Rule Enforcers vs Rule Breakers; and Florida Real Estate Contracts

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                 Rule Enforcers vs Rule Breakers + Florida FAR/BAR Real Estate Contracts

scales of justiceI was recently reading an article in a local magazine, that was written by a Little League Baseball Coach. He is a bonafide Rule Enforcer. He knows every rule of the game, and exactly how far they can or cannot be bent. He also knows a couple of common mistakes that are made by other coaches when they get 2 similar rules confused. As I read the article, my mind was comparing his nature, and his experiences, to my own nature and experiences, and how these can apply to the real estate industry as well.

I admit to being a Rule Enforcer. I have absolutely no problem singling out the Rule Breakers, which is probably obvious from my very rare "rant" posts. (Just be glad they're rare =P) But this post is about how as real estate professionals, we have MANY rules and laws that must be followed. And when representing my clients, I use my knowledge of the legalities, the rules, and the REALTOR® Code of Ethics, in a manner that best benefits my clients. (I imagine most of us work in a similar manner; within the means of our own strengths and personalities.)

Again, I'd be remiss if I didn't admit to my love of Rules! I like knowing exactly where the boundaries are. And I like knowing exactly how far a rule can or cannot be bent. (Blatant Honesty Moment: I DO NOT like gray areas, and I don't think much of people who live in the gray areas!) And I Use My Knowledge for the Benefit of My Clients! Yes, I admit to that too. I go out of my way to take the instructional classes at the Daytona Beach REALTOR® Association  (available for REALTORS® only - not just real estate licensees) every time the FAR/BAR contracts are changed. I go out of my way to seek out the changes and differences in the Standard FAR/BAR contract vs the "As Is" FAR/BAR contract

To clear up any confusion here, we have 2 separate contracts instead of just an AS-IS rider. This was changed several years ago, in order to clear up some common legal problems that were occurring due to mis-use, and mis-information when implementing the "As Is" clauses, formerly referred to as the "D' and "N" clauses. Also, so there's no confusion, in our area, the FAR/BAR contract is the one that is expected to be used when presenting an offer; so I'm only addressing the 2 FAR/BAR contracts, rather than the "FAR" contract(s). hand signing

I enjoy learning the legalities and reasoning for why certain changes have been made to our FAR/BAR contracts, and how we can protect our real estate clients. (Again, the contracts AND the training classes at the REALTOR® Association are only available to actual REALTORS®, not just those who hold a real estate license.)

I'm now going to show my hand a tiny bit here by pointing out the most common mistakes that I've personally seen, where other REALTORS® misstep on the FAR/BAR contract. And no, I do not point these mistakes out to them when they bring me an offer on one of my real estate listings. I just keep it under my hat, and pull it out if the offer becomes a contract, and the other agent starts dropping the ball on their end. My reasoning? From the very beginning of an offer, I'm focused on the big picture... the long haul... the "what if" of what could happen in the Worst Case Scenario. And I want my clients to be ahead of the ball! It's just good business and BEING a real estate professional.

Now for my tiny tips as I show my hand just a bit  ;-)

In the Daytona Beach area, the most common places where mistakes are made in our FAR/BAR real estate contracts are...

  1. The "money" section, and how what wording is used, and in what places it is used, when a deposit/good faith money is not collected at the time of the initial offer. Do you use verbiage like "Upon Acceptance" for when the good faith money will be provided by your buyers? Hmm. Maybe you should take that class at your local REALTOR® Association.
  2. Writing any type of verbiage that reference clauses that are already detailed in the contract. Why would you do this? Isn't all the necessary verbiage already there? Wasn't that legal verbiage used, based on real estate history and past problems? Isn't that verbiage stated in a manner that's meant to prevent the problems we've had in the past?  What are the potential problems that can happen when you add to that verbiage?house for sale and sold

OK. So I've just posed 2 problem areas, and several questions. In reading this, do you know WHY the examples I've given might pose a problem? I know this post is open for the whole world to see, and I'm only addressing Florida real estate, but we can still learn from each other. So what are your experiences? How do you handle these areas? Or do you encounter other contractual areas that are a greater problem in your location?

So many questions. So many loopholes and potential pitfalls. What's your take on the rules, laws, and REALTOR® Code of Ethics? Have you been an "unintentional rule breaker"? I'm interested in the thoughts of all of you who work in ANY area of real estate, even if you're not a REALTOR®, and even if you're not in the "sales" part of the industry.

And yes, I'll answer some questions as you comment. I wouldn't want to just leave you all scratching your heads and wondering what the heck my point could be. Just consider this an educational blog post for everyone involved in real estate; even the individual buyers and sellers. =)

Looking forward to your comments!

Lisa Hill, The Smart Choice for all your real estate needs

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Richard Weeks
Dallas, TX
REALTOR®, Broker
I am definitely a rule enforcer. I keep up with proposed changes and then when the changes take full effect. Then I follow the letter and spirit of the law.
Jul 04, 2010 02:25 AM #1
Susan Laxson CRS
Palm Properties - La Quinta, CA
Local Knowledge & Global Network

Lisa, thanks for this post and although our California contract is different and I would need to view yours to answer your questions, I do believe that we, in the real estate community, have an ethical obligation to KNOW and UNDERSTAND and FOLLOW the rules.  The "I didn't know" excuse doesn't really work in the legal world, because when we profess to be a professional, we should know, it is part of our craft.   Have a wonderful Fourth of July!   ~ Susan

Jul 04, 2010 02:26 AM #2
Jeff Dowler, CRS
eXp Realty of California - Carlsbad, CA
The Southern California Relocation Dude

Lisa - I like rules, too, nd it drives me nuts when something is to much in the gray area. We have some different issues with our contract (which was just revised significantly) here in CA. Part of our job IS to know the rules and make sure we do not put our clients in jeopardy. But at the same time we have to be careful to not play attorney.

Susan makes an excellent  point - saying you didn't know is not likely going to get you out of hot water in a legal matter.

Have a great holiday!


Jul 04, 2010 04:23 AM #3
William Johnson
Retired - La Jolla, CA
Retired Real Estate Professional

Good Morning Lisa and Happy 4th of July. I had worked on our state Standard Forms committee for a number of years. Really enjoyed the discipline of developing contracts. When a contract for purchase is generated for the purchase of something, the contract is usually generated by the owner of the product or service. Real Estate being one of the exceptions. The forms are generated for the Principals in the "fill in the blanks" with tons of legal boilerplate. We have to take classes to best understand the significance of any clause, how those clauses are to be used and any resultant counter of the usage. The consumer relies on us as professionals with a fiduciary relationship to them to get it right. For the most part I think we do but there are those that just don't pay much attention and give misinformed counsel. A very good post!

Jul 04, 2010 07:01 AM #4
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

Lisa. Redundancy in a purchase offer/contract drives me crazy!!! And I have to say that the big brand companies are the worse when it comes to an overload of addenda. Do we really need separate addenda telling me the transaction is contingent upon inspection, appraisal, mold, termites, insurance, flood zone, sunny weather, McDonald's selling their 254 billionth burger!! OK you get my point.

It's all there. Just read the Far/Bar almsot every possible issue is already addressed. Just fill in the blanks. Send it over. And let's do the deal. It doesn't need to be complicated.

Your 2 examples are perfect.

Jul 05, 2010 06:15 AM #5
Dan Cronin
Ocala, FL

Ok, Lisa, you have my attention. Anymore examples you care to share? :-)

Jul 05, 2010 09:18 AM #6
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Lisa Hill

Daytona Beach Real Estate
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