IS THERE A RECOURSE FOR POST-LOI DUE DILIGENCE SPEND?
Happy new year everyone!
I have a deal close to LOI and I'm trying to create a recourse for my due diligence spend if the seller changes his mind about selling post-LOI. The seller has been taking a long time making up their mind and negotiating each item. It has been 3 months since my initial offer. This overall is making me wonder if they will stay true to the deal (nothing stopping them from backing out of the sale after I spend money for due diligence).
1- Are there ways to protect my due diligence spend based on your first or second hand observations? 2- I'm thinking of asking the seller to deposit an amount in an escrow account. If he backs out if there is more than 10% variance in the price agreed upon at LOI (if we have to retrade the LOI at more than 10% price difference) then the seller can back out without penalty. If the seller is backing out even with less than 10% of price variance (which means they are changing their mind about the sale) then I get the money in the escrow account. Can this be a workable solution? 3- If this is a workable solution, are there any suggestions for a good escrow account service? 4- I can bear the cost of escrow account and I'm also happy to pay an interest rate for the escrow account to the seller upon successful closing.
I would love to hear feedback if this can be a workable plan. This seems like a good deal to pursue if not for my personal gut feel about the risk of the seller backing out.