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from the local municipality or health department may be required. D. Seller’s Disclosures . For improved residential property, the seller is required to provide a seller’s disclosure statement where the seller discloses certain conditions (water infiltration, condition of heating unit, etc.) of which it is aware. For houses built before 1978, a lead paint disclosure is also required. See also Paragraph G. “As Is Clause”. E. Certificates of Occupancy and Building Permits. Some cities and townships require that a home be inspected to verify that it meets the applicable building codes before it can be sold. If code violations are cited, the parties often negotiate a price reduction if the seller is not willing or able to cure the violation(s). A buyer should also check the municipality building department to determine if there are any open permits for work that have not been approved through a final inspection. F. Commercial: In addition to the inspections performed by residential buyers, commercial buyers also usually obtain a survey, an environmental review, and a use and zoning and/or permit compliance review. Depending on the municipality, a certificate of occupancy may also be needed before commercial property can be transferred. If commercial tenants occupy the premises, a thorough review of the leases is advised (buyers are advised not to rely on rent rolls or lease summaries) and it is not uncommon for commercial leases to contain a right of first refusal to buy the property that must be complied with or waived before a sale can proceed. A certificate from the
commercial tenants certifying the exact lease and all amendments thereto and that the seller-landlord is not in default are often obtained as part of the due diligence. G. “AS IS” Clause. “As Is” clauses are common and for a seller, always recommended. “ A contract may be rescinded where, at the time the contract was entered into, both parties were under a misapprehension of present fact that materially alters the essence of the agreement and the performance of the parties. [citations omitted]. “Rescission is not available, however, to relieve a party who has assumed the risk of loss in connection with the mistake.” Id . at 30. An “as is” clause in the parties’ contract constitutes persuasive evidence that the purchaser assumed the risk of loss. [citation omitted]. However, an “as is” clause does not “transfer the risk of loss where a seller makes fraudulent misrepresentations before a purchaser signs a binding agreement.” [citations omitted]. Therefore, if [buyer] was aware of the [defect], the “as is” clause would be a nullity as to plaintiffs’ fraud claim.” Coosard v Tarrant, ___ Mich App ___, ___; ___ NW2d ___ (2022) (Docket No. 357950); slip op at 7. IV. FORMS OF OWNERSHIP A. Typically, residential property is held in a trust or an individual’s name. If held in a trust, the trust may be either irrevocable or revocable. Irrevocable trusts typically cannot be modified or terminated by the grantor without the consent of all of the beneficiaries or court approval. In Michigan, trusts are generally governed by the Michigan Trust Code, MCL 700.7101 et seq . Joint owners to property may take title as:
ILN Real Estate Group – Buying and Selling Real Estate Series
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