Seller-Drafted PSA Terms Shift Risk to the Buyer

Commercial real estate buyers walk into a transaction assuming the purchase agreement covers the basics. That assumption gets expensive when the seller drafts the contract.

In Arizona commercial real estate, a seller-drafted PSA often strips out the protections buyers expect from standard contracts. Those gaps do not show up until closing day, when the leverage has already shifted.

Non-Standard Arizona Contracts Strip Out Buyer Protections

Standard Arizona Department of Real Estate commercial contracts and AIR forms carry language that reflects decades of deals gone sideways. Consider the contingency timelines, due diligence windows, disclosure obligations, HOA addenda, and title review periods. Every clause exists because a past transaction exposed a gap that someone left to assumption.

A seller who substitutes their own attorney-drafted PSA resets every one of those items to a blank. The buyer now maps each clause from scratch against a document written to favor the seller’s position. Miss a contingency deadline, and your exposure to earnest money shifts immediately. Miss a disclosure item, and the cap rate you underwrote on day one may not be the cap rate you absorb at the closing table.

A $6,000 Surprise Landed on Closing Day in Anthem

The Anthem deal looked clean. The buyer had done their homework, with tenants in place, a known location, and a clear price. But the seller refused to use a standard Arizona contract or the AIR form. They offered their own attorney-drafted PSA with no seller disclosures and no HOA addendum.

That gap mattered because Anthem operates with two fee layers. There is a commercial complex HOA and a separate Anthem POA. Neither was flagged during due diligence. The POA alone carried nearly $6,000 in fees that surfaced at the closing table.

Escrow did not request the Anthem fee documents early enough, so they arrived on closing day. The escrow officer had taken time off, leaving an assistant to handle what remained. The buyer learned the full cost picture while sitting at the table.

The seller was executing a 1031 exchange, so his funds sat in escrow until the fee question was resolved. That hold gave both sides leverage, and the seller ultimately paid. Had the funds been released on his timeline, the outcome would likely have gone differently.

Seller-Drafted Contracts Put More Risk on the Buyer

Both parties using a standard form means everyone at the table already knows the framework. The review moves faster because everyone already knows the structure. Attorneys, escrow officers, and agents have read that contract a hundred times.

An attorney-drafted contract removes that shared baseline, so each clause requires fresh analysis. Protections a buyer assumed were present may not appear anywhere in the document. Sellers who believe earnest money is locked after due diligence expires sometimes find that the buyer’s contract language says otherwise.

The risk cuts both ways, but buyers absorb more of it. They are evaluating a document written by the opposing party’s attorney, often under time pressure.

The Anthem Buyer Walked Away With One Clear Rule

The buyer acknowledged it directly after closing. They would not purchase another commercial property without seller disclosures and an HOA addendum in place.

Five other buyers had competed for the same property, so winning required accepting the seller’s terms. That was a calculated risk, and it paid off. The three-week scramble to locate HOA information still added real friction to the close. A boilerplate form would have required that information upfront.

Randy Shuffler has spent over two decades transacting commercial retail, industrial, medical, and office assets across Lake Havasu City and Kingman. He holds the CCIM designation, earned by fewer than 6% of commercial practitioners nationwide.

“We bought the Anthem building with no disclosures, no Anthem POA fees, and no regular commercial complex HOA. There’s usually an HOA addendum that states exactly who pays for what. They didn’t want to do one. Since they held the money, he ended up paying for it. My buyer was happy with how it resolved.” – Randy Shuffler, Founder and Principal Broker, Lake Havasu City Commercial at Realty ONE Group Mountain Desert

Demand These Documents Before Due Diligence Opens

A seller who insists on their own contract turns the entire due diligence period into a documentation recovery mission. Every disclosure item that a standard form would have required must now be sourced independently.

Recovering that documentation takes time, and time is rarely something you have to spare. In a 45-day 1031 identification window or a tight due diligence clock, time is the one variable you cannot recover. Pre-positioning before the clock starts matters more than most sellers expect.

Get the HOA documentation early in any deal like this. In master-planned corridors or HOA-governed complexes, ask about layered fee structures before due diligence opens. If the seller will not provide a disclosure addendum, build the time to find that information yourself into the timeline from the start.

Protect Your Downside Before You Accept the Terms

Protecting the downside starts before you ever accept the terms. Run through a standard AIR or ADRE form line by line and identify every item that does not appear in the seller’s PSA. That gap analysis then becomes the backbone of your due diligence checklist.

A few things belong on every list when a custom PSA is in play. Verify the full HOA and POA fee structure on your own. Confirm whether the earnest money protections match what you expect. Map every contingency window and confirm the timeline works for your financing and inspection schedule.

Buyers who accept seller-drafted terms but still do the documentation chase usually close cleanly. Buyers who accept those terms and skip the chase absorb the cost. The Anthem deal worked out, but that outcome depended partly on leverage that appeared by accident, not by design.

Buying into a market where commercial land in Lake Havasu City is constrained raises the pressure. Deal competition is real, and accepting seller terms without pushback starts to feel normal. That is exactly the moment when documentation discipline matters most.

FAQs About Seller-Drafted PSA Terms in Commercial Real Estate

What is the difference between an attorney-drafted PSA and a standard Arizona commercial contract?

A standard Arizona Department of Real Estate commercial contract or AIR form carries pre-negotiated language. The standard language covers disclosures, contingency timelines, HOA addenda, and title review periods. An attorney-drafted PSA starts from a blank slate and is typically written to favor the drafting party. Protections present in a standard form may not appear at all in a custom contract.

Do seller disclosures apply to commercial transactions in Arizona?

Disclosure obligations in commercial transactions depend heavily on the contract language and asset type. A seller who uses their own PSA and omits a disclosure addendum leaves the buyer with limited recourse. The buyer only has recourse if the contract specifically requires disclosure. This is one of the key risks buyers accept when they agree to a seller-drafted contract.

What is an HOA addendum, and why does it matter in a commercial deal?

An HOA addendum specifies which party pays which fees at closing, including initiation, transfer, and ongoing assessment fees. In a master-planned area like Anthem, where layered fee structures are common, the addendum prevents surprises at the closing table. Without one, fee responsibility defaults to negotiation or silence, and silence almost always benefits the seller.

How do layered HOA fee structures affect commercial underwriting?

In developments with both a property-level HOA and a master association such as a POA, buyers face two sets of fees rather than one. Neither may appear in a seller’s contract that omits disclosure requirements. These fees affect true net income calculations and, by extension, the cap rate a buyer actually achieves versus the one they modeled. Hidden costs like these quietly distort the cap rate math behind triple net listings.

Can a buyer walk away from a deal if a seller-drafted contract has missing protections?

It depends entirely on what the contract says about contingencies and earnest money. A custom PSA may compress or eliminate the windows that allow a buyer to exit cleanly. Before accepting a seller-drafted contract, buyers and their legal counsel should identify every exit clause and confirm what triggers forfeiture of earnest money. Assuming standard terms apply when they are not written into the document is an expensive mistake.

What role does an escrow officer play when documentation gaps appear at closing?

The escrow officer simply processes what the contract directs them to do. They do not independently source missing documentation or flag what a seller failed to disclose. If HOA fee documents arrive late, the escrow officer works with what is available to them. In the Anthem deal, the officer went on leave, and an assistant managed the close. The lesson is that documentation gaps create closing-day chaos, regardless of who handles escrow.

How does a seller-drafted commercial contract affect a buyer’s financing?

Lenders underwrite based on the contract terms they are given. For example, a seller-drafted PSA might compress the inspection or appraisal windows. Under those conditions, the buyer might not have enough time to satisfy the lender’s conditions before the contingency deadlines expire. Some commercial lenders also require specific representations in the purchase agreement. A custom PSA written without those provisions may require a contract amendment before the loan can proceed. That adds time and friction to a deal already under pressure.

Before You Write the Offer, Run the True-Net Numbers

If you are underwriting a commercial acquisition in a master-planned corridor or an HOA-governed complex, run the true-net numbers before you finalize the offer. A seller-provided contract means adding time to your due diligence schedule. Start sourcing documentation from day one, not in response to whatever surfaces later.

Send the address to my team at Shuffler Commercial Realty. A true-net snapshot takes the guesswork out of what you are actually buying.

Randy Shuffler is the founder and principal broker of Lake Havasu City Commercial at Realty ONE Group Mountain Desert. He holds the CCIM designation, earned by fewer than 6% of commercial real estate practitioners nationwide. He brings over 20 years of transactional experience across retail, industrial, medical, and office assets in Lake Havasu City and Kingman.