Writing Complete Special Stipulations

A Special Stipulation is a specific instruction written in a contract that is unique to the buyer and this seller. It is not a place to reiterate what is already in the contract. In the GAR Purchase and Sale Agreement (PSA), if there is a conflict between a Special Stipulation and any exhibit, addendum, or preceding paragraph, including any changes made by the parties, the Special Stipulation controls.
 
The Critical 5 elements:  Who, What, When, How and Remedy.
 
The rules for writing Special Stipulations are simple.  Include the critical 5 elements and you will have written a solid Special Stipulation.  Below are 2 appraisal Special Stipulations.  One is missing the critical “Remedy” element.  The other includes a remedy and is complete.
 
Missing Remedy Element Example
In the event the Property does not appraise for at least the purchase price, Buyer shall pay the difference between the appraised price of the Property and the purchase price of the Property in cash at closing, provided that the amount does not exceed the sum of $­­­­­­­­­ 10,000.
1.Who is going to do it?  The Buyer.
2.What are they doing?  Paying the difference, limited to $10,000.
3.When will it be done?  At closing.
4.How is it going to be done? In cash.
5. Remedy if the Special Stipulation doesn’t work?
There is no remedy!  The Buyer and the Seller will either have to negotiate to save the deal or the contract will fail for being too vague to enforce.  If one of the parties wants it to fail, it will fail.
Complete Special Stipulation                                                                                                                      In the event the Property does not appraise for at least the purchase price, Buyer shall pay the difference between the appraised price of the Property and the purchase price of the Property in cash at closing, provided that the amount does not exceed the sum of $­­­­­­­­­ 10,000.  Notwithstanding the above, if the difference between the sales price and the appraised value of the Property is more than $10,000, Buyer shall have the right, but not the obligation, to terminate this Agreement provided that Buyer gives notice to Seller within 3 days of receiving the appraisal of the Property, in which case Buyer shall be entitled to the return of Buyer’s earnest money. If Buyer does not terminate the Agreement within this time frame, Buyer’s right to terminate on this basis shall be waived and Buyer shall pay cash to Seller at the closing for the entire difference between the appraised value and the sales price of the Property.
1.Who is going to do it?  The Buyer.
2.What are they doing?  Paying the difference, limited to $10,000.
3. When will it be done?  At closing.
4.How is it going to be done? In cash.
5. Remedy if the Special Stipulation doesn’t work? If the difference is greater than $10,000, the Buyer can terminate or the buyer’s right to terminate is waived.The complete Special Stipulation appraisal is not vague. It allows the contract to proceed according to its terms. 
 
Hope this helps!