Secure Your Contract With A Memorandum Of Agreement
Once you have an offer accepted, you may have concerns that the seller will get a higher offer and try to back out of selling to you. While this usually is not a concern when buying bank owned properties, some private sellers and investors have been known to do this.
The Memorandum And Notice Of Agreement which you sign and have notarized, and then record in the county courthouse for which the property is located. This document clouds the property’s title so that the seller cannot sell the property to anyone else other than you. As long as the seller closes with you as agreed, the seller won’t even know that you ever filed it on record.
However, if the seller tries to close with another buyer, the title company that searches the title will see that the seller has an agreement with you and the title company will contact you at the contact information provided on the affidavit. At that time, you will inform them that the seller already has an agreement with you and that they are not supposed to be entering into any other sale with other buyers. This will stop the seller’s closing dead in its tracks because the title company will not issue a title policy and insure the title, knowing that you have an interest in purchasing the property.
This affidavit is a powerful tool that puts you in control and prevents the seller from closing on a higher offer from another investor after they have already sign an agreement with you. It adds extra protection when entering into long-term lease options, subject-to deals or agreement for deeds.
Before using a Memorandum And Notice Of Agreement, be sure to seek proper legal counsel and fully understand how to use the notice. Improper use of a memorandum can result in legal action being taken against you for such things that include but are not limited to “Slander of Title” or damages for interference in another contract/sale.
Below is the text of a memorandum…
Record & Return to
MEMORANDUM AND NOTICE OF AGREEMENT
BEFORE ME, the undersigned authority, on this day personally appeared ______________________________, who being first duly sworn, deposes and says that:
- On the ____ day of ___________, 20____, an agreement for the Purchase and Sale, Lease-Option, or Agreement for Deed was entered into by and between the Affiant, as Buyer, Optionor, or Lessor, and the Owner of Record, as Seller, Optionee, or Lessee of the real property described as (legal description below):
Also know as street address: __________________________________________________
- Per the terms of the agreement the closing date may be undetermined and may have a renewable term. If a purchase and sale, or an agreement with a pre-determined term, the closing shall take place on or before the ____ day of _____________, 20____.
- A copy of the said agreement for purchase and sale may be obtained by contacting…
FURTHER AFFIANT SAYETH NOT.
In witness whereof, signed, sealed and delivered in the presence of:
STATE OF ____________
COUNTY OF ____________
Before me personally appeared __________________________________. He/She is personally known to me or has produced ____________________________________________ as identification, and who executed the foregoing instrument, and acknowledged to and before me that they executed said instrument for the purposes therein expressed.
WITNESS my hand and official seal in the state and County aforesaid, this _____ day of ______________, 20_____.
Notary Public: _________________________________
State of: ______________________
My Commission Expires: _________________