The Essential Carve-Outs on Non-Refundable Transactions

Nonrefundable offers have become a popular way for investors to win apartment deals amid ever-increasing competition for opportunities. While providing a nonrefundable offer—meaning the deposit is nonrefundable—is a successful strategy to secure a property, the are high-risk to the buyer. T. Gaillard Uhlhorn, member at Bass, Berry & Sims PLC, however, says that there are several essential care-outs that buyers should include to help mitigate risk while maintaining a competitive advantage.

“If a purchaser is willing to accept the potential risk that it will actually lose their deposit, there are certain important carve-outs that a purchaser must ensure are included in the contract so that its nonrefundable deposit is actually refundable in certain circumstances,” Uhlhorn tells GlobeSt.com. “While it sounds contradictory that the nonrefundable deposit can actually be refundable, sellers generally accept certain limited carve-outs as no rational buyer would agree to shift the risk for certain diligence matters without a chance to review.”