Imagine your organization, whether a non-profit, a corporation, or a homeowners association, has identified a prime piece of property perfect for its future needs. But before you can start dreaming of construction or renovations, you need a formal plan, a documented agreement with the seller, and most importantly, the approval of your board of directors. This is where a board resolution to purchase property comes in. An essential legal document, it not only outlines the purchase agreement but also demonstrates the board’s official decision to proceed.
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This comprehensive guide will walk you through the intricacies of drafting a board resolution to purchase property, explaining its purpose, key components, and best practices. Whether you’re a board member, an officer, or simply someone interested in how organizations make major property decisions, this article will arm you with the information you need to understand this crucial step in the real estate acquisition process.
Understanding the Purpose of a Board Resolution
At its core, a board resolution is a formal document that records the decision made by a board of directors. In the case of property purchase, it essentially serves as a written authorization for the organization to commit itself to acquiring the property. It’s a legally binding document that reflects the official stance of the board and provides legal protection for the organization and its members. Think of it as a contract between the organization and its board, ensuring all actions are officially approved and documented.
Essential Components of a Sample Board Resolution
A well-constructed board resolution to purchase property should include several key components, each serving a specific purpose in solidifying the agreement and protecting all stakeholders:
- Introduction: The resolution should clearly state the purpose, outlining the intention to acquire the property.
- Property Description: A precise and detailed description of the property is crucial, including its legal address, acreage, and any identifying features.
- Purchase Price: The exact amount the organization will pay for the property should be clearly stated, along with any financing details if applicable.
- Payment Terms: The resolution should specify the method and timeframe for making the payment, be it a lump sum, installment payments, or other arrangements.
- Closing Date: A specific date for closing the transaction should be provided, ensuring all parties are aware of the timeline.
- Authorized Signatory: The resolution must clearly state who is authorized to sign the purchase agreement on behalf of the organization.
- Board Approval: The resolution should contain a statement confirming that the board of directors has formally approved the purchase by a majority vote.
- Attestation: A formal signature and date should be included, confirming the resolution’s authenticity.
Crafting a Comprehensive Resolution
While the structure outlined above provides a strong foundation, creating an effective resolution requires careful consideration of specific details. Here’s a deeper dive into some crucial aspects:
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1. Detailed Property Information
Don’t rely on general descriptions. Include:
- Legal Property Description: This is the official document that legally defines the property’s boundaries.
- Survey: If available, reference the most recent survey to ensure the property’s boundaries are accurate.
- Zoning: Specify the current zoning classification, as it can impact future use of the property.
- Easements: Detail any existing easements (rights of way for utilities, etc.) that could affect the property.
2. Purchase Price and Financing
Clearly articulate:
- Payment Schedule: For any installment payments, specify the amount, timing, and interest rates if applicable.
- Down Payment: Identify the amount of the down payment and how it will be funded.
- Contingency Clause: Consider including a contingency clause allowing the organization to back out of the purchase if certain conditions (e.g., financing approval) aren’t met.
3. Conditions and Representations
Include statements regarding:
- Environmental Due Diligence: Indicate that the organization has conducted necessary environmental inspections and is satisfied with the results.
- Title Search: The resolution should state that a title search has been conducted and no significant encumbrances have been discovered.
- Insurance: Specify the types of insurance the organization will secure for the property.
Sample Board Resolution to Purchase Property:
To provide a visual example, here’s a sample of a board resolution to purchase property, taking into consideration the elements discussed above. Note: This is a template, not legal advice. Consult with a legal professional before finalizing your resolution.
Resolution Number: [Insert Resolution Number]
Date: [Insert Date]
Re: Resolution to Authorize the Purchase of Real Property
WHEREAS, the [Organization Name] desires to acquire real property located at [Insert Property Address] (hereinafter referred to as the “Property”) for the purpose of [Insert Purpose of Purchase]; and
WHEREAS, the Board of Directors has reviewed the Purchase Agreement with [Insert Seller Name], which agreement sets forth the purchase price of [Insert Purchase Price] and the terms of payment; and
WHEREAS, the Board of Directors has determined that the purchase of the Property is in the best interests of the [Organization Name];
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors of the [Organization Name] hereby authorizes the acquisition of the Property in accordance with the terms of the Purchase Agreement, subject to the following conditions:
1. The purchase price shall be [Insert Purchase Price] dollars. The [Organization Name] shall make a down payment of [Insert Down Payment Amount] dollars at closing.
2. The closing of the purchase shall occur on or before [Insert Closing Date].
3. The [Organization Name] shall obtain title insurance and other necessary insurance policies for the Property.
4. The [Organization Name] shall complete all necessary environmental due diligence and shall not proceed with the purchase if any unacceptable environmental hazards are discovered.
5. The President of the [Organization Name] is hereby authorized to execute the Purchase Agreement and all other necessary documents on behalf of the [Organization Name].
This resolution was approved by a majority vote of the Board of Directors on this [Insert Date] day of [Insert Month], [Insert Year].
Attest:
_______________________________
Secretary
_______________________________
President
Important Considerations Before Moving Forward
Before you finalize this resolution, here are some key considerations:
- Legal Advice: Always consult with an attorney specializing in real estate law. They can ensure the resolution is legally sound and protects your organization.
- Insurance: Discuss with your insurance broker the appropriate coverage for the property. This includes title insurance, liability insurance, and property insurance.
- Financial Planning: Ensure your organization has the financial resources to cover the purchase price, closing costs, and any potential future expenses related to the property.
- Internal Review: Share the resolution with your board members and other relevant stakeholders for review and feedback before finalization.
Sample Board Resolution To Purchase Property
Conclusion
A board resolution to purchase property is a crucial step in ensuring a smooth and legally sound acquisition process. By carefully considering the essential components and crafting a comprehensive resolution, you equip your organization with the necessary documentation to proceed confidently with your real estate goals. This guide provides a solid foundation, but remember to consult with legal and financial professionals to ensure that your resolution fully protects your interests and meets all applicable regulations.
