When purchasing a multi-family dwelling such as an apartment building or duplex, your purchase contract should contain clauses to protect your interests as the buyer. Unfortunately, many buyers are unfamiliar with the most important elements that they should include.
There are a few components to consider in the purchase contract for any multi-family dwelling you buy.
An inspection clause gives you the right to have the property thoroughly inspected before closing on the purchase. You can specify the types of inspections you want, such as a structural inspection, pest inspection and inspection of the electrical, plumbing, HVAC and other systems.
The clause should state that you can terminate the contract without penalty if the inspections reveal significant defects or problems. This gives you leverage to renegotiate the purchase price if the inspection reveals issues.
Lead paint disclosure
For structures built before 1978, make sure the contract includes a lead paint disclosure. This requires the seller to disclose any known information about the presence of lead-based paint or lead paint hazards in the building. An estimated 29 million dwellings still contain lead paint, making this an important consideration.
Under federal law, the seller must provide you with any available records or reports pertaining to lead paint and give you a mandated lead hazard information pamphlet. This helps protect you from liability for lead poisoning suits if tenants contract lead poisoning after you purchase the property.
A seller disclosure requires the seller to disclose known material defects about the property. This could include things such as roof leaks, foundation cracks, flooding issues or other problems. The clause gives you the right to terminate the contract if the seller fails to disclose issues they were aware of. It also protects you from liability if the seller hides defects that you later discover.
Including these three key clauses in your multi-family purchase contract helps protect you legally and financially as the buyer.