Broker NDA agreements
June 21, 2023
by a professional from Bishop's University in Moncton, NB, Canada
What’s the problem with that Broker NDA you’re about to sign? Maybe lots…
Are you comfortable sharing your financial information? Maybe you should be…
Could you be opening yourself to added liabilities? Maybe…
Here are two big issues with Broker NDAs and how I sometimes advise people to avoid them.
Watch here now: https://youtu.be/wHxYmcrcq4M
from Arizona State University in Long Beach, CA, USA
1. The Non-circumvention language in Broker NDAs (particularly CABB version) only holds the Buyer responsible for Broker fees if they specifically go around the Broker or interfere with the Broker's ability to collect a fee from the Seller. Ex. Advising the Seller to wait until the Representation Agreement expires before selling to them and keeping it confidential from the Broker to save Broker Fees. As long as they are working through the Broker, Buyer will not be responsible for Fees. The NDA clearly says that the Seller will be responsible for Fees. Any other violation of the NDA by the Buyer will NOT lead to them being liable for Broker Fees. If a Searcher asked me to waive this clause, it would be a huge red flag and indication of their intent to circumvent me.
2. As for Proof of Funds, I agree that we don't need a full Financial Statement at the early stages. Providing POF showing adequate funds for the transaction would be sufficient. However, I'd say they should show more than just the minimum required downpayment. Otherwise, the Broker and Seller could be concerned that they are too weak to get the deal done. Lender may want to see more liquidity and know that they are not going to be bone dry after Closing the deal. The landlord will need to see additional Proof of Funds to qualify for the lease. If every last penny on their bank statement iis going to the downpayment, they won't get approved by the landlord.
from University of Canterbury in Houston, TX, USA