In our last RealDealDocs blog entry, we discussed liquidation agreements, music license agreements, and proxy agreements. This week, we will review three other types of agreements: purchase and sale agreements, triple net lease agreements, and outsourcing agreements.
To review, an agreement can be defined as “a negotiated and usually legally enforceable understanding between two or more legally competent parties. Although a binding contract can (and often does) result from an agreement, an agreement typically documents the give-and-take of a negotiated settlement and a contract specifies the minimum acceptable standard of performance.”
Purchase and Sale Agreements
A purchase and sale agreement is a document used in real estate transactions, when a seller / property owner (”Seller”) sells a property to a company or individual (”Buyer”). This document outlines the terms and conditions of transaction. Information contained in the document includes the names of both parties, the address and description of the property the agreement concerns and the purchase price. The closing details of the transaction are included in the document outlining where and when closing on the property shall occur.
When purchasing a property, particularly with a cash payment, a real estate investor may provide earnest money as a deposit. This information will be present in the contract and will include details on the amount and how it shall be paid to the seller. If a loan is being used to purchase the property, details of the lender and the amount will be included in the document.
There may be clauses regarding property taxes and disclosures of potential issues of the property. If the seller agrees to perform certain repairs before transfer of ownership to the buyer, the repairs may be contained within the agreement. Some buyers may request fixtures or furnishings along with the sale of the property, and these will be listed within the document. A purchase and sale agreement may also contain warranties, waiver of claims, and information about the title insurance policy.
Triple Net Lease Agreements
A triple net lease agreement is a document used when a tenant (”Lessee”) is paying costs in addition to the rental cost of the property. In a triple net lease, the lessee agrees to pay all costs the property is subject to, including real estate taxes, insurance, and maintenance costs. These lease agreements are usually used in commercial real estate transactions. A landlord may own a commercial property and have a lessee sign this document to cover all the costs the lessee’s business may incur. These documents may occasionally be used for a single family residence on a case-by-case basis. Any ”net” is a cost other than the required rent.
The agreement may contain the rental amount, all the terms and conditions the lessee agrees to, including the additional costs. A description of the subject property including address and square footage may be included in the document as well. The agreement may include a beginning and end date for the agreement, the names of all parties involved, and payment information.
Payment information may include a schedule of when payment is due, plus late charges and security deposit. Some landlords may include a fee for returned checks in the document. A landlord may include the acceptable use of the property, any parking privileges or restrictions, provided furnishings, damage fees and what party is responsible for repairs to be made to the property. The contract may include how both parties have a right to terminate the lease, as well as any potential fees for early termination may be included in a triple net lease agreement.
An outsourcing agreement is a document used when a company or individual (“Client”) decides to use an outside source for a business service (“Outsourcer”). A technology company outsourcing their customer support call center to a company in another state or country would use this type of agreement. Businesses that need to collect funds from past due clients often use these documents when hiring a company to outsource the collection process.
This agreement should contain a description of the service being performed by the outsourcer, and the terms and conditions both parties must meet. Additionally, it should contain a beginning and an end date for the services, as well as the options to renew. The document might contain confidential information regarding the company’s product, therefore, the outsourcer may need sign a confidentiality agreement. The agreement may contain information regarding the commission per service the outsourcer will receive from the client upon services rendered, as well as any potential quota the client would like the outsourcer to meet. A payment schedule may be included along with any potential late charges if payment is overdue.
The client may include language concerning their ability to waive any liabilities resulting from the actions of the outsourcer, as well as an indemnity clause. Deadlines, reports, taxes, fees and how to handle costs of the outsourcing process may also be present in the document. The outsourcing agreement will also contain what state or locality’s governing law it will follow, plus clauses for both parties’ right to termination.
Drafting an agreement from scratch can be a time consuming and daunting task – plus, without input from a qualified attorney, you may be poised to enter into an arrangement this not legally sound or in your best interest. Fortunately, RealDealDocs allows you access to thousands of agreements that have already been used in a myriad of different industries.