If you are a real estate broker or agent, you are likely to already be familiar with the possibility of being sued after a real estate deal has completed or even as the result of a failed real estate transaction. Unfortunately, there is the very real possibility that a lawsuit could result in significant financial loss. Even if the case is ultimately decided in your favor or it is dropped prior to making it to court, the issue could result in the loss of future income because of the bad PR. Therefore, it is a good idea to be aware of the information below so that you can have a clear understanding of what constitutes a breach of contract and how you can prevent its occurrence.
The Breach Of Contract
It is important to understand that there are numerous ways that a breach of contract could occur. Whether it is the seller changing his or her mind at the last minute or the buyer needing to extend the date of purchase, that last-minute change can be disastrous. Therefore, it is essential for both parties to have full knowledge of the contract prior to signing any binding paperwork and a real estate attorney can help you customize a contract to clarify specific concerns that could be of interest to both parties. While standard contracts are often available for a nominal fee, it is a good idea to elect for customized paperwork from a respected real estate attorney.
Given the propensity of experienced buyers and sellers to skim the paperwork because they are overly confident of their existing real estate knowledge, that step is crucial. In addition, many buyers are surprised to learn that if they extend the closing date by as little as a day, the contract could be voided and the seller may be allowed to keep the earnest money. It will ultimately be helpful to not only discuss that problem with your client but also to have it clearly and succinctly explained in the contract.
Making sure that both parties sign off on their understanding of that information is also a good idea. By listing that within a very visible portion of the paperwork, it would be almost impossible for someone to say later that they were not provided with that caveat.
What You Say Can Be As Important As What Is In Writing
One issue that is easy to overlook as a realtor or agent who is just trying to help people find or sell a home is that a breach of contract does not have to be written. Instead, it is possible for it to be a verbal issue. For example, it is never a good idea to make statements about your confidence in an increased property value of the home in the future or that you are sure the owner will consent to include certain items in the home for the buyer.
Since you must protect your interests by consistently being an accurate and honest communicator with all sellers and buyers, you should be careful to never make a statement you cannot follow through with. In addition, avoid vague statements that could be subject to misinterpretation later.
Encourage Legal Representation For Both Parties
It is also important for you to make sure that both parties understand how important it is to have their own legal representation, so that it is not possible later on for someone to claim that you failed to inform them of important information. Even if one or both parties choose to skip getting legal advice, you may find that it behooves you to have paper drawn up attesting to the fact that they were advised to speak with an attorney of their choosing and have declined to do so.
In conclusion, real estate law can be both tricky and challenging to successfully navigate due to its complexities and the potential of misunderstandings between the client and the broker or agent. In order to prevent a messy situation and an unhappy client that could result in legal action being started against you, you should be aware of the aforementioned information and take the necessary steps to prevent any legal issues from occurring.
For more information, contact a local real estate attorney, such as Steve Butcher Sr.