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Buy-Sell Agreement Between Co-Owners of Real Property

Agreement made on the ___ day of __________, 20___, between ___________________


of ________________________________________(street address, city, county, state, zip code),
referred to herein as _______, and ______________, of ________________________________
(street address, city, county, state, zip code), referred to herein as ___________.
Whereas, _______ and ________ (sometimes referred to herein jointly as Co-Owners
and Individually as Co-Owner) own real property as tenants-in-common at ________________
__________________________________ (street address, city, county, state, zip code); and
Whereas, _______ and __________ desire (1) to provide for the sale by a Co-Owner
during his or her lifetime, or by a deceased Co-Owners estate, with the purchase of such interest
by the remaining Co-Owner to be at a price fairly established; and (2) to provide all or a
substantial part of the funds for the purchase in the case of a sale by a deceased Co-Owners
estate.
Now, therefore, for and in consideration of the mutual covenants contained in this
agreement, and other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:
1.
___________ and ___________ own the following described real property (the Property)
as equal tenants-in-common: ______________________________________________________
______________________________________________________________ (legal description)
2.
While this agreement is in effect, neither Co-Owner shall have the right to assign,
encumber or dispose of his/her interest in the Property except as provided herein.
3.
Upon the death of a Co-Owner, his/her estate shall sell, and the surviving Co-Owner
shall purchase, the deceased Co-Owners entire interest in the Property for the price and pursuant
to the other terms provided herein.
4.
If either Co-Owner desires to sell or otherwise dispose of any part of his/her interest in
the Property during his/her lifetime, he/she shall give the other Co-Owner (herein referred to as
Remaining Co-Owner) written notice of his/her intention. If there is a prospective transferee
other than the Remaining Co-Owner, such notice shall state the name and address of such
transferee and the terms and conditions of the proposed transfer.
5.
Upon receipt of such written notice referred to in Paragraph 4, the Remaining CoOwner shall have the right to purchase all of the interest in the Property offered for sale or
transfer. The purchase price shall be the amount established in Paragraphs 8 and 9 below;
provided, however, that if a lower price was stated in the notice to the Remaining Co-Owner, the
Remaining Co-Owner shall have the right to purchase said interest in the Property at such lower
price.
6.
The Remaining Co-Owner shall pay for the interest of the selling Co-Owner in cash (or
by cash and a Promissory Note as described in Paragraph 7) on the date of sale, and thereafter

the selling Co-Owner shall not participate in the future profits of the Property.
7.
The Remaining Co-Owner shall have the right to pay for the interest he/she purchases
upon the following terms: ____ % of the purchase price in cash upon the date of exercise of the
option to purchase with the balance to be evidenced by a Promissory Note containing the
following provisions:
A.

The unpaid balance of said Note shall bear interest at the rate of ___% per annum.

B.
Principal and interest shall be due and payable at the address of selling Co-Owner
in____ consecutive equal monthly installments on the first day of each month beginning
on the first day of the month following the exercise of this option by Remaining CoOwner. Each subsequent monthly installment shall be due and payable on the first day of
each succeeding month thereafter until the entire indebtedness evidenced by this Note is
fully paid.
C.
In the event default is made in the payment of this Note at maturity, or of any
installment thereof, whether maturing by expiration of time, by default as herein
provided, and same is placed in the hands of an attorney for collection, then an additional
amount of Fifteen Percent (15%) on the principal and interest of this Note shall be added
to the same as a collection fee, and the failure to pay any installment when due shall
mature the entire indebtedness at the option of the holder of this Note.
D.
The Remaining Co-Owner may prepay the principal amount outstanding in whole
or in part without penalty. The holder of this Note may require that any partial
prepayments (i) be on the date monthly installments are due, and (ii) be in the amount
of that part of one or more monthly installments which would be applicable to principal.
Any partial prepayment shall be applied against the principal amount outstanding and
shall not postpone the due date of any subsequent monthly installments or change the
amount of such installments, unless the holder of this Note shall otherwise agree in
writing.
8.
___________ and ______________ agree that at this time the fair market value of each
Co-Owners interest in the Property is $_________________, and the purchase price to be paid
by the Remaining Co-Owner pursuant to this Agreement shall be ____% of that amount. This
value shall remain effective for the purposes herein until there is a re-determination of the value
as provided in Paragraph 9.
9.
At the end of each calendar year, the Co-Owners shall re-determine this value and shall
indicate the new values by entries in Schedule A attached hereto. Each new set of values entered
in Schedule A shall be signed by both Co-Owners, and the last value entered opposite in
Schedule A shall be controlling for the purposes of this Agreement. In determining the value of a
deceased Co-Owners interest in the Property after his/her death, the excess of the death claim
proceeds over the cash values of the insurance policies on his/her life which are subject to this
Agreement at the time of his/her death shall not be taken into account.

10.
To assure that all or a substantial part of the purchase price of a deceased Co-Owners
interest will be available in cash upon his/her death, the Co-Owners have purchased key man life
insurance on the lives of each Co-Owner from the ___________Insurance Company in the
amount of $_______________ with the other Co-Owner as the beneficiary.
11.

The Procedure upon the death of a Co-Owner shall be as follows:

A.
The surviving Co-Owner, as beneficiary, shall promptly file a claim to collect in
cash the one-sum death proceeds of the policies on the deceased Co-Ownerslife. Upon the
collection of such proceeds and the qualification of a personal representative for the deceased
Co-Owner, the surviving Co-Owner shall pay over to the personal representative an amount
equal to the full proceeds collected, in part or in full payment for the deceased Co-Owners
interest in the Property.
B.
If the one-sum death proceeds of the policy on the deceased Co-Ownerslife is
less than the total purchase price for his/her interest as provided herein, the surviving Co-Owner
shall either pay the balance forthwith in cash, or in lieu of such cash payment shall execute and
deliver to the personal representative of the deceased Co-Ownersestate a Promissory Note
containing the following provisions:
1.

The unpaid balance of said Note shall bear interest at the rate of ___% per
annum.

2.

Principal and interest shall be due and payable, at such address as the
personal representative of the deceased Co-Owner shall designate to the
surviving
Co-Owner in writing, in ____consecutive equal monthly installments on
the first
day of each month beginning on the first day of the month
following the
payment of the insurance proceeds to the personal
representative of the deceased
Co-Owners estate. Each subsequent
monthly installment shall be due and
payable on the first day of each
succeeding month thereafter until the entire
indebtedness evidenced by this Note
is fully paid.
3.

In the event default is made in the payment of this Note at maturity, or of


any installment thereof, whether maturing by expiration of time, by default
as
herein provided, and same is placed in the hands of an attorney for
collection,
then an additional amount of Fifteen Percent (15%) on the
principal and interest
of this Note shall be added to the same as a collection fee,
and the failure to pay
any installment when due shall mature the entire
indebtedness at the option of the
holder of this Note.
4.
any
(b) be in
would be

The surviving Co-Owner may prepay the principal amount outstanding in


whole or in part without penalty. The holder of this Note may require that
partial prepayments (a) be on the date monthly installments are due, and
the amount of that part of one or more monthly installments which
applicable to principal. Any partial prepayment shall be applied

against the
of any
installments,

principal amount outstanding and shall not postpone the due date
subsequent monthly installments or change the amount of such
unless the holder of this Note shall otherwise agree in writing.

C.
The personal representative of the deceased Co-Owner shall promptly execute
(and shall cause any other party or parties whose signatures may be necessary to transfer
complete title to the deceased Co-Owners interest to execute) all instruments necessary to
effectuate the transfer of the deceased Co-Owners interest in and to the Property, as of the date
of the deceased Co-Owners death. and, concurrently with receipt of the full purchase price for
the deceased Co-Owners interest (either in cash, or in cash and note, as provided above), shall
deliver all instruments necessary to effectuate the transfer of the deceased Co-Owners interest in
and to the Property, as of the date of the deceased Co-Owners death. Transfer of such interest
shall be made free and clear of all taxes, debts, claims, or other encumbrances whatsoever,
except as allowed in Subparagraph D below.
D.
Concurrently with the transfer to the Co-Owner of the deceased Co-Owner's
interest, the surviving Co-Owner shall execute and deliver to the personal representative of the
deceased Co-Owner, a warranty deed with no exceptions as to title other than recorded building
restrictions, restrictive covenants, easements, rights-of-way, zoning ordinances, and mineral
reservations applicable to Property.
12.
Any notice provided for under this Agreement shall be deemed duly given if delivered or
mailed by certified mail to the party entitled to receive such notice at the address of the CoOwners set forth above.
13.
Notwithstanding the foregoing, and anything herein to the contrary notwithstanding, any
dispute under this agreement shall be required to be resolved by binding arbitration of the parties
hereto. If the parties cannot agree on an arbitrator, each party shall select one arbitrator and both
arbitrators shall then select a third. The third arbitrator so selected shall arbitrate said dispute.
The arbitration shall be governed by the rules of the American Arbitration Association then in
force and effect.
14.

This Agreement shall be construed according to the law of the State of ___________.
WITNESS our signatures as of the day and date first above stated.

________________________

________________________

(Acknowledgment may vary by state)


State of _________________
County of _________________
Personally appeared before me, the undersigned authority in and for the said County and
State, on this _____________ (date), within my jurisdiction, the within-named __________ and

________________, proven to me on the basis of satisfactory evidence to be the persons whose


names are subscribed to the above instrument, and who acknowledged that they executed the
above and foregoing instrument for the purposes therein stated, being duly authorized so to do.
Witness my hand and official seal on this _________(date).

___________________________________
NOTARY PUBLIC
My Commission Expires:
______________________

Seal