How to Deal with Personal Property Without Upsetting Your Lender

A one word change in the Personal Property Pargaph of the Regional Sales Contract (Old P.2, new P. 9) was necessary to solve a somtimes significant problem with the old form. Lender's would often be concerned when Purchaser's and Seller's wanted to include valuable items of personal property (things like Big Screen TV's, patio furniture, outdoor kitchens, etc) in the Sales Contract. They didn't know how to put a value on those items, and how much the value of those items impacted the final Sales Price of the home. This is important to them when they try to determine to value of their collateral, which is the Real Property. The old language said "The Sales Price includes the following personal property and fixtures . . . " the new language says "The Property includes the following . . . "

That helps solve the problem, but many lenders still have heartburn when they see the Big Screen TV, the Bar Stools, and the Home Theater Equipment" listed under the lines for "Other:"

The best way to deal with this problem is to have a separate side agreement for the expensive personal property. This written agreement can take the form of a Bill of Sale. The consideration for the purchase of hte personal property is the purchase of the home, not a specific dollar amount. We all sort of know this intutively, but saying so in a separate document makes it easier to explain to a lender. I have attched a generic form to give you an idea of what I mean.

E-mail me if you want a cleaner copy of if you have any questions.

BILL OF SALE

(EXHIBIT B)

THIS BILL OF SALE is made and entered into this _____ day of _________, ____, by and between __________________________, a ____________________ (Seller) and __________________________, a ___________________ (Purchaser).

RECITAL

Pursuant to the terms of that certain Sales Contract dated _____________, ____, between Seller and Purchaser (the Agreement) and in consideration of the amounts set forth in the Agreement, the receipt and adequacy of which is hereby acknowledged, Seller bargains, sells, conveys, transfers, and assigns to Purchaser all of its right, title, and interest in and to the inventory, equipment, and other assets described in Schedule A attached hereto (collectively, the "Purchased Assets").

Purchaser will have all of the right, title, and interest in and to the aforesaid Purchased Assets for itself and its successors and assigns.

Seller certifies that it is the sole and lawful owner of the Purchased Assets; that the Purchased Assets are free from all encumbrances; that Seller has the right to sell and convey the Purchased Assets and to execute this Bill of Sale; and that Seller will warrant and defend the sale of the Purchased Assets to Purchaser, its successors, and assigns against the claims and demands of all persons.

IN WITNESS WHEREOF, the undersigned duly executes this Bill of Sale as of the date first hereinabove written.


Seller

By:
Its:
Schedule A

PURCHASED ASSETS

[insert asset list]

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