Jim Valentine on Real Estate
A contract is only as good as the person signing the document. Ideally, we could shake hands, and everyone would honor the terms and spirit of the agreement, but that isn’t always the case these days. In real estate all agreements are made in writing eliminating any doubt as to what was agreed to. Unfortunately, there are many ways to get out of a written contract.
Some clauses facilitate exiting a transaction more readily than others and are known as “weasel clauses” in the profession. Any clause that provides for approval after the contract was signed by all parties can be used as a means to get out of the deal. These include inspection reports, review of disclosures, review of transaction documents such as title report and HOA docs. Most have timelines within which they must be completed and approved. Missed dates can provide an exit in some instances so be sure to be timely in your escrow efforts.
Some transactions blow up early when the earnest money deposit isn’t tendered. Most EMDs these days are submitted via bank wire. That means there isn’t money on the line for a day or two. If the deposit doesn’t arrive you can rescind the transaction, but you’ve been weaseled and may have lost another buyer if there were multiple offers or interest in the property.
Many sellers want to sell their property as is without making repairs. That’s great, but you give the buyer the biggest exit path available, the as-is addendum. Among many other things it says, “Buyer will notify seller in writing, within the inspection contingency period specified in the purchase agreement… that the condition of the property is either acceptable or unacceptable. … Should buyer find the property unacceptable the buyer has the option of terminating the Purchase Agreement.” That’s it, just unacceptable and they can be out.
The new sales contract from the board of realtors has eliminated the financial ceiling for repairs required as a result of inspections or disclosure. That leaves the back door wide open for an exit if there are any repairs required, and there usually is something found. Additionally, the inspection clause itself gives the buyer the ability to terminate the transaction. No ties to repair cost, just terminate within the provided time frame.
If one owner doesn’t sign the contract, they can weasel out of the deal if they want to. Unlike stocks where a decision of the majority of stockholders controls, real estate must have everyone agreeing. Agents warrant to their fellow members of the multiple listing service that they have a contract with the seller, but if there is a missing party to their transaction you could be waiting until you see the title report before you know that you don’t have a solid agreement.
The loan process provides several ways to get out. From the appraisal to having funds available there are many potential pitfalls that a buyer can rely on the get out if they so desire.
The character of your buyer or seller and their agents is as important to the transaction as is the contract itself. If all are of good moral character even legitimate glitches can be worked through together with the cooperation of all in keeping with the spirit of the original contract. Bumps happen in escrows. How they are handled will keep everyone involved or let them out.
Don’t count your proverbial chickens before they hatch. Make sure your escrow is solid right down the line as best you can before committing to big things based on it closing.
Just because you have an EMD in escrow for the sale of your property doesn’t mean you will be able to keep it if the transaction fails. That’s where weasel clauses usually come in to play, when someone can’t or won’t perform and they want their deposit money back.
When it comes to choosing professionals to assist you with your Real Estate needs… Experience is Priceless! Jim Valentine, RE/MAX Realty Affiliates, 775-781-3704. firstname.lastname@example.org