SELF-CANCELING INSTALLMENT SALES AGREEMENT

Transcription

1 SELF-CANCELING INSTALLMENT SALES AGREEMENT THIS SELF-CANCELING INSTALLMENT SALES AGREEMENT (the Agreement ) is made this day of, 1999, between [CLIENT], residing at [CLIENT ADDRESS] (the Buyer ) and [SELLER] and [SELLER], residing at [SELLERS ADDRESS] (the Sellers ). R E C I T A L S Sellers are the owners of real property located in Lake County, Montana described in more detail below: Buyer has independent means and resources with which to purchase the remainder interest in this property from Sellers by making fixed monthly payments to Sellers for the remainder of their lives or the expiration of fifteen (15) years, whichever occurs first. NOW, THEREFORE, in consideration of the mutual promises made by each party to the other, the parties desire to set forth their agreements and understandings with respect to the sale of the property to the Buyer as follows: I. SALE OF PROPERTY A G R E E M E N T S 1.1 Description of Property. The Sellers agree to sell to Buyer, and Buyer agrees to purchase from the Sellers, on the terms and conditions stated in this Agreement, the remainder interest in fee simple to the following real property (the Property ): That real estate in Lake County, Montana, more particularly described as: [LEGAL DESCRIPTION OF PROPERTY] Together with all appurtenances, improvements and fixtures (except as may be excluded below) and all water, water rights (however evidenced) and ditch rights appurtenant thereto. 1.2 Value of Property. The Sellers and Buyer have jointly selected an appraiser, [APPRAISER NAME], to value the property. The fair market value of the Property according to the appraiser s report is $250,000. Due to certain promises and agreements set forth in this Agreement, the parties agree that the fair market value of the property and rights transferred is $300,000. Based upon this fair market value of the property, the remainder interest in the property to be purchased by the Buyer has a present value of $97, 094. SELF-CANCELING INSTALLMENT SALES AGREEMENT Page 1

2 1.3 Payment Terms. Parties agree that the total purchase to be paid for the remainder interest in the property shall be $97,094. The Buyer agrees to pay the purchase price to Sellers in the following manner: (a) The sum of $5,000 provided by Buyer to Sellers, as the initial down payment, receipt of which is hereby acknowledged; (b) The sum of $55,000 as and for the remainder of the down payment to be paid at the time of the closing of this transaction; and (c) The remaining amount of $37,094 shall be paid pursuant to a Self Canceling Installment Note. The Buyer has retained an attorney to determine the appropriate risk premiums for monthly payments made over a fifteen (15) year period but subject to complete cancellation upon the Sellers deaths prior to the expiration of the 15-year period as described in Section 1.6. The attorney has indicated that the applicable risk premium required to be applied to the transaction is $8,770.07, and the interest risk premium is 3.466%. Applying the appropriate risk premium of $8, to the value of the remaining amount of $37,094 results in a remaining purchase price to be paid to the Sellers of $45, together with interest on the unpaid balance at 9.666% per annum (which rate includes the applicable risk premium). This amount shall be paid as follows: Buyer will make 180 monthly installments to the Sellers in the amount of $ (Four Hundred Eighty-Three Dollars and 53/100) according to the amortization schedule ( Amortization Schedule ) attached hereto as Exhibit A. These monthly payments shall be due on the first day of each month commencing July 1, 1999, with the last scheduled payment being due on June 1, 2014 (the Maturity Date ). 1.4 Prepayment. Buyer may prepay all or any portion of the principal of the purchase price at any time, without penalty or premium. 1.5 Amortization Schedule. The Sellers and Buyer agree that the Amortization Schedule is accurate and will control, absent any prepayment. The parties agree to report the interest and principal payments for tax and financial purposes according this schedule. 1.6 Termination Upon the Deaths of the Sellers. The parties hereby expressly agree that Buyer s obligation under the preceding paragraphs shall terminate upon the death of the last surviving Seller, and that no heir, legatee, creditor, or beneficiary of the estates of the Sellers, nor the estate itself, shall have any rights whatsoever under this Agreement; provided, however, that if the Sellers shall die prior to receipt of the monthly payment due to the Sellers under this Agreement for such month or any previous month, then the amount otherwise payable to the Sellers for that month or a previous month shall be paid to such beneficiary as is designated by SELF-CANCELING INSTALLMENT SALES AGREEMENT Page 2

3 the Sellers, in writing, or in the absence of an effective beneficiary designation, such payment shall be made to the estate of the last surviving Seller. 1.7 No Contingencies. Buyer shall be absolutely liable for the payments due under Section I, and payments are in no way contingent upon the future earnings, if any, from the property transferred to the Buyer. II. SECURED PROMISE 2.1 Secured Promissory Note. To evidence the Buyer s promise to pay under Section 1, Buyer shall deliver to Sellers at closing a promissory note ( Note ) in the form attached hereto as Exhibit B. The Note shall be secured by a Montana Trust Indenture encumbering Buyer s remainder interest in the Property. III. CLOSING 3.1 Closing Date. The closing of this sale shall be held on or before Friday, June, 11, 1999 (the Closing Date ), at the office of Lake County Abstract and Title, st St. E., Polson, Montana ( Closing Agent ), unless otherwise mutually agreed by the parties. Closing fees, which do not include attorney fees and costs of the parties, shall be shared equally by Buyer and Sellers. IV. TITLE DOCUMENTS AND INSURANCE 4.1 Conveyance Documents. On the Closing Date, the Sellers shall execute and deliver to the Closing Agent a warranty deed to the property conveying a merchantable remainder interest in fee simple title to the Buyer free and clear of all liens and encumbrances except reservations and exceptions in patents from the United States and the State of Montana; existing easements and rights-of-way; all building, use, zoning, sanitary and environmental restrictions; mineral and royalty reservations or conveyances of record, and oil, gas and mineral leases of record, together with the reservations, if any, by the Sellers as noted above; taxes and assessments for the current year and subsequent years; and mortgages or contracts for deed, if any, assumed by Buyer as part of the purchase price. 4.2 Title Evidence. Within a reasonable time after the execution of this Agreement, Seller shall furnish to Buyer title evidence to the Property in the form of a commitment for a standard owner s policy of title insurance in the amount of the purchase price, showing that Sellers title is free and clear of liens, encumbrances, and title defects, excepting the usual printed exceptions contained in the commitment, and the items specifically excepted in paragraph 4.1 above. Should Buyer s examination (at Buyer s expense) of the title commitment disclose title irregularities beyond the permitted exceptions described above which render the title unmerchantable, then Seller shall proceed with reasonable diligence at Sellers expense to correct the same if such irregularities are specified in a written notice delivered to Seller on or before ten (10) days after the title commitment has been SELF-CANCELING INSTALLMENT SALES AGREEMENT Page 3

4 made available to Buyer. If, on the Closing Date, Sellers have been unable to cure or remove any such title irregularities specified in the written notice, then this Agreement may be rescinded at the option of either party hereto, by written notice to the other party. Within a reasonable time after the Closing Date, Sellers shall cause, at Sellers expense, an owner s policy of title insurance to be issued to Buyer in accordance with the terms of this paragraph. Thereafter, Sellers shall not take any actions which will encumber or otherwise adversely affect the title to the property without the express written consent of Buyer. 4.3 Responsibility for Taxes. Taxes and assessments on the Property for the current year and all subsequent years until the deaths of the Sellers, shall be the sole responsibility of the Sellers. Sellers shall provide Buyer with copies of all tax notices, together with proof of payment. Should Sellers fail for any reason to make the requirement payment for any taxes and assessments on the property, then Buyer may make such payments. Sellers agree to reimburse Buyer for all sums paid and Buyer may reduce future monthly payments to the Sellers in an amount equal to that paid for the taxes and assessments. 4.4 Responsibility for Property Insurance. Sellers shall maintain adequate property insurance to cover any potential loss associated with the property. Sellers shall provide proof of such insurance to Buyer for the current year and all subsequent years until the deaths of the Sellers. Should the Sellers fail to maintain such property insurance, Buyer may purchase adequate insurance for the property. Sellers agree to reimburse Buyer for all sums paid and Buyer may reduce any future monthly payments in an amount equal to the insurance premiums paid on behalf of Sellers. 4.5 Maintenance of Property. Sellers shall not commit of suffer any waste, damage or injury to the property or any improvements located thereon, and will keep and maintain the property and improvements in as good condition and repair as at the time of the execution of this agreement, reasonable wear and tear excepted. V. BUYER S OPTION 5.1 Option to Purchase Life Estate. If in the future, the Sellers wish to sell the remaining life estate in the property, the Buyer shall have the option to purchase Seller s remaining life estate for an amount equal to the Sellers actuarial life estate interest at that time, calculated on a $300,000 fair market value for the property, and using the applicable life interest tables pursuant to Treasury Regulation Section (or the applicable successor to the Section) and the applicable interest rate for the computation. VI. DEFAULT 6.1 Default. In the event Buyer should fail to keep and perform any of the duties and conditions set forth in this agreement, the Sellers may declare Buyer in default by SELF-CANCELING INSTALLMENT SALES AGREEMENT Page 4

5 delivering to Buyer a written Notice of Default by certified mail, return receipt requested, describing the default and demanding that the default be cured within 45 days after such notice has been sent. All amounts not paid pursuant to this agreement shall bear default interest at a rate of 10% per annum. In the event the Buyer does not cure any such default within 45 days after the notice was sent, Sellers remedy shall be termination and cancellation of Buyers rights under this agreement, in which case the Buyer shall forfeit any and all rights to the property and any all sums paid by the Buyer to the date of the default. VII. MISCELLANEOUS 7.1 Assignment. This Agreement shall not be assigned by Buyer without Sellers written consent, unless otherwise specified herein. 7.2 Environmental Matters. To Sellers knowledge, neither Sellers nor any previous owner, tenant, occupant or use of the Property has engaged in or permitted any operation or activities upon, or any use or occupancy of the Property, or any portion thereof, for the purpose of or in any way involving the handling, manufacture, treatment, storage, use, generation, release, discharge, refining, dumping or disposal of any asbestos, oil or petroleum products, or hazardous materials (as defined under federal and Montana law) on, under, in or about the Property, nor are any hazardous materials presently deposited, stored or otherwise located on, under, in or about the Property. To Sellers knowledge, no portion of the Property has ever been used for a dump or landfill. There are no underground storage tanks located on the Property, and to Sellers knowledge, no underground storage tanks have been removed from the Property except in compliance with applicable Montana and federal law. 7.3 Independent Investigation. Buyer enters into this Agreement in full reliance upon Buyer s independent investigation and judgment, and neither Sellers nor Sellers agents or attorneys make any warranties or representations to Buyer about the Property except as specifically stated herein. There are no verbal or other agreements which modify or affect this Agreement. 7.4 Attorney Fees. If either party defaults in its performance hereunder and the other party employs an attorney because of such default, the defaulting party agrees to pay, on demand, all costs, charges and expenses, including reasonable attorney and paralegal fees, incurred at any time by the other party because of the default. 7.5 Notice. Any notice to be given hereunder shall be in writing and shall either be served upon a party personally, or served by registered or certified mail, return receipt requested, directed to the party to be served at the address of the party stated on the first page of this Agreement. A party wishing to change his designated address shall do so by notice in writing to the other party. Notice served by mail shall be deemed complete when deposited in the United States mail, postage prepaid. SELF-CANCELING INSTALLMENT SALES AGREEMENT Page 5

6 7.6 Risk of Loss. Risk of loss shall remain with the Sellers until Closing. 7.7 Time and Binding Effect. Time shall be of the essence of this Agreement. The terms and conditions hereof shall inure to the benefit of, and be binding upon, the heirs, legal representatives, successors and permitted assigns of the parties hereto. 7.8 Entire Agreement. This Agreement embodies the entire Agreement between the parties, and supersedes all prior negotiations, understandings and agreements, if any, relating to the Property. This Agreement may be amended, modified, or supplemented only by an instrument in writing duly executed by both parties hereto. 7.9 Governing Law. This Agreement, and the parties rights and liabilities under it, shall be governed by the laws of the State of Montana. BUYER S SIGNATURE: I hereby agree to the terms hereof and acknowledge receipt of a copy of this Agreement bearing my signature. DATED this day of, 1999, a.m./p.m. [CLIENT] State of ) :ss County of ) This instrument was acknowledged before me this day of, 1999 by [Client]. Notary Public for the State of (SEAL) Residing at : My Commission expires: SELLERS SIGNATURE: We hereby agree to the terms hereof and acknowledge receipt of a copy of this Agreement bearing our signature. DATED this day of, 1999, a.m./p.m. [SELLER] SELF-CANCELING INSTALLMENT SALES AGREEMENT Page 6

7 [SELLER] State of Montana ) :ss County of Lewis & Clark ) This instrument was acknowledged before me this day of, 1999 by [Seller] and [Seller]. Notary Public for the State of Montana (SEAL) Residing at : My Commission expires: SELF-CANCELING INSTALLMENT SALES AGREEMENT Page 7