I’ve experienced it so many times before. I’m sitting at the table of Mr. and Mrs. Seller. In my hands I hold an offer from my clients, the buyers. It’s clean, full price, quick closing, modest financing contingency and a quick inspection contingency removal period. As I’m reviewing my client’s offer for the sellers, I notice their agent’s eyes darting nervously from the contract page to me then back to the page. It is a familiar moment, one I’ve witnessed many times before. The agent actually doesn’t know exactly what I am talking about. Gracefully and so as not to cause the agent any loss of face in front of the client, I ask if it’s okay that I explain to Mr. and Mrs. Seller more fully exactly how our inspection contingency form (for example) works and why it is to both parties’ benefit as it is currently structured. With a subtle sigh of relief, my counterpart agrees, paying rapt attention as I proceed to review the mechanisms, implications and evolution of the addendum.
A subtle, yet significant modification to our seller real property disclosure statement and, as a byproduct, our multiple listing service’s inspection contingency addendum is going into effect this weekend. Sellers of active listings not under contract will have to update their disclosure statements once the current one expires. On the face of it this doesn’t seem such a significant issue. Documents are easily updated and informed agents will be in touch with their clients in short order as the amendments go into force. Unfortunately for buyers and sellers alike, it is sometimes the case their agent is not quite as up to date is necessary. For example, I’ve reviewed offers with thoroughly outdated forms attached. These can be incomplete offers which I must then counsel the client to refuse or counter until the correct, current addendum has been included. I’ve seen contracts left half blank or with blatantly contradictory language. I’ve received unenforceable or easily voidable contracts. Agents have thanked me profusely (in front of their clients no less) for helping them understand key contractual points.
I’m very fortunate. I hold my license in an office whose managing broker is one of the top and most seasoned educators in our state. As a matter of course, we review all addendum and contractual changes before they come into effect; discuss the legal implications and their impact to our clients, existing contracts, etc. Furthermore, our broker reviews each and every agreement to catch omissions as they occur. And, it is because we are so current in our education that I find myself educating the agent on the other side occasionally. Although, in principle, I would prefer not to have to do so as it’s every licensed agent’s obligation to understand fully the language and terms of a Purchase and Sale Agreement, I do have an obligation to my client to ensure that the contract is properly executed. Of course, there are those occasions when an opposing agent’s contractual omission places my client in a commanding position. Those, I play to my client’s advantage.
Bottom line and regardless of whether or not an agent is covered by errors and omissions insurance, creating an incomplete or poorly executed contract is unconscionable and possibly malpractice. Certainly, it’s not in the client’s best interest. In our state, we are held to the same legal standard of care as an attorney, though we are not permitted to offer legal counsel or practice law in any manner. Regardless of where your real estate business resides, be informed about your contracts. Check your local multiple listings service postings (ours are on the home page of our Internet-based MLS) for announcements about coming changes. If your broker hasn’t already implemented internal contract review and training classes, suggest they do. To avoid embarrassment or, more importantly, stay out of trouble, remain current.