1003 95 The only practical difference between "subject to" and "assume" is when there is a foreclosure sale and a deficiency judgment is sought. In that case, if the buyer took title subject to the loan, he cannot be held responsible for the judgment. The seller remains primarily responsible. On the other hand, if the buyer assumes the loan (guarantees its payment), he would have to pay the judgment as he would be primarily liable. However, under an assumption agreement, the seller is not entirely relieved of his responsibility but remains secondarily liable unless specifically released by the lender. 96 Subordination clause - Used in a trust deed or mortgage. This clause states that some other trust deed or mortgage, dated and recorded subsequently, may take priority over it. Usually, the amount of the loan to be obtained, dated, and recorded later, is stated. Such agreements are written for the benefit of the borrower. 98 Liquidated damages clause - This is a contractual agreement predetermining the amount of damages for breach or failure to carry out a contract. In contracts for the sale of residential property containing 1 to 4 units with one to be occupied by the buyer, the following provisions will apply: (1) The forfeiture of deposits that are paid and do not exceed 3% of the purchase price will be presumed valid unless the amount is proved to have been unreasonable. (2) If the amount actually paid pursuant to the liquidated damages provision exceeds 3% of the purchase price, the provision is invalid. The seller will have to establish the reasonableness of the damage amount. In other sales contracts the forfeiture of deposits actually paid will be presumed valid regardless the amount. Terms of a subsequent sale will be evidence of the reasonableness of a liquidated damages provision. The law also requires that such clauses be prominently displayed and separately signed or initialed by each party to the contract. 98A Protection clause - This clause is also referred to as the “safety clause”. It provides that the agent is protected in his commission if the property is sold after the expiration of the listing term to a person with whom the agent has negotiated during the listing term. However, before it is operative, the agent must inform the seller of the names of such persons in writing and within the listing period. This period is often called the “safety period.” PEST CONTROL DOCUMENTATION (Structural Pest Control Board) 99 Termites are the most destructive type of wood destroying insects. The subterranean type that lives in the soil and enters into the foundation of a home does more damage than the flying type known as the dry wood termite.
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- Fall '17
- Contract Law