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Pro tip: Always verify demo timelines BEFORE signing off
I was working on a retail flip on Gratiot last month, the tenant was supposed to be out by June 1st but their demo crew didn't show until June 10th. That delay cost me $3,200 in extra carrying costs on the loan because I couldn't start my buildout on time. Has anyone else had a seller's timeline slip like that and found a way to hold them accountable?
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seth_harris3611d ago
I used to skip penalty clauses too, but @cameronf88 is right. Now I add them every time.
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cameronf8811d ago
I slid a $200/day penalty clause into the P&S on a similar deal in Hamtramck after a seller's demo crew ghosted me for two weeks. I didn't get the full amount I wanted out of them, but it covered about half my holding costs and made them take my next deadline seriously. You might look back at your contract to see if there's a force majeure or general delay clause you could leverage (or get one added next time). Doesn't fix the current hit, but it hedges against the next one (which you know is coming eventually).
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Penalty clauses are the only real leverage we have. $200/day sounds light but it adds up fast. The threat alone usually keeps them honest on the next deal.
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