Our client, a community center in Aurora, wanted to expand onto a vacant, city-owned lot across the street from its current location. The organization was unfamiliar with the legal process involved, including how to negotiate and protect its interests in the seller-finance arrangement offered by the Aurora Housing Authority.
While the client was eager to proceed and sign off on whatever arrangement the Housing Authority put forward, we encouraged them to take a more deliberate approach.
We drafted a Letter of Intent (or “deal sheet”) to:
- Clarify and highlight the parameters of the arrangement.
- Provide a simple framework to negotiate the major elements of the transaction.
- Set the stage for efficiently drafting the lengthy final contract.
Through the Letter of Intent, we were able to shift the Housing Authority’s proposed arrangement to one more similar to a typical commercial seller-financed arrangement. This included revising several specific matters to the benefit of our client, including:
- Reducing the interest rate proposed by the Authority.
- Allowing sufficient time for our client to perform due diligence on the property, related, for example, to surveying the property lines and ensuring environmental and title protection.
- Modifying a provision that would have allowed the seller to seize the property in the event of even one missed payment without going through the normal foreclosure process.
With these buyer protection provisions in place, the contract was drafted and agreed to and the deal was concluded. The client is now paying off the loan in advance of building on the property.