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Clauses Your Foreclosure Cleanup Business Contract Form Should Include to Save You Time and Money and to Protect You and Your Business

There are tons of cleaning business forms for sale, but as a foreclosure cleanup business / REO trash out business owner, it's imperative that you use forms that address the sticky situation of working with realtors and banks in a foreclosure-ridden market.

There are tons of cleaning business forms for sale, but when I started my foreclosure cleaning business, I could not find one that addressed the sticky situation of working with realtors and banks in a foreclosure-ridden market.

As a realtor and foreclosure cleaning business / REO trash out business owner, I've seen both sides of contractor transactions: being a realtor hiring a contractor and being a contractor working for a realtor. I knew there were scenarios a blanket contract agreement would not cover. So I decided to create my own contractual form for my foreclosure cleanup business.

With the I's dotted and the T's crossed, I knew my business could operate successfully knowing we had a solid foreclosure cleanup business / REO trashout business form in place to help ensure we got paid and to assist us if we had to sue someone for non-payment.

There are several clauses we use in our primary estimate and contract form to protect us. For example purposes, let's address the "contingency clause" as it relates to the foreclosure cleanup business form.

Just recently, a realtor client asked me if our company could wait until the property closed to get our check for a pending cleanup job. Since the closing was only a week away, we agreed to wait to get paid on the date of the closing. But we indicated in our contract that our getting paid was NOT contingent upon a successful closing.

"Contingent upon" means if A happens, then B will happen. If you have your contract CONTINGENT upon the closing, you're gambling that invoice away. That means if buyers lose financing, or the sellers pull out, or an inspection doesn't pan out, you will have worked for nothing and will be out-of-pocket on the job because you will have already completed the cleanup work.

Note, I said we indicated IN OUR CONTRACT that our getting paid was NOT continent upon a successful closing." If it ain't in writing, it ain't so. This realtor happened to be a colleague of mine; I'd worked with her before under a large real estate broker. But a verbal agreement would not do, no matter we were colleagues. It needed to be in writing, so I included the contingency clause in my contract with her.

As it turned out, the property did not close; it was a short sale that did not go through. The realtor ultimately took over a month to pay us, likely because the deal fell through and the bank or buyer didn't pay her. Imagine if we had made our getting paid contingent upon the sale.

TIPS: Always make sure your foreclosure cleanup contract is NOT contingent upon a successful closing. You want to get paid whether the buyer closes or not.

Take care to put contractual details in writing to avoid confusion. No matter how casual you are with your clients, the point of a contract is "proof of meeting of the minds." You need something written you can show as proof in a court of law in the event of legal action.

Remember to list your "terms" on your forms (i.e., payment due IMMEDIATELY, within 30 days, etc.).

Also, if you're dealing with a real estate agent, you want the broker's contact information as well. Realtors enter into deals as arms of their brokers, so you want to know who that broker is.

Of course, you want the address of the subject property on the form, estimated time of job completion, and a host of other important details.

Commissions are lower and slower for real estate professionals, and banks are taking longer than usual to pay. If you don't have a solid foreclosure cleanup contract specific to the foreclosure cleanup industry, you may be busy as a bee, but working for free. Remember, don't make a deal on a verbal agreement or a handshake, or you'll likely get the raw end of the deal.

The beauty of this industry is that the professionals you will work with most of the time in the foreclosure cleanup industry will be realtors, mortgage personnel, bank employees, and investors. They are all accustomed to working with written contractual agreements.

The bottom line is to simply take precaution from the outset and use foreclosure cleanup forms with the proper clauses that will protect you and your business.

Of course, this article is not intended to be a substitute for legal advice.

NOTE: Throughout the internet and in real estate industry literature, you may see the names mortgage field services, property preservation business, foreclosure cleanup, foreclosure cleaning, foreclosure clean-outs, foreclosure clean, clean foreclosures, cleaning foreclosures, REO trashout, REO trashouts and field services used interchangeable. The main thing to remember is foreclosure cleaning and foreclosure cleanup generally refer to smaller entities; while property preservation generally refers to larger companies.

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Article by Cassandra Black, Author of How to Start a Foreclosure Cleanup Business and several foreclosure cleanup industry Guides, Reports and Forms. Sign up as a Premium Newsletter Subscriber. You will periodically receive foreclosure clean-up job leads and consultative advice to help you grow your foreclosure cleanup business!

For more industry information, visit the foreclosure cleanup blog and the foreclosure cleaning newsletter archive.

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