This week’s column is related to real estate sales, which increase this time of year.
Nearly everyone will buy or sell real estate at some point in their life. And when doing that, they have to sign a purchase contract, the key document in a real estate transaction. The purchase contract governs the rights and responsibilities of each party. And believe it or not, those contracts, while seemingly straightforward, are full of complex issues and pitfalls.
And while it is the key document, it is often prepared by and signed in the presence of a realtor, as opposed to a lawyer (which can be problematic). While realtors have some skills in contract preparation, they don’t have the expertise that lawyers do in drafting contracts. As you can imagine, problems sometimes occur…
I’ll give you an example: very generally, the essential terms to a purchase contract are the ‘three Ps’: parties, price, and property. Other essential terms include completion date and the particulars of any vendor financing. If a contract is not certain on its essential terms, the contract is likely unenforceable. And, if essential terms are vague and then one party asks to clarify those essential terms, the whole deal could collapse entirely. Clearly, there is a lot at stake.
After signing the purchase contract, it is common for people to go to a lawyer (typically their real estate lawyer) and ask for a legal opinion on the contract. You know: just to make sure that everything is ‘OK’ and that the other party isn’t taking advantage of them.
While there are good intentions, it is TOO LATE. Once the contract is signed, it’s signed – it’s a done deal. Even if your lawyer sees something that is ‘bad’ for you, it’s too late to change it (without possibly suffering some serious expense and/or inconvenience).
So, what’s the alternative? Well, without venturing into the realm of telling you what to put in your contract, I’d suggest talking to your realtor and letting them know that it is important that you have your purchase contract reviewed by a lawyer. They will be able to assist you in making that happen.
Contrary to public sentiment/opinion, real estate law is VERY complicated and is fraught with A LOT of risk. Do yourself a favour: whether or not you decide to retain a lawyer to review the purchase contract, make sure that you take the signing/drafting of the contract very seriously. You have a lot to gain (and lose).
**The information contained in this column should not be treated by readers as legal advice and should not be relied on without detailed legal counsel being sought.
Originally posted on Castanet.net on July 31, 2012: Be careful in real estate contracts.