Ear­nest Money will become part of the Earnest Money.

B.3.Application of Earnest Money.      If the sale of the Property is consummated as contemplated in this Contract, then the Earnest Money will be applied to the Purchase Price at Closing. If this Contract is terminated prior to consummation of the sale of the Property in accordance with this Contract, then the Earnest Money will be applied in accordance with sec­tions D. and G. below.

C.Title and Survey

C.1.Review of Title.      The following statutory notice is provided to Buyer on behalf of the real estate licensees, if any, involved in this transaction: Buyer is advised that it should either have the abstract covering the Property examined by an attorney of Buyer’s own selec­tion or be furnished with or obtain a policy of title insurance.

C.2.Title Commitment; Title Policy.      “Title Commitment” means a Commitment for Issuance of an Owner Policy of Title Insurance by Title Company stating the condition of title to the Land. The “effective date” stated in the Title Commitment must be after the Effec­tive Date of this Contract. “Title Policy” means an Owner Policy of Title Insurance issued by the Title Company in conformity with the last Title Commitment delivered to and approved by Buyer.

C.3.Survey.      To be obtained by [Buyer/Seller], at [Buyer’s/Seller’s] expense:

“Survey” means an on-the-ground, staked plat of survey and metes-and-bounds description of the Land, prepared by a Registered Professional Land Surveyor licensed by the state of Texas and acceptable to Buyer, Seller, and the Title Company, dated after the Effec­tive Date, and certified [include as applicable: to Seller, Buyer, Title Company, and any other person specified by Buyer] to comply with the most recent Minimum Standard Detail Requirements and Accuracy Standards for ALTA/ACSM Land Title Surveys (“ALTA”), as published by the American Land Title Association and the National Society of Professional Surveyors for the Survey Category.

“Survey” means an on-the-ground, staked plat of survey and metes-and-bounds description of the Land, prepared by a Registered Professional Land Surveyor licensed by the state of Texas and acceptable to Buyer, Seller, and the Title Company. Any existing survey delivered by Seller must be accompanied by an affidavit detailing any changes to the Land and Improvements since the date of the Survey.

For purposes of the legal description for the Land to be included in the Title Policy and the Deed and other documents to be delivered at Closing, the field notes prepared by the sur­veyor will control any conflicts or inconsistencies with the legal description contained on Exhibit A herein or in the Title Commitment and such field notes will be incorporated herein by this reference upon completion and substituted on Exhibit A herein and included as the legal description for the Land in the Deed and the Title Commitment and Owner’s and Loan policies.

C.4.UCC Search.      “UCC Search” means written reports stating the instruments that are on file in the Texas secretary of state’s UCC records, the UCC records of any other appropriate state, and the UCC records in the jurisdiction in which Seller is organized, show­ing as debtor Seller and all other owners of the Personal Property during the five years before the Effective Date of this Contract.

C.5.Delivery of Title Commitment, Survey, UCC Search, and Legible Copies. 
Seller must deliver the Title Commitment, the UCC Search, and legible copies of the instru­ments referenced in the Title Commitment within [item 9] days from the Effective Date of this Contract. If Seller’s existing survey is not satisfactory to Buyer or the Title Company, Buyer must obtain a current Survey within [item 10] days from the Effective Date of this Contract.

C.6.Title Objections.      Buyer has [item 11] days after delivery of the last of the Title Commitment, legible copies of the instruments referenced in the Title Commitment, the UCC Search, and the Survey if a new Survey is required by Buyer or Title Company (“Title Objec­tion Deadline”) to review the Survey, Title Commitment, UCC Search, and legible copies of the title instruments referenced in them and notify Seller of Buyer’s objections to any of them (“Title Objections”). Buyer will be deemed to have approved all matters reflected by the Sur­vey, Title Commitment, and UCC Search to which Buyer has made no Title Objection by the Title Objection Deadline. The matters that Buyer either approves or is deemed to have approved are “Permitted Exceptions.” If Buyer notifies Seller of any Title Objections, Seller has [item 12] days from receipt of Buyer’s notice to notify Buyer whether Seller agrees to cure the Title Objections before Closing (“Cure Notice”). If Seller does not timely give its Cure Notice or timely gives its Cure Notice but does not agree to cure all the Title Objections before Closing, Buyer may, within [item 13] days after the deadline for the giving of Seller’s Cure Notice, notify Seller that either this Contract is terminated or Buyer will proceed to close, subject to Seller’s obligations, at or before Closing, to remove all liquidated liens; remove all exceptions that arise by, through, or under Seller after the Effective Date; and cure any other Title Objections that Seller has agreed to cure in the Cure Notice.

D.Inspection Period and Buyer’s Right to Terminate

D.1.Inspection Period.      Buyer’s inspection of the Property may be conducted com­mencing on the Effective Date of the Contract and ending at 5:00 p.m. local time where the Property is located, [item 14] days after the Effective Date (the “Inspection Period”).

D.2.Buyer’s Right to Terminate.      Buyer may terminate this Contract for any reason by notifying Seller of the termination in writing before the end of the Inspection Period. Upon Buyer’s delivery of written notice of termination to the Seller, the Title Company is hereby authorized to deliver the Earnest Money to Buyer, less $100, which will be paid to Seller as consideration for the right granted by Seller to Buyer to terminate this Contract. Upon written request by Seller, Buyer will provide to Seller copies of the following reports related to the Property in Buyer’s possession: environmental reports, physical inspection reports, and sur­veys.

If Buyer does not deliver written notice to Seller of Buyer’s termination of the Contract before the end of the Inspection Period, Buyer waives the right to terminate this Contract pur­suant to this provision.

D.3.Review of Seller’s Records.      Seller will make available to Buyer copies of Seller’s records specified in Exhibit C (“Seller’s Records”), or otherwise make Seller’s Records available for Buyer’s review (for instance, through an online file sharing service), within [item 15] days from the Effective Date of this Contract.

D.4.Entry onto the Property.      Buyer and its duly authorized agents and representa­tives may enter the Property before Closing, at Buyer’s cost and risk, subject to the following:

D.4.a.Buyer must deliver evidence to Seller that Buyer has commercial general liabil­ity insurance, with coverages and in amounts that are substantially the same as those main­tained by Seller or with such lesser coverages and in such lesser amounts as are reasonably satisfactory to Seller.

D.4.b.Buyer may not interfere in any material manner with existing operations or occupants of the Property.

D.4.c.Buyer must notify Seller in advance of Buyer’s plans to conduct tests so that Seller or Seller’s representatives may be present during the tests.

D.4.d.If the Property is physically altered because of Buyer’s inspections, Buyer must return the Property to its preinspection condition [promptly/within [number] days] after the alteration occurs.

D.4.e.Buyer must abide by any other reasonable entry rules imposed by Seller.

D.5.Environmental Assessment.      Prior to the end of the Inspection Period, Buyer has the right to conduct environmental assessments of the Property. Seller will provide, or will designate a person with knowledge of the use and condition of the Property to provide, infor­mation requested by Buyer or Buyer’s agent or representative regarding the use and condition of the Property during the period of Seller’s ownership of the Property. Seller will cooperate with Buyer in obtaining and providing to Buyer or its agent or representative information regarding the use and condition of the Property before Seller’s period of ownership to the extent that the information is within Seller’s possession or control.

D.6.Buyer’s Indemnity and Release of Seller

D.6.a.Indemnity.      Buyer will indemnify, defend, and hold Seller harmless from any loss, attorney’s fees, expenses, or claims arising out of Buyer’s inspection of the Property, except those arising out of the acts or omissions of Seller and those for repair or remediation of existing conditions discovered by Buyer’s inspection. The obligations of Buyer under this provision will survive termination of this Contract and Closing, any other provision of this Contract to the contrary notwithstanding.

D.6.b.Release.      Buyer releases Seller and those persons acting on Seller’s behalf from all claims and causes of action (including claims for attorney’s fees and court and other costs) resulting from Buyer’s inspection of the Property [include if applicable: , including claims arising out of Seller’s negligence, but not Seller’s gross negligence or intentional misconduct].

E.Representations [; As Is, Where Is Provision; Environmental Matters]

The parties’ representations stated in sections A. and D. of Exhibit B are true and cor­rect as of the Effective Date and must be true and correct on the Closing Date. A party who becomes aware that any of the representations of either party are not true and correct will promptly notify the other party. Unless a party notifies the other party to the contrary on or before the Closing Date, or a party has actual knowledge to the contrary as of the Closing Date, each party is entitled to presume that the representations of the other party in Exhibit B are true and correct as of the Closing Date.

The parties agree to the terms of section B. (As Is, Where Is) and section C. (Environ­mental Matters) in Exhibit B.

F.Condition of the Property until Closing; Cooperation; No Recording of Contract

F.1.Maintenance and Operation.      Until Closing, Seller will (a) maintain the Prop­erty as it existed on the Effective Date, except for reasonable wear and tear and casualty dam­age; (b) use the Property in the same manner as it was used on the Effective Date; (c) comply with all Leases and other contracts of Seller pertaining to the Property in effect on the Effec­tive Date and all laws and all governmental regulations affecting the Property; and (d) not encumber, transfer, or dispose of any of the Property [include if applicable: or Personal Prop­erty], except to sell inventory, replace equipment, and use supplies in the normal course of operating the Property. Until the end of the Inspection Period, Seller will not enter into, amend, or terminate any Lease or other contract that affects the Property other than in the ordinary course of operating the Property and will promptly give notice to Buyer of each new, amended, or terminated Lease or other contract, including a copy of the Lease or other con­tract, in sufficient time so that Buyer may consider the new information before the end of the Inspection Period. If Seller’s notice is given within three days before the end of the Inspection Period, the Inspection Period will be extended for three days. After the end of the Inspection Period, Seller may not enter into, amend, or terminate any Lease or other contract that affects the Property without first obtaining Buyer’s written consent, which Buyer will have no obliga­tion to grant and, if granted, may be conditioned in any manner Buyer in its sole discretion deems appropriate.

F.2.Casualty Damage.      Seller will notify Buyer promptly after discovery of any casualty damage to the Property. Seller will have no obligation to repair or replace the Prop­erty if it is damaged by casualty before Closing. Buyer may terminate this Contract if the casualty damage that occurs before Closing would materially affect Buyer’s intended use of the Property, by giving notice to Seller within fifteen days after receipt of Seller’s notice of the casualty (or before Closing if Seller’s notice of the casualty is received less than fifteen days before Closing). [Include if applicable: The casualty damage will be deemed to materially affect Buyer’s intended use if the estimated amount of the damage exceeds [item 16] percent of the Purchase Price.] If Buyer does not terminate this Contract, Seller will (a) convey the Property to Buyer in its damaged condition, (b) assign to Buyer all of Seller’s rights under any property insurance policies covering the Property, and (c) credit to Buyer the amount of the deductibles and coinsurance provisions under any insurance policies covering the Property, but not in excess of the cost to repair the casualty damage and less any amounts previously paid or incurred by Seller to repair the Property. If Seller has not insured the Property and Buyer does not elect to terminate this Contract in accordance with this section, the Purchase Price will be reduced by the cost to repair the casualty damage less any amounts previously paid or incurred by Seller to repair the Property.

F.3.Condemnation.      Seller will notify Buyer promptly after Seller receives notice that any part of the Property has been or is threatened to be condemned or otherwise taken by a governmental or quasi-governmental authority. Buyer may terminate this Contract if the condemnation would materially affect Buyer’s intended use of the Property by giving notice to Seller within fifteen days after receipt of Seller’s notice to Buyer (or before Closing if Seller’s notice is received less than fifteen days before Closing). The condemnation will be deemed to materially affect Buyer’s intended use if [specify reason, e.g., the condemnation would eliminate all curb cuts on Main Street]. If Buyer does not terminate this Contract, (a) Buyer and Seller will each have the right to appear and defend their respective interests in the Property in the condemnation proceedings, (b) any award in condemnation will be assigned to Buyer, (c) if the taking occurs before Closing, the description of the Property will be revised to delete the portion taken, and (d) no change in the Purchase Price will be made.

F.4.Claims; Hearings.      Seller will notify Buyer promptly after Seller receives notice of any claim or administrative hearing that is threatened, filed, or initiated before Clos­ing that involves or directly affects the Property.

F.5.Cooperation.      Seller will cooperate with Buyer, (a) before and after Closing, to transfer the applications, permits, and licenses held by Seller and used in the operation of the Property and to obtain any consents necessary for Buyer to operate the Property after Closing, and (b) before Closing, with any reasonable evaluation, inspection, audit, or study of the Prop­erty prepared by, for, or at the request of Buyer.

F.6.No Recording.      Buyer may not file this Contract or any memorandum or notice of this Contract in the real property records of any county. If, however, Buyer records this Contract or a memorandum or notice, Seller may terminate this Contract and record a notice of termination.

F.7.Cessation of Marketing and Other Activities.      During the term of this Contract, Seller (a) will not contract to sell or lease the Property or grant any easement or other rights to the Property to any other person (whether or not such contract is denominated as a “back-up” contract); (b) will cease all efforts to market the Property to any other prospective buyer or lessee thereof; and (c) will inform any such prospective buyer or lessee inquiring as to the sta­tus of the Property that it is under contract of sale.

G.Termination

G.1.Disposition of Earnest Money after Termination

G.1.a.To Buyer.      If Buyer terminates this Contract in accordance with Buyer’s rights to terminate, Buyer will send a request for release of the Earnest Money to Seller, with a copy to the Title Company, to be signed by Seller. If Seller fails to deliver a signed release to the Title Company within fifteen days after delivery of the request for release, Buyer may make a written demand on the Title Company for the Earnest Money, and Title Company will promptly deliver a copy of the demand to Seller. Unless Seller delivers a written objection to the Title Company, within fifteen days after the Title Company delivers Buyer’s written demand for the Earnest Money, the Title Company will, without any further authorization from Seller, deliver the Earnest Money to Buyer, less $100, which will be paid to Seller as consideration for the right granted by Seller to Buyer to terminate this Contract.

G.1.b.To Seller.      If Seller terminates this Contract in accordance with Seller’s rights to terminate, Seller will send a request for release of the Earnest Money to Buyer, with a copy to the Title Company, to be signed by Buyer. If Buyer fails to deliver a signed release to the Title Company within fifteen days after delivery of the request for release, Seller may make a written demand on the Title Company for the Earnest Money, and the Title Company will promptly deliver a copy of the demand to Buyer. Unless Buyer delivers a written objection to the Title Company, within fifteen days after the Title Company delivers Seller’s written demand for the Earnest Money, the Title Company will, without any further authorization from Buyer, deliver the Earnest Money to Seller.

G.2.Duties after Termination.      If this Contract is terminated after the expiration of the Inspection Period, Buyer will promptly return to Seller or destroy as directed by Seller all of Seller’s records in Buyer’s possession or control. After return of the records, neither party will have further duties or obligations to the other under this Contract, except for those obliga­tions that cannot be or were not performed before termination of this Contract or that expressly survive termination of this Contract.

H.Closing

H.1.Closing.      This transaction will close (“Closing”) at the Title Company’s offices on [item 17] (the “Closing Date”).

H.2.Conditions of Closing.      Neither party will be obligated to close the sale and purchase of the Property unless the other party has satisfied the following conditions, any of which may be waived by the first party in its discretion:

H.2.a.Representations and Warranties.      The representations and warranties of the other party must be true and correct at Closing.

H.2.b.Performance of Covenants and Agreements.      The other party must have per­formed all covenants and agreements required to be performed at or before Closing by that party.

H.2.c.No Bankruptcy.      No voluntary or involuntary proceeding in bankruptcy shall be pending with respect to that party.

H.3.Closing Documents; Title Company Documents.      The parties will execute and deliver the following closing documents and any documents required by the Title Company.

H.3.a.At Closing, Seller will deliver the following items:

General Warranty Deed [include if applicable: with Vendor’s Lien at Buyer’s option]

Special Warranty Deed [include if applicable: with Vendor’s Lien at Buyer’s option]

Bill of Sale and Assignment

IRS Nonforeign Person Affidavit

Evidence of Seller’s authority to close this transaction

Notices, statements, and certificates as specified in Exhibit D

Assignment and Assumption of Leases

Assignment and Assumption of Contracts

Tenant Estoppel Certificate

H.3.b.At Closing, Buyer will deliver the following items:

Balance of Purchase Price

Evidence of Buyer’s authority to close this transaction

Deceptive Trade Practices Act waiver

Assignment and Assumption of Leases

Assignment and Assumption of Contracts

Acknowledgment(s) of receipt of notices, statements, and certificates as specified in Exhibit D

Seller-financing documents

Promissory Note

Deed of Trust

Deed of Trust to Secure Assumption

Security Agreement

Financing Statement

Loan Documents required by third-party lender

The documents listed in these paragraphs H.3.a. and H.3.b. are collectively known as the “Closing Documents.” Unless otherwise agreed by the parties before Closing, the Closing Documents for which forms exist in the current edition of the Texas Real Estate Forms Man­ual (State Bar of Texas) will be prepared using those forms.

H.3.c.Payment of Purchase Price.      Buyer will deliver the Purchase Price and other amounts that Buyer is obligated to pay under this Contract to the Title Company in funds acceptable to the Title Company. The Earnest Money will be applied to the Purchase Price.

H.3.d.Disbursement of Funds; Recording; Copies.      The Title Company will be instructed to disburse the Purchase Price and other funds in accordance with this Contract, record the deed and the other Closing Documents directed to be recorded, and distribute docu­ments and copies in accordance with the parties’ written instructions.

H.3.e.Delivery of Originals.      Seller will deliver to Buyer the originals of Seller’s Records.

H.3.f.Possession.      Seller will deliver possession of the Property to Buyer, subject to the Permitted Exceptions existing at Closing and any liens and security interests created at Closing to secure financing for the Purchase Price.

H.4.Transaction Costs

H.4.a.Seller’s Costs.      Seller will pay the basic charge for the Title Policy; one-half of the escrow fee; the costs to prepare the deed; the costs to obtain, deliver, and record releases of any liens required to be released in connection with the sale; the costs to record documents to cure Title Objections agreed or required to be cured by Seller and to resolve matters shown in Schedule C of the Title Commitment; [include if applicable: the Title Company’s inspection fee to delete from the Title Policy the customary exception for rights of parties in possession;] the costs to obtain the [Survey, UCC Search, and] certificates or reports of ad valorem taxes; the costs to deliver copies of the instruments described in paragraph C.5. and Seller’s records; any other costs expressly required to be paid by Seller in this Contract; and Seller’s attorney’s fees and expenses.

H.4.b.Buyer’s Costs.      Buyer will pay one-half of the escrow fee; the costs to obtain, deliver, and record all documents other than those to be obtained or recorded at Seller’s expense; [include if applicable: the additional premium for the “survey/area and boundary deletion” in the Title Policy, if the deletion is requested by Buyer, as well as the cost of any other endorsements or modifications of the standard form of Title Policy requested by Buyer; the costs of work required by Buyer to have the Survey reflect matters other than those required under this Contract except changes required for curative purposes;] the costs to obtain financing of the Purchase Price, including the incremental premium costs of the loan title policies and endorsements and deletions required by Buyer’s lender; any other costs expressly required to be paid by Buyer in this Contract; and Buyer’s attorney’s fees and expenses.

H.4.c.Ad Valorem Taxes.      Ad valorem taxes on the Property for all years before the calendar year of Closing must be paid by Seller at or before Closing. Ad valorem taxes for the Property for the calendar year of Closing will be prorated between Buyer and Seller as of the Closing Date. If the ad valorem taxes for the current year are assessed, the Title Company will pay the current year’s ad valorem taxes at Closing. If the ad valorem taxes for the current year are not assessed, Seller’s portion of the prorated taxes will be paid to Buyer at Closing as a credit to the Purchase Price. Buyer will assume the obligation to pay, and will pay in full, such taxes for the year of Closing before delinquency. If the assessment for the calendar year of Closing is not known at the Closing Date, the proration will be based on tax rates for the pre­vious tax year applied to the most current assessed value, and Buyer and Seller will adjust the prorations in cash within thirty days after the actual assessment and taxes are known. Seller will promptly notify Buyer of all notices of proposed or final tax valuations and assessments that Seller receives after the Effective Date and after Closing.

H.4.d.Income and Expenses.      Income and expenses, including service contracts assumed by Buyer, general and special assessments, and sewer, water and other utility costs pertaining to the Property will be prorated as of the Closing Date on an accrual basis and paid at Closing as a credit or debit adjustment to the Purchase Price. Invoices that are received after Closing for operating expenses incurred on or before the Closing Date and not adjusted at Closing will be prorated between the parties as of the Closing Date, and Seller will pay its share within ten days after receipt of Buyer’s notice of the deficiency.

H.4.e.Postclosing Adjustments.      If errors in the prorations made at Closing are iden­tified within ninety days after Closing, Seller and Buyer will make post-closing adjustments to correct the errors within fifteen days after receipt of notice of the errors.

H.4.f.Brokers’ Commissions.      Other than the real estate broker disclosed in writing to the other party and the responsibility for the payment thereof set forth in such written dis­closure, Buyer and Seller represent that there are no other real estate agents or brokers involved in this transaction and each indemnify and agree to defend and hold the other party harmless from any loss, attorney’s fees, and court and other costs arising out of a claim by any person or entity claiming by, through, or under the indemnitor for a broker’s or finder’s fee or commission because of this transaction or this Contract, whether the claimant is disclosed to the indemnitee or not.

H.5.Issuance of Title Policy.      Seller will cause the Title Company to issue the Title Policy to Buyer promptly after Closing.

I.Default and Remedies

I.1.Seller’s Default; Remedies before Closing.      If Seller fails to perform its obliga­tions under this Contract or if Seller’s representations are not true and correct as of the Clos­ing Date (“Seller’s Default”), Buyer may elect one of the following as its sole and exclusive remedy before Closing:

I.1.a.Termination; Liquidated Damages.      Buyer may terminate this Contract by giv­ing notice to Seller on or before the Closing Date and have the Earnest Money, less $100 as described above, returned to Buyer. Unless Seller’s Default relates to the untruth or incorrect­ness of Seller’s representations for reasons not reasonably within Seller’s control, if Seller’s Default occurs after Buyer has incurred costs to inspect the Property after the Effective Date and Buyer terminates this Contract in accordance with the previous sentence, Seller will also pay to Buyer as liquidated damages Buyer’s actual out-of-pocket expenses incurred to inspect the Property after the Effective Date (“Buyer’s Expenses”), not to exceed the amount of [item 18] (“Buyer’s Liquidated Damages”), within ten days after Seller’s receipt of Buyer’s itemiza­tion of Buyer’s Expenses accompanied by reasonable evidence thereof.

I.1.b.Specific Performance.      Unless Seller’s Default relates to the untruth or incor­rectness of Seller’s representations for reasons not reasonably within Seller’s control, Buyer may enforce specific performance of Seller’s obligations under this Contract, but any such action must be initiated, if at all, within [item 19] days after the breach or alleged breach of this Contract. If such action is not initiated within that period and this Contract has not previ­ously been terminated, Buyer will be deemed to have elected to terminate this Contract as of the expiration of that period. If title to the Property is awarded to Buyer, the conveyance will be subject to the matters stated in the Title Commitment.

I.1.c.Actual Damages.      If Seller conveys or encumbers any portion of the Property before Closing so that Buyer’s ability to enforce specific performance of Seller’s obligations under this Contract is precluded or impaired, Buyer will be entitled to seek recovery from Seller for the actual damages sustained by Buyer by reason of Seller’s Default, including attorney’s fees and expenses and court costs.

I.2.Seller’s Default; Remedies after Closing.      If Seller’s representations are not true and correct at Closing due to circumstances reasonably within Seller’s control and Buyer does not become aware of the untruth or incorrectness of such representations until after Clos­ing, Buyer will have all the rights and remedies available at law or in equity. If Seller fails to perform any of its obligations under this Contract that survive Closing, Buyer will have all rights and remedies available at law or in equity unless otherwise provided by the Closing Documents.

I.3.Buyer’s Default; Remedies before Closing.      If Buyer fails to perform any of its obligations under this Contract (“Buyer’s Default”), Seller may terminate this Contract by giving notice to Buyer on or before Closing and have the Earnest Money paid to Seller.

I.4.Buyer’s Default; Remedies after Closing.      If Buyer fails to perform any of its obligations under this Contract that survive Closing, Seller will have all rights and remedies available at law or in equity unless otherwise provided by the Closing Documents.

I.5.Liquidated Damages.      The parties agree that just compensation for the harm that would be caused by a default by either party cannot be accurately estimated or would be very difficult to accurately estimate and that Buyer’s Liquidated Damages or the Earnest Money [include if applicable: and Seller’s Additional Liquidated Damages] are reasonable forecasts of just compensation to the nondefaulting party for the harm that would be caused by a default.

I.6.Attorney’s Fees.      If either party retains an attorney to enforce this Contract, the party prevailing in litigation is entitled to recover reasonable attorney’s fees and court and other costs.

J.Miscellaneous Provisions

J.1.Notices.      Any notice required by or permitted under this Contract must be in writing. Any notice required by this Contract will be deemed to be given (whether received or not) the earlier of receipt or three business days after being deposited with the United States Postal Service, postage prepaid, certified mail, return receipt requested, and addressed to the intended recipient at the address shown in this Contract. Notice may also be given by regular mail, personal delivery, courier delivery, or e-mail and will be effective when received, pro­vided that (a) any notice received on a Saturday, Sunday, or holiday will be deemed to have been received on the next day that is not a Saturday, Sunday, or holiday and (b) any notice received after 5:00 p.m. local time at the place of delivery on a day that is not a Saturday, Sun­day, or holiday will be deemed to have been received on the next day that is not a Saturday, Sunday, or holiday. Any address for notice may be changed by not less than ten days’ prior written notice given as provided herein. Copies of each notice must be given by one of these methods to the attorney of the party to whom notice is given.

To Buyer:   [item 20]

To Seller:   [item 21]

J.2.Entire Agreement.      This Contract, its exhibits, and any Closing Documents are the entire agreement of the parties concerning the sale of the Property by Seller to Buyer. There are no representations, warranties, agreements, or promises pertaining to the Property or the sale of the Property by Seller to Buyer, and Buyer is not relying on any statements or representations of Seller or any agent of Seller, that are not in this Contract, its exhibits, and any Closing Documents.

J.3.Amendment.      This Contract may be amended only by an instrument in writing signed by the parties.

J.4.Prohibition of Assignment.      Buyer may not assign this Contract or Buyer’s rights under it without Seller’s prior written consent, which Seller has no obligation to grant and which, if granted, may be conditioned in any manner Seller deems appropriate, and any attempted assignment without Seller’s consent is void. The consent by Seller to any assign­ment by Buyer will not release Buyer of its obligations under this Contract, and Buyer and the assignee will be jointly and severally liable for the performance of those obligations after any such assignment.

J.4.Assignment.      Buyer may assign this Contract and Buyer’s rights under it only to an entity in which Buyer possesses, directly or indirectly, the power to direct or cause the direction of its management and policies, whether through the ownership of voting securities or otherwise, and any other assignment is void. No such assignment will release Buyer of its obligations under this Contract, and Buyer and the assignee will be jointly and severally liable for the performance of such obligations after any such assignment.

J.5.Survival.      The provisions of this Contract that expressly survive termination or Closing and other obligations of this Contract that cannot be performed before termination of this Contract or before Closing survive termination of this Contract or Closing, and the legal doctrine of merger does not apply to these matters. If there is any conflict between the Closing Documents and this Contract, the Closing Documents control. The representations made by the parties as of Closing survive Closing.

J.6.Choice of Law; Venue.      This Contract is to be construed under the laws of the state of Texas, without regard to choice-of-law rules of any juris­diction. Venue is in the county where the property is located.

J.7.Waiver of Default.      Default is not waived if the nondefaulting party fails to declare a default immediately or delays taking any action with respect to the default.

J.8.No Third-Party Beneficiaries.      There are no third-party beneficiaries of this Contract.

J.9.Severability.      If a provision in this Contract is unenforceable for any reason, to the extent the unenforceability does not destroy the basis of the bargain among the parties, the unenforceability does not affect any other provision of this Contract, and this Contract is to be construed as if the unenforceable provision is not a part of the Contract.

J.10.Ambiguities Not to Be Construed against Party Who Drafted Contract.      The rule of construction that ambiguities in a document are construed against the party who drafted it does not apply in interpreting this Contract.

J.11.No Special Relationship.      The parties’ relationship is an ordinary commercial relationship, and the parties do not intend to create the relationship of principal and agent, partners, joint venturers, or any other special relationship.

J.12.Counterparts.      If this Contract is executed in multiple counterparts, all coun­terparts taken together constitute this Contract. Copies of signatures to this Contract are effec­tive as original signatures.

J.13.Confidentiality.      This Contract, this transaction, and all information learned in the course of this transaction will be kept confidential, except to the extent disclosure is required by law or court order or to enable third parties to advise or assist Buyer to inspect the Property or Seller or Buyer to close this transaction. Remedies for violations of this provision are limited to injunctions, and no damages or rescission may be sought or recovered as a result of any such violations.

J.14.Binding Effect.      This Contract binds, benefits, and may be enforced by the par­ties and their respective heirs, successors, and permitted assigns.

K.Exhibits

The following are attached to and are a part of this Contract:

Exhibit A—Legal Description of Land [and Personal Property]
Exhibit B—Representations; Environmental Matters
Exhibit C—Seller’s Records
Exhibit D—Notices, Statements, and Certificates
[Include if applicable: Exhibit E—Seller Financing Addendum]

   
[Name and title of seller]
Date:

   
[Name and title of buyer]
Date:

Title Company’s Acceptance of Contract

Title Company, by its execution and delivery of this Real Estate Sales Contract, acknowledges it is “the person responsible for closing” the transaction that is the subject of this Contract pursuant to section 6045(e) of the Internal Revenue Code and to prepare and file all informational returns, including, without limitation, IRS Form 1099S, and to otherwise comply with the provisions of section 6045(e) of the Internal Revenue Code, and acknowl­edges receipt of a fully executed counterpart of this Real Estate Sales Contract on this ____ day of _________, 20__.

[Item 7]

By:      
     Name:
     Title:

Receipt for Earnest Money Deposit

Title Company acknowledges receipt of the Earnest Money deposit of [item 6] required under this Real Estate Sales Contract on this ____ day of _________, 20__.

[Item 7]

By:      
     Name:
     Title:

Receipt for Additional Earnest Money Deposit

Title Company acknowledges receipt of the Additional Earnest Money deposit of [amount] AND NO/100 DOLLARS ($[amount]) required under this Real Estate Sales Con­tract on this ____ day of _________, 20__.

[Item 7]

By:      
     Name:
     Title:

Exhibit A
Legal Description of Land [and Personal Property]

All personal property associated with the Land and Improvements, except the follow­ing: [list exceptions].

The following described personal property: [describe property].

Exhibit B
Representations; Environmental Matters

A.Seller’s Representations to Buyer

Seller represents to Buyer that the following are true and correct as of the Effective Date and will be true and correct on the Closing Date, unless Seller has given Buyer notice of any changes prior to the Closing Date that such circumstances have changed due to causes not reasonably within Seller’s control.

A.1.Authority.      Seller is a [specify type of organization] duly organized, validly existing, and in good standing under the laws of the state of [Texas/[state]] with authority to perform its obligations under this Contract. This Contract is binding on Seller. This Contract is, and all documents required by this Contract to be executed and delivered to Buyer at Clos­ing will be, duly authorized, executed, and delivered by Seller.

A.2.Litigation.      Seller has not received written notice and has no actual knowledge of any litigation pending or threatened against the Property or Seller that might adversely affect the Property or Seller’s ability to perform its obligations under this Contract [include if applicable: , except: [specify]].

A.3.Violation of Governmental Requirements.      Seller has not received written notice and has no actual knowledge of violation of any law, ordinance, regulation, restriction, or legal requirements affecting the Property or Seller’s use of the Property [include if applica­ble: , except: [specify]].

A.4.Licenses, Permits, and Approvals.      Seller has not received written notice and has no actual knowledge that any license, permit, or approval necessary to use the Property in the manner in which it is currently being used has expired or will not be renewed on expira­tion or that any material condition will be imposed to use or renew the same [include if appli­cable: , except: [specify]].

A.5.Condemnation; Zoning; Land Use; Hazardous Materials.      Seller has not received written notice and has no actual knowledge of any condemnation, zoning, land-use, hazardous materials, or other proceedings affecting the Property or any written inquiries or notices by any governmental authority or third party with respect to condemnation, zoning, or other land-use regulations or the presence of hazardous materials affecting the Property [include if applicable: , except: [specify]].

A.6.Terrorist Organizations Lists.      Seller is not and Seller has no actual knowledge that any of its partners, members, shareholders, owners, employees, officers, directors, repre­sentatives, or agents is a person or entity with whom U.S. persons or entities are restricted from doing business under regulations of the Office of Foreign Asset Control of the Depart­ment of the Treasury or under any statute, executive order, or other governmental action.

A.7.No Other Obligation to Sell Property or Restriction against Sale.      Seller is not obligated to sell any of the Property to any person other than Buyer. Seller’s performance of this Contract will not cause a breach of any other agreement or obligation to which Seller is a party or by which Seller or the Property is bound.

A.8.No Liens.      On the Closing Date, the Property will be free and clear of all mechanic’s and materialman’s liens and other liens and encumbrances of any nature not aris­ing by, through, or under Buyer except the Permitted Exceptions or liens to which Buyer has given its consent in writing, and no work or materials will have been furnished to the Property by Seller that might give rise to mechanic’s, materialman’s, or other liens against the Property other than work or materials to which Buyer has given its consent in writing.

A.9.Seller’s Records.      The records provided by Seller to Buyer for Buyer’s inspec­tions will be true, correct, and complete copies of the records in Seller’s possession or control. The  records that were prepared by or under Seller’s supervision and control will be true, cor­rect, and complete in all material respects. Unless Seller notifies Buyer to the contrary at the time of delivery of records provided by Seller to Buyer that were not prepared by or under Seller’s supervision and control, Seller has no actual knowledge that such records are not true, correct, and complete in any material respect.

A.10.No Other Representation.      Except as stated above or in the notices, statements, and certificates set forth in Exhibit D, Seller makes no representation with respect to the Prop­erty.

A.11.      No Warranty.      Except as set forth in this Contract and in the Closing Docu­ments, Seller has made no warranty in connection with this transaction.

B.“As Is, Where Is”

This Contract is an arm’s-length agreement between the parties. The Pur­chase Price was bargained on the basis of an “as is, where IS” transaction and reflects the agreement of the parties that there are no representations, disclo­sures, or express or implied warranties, except those in this Contract and the Closing Documents.

Buyer is not relying on any representations, disclosures, or express or implied warranties other than those expressly contained in this Contract and the Closing Documents. Buyer is not relying on any information regarding the Property provided by any person, other than Buyer’s own inspection and the rep­resentations and warranties contained in this Contract and the Closing Docu­ments.

The provisions of this section B. regarding the Property [will/will not] be included in the deed [include if applicable: and bill of sale] with appropriate modification of terms as the context requires.

C.Environmental Matters

After Closing, Buyer releases Seller from liability for environmental problems affecting the Property, including liability (1) under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), the Resource Conservation and Recovery Act (RCRA), the Texas Solid Waste Dis­posal Act, or the Texas Water Code; or (2) arising as the result of theories of products liability and strict liability, or under new laws or changes to existing laws enacted after the Effective Date that would otherwise impose on sellers in this type of transaction new liabilities for environmental problems affecting the Property. This release applies even when the environmental problems affecting the Property result from Seller’s own negligence or the negli­gence of Seller’s representative.

The provisions of this section C. regarding the Property [will/will not] be included in the deed [include if applicable: and bill of sale] with appropriate modification of terms as the context requires.

D.Buyer’s Representations to Seller

Buyer represents to Seller that the following are true and correct as of the Effective Date and will be true and correct on the Closing Date, unless Buyer has given Seller notice of any changes prior to the Closing Date that such circumstances have changed due to causes not reasonably within Buyer’s control.

D.1.Authority.      Buyer is a [specify type of organization] duly organized, validly existing, and in good standing under the laws of the state of [Texas/[state]] with authority to perform its obligations under this Contract. This Contract is binding on Buyer. This Contract is, and all documents required by this Contract to be executed and delivered to Seller at Clos­ing will be, duly authorized, executed, and delivered by Buyer.

D.2.Terrorist Organizations Lists.      Buyer is not and Buyer has no actual knowl­edge that any of its partners, members, shareholders, owners, employees, officers, directors, representatives, or agents is a person or entity with whom U.S. persons or entities are restricted from doing business under regulations of the Office of Foreign Asset Control of the Department of the Treasury or under any statute, executive order, or other governmental action.

Exhibit C
Seller’s Records

To the extent that Seller has possession or control of the following items pertaining to and currently impacting the Property, Seller will deliver or make the items or copies of them available to Buyer by the deadline stated in paragraph D.3.:

Governmental

governmental licenses, certificates, permits, and approvals

tax statements for the current year and the last [number] years

notices of appraised value for the current year and the last [number] years

records of any tax exemption, special use, or other valuation or exemption applicable to the Property

records of regulatory proceedings or violations (for example, condemnation, environ­mental)

other: [specify]

Land

soil reports

environmental reports and other information regarding the environmental condition of the Property

water rights

engineering reports

prior surveys

site plans

other: [specify]

Facilities

as-built plans, specifications, and mechanical drawings for improvements

warranty agreements

management, employment, labor, service, equipment, supply, and maintenance agree­ments

insurance policies and loss runs

ADA and other building inspection reports

engineering reports

environmental reports

incident reports

operating and maintenance plans (for example, asbestos maintenance plans)

life-safety plans

other: [specify]

Financial

annual operating statements for the most recent [number] years of operation

monthly operating statements since the close of the last fiscal year

balance sheet as of [date]

books and records for the Property

utility bills for the most recent [number] months of operation

other: [specify]

Leases

commission and leasing agent agreements

rent roll setting forth for each Lease:

tenant’s name

square footage leased

date of expiration of current and renewal terms

renewal options

basic rent and formula for any additional rents

amount of additional rent paid during the last [number] [months/years]

prepaid rent

delinquent rent

security deposit

current tenant or landlord defaults

options to purchase any portion of the Property

rights of first refusal to lease other space

rights to rent concessions, tenant improvements, or other allowances

unpaid or contingent brokerage commissions (including commission on renewals)

estoppel letters and/or subordination agreements

other: [specify]

Licenses, Agreements, and Encumbrances

all licenses, agreements, and encumbrances (including all amendments and exhibits) affecting title to or use of the Property that have not been recorded in the real prop­erty records of the county or counties in which the Property is located

Exhibit D
Notices, Statements, and Certificates

The notices, statements, and certificates (arranged by their application to particular transactions) that are listed below are [included in the sales contract] [and] [attached for deliv­ery to Buyer], and Buyer acknowledges receipt of the notices, statements, and certificates by executing this contract:

A.Consumer Notices

Notice of Cancellation.      Notice concerning the purchaser’s three-day right of rescis­sion under a contract to purchase real property if (1) the seller or the seller’s agent solicits the sale at a place other than the seller’s place of business; (2) the purchaser submits the purchase contract to the seller or the seller’s agent at a place other than the seller’s place of business; and (3) the consideration payable under the purchase contract exceeds $100; unless either
(1) the purchaser is represented by a licensed attorney; (2) the transaction is negotiated by a licensed real estate broker; or (3) the transaction is negotiated at a place other than the pur­chaser’s residence by the person who owns the property, as described in chapter 601 of the Texas Business and Commerce Code.

B.Residential Transaction Notices

B.1.Seller’s Disclosure of Property Condition.      Seller’s disclosure of the condition of residential property, described in section 5.008 of the Texas Property Code.

B.2.Notice of Membership in Property Owners’ Association.      Notice concerning the sale of single-family residential property that is subject to membership in a property own­ers’ association, described in section 5.012 of the Texas Property Code.

B.3.Seller’s Disclosure of Location of Conditions under Surface of Unimproved Real Property.      Seller’s disclosure of the location of pipelines under the surface of unim­proved property to be used for residential purposes, described in section 5.013 of the Texas Property Code. A seller of unimproved property to be used for residential purposes shall pro­vide the purchaser written notice disclosing the location of any transportation pipeline to the best of the seller’s belief and knowledge as of the date the notice is completed and signed by the seller. If the information required to be disclosed is not known by the seller, the seller shall indicate that fact in the notice. A seller is not required to give this notice if (a) the seller is obligated under the terms of the contract to furnish a title insurance commitment to the buyer before Closing and (b) the buyer is entitled to terminate the contract if the buyer’s objections to title as permitted by the contract are not cured by the seller before Closing.

B.4.Notice of Obligation to Pay Public Improvement District Assessment.      Seller’s disclosure that a single-family residential property is located within a public improvement dis­trict, described in section 5.014 of the Texas Property Code.

B.5.Residential Contracts for Deed.      Notice regarding the sale of property used or to be used as the purchaser’s residence if the contract does not provide for delivery of a deed from the seller to the purchaser within 180 days after the final execution of the contract.

B.6.Notice Regarding Insulation to Buyer of New Home.      Notice concerning insu­lation to be installed in a new home, described in section 460.16 of title 16 of the Code of Fed­eral Regulations.

B.7.Disclosure of Information on Lead-Based Paint and/or Lead-Based Paint Hazards.      Lead-based paint warning statement, described in section 745.100 et seq. of title 40 of the Code of Federal Regulations.

B.8.Asbestos Disclosure Notice.      Notice concerning asbestos, described in sections 1910.1001 and 1926.1101 of title 29 of the Code of Federal Regulations.

B.9.Notice Regarding Sale Subject to a Recorded Lien.      Notice to the purchaser and each lienholder required under Texas Property Code section 5.016 that property being sold will be conveyed subject to a lien.

C.Condominium Transaction Notices

C.1.Acknowledgment of Receipt of Condominium Documents.      Condominium dec­laration, bylaws, and association rules, described in section 82.156 of the Texas Property Code.

C.2.Condominium Resale Certificate.      Resale certificate from the condominium owners’ association or waiver of resale certificate, described in section 82.157 of the Texas Property Code.

D.All Real Property Transaction Notices

D.1.Storage Tanks Disclosure Provider.      Notice concerning underground storage tanks, described in section 334.9 of title 30 of the Texas Administrative Code.

D.2.Notice to Purchaser Regarding Restrictive Covenants.      Notice of deed restric­tions, described in section 212.155 of the Texas Local Government Code.

D.3.Notice to Purchaser Regarding Coastal Area Property.      Notice regarding real property located adjacent to tidally influenced, submerged lands of Texas, described in sec­tion 33.135 of the Texas Natural Resources Code.

D.4.Notice to Purchaser of Property Seaward of Gulf Intracoastal Waterway.      Notice concerning public easements to the public beach, described in section 61.025 of the Texas Natural Resources Code.

D.5.Notice Regarding Possible Liability for Additional Taxes.      Notice of additional tax liability for vacant land that has been subject to a special tax appraisal method, described in section 5.010 of the Texas Property Code.

D.6.Notice Regarding Possible Annexation.      Notice concerning the sale of prop­erty located outside the limits of a municipality that may now or later be included in the extra­territorial jurisdiction of a municipality and may now or later be subject to annexation by the municipality, described in section 5.011 of the Texas Property Code.

D.7.Notice for Unimproved Property in a Certificated Service Area of a Utility Ser­vice Provider.      Notice for property in a certificated service area of a utility service provider, described in section 13.257 of the Texas Water Code.

D.8.Utility District Notice.      Notice concerning the bonded indebtedness of, or rates to be charged by, a utility or other special district, described in section 49.452 of the Texas Water Code, with the form of notice to be used being dependent on whether the property (a) is located in whole or in part within the extraterritorial jurisdiction of one or more home-rule municipalities but is not located within the corporate boundaries of a municipality, (b) is located in whole or in part within the corporate boundaries of a municipality, or (c) is not located in whole or in part within the corporate boundaries of a municipality or the extraterri­torial jurisdiction of one or more home-rule municipalities.

D.9.Notice to Purchaser of Property Located in Certain Annexed Water Districts.      Notice required by section 54.016(h)(4)(A) of the Texas Water Code when prop­erty being sold is in a water or sanitary sewer district that entered a contract with a city with a population of 1.18 million or less under which the city is permitted to set rates in the district after annexation that are different from rates charged other residents of the city.

D.10.Notice to Purchaser that Property Is Located within the Area of the Alignment of a Transportation Project.      Notice required under Texas Local Government Code section 232.0033 that all or part of the subdivision in which the property being sold is located is within the area of the alignment of a transportation project as shown in the final environmen­tal decision document that is applicable to a future transportation corridor identified in a con­tract between the Texas Department of Transportation and a county under Texas Transportation Code section 201.619.

D.11.Certificates of Mold Remediation.      Notice pursuant to section 1958.154 of the Texas Occupations Code, titled “Certificate of Mold Remediation; Duty of Property Owner,” requiring a property owner who sells property that has been issued a certificate of mold reme­diation pursuant to this section to deliver copies to the purchaser of each certificate of mold remediation issued for the property within the preceding five years.

D.12.Notice of Water Level Fluctuations.      Notice to purchasers of real property adjoining an impoundment of water, including a reservoir or lake, constructed and maintained under Texas Water Code chapter 11, that has storage capacity of at least 5,000 acre-feet at the impoundment’s normal operating level, provided pursuant to section 5.019 of the Texas Prop­erty Code.

E.Property Owners’ Association Disclosures

E.1.Resale Certificate.      Resale certificate from a property owners’ association that is entitled to levy regular or special assessments as described in sections 207.002–.003 of the Texas Property Code. In contrast to the obligation of a condominium seller to provide the con­dominium governing documents and resale certificate under section 82.157 of the Texas Prop­erty Code, the obligation in chapter 207 is an obligation of the property owners’ association upon a request from an owner, purchaser, agent, title insurance company, or other interested party.

Exhibit E
Seller Financing Addendum

A.Promissory Note.      The promissory note (“Note”) will be payable by Buyer (“Maker”) to the order of Seller (“Payee”) at the place designated by Payee. The Note may be prepaid in whole or in part at any time without penalty, premium, or restriction of any kind. Any prepay­ments are to be applied to the payment of the installments of principal last maturing, and inter­est will immediately cease on the prepaid principal. The lien securing payment of the Note will be inferior to any lien securing any superior note described in the contract. The Note will be payable as follows:

In one payment due [number] days after the date of the Note with interest payable [at maturity/monthly/quarterly/annually].

In [number] installments of $[amount] each [including interest/plus interest] beginning [number] days after the date of the Note and continuing at [monthly/quarterly/annual] inter­vals thereafter until [date], when the entire balance of the Note will be due and payable.

Interest only in [number] installments for the first [number] year[s] and thereafter in [number] installments of $[amount] each [including interest/plus interest] beginning [number] days after the date of the Note and continuing at [monthly/quarterly/annual] intervals thereaf­ter until [date], when the entire balance of the Note will be due and payable.

Other: [specify].

B.Deed of Trust.      The deed of trust (“Deed of Trust”) securing the Note will provide for the following:

B.1.Assumption without Consent.      The Property may be sold, transferred, or con­veyed without the consent of Payee, provided any subsequent buyer or transferee assumes in writing for the benefit of Payee the obligation to pay the Note and to perform the covenants and agreements in the Deed of Trust in accordance with the terms of those instruments. No such assumption will release Maker from any liabilities or obligations arising under the Note or Deed of Trust. Neither the creation of a subordinate lien nor a sale thereunder will be con­strued as a sale or conveyance of the Property.

B.1.Prohibition on Transfer      

If Maker transfers any part of the Property without Payee’s prior written consent, Payee may declare the Obligation immediately payable and invoke any remedies provided in the deed of trust for default. If the Property is residential real property containing fewer than five dwelling units or a residential manufactured home, this provision does not apply to (a) a sub­ordinate lien or encumbrance that does not transfer rights of occupancy of the Property; (b) creation of a purchase-money security interest for household appliances; (c) transfer by devise, descent, or operation of law on the death of a co-Maker; (d) grant of a leasehold inter­est of three years or less without an option to purchase; (e) transfer to a spouse or children of Maker or between co-Makers; (f) transfer to a relative of Maker on Maker’s death; (g) a trans­fer resulting from a decree of a dissolution of marriage, a legal separation agreement, or an incidental property settlement agreement by which the spouse of Maker becomes an owner of the Property; or (h) transfer to an inter vivos trust in which Maker is and remains a beneficiary and occupant of the Property.

Maker may not sell, transfer, or otherwise dispose of any Property, whether voluntarily or by operation of law, without the prior written consent of Payee. If granted, consent may be conditioned upon (a) the grantee’s integrity, reputation, character, creditworthiness, and man­agement ability being satisfactory to Payee; and (b) the grantee’s executing, before such sale, transfer, or other disposition, a written assumption agreement containing any terms Payee may require, such as a principal pay down on the Obligation, an increase in the rate of interest payable with respect to the Obligation, a transfer fee, or any other modification of the Note, the Deed of Trust, or any other instruments evidencing or securing the Obligation.

B.2.Prohibition on Further Encumbrances.      Maker may not cause or permit any Property to be encumbered by any liens, security interests, or encumbrances other than the liens securing the Obligation and the liens securing ad valorem taxes not yet due and payable without the prior written consent of Payee. If granted, consent may be conditioned upon Maker’s executing, before granting such lien, a written modification agreement containing any terms Payee may require, such as a principal pay down on the Obligation, an increase in the rate of interest payable with respect to the Obligation, an approval fee, or any other modi­fication of the Note, the Deed of Trust, or any other instruments evidencing or securing the Obligation.

Maker may not grant any lien, security interest, or other encumbrance (“Subordinate Instrument”) covering the Property that is subordinate to the liens created by the Deed of Trust without the prior written consent of Payee. If granted, consent may be conditioned upon the Subordinate Instrument’s containing express covenants to the effect that—

a.the Subordinate Instrument is unconditionally subordinate to the Deed of Trust;

b.if any action is instituted to foreclose or otherwise enforce the Subordinate Instrument, no action may be taken that would terminate any occupancy or tenancy without the prior written consent of Payee, and that consent, if granted, may be conditioned in any manner Payee determines;

c.rents, if collected by or for the holder of the Subordinate Instrument, will be applied first to the payment of the Obligation then due and to expenses incurred in the ownership, operation, and maintenance of the Property in any order Payee may determine, before being applied to any indebtedness secured by the Subordinate Instrument;

d.written notice of default under the Subordinate Instrument and written notice of the commencement of any action to foreclose or otherwise enforce the Subordinate Instrument must be given to Payee concurrently with or immedi­ately after the occurrence of any such default or commencement; and

e.in the event of the bankruptcy of Maker, all amounts due on or with respect to the Obligation and the Deed of Trust will be payable in full before any pay­ments on the indebtedness secured by the Subordinate Instrument and all decisions or elections in such proceedings affecting the Property will be made and controlled by Payee.

B.3.Prohibition on Transfer of Interests in Borrower.      Maker may not cause or permit any of the following events to occur without the prior written consent of Payee: if Maker is (a) a corporation, the termination of the corporation or the sale, pledge, encum­brance, or assignment of any shares of its stock; (b) a limited liability company, the termina­tion of the company or the sale, pledge, encumbrance, or assignment of any of its membership interests; (c) a general partnership or joint venture, the termination of the partnership or ven­ture or the sale, pledge, encumbrance, or assignment of any of its partnership or joint venture interests, or the withdrawal from or admission into it of any general partner or joint venturer; or (d) a limited partnership, (i) the termination of the partnership; (ii) the sale, pledge, encum­brance, or assignment of any of its general partnership interests, or the withdrawal from or admission into it of any general partner; (iii) the sale, pledge, encumbrance, or assignment of a controlling portion of its limited partnership interests; or (iv) the withdrawal from or admis­sion into it of any controlling limited partner or partners. If granted, consent may be condi­tioned upon (a) the integrity, reputation, character, creditworthiness, and management ability of the person succeeding to the ownership interest in Maker (or security interest in such own­ership) being satisfactory to Payee; and (b) the execution, before such event, by the person succeeding to the interest of Maker in the Property or ownership interest in Maker (or security interest in such ownership) of a written modification or assumption agreement containing such terms as Payee may require, such as a principal pay down on the Obligation, an increase in the rate of interest payable with respect to the Obligation, a transfer fee, or any other modi­fication of the Note, the Deed of Trust, or any other instruments evidencing or securing the Obligation.

B.4.Without Escrow.      Maker will furnish to Payee annually, before the taxes become delinquent, copies of tax receipts showing that all taxes on the Property have been paid. Maker will furnish to Payee annually evidence of current paid-up insurance naming Payee as an insured.

B.4.With Escrow.      Maker will, in addition to the principal and interest installments, deposit with Payee a pro rata part of the estimated annual ad valorem taxes on the Property and a pro rata part of the estimated annual insurance premiums for the improvements on the Property. These tax and insurance deposits are only estimates and may be insufficient to pay total taxes and insurance premiums. Maker must pay any deficiency within thirty days after notice from Payee. Maker’s failure to pay the deficiency will constitute a default under the Deed of Trust. If any superior lienholder on the Property is collecting escrow payments for taxes and insurance, this paragraph will be inoperative as long as payments are being made to the superior lienholder.

B.5.Cross-Default.      Any act or occurrence that would constitute default under the terms of any lien superior to the lien securing the Note will constitute a default under the Deed of Trust securing the Note.

C.Recourse Provisions.      The Note and Deed of Trust are subject to the following provi­sions:

Full Recourse.      Maker will have full recourse liability for repayment of the principal and interest of the Note and the performance of all covenants and agreements of Maker in the Deed of Trust.

No Recourse.      Maker will not have any recourse liability for repayment of the princi­pal and interest of the Note or the performance of any covenants and agreements of Maker in the Deed of Trust. The sole remedy of Payee or other holder of the Note in the event of a default by Maker under the Note or Deed of Trust will be to foreclose the liens and security interests granted in the Deed of Trust, and Payee or other holder of the Note will not be enti­tled to any deficiency judgment against Maker.

Partial Recourse.      Except as set forth below, Maker will not have any recourse liabil­ity for repayment of the principal and interest of the Note or the performance of any covenants and agreements of Maker in the Deed of Trust. Except as set forth below, the sole remedy of Payee or other holder of the Note in the event of a default by Maker under the Note or Deed of Trust will be to foreclose the liens and security interests granted in the Deed of Trust, and Payee or other holder of the Note will not be entitled to any personal judgment against Maker. Maker will have full recourse liability for any loss or damage actually suffered or incurred by Payee or other holder of the Note by reason of the following matters:

1.taxes, assessments, and charges for labor, materials, or other amounts that if unpaid may create an encumbrance against the Property that accrue before foreclosure;

2.unpaid premiums for insurance required hereunder that accrue before fore­closure;

3.damage to the Property to the extent such damage would be otherwise cov­ered by insurance required hereunder that was not maintained;

4.all rents, issues, profits, and income derived from the Property, including forfeited security deposits, after a default occurs and not expended for debt service or operating expenses of the Property before foreclosure;

5.tenant security deposits for leases of the Property not forfeited by or refunded to the tenants;

6.any condemnation or insurance proceeds not paid or applied as required in the Deed of Trust;

7.damage to and depreciation of the Property beyond normal wear and tear caused by the negligence of Maker or the failure of Maker to keep the Property in good repair and condition;

8.the return of or reimbursement for personal property taken from the Prop­erty by or on behalf of Maker and not replaced with personal property of equal utility and value;

9.damages resulting from fraud or misrepresentation by Maker;

10.damages resulting from breach of any warranty of title by Maker;

11.interest on the Note from the date of default through foreclosure, payment, or settlement of the debt;

12.all interest on the Note during any bankruptcy proceeding of Maker and all reasonable attorney’s fees and expenses incurred as a result of Maker’s bankruptcy; and

13.all attorney’s fees and expenses incurred by Payee to collect any of the foregoing amounts.

   
Buyer/Maker

   
Seller/Payee