Bulk sale agreement provisions—To protect successor from liability.
Agreement of Purchase and Sale Bulk Sale of Residential Property
This Agreement of Purchase and Sale ("Agreement") is made as of _________[date] ("Effective Date"), by and between _________, herein called "Bank," and _________, a California corporation, herein called "Buyer."
A. Bank is the owner as a result of foreclosure proceedings or by deed in lieu of foreclosure of certain real property situated in the City and County of _________, State of _________, consisting of (i) _________ residential dwelling units and the personal property located therein (the "Condominiums") more particularly described on Exhibit A attached, and (ii) Parcel _________ of Parcel Map No. _________, as per Plat recorded in Book _________ of Parcel Maps, Page _________, recorded in the Official Records of the Recorder of _________ County (the "Lot"), which Lot is to be further subdivided by Buyer by recordation of a Condominium Plan, into _________ new condominiums intended to be constructed by Buyer. The Condominiums and the Lot are hereafter collectively referred to as the "Real Property."
B. Bank desires to sell the Real Property in its "As Is" condition to Buyer and Buyer desires to purchase the Real Property in bulk in its "As Is" condition from Bank on the terms and conditions contained in this Agreement.
C. Buyer desires to acquire the Real Property for the purpose of completing the construction thereof and leasing the Condominiums to the public, and for the purpose of developing and constructing additional improvements and condominiums on the Lot, all in compliance with the existing Final Subdivision Map(s) and all conditions imposed in connection therewith and in compliance with the condominium plan(s) and all agreements previously executed relating thereto, and for the purpose of thereafter leasing the completed units to the public.
Recitals and Agreement
1.1. Recitals. The parties to this Agreement agree that the Recitals are true and correct and are incorporated in this Agreement by this reference.
1.2. Agreement To Purchase. Bank agrees to sell the Real Property to Buyer and Buyer agrees to purchase the Real Property, "As Is," from Bank on the terms and conditions contained in this Agreement.
2.1. Amount of Purchase Price. The Purchase Price for the Real Property is the sum of _________ U.S. Dollars (U.S. $_____) ("Purchase Price") allocated as follows:
(a). Condominiums: U.S. $_____
(b). Lot: U.S. $_____
Total Purchase Price: U.S. $_____
2.1.1. Adjustment to Purchase Price for Repair of Defects to and/or Completion of Condominiums. The construction of the Condominiums on the Real Property is not complete. Completion of construction of the Condominiums and obtaining Certificates of Occupancy from the City is the sole responsibility of Buyer. However, Bank agrees that it will give Buyer a _________ Thousand U.S. Dollars (U.S. $—,000) Credit ("Construction Credit") towards the Purchase Price for the Condominiums at Close of Escrow, representing the costs Buyer expects to incur to complete such construction. Buyer acknowledges (i) that the estimate of the costs required to complete construction of the Condominiums in accordance with plans and specifications approved by the City has been prepared by Buyer; (ii) that Buyer is an experienced real estate developer with a staff qualified to make such estimates; and (iii) that Bank has not made, nor has any agent of Bank made, any representations to Buyer with respect to the costs involved to complete construction of the Condominiums.
2.2. Terms of Payment. The Purchase Price for the Real Property shall be paid by Buyer to Bank as follows: _________.
4.1. Investigation by Buyer. Buyer acknowledges: (i) that Bank acquired the Real Property pursuant to foreclosure proceedings or by deed in lieu of foreclosure; (ii) that Bank is not the developer of the Real Property and that Bank has no knowledge of the construction, planning, or any other status of the Real Property or of the existence, nature, or extent of any outstanding contracts or agreements executed by Bank's predecessor(s) that affect the Real Property, except as identified on Exhibit _________, if any, attached; and (iii) that the parties desire to provide Buyer with a feasibility study period during which period Buyer may conduct whatever investigation it deems prudent to determine the condition and status of the Real Property, including without limitation (a) the status and state of completion of construction of the Condominiums, as well as all off-site and on-site improvements, (b) the existence and status of any Tentative Subdivision Map(s), the Final Subdivision Map(s), Condominium Plan(s), any Subdivision Improvement Agreements, or other contracts and agreements that may affect the Real Property, and (c) the accuracy of all information contained in the Final Subdivision Public Report covering the Condominiums. Accordingly, the parties agree that Buyer shall have a period of 10 calendar days from the Effective Date of this Agreement ("Feasibility Period") to conduct whatever studies, tests, and investigations Buyer desires relating to the Real Property, including without limitation soils tests, engineering analyses, and analysis of any applicable records of the Planning, Building, Public Works, or any other departments or agencies of the City or any other governmental agency or entity having or asserting jurisdiction over the Real Property. Buyer may terminate this Agreement by written notice of termination delivered to Bank before the expiration of the Feasibility Period if Buyer concludes that purchase, development, and resale of the Real Property is not economically feasible. If Buyer terminates the Agreement as provided in this section, Buyer's deposit shall be returned to Buyer and neither party shall have any further rights against or obligations to the other. If Buyer fails to give Bank written notice of its election to terminate the Agreement before the expiration of the Feasibility Period, it shall be conclusively presumed: (i) that Buyer is satisfied with the status of the Real Property and all construction thereon and has waived its termination right under this section; (ii) that it has obtained, reviewed, read, and understood (or has elected not to do so) all contracts and agreements affecting the Real Property that it deems relevant, including without limiting the generality of the foregoing, (a) the Declaration of Covenants, Conditions, and Restrictions affecting the Real Property; (b) the Articles of Incorporation and By-Laws of the Homeowners' Association, if any, created in connection with the Real Property; (c) the Department of Real Estate ("Department") Final Subdivision Public Report, if any, and all supporting documents on file with the Department deemed relevant by Buyer; and (d) the Tentative and Final Subdivision Map(s), Condominium Plan(s), and the Subdivision Improvement Agreement(s) and the provisions and conditions of approval attached thereto; (iii) that it agrees to assume any liabilities of Bank as a successor by foreclosure or deed in lieu of foreclosure to Declarant thereunder; and (iv) that Buyer will indemnify, defend (utilizing counsel designated by Bank) and hold Bank free and harmless from any claims, liability, damage, loss, demands, actions, or causes of action of whatever kind or nature (collectively "Claims") arising out of or in any way connected with the Real Property (excluding, however, any third party's Claims for personal injuries arising from Bank's negligent or willful misconduct) and with the performance by Buyer of its obligations under this Agreement.
4.2. Right of Entry. Bank hereby grants to Buyer, its officers, agents, employees, contractors, and subcontractors, the right at any time during the Feasibility Period to enter into and upon the Real Property for the purpose of inspecting the same and making such engineering, soils, and other tests of the Real Property as Buyer shall determine to be necessary or desirable to satisfy itself as to the physical condition of the Real Property, as well as to satisfy itself as to any outstanding contracts or agreements that may affect the Real Property. Buyer agrees to keep the Real Property free and clear of all liens arising out of Buyer's activity or conduct on the Real Property and, if it does not purchase the Real Property, to restore the Real Property to the same condition as it existed before Buyer's entry pursuant to this Agreement. Buyer agrees to defend (utilizing counsel designated by Bank), hold harmless and indemnify Bank, its subsidiaries, affiliates, employees, or agents, or all of them, of and from any and all claims, liens, demands, expenses, liabilities, and causes of action of any kind arising out of or in any way connected with, directly or indirectly, the right of entry granted in this Agreement to Buyer, its agents, employees, contractors, and subcontractors.
4.3. Assignment of Manufacturer's Warranties. Upon Close of Escrow, Bank will assign, without warranty, to Buyer its interest, if any, in any manufacturers', suppliers', or subcontractors' warranties acquired by Bank as a result of or in connection with Bank's acquisition of the Real Property.
Conditions Precedent to Close of Escrow
5.3. Property Inspection Condition. Bank's obligation to sell the Real Property to Buyer and Buyer's obligation to purchase the Real Property from Bank is conditioned upon Buyer's inspection of the Real Property inasmuch as the Real Property is sold, in bulk, only "As Is" without any representation or warranty by Bank of any kind. An authorized representative of Buyer who is competent to conduct an on-site inspection of the Real Property shall conduct such an inspection within the ten- (10-) day Feasibility Period described in Article IV. The condition contained in this Paragraph 5.3 is for the benefit of both Bank and Buyer. Buyer shall be deemed to have waived this condition unless it conducts its on-site inspection within the Feasibility Period. The condition contained in this Paragraph 5.3 shall be deemed satisfied upon Buyer's notification to Bank that the inspection has been completed.
Completion of Construction
6.1. Condominiums; Off-Site Improvements. Buyer acknowledges that construction of the Condominiums and the on-site and off-site improvements, included, or to be included, on the Real Property related thereto are not complete. Buyer agrees that, as between Bank and Buyer, it is Buyer's obligation to complete (or obtain the completion of) construction of the Condominiums and all other work and improvements on the Real Property (including all off-site and on-site improvements), required by the Tentative or Final Subdivision Map(s), or the Subdivision Improvement Agreements, or that may be required to obtain Certificates of Occupancy for the Condominiums and final acceptance of all work by the City, or all of the preceding. Buyer agrees to complete all construction work on the Real Property in accordance with the existing plans and specifications therefor and in a manner acceptable to City and Bank, unless otherwise agreed in writing by Bank. Buyer further agrees to indemnify, defend (utilizing counsel designated by Bank), and hold Bank harmless from any liability Bank may have to the City or any other person or entity, including Buyer, to complete any construction or improvements and from any damages, costs, fees, or expenses, including attorneys' fees, Bank may incur arising out of or connected with Buyer's failure to complete or obtain completion of all such construction.
6.2. Lots. Bank agrees that it will consider a construction loan application made by Buyer for a construction loan to finance the construction by Buyer of _________ new condominium townhouse units and related on-site and off-site improvements on the Lots, if such application is made by Buyer to Bank within 21 months after Close of Escrow. Execution of this Agreement by Bank shall not constitute a commitment by Bank to provide construction financing. Such commitment, if any is made, will be made only in accordance with Bank's normal construction loan policies and procedures and only by written construction loan commitment specifying the precise terms and extent of any commitment made.
Condition of Real Property
9.1. Condition of Real Property; "As Is" Purchase. No person acting on behalf of Bank is authorized to make, and by execution hereof, Buyer acknowledges that no person has made any representation, agreement, statement, warranty, guarantee, or promise regarding the Real Property or the transactions contemplated in this Agreement or regarding the status of the Real Property with regard to any construction thereon or insofar as the Planning, Building, Public Works, or any other department or agency of the City is concerned, except as may be expressly set forth in this Agreement. No representation, warranty, agreement, statement, guarantee, or promise, if any, made by any person acting on behalf of Bank that is not contained in this Agreement shall be valid or binding on Bank.
9.2. Personal Inspection of Real Property. Buyer acknowledges that pursuant to the terms of Article IV and of Paragraph 5.3, above, Buyer will have independently and personally inspected the Real Property and that Buyer has entered into this Agreement based upon such personal examination and inspection. Buyer agrees that the Real Property is to be sold to and accepted by Buyer in its present condition, "As Is," with all faults, if any, and without any warranty whatsoever; specifically (but without limiting the generality of the foregoing) without any warranty of the nature or quality of the construction of the Condominiums, the Lots, or of any off-site improvements; the adequacy of the design of the Project, the Condominiums, or the Lots; the quality of the labor or materials included in any of the work or improvements; the saleability of the Condominiums or Lots comprising the Real Property; or the fitness of the Real Property for any particular purpose or development potential.
Plans, Specifications, and Consultants
10.1. Consultants, Civil Engineers, and Architects. To the extent it has the legal right to do so, at Close of Escrow, Bank shall assign (without warranty) to Buyer its right, title and interest, if any, in any reports, studies, and plans and specifications Bank may have obtained relating to the Real Property.
10.2. Waiver. Even though Bank's predecessor contracted for work already performed by various consultants in connection with the real property, Buyer agrees that Bank shall not be responsible for or liable to Buyer or its successors on account of any errors or omissions of said consultants. As a material covenant and condition of this Agreement, Buyer agrees that in the event of any such errors or omissions, Buyer will look solely to Bank's predecessor or to such consultants directly for any redress or relief, Bank shall not be responsible therefor, and no cause of action shall lie, nor shall any judgment, however obtained, be executed against Bank, its subsidiaries or affiliates on account thereof. The foregoing is not intended to relieve Bank of any direct and active negligence of Bank, but is intended to prevent imputing the conduct of Bank's predecessor or of such consultants to Bank.
Covenants, Representations, and Warranties of Buyer
Buyer covenants, represents, and warrants to Bank as of the Effective Date and as of the Close of Escrow that:
(a). Buyer is purchasing the Condominiums for the purpose of completing the construction and becoming the developer/subdivider thereof and thereafter leasing the completed Condominiums to the public and that Buyer will obtain a Final Subdivision Public Report from the Department of Real Estate of the State of California authorizing the sale of the Condominiums to the public, if such Final Report is required under California law at the time of such sales to the public;
(b). Buyer has contracted to purchase and Bank has contracted to sell the Lots to Buyer in bulk and without delivery to Buyer of a Final Subdivision Public Report in reliance upon _________[e.g., California Business and Professions Code §§ 11004.5(a) and 11004.5], within the representations by Buyer, and pursuant to the subdivider bulk sale exemption of _________[e.g., Westbrook v. Summerfield, Roberts & McArthur, Inc., 154 Cal 2d 761, 316 P2d 691 (1957)];
(c). Buyer is purchasing the Lots for the purpose of developing and constructing additional condominium units thereon, becoming the subdivider/developer thereof, and thereafter leasing the same to the public and that Buyer will obtain a Final Subdivision Public Report from the Department of Real Estate of the State of _________, authorizing the sale of such additional condominiums, if such a public report is required under _________[state] law at the time the additional condominiums are sold to the public; and
(d). The foregoing covenants, representations, and warranties of Buyer are true as of the date of Buyer's execution of this Agreement and shall be true on the date of Close of Escrow and Buyer hereby indemnifies Bank, agrees to hold Bank harmless, and to defend Bank (utilizing counsel designated by Bank) against any loss, claim, liability, cost, or expense sustained by Bank arising out of or in any way related to the inaccuracy of the covenants, representations, and warranties set forth in this Article XII.
In witness, etc.
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