While a real estate indemnity agreement may have a scary or intimidating sounding name, it is a very common and very simple type of legal agreement. With a real estate indemnity agreement, one party is pledging to protect another from any kind of financial loss or from a lawsuit of some kind. We often hear about an indemnity agreement when we are filling out our car insurance forms, but this type of agreement is commonplace in most other forms of law. Lets take a look at how a real estate indemnity agreement can be used to protect a vulnerable party.
When it comes to buying real estate, many of us understand that finding the perfect piece of property is almost always impossible. No matter how perfect the home or property, there are other issues that could make the property difficult to sell or even dangerous. That’s why we have real estate indemnity agreements. With a real estate indemnity agreement, one party, usually the buyer, agrees to take full responsibility for a mistake or a problem caused by the other. Lets look at an example or two.
Let’s say that you have agreed to buy a home that was recently repaired due to an accident that was caused by the sellers own hand. It could be that the seller had an accident and drove his car into the living room picture window and there was serious damage to the home. By singing an indemnity agreement, you agree that any further problems with the home, even if the problem were to cause harm to a third party, that you will take responsibly for it, not the seller. This type of agreement absolves the original party, in this case, the seller, from any further legal problems.
Another example would be if you bought a piece of land that had a toxic spill on it due to an accident caused by the seller. By signing a real estate indemnity agreement, you agree that any future law suits filed by anyone for any reason over what happened to that piece of land are now your responsibility. So, lets say you built an apartment building on that piece of land and 20 years from now, people are sick because the toxic spill wasn’t cleaned up properly. You would be the person legally responsible for the issue here, not the person who actually caused the problem in the first place.
While these types of agreements are obviously difficult to analyze or sign, they are considered very basic legal forms if you are buying a problem property for a price well below average. Many times, the best deals in the world of real estate come with problems and a real estate indemnity form will be a required part of buying that piece of property. The best advice is to have any problem piece of property analyzed as best you can before you sign on the dotted line.
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Source by Mark Warner