Jim Valentine: Why all the forms and clauses?
The Nevada residential home sale contract today consists of at least 50 pages, and is often longer. The residential contract when we started our careers was one page. What happened? The obvious answer for most of the additional transaction documentation is litigation. So many lawsuits, some warranted, others not, have created the need for specific protection for Buyers, Sellers and Agents.
One form takes up 32 of those 50 pages, the Nevada Residential Disclosure Guide. It is the Disclosure of the Disclosures, exhibits all disclosures available to Buyers and Sellers. The law says it must be presented to the Buyer and Agents must have the Buyer acknowledge receipt of the Guide on a form that is contained in the Guide. The Guide allows Buyers to review available disclosures to see if there are any that their Agent may have not included in their offer package that they would want to have the benefit of.
Current COVID-19 events have generated two additional forms for the offer package. The first is the COVID-19 Property Entry Advisory. It addresses risks and behavior practices of viewing a home during this pandemic situation. Most Listing Agents want the Buyer to sign the form before entering the home for their protection as well as that of the Seller.
The Coronavirus Addendum states the overall circumstances of the pandemic, how escrow processes may be affected and allows for the extension of an escrow that is due to a Virus cause. It provides for an escrow extension of up to 30 days, but things are going fairly smooth right now and the form is confusing as to when it should be signed so it isn’t always included in the offer package.
There is so much computer hacking these days that we have a Wire Fraud Advisory form that was derived from a FBI 3 page memorandum. This is included in all escrow files in order to put Buyers and Sellers on notice that their email may be intercepted by internet thieves looking to have the purchase money funds, or sale proceeds redirected to their account.
There are many forms that are just advisory to prevent future litigation. These include Flood Map Disclosure which advises that regardless of what the FEMA maps state today, they are subject to change. Right to Farm Disclosures are important to prevent future lawsuits when area farmers’ dust or odors disturb new residents. We are an agriculture based region and our farmers can do things that other states have stopped them from doing. Transplants bring those meddling ideas with them necessitating advance disclosure requirements to advise them before they act up.
The forms are a nuisance, but they are there for the protection of the parties. Sometimes a form may be excessive for a circumstance and it is important to understand the character of the parties, what the form is for, and what the consequence of not including an optional form in an offer package simply because a Broker wants another line of defense.
The only time the defense will be needed is if there is a lawsuit initiated. Will the lack of a specific, again, optional not legally required, form be the catalyst for the lawsuit? Not usually. They are advisory or disclosure in nature, not an active component of the negotiations. Think substance over form. What is in the best interest of the parties, to put the transaction together, or to have it papered so a Broker is protected? Work in the best interest of the clients and the Broker will be better protected by your actions and service to the customer than the proper papering of the file.
Frivolous lawsuits happen regardless of how well your file is documented. Those plaintiffs are usually looking to extort money for no cause by filing a lawsuit hoping to get paid to go away. Having a solid file helps all parties in such situations sign your forms!
Be honest, candid, transparent and always work in the interest of your client and everyone will be happy during the escrow process and long after the close of escrow.
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