Is it just me in Prescott, Arizona or have any of you folks out there had it "up to here" with finding the phrase "to be determined in escrow" in the Property Identification section of a purchase contract? Let me tell you another story.
Several years ago, a friend of mine who was a pretty new agent at the time, listed a property in one of our outlying areas. The seller had a total of 20 acres whereon stood his personal residence. He listed only 10 of those acres for sale -- decidedly NOT the ones with his house on them.
In fairly short order, an agent from another company brought a buyer to the table with an acceptable offer. This agent was also new. Since the property being purchased had not yet been split from the mother parcel by survey when the offer was being prepared, there was no new address assigned, no new assessor's parcel I.D. number assigned, and, of course, no legal description.
As a result, here is how Property I.D. section of the contract read:
Address: 6854 XYZ Street (Not the real address of the ENTIRE property)
Assessor's Parcel I.D. Number: 555-55-555 (Not the real APN of the ENTIRE property)
Legal Description: To Be Determined in Escrow
(Anybody smell a perfect storm brewing here?)
Because this had become something of a tradition in our area over many years, (this is the wild, wild west ya know) neither broker objected to this ugly picture and it went unhindered into escrow. (Oh, did I mention that this agreement had been written on a standard VACANT LAND contract form? In AZ this is a distinctly different form than the Residential Resale Purchase Contract form. You'da thunk the escrow officer might have noticed that minor detail -- NOT)
As one would expect, a survey was performed during the inspection period, (even thought the contract itself failed to mention the fact) to specifically identify the newly created parcel. But, of course, each agent assumed that somebody else had copied escrow with the survey. (Y'all remember what happens when you ASSUME -- right?)
Long (scary) story short, not having the survey or any other indicator (talk about yer failure to communicate) that this was a land split, the escrow officer recorded on the legal description that was attached to the seller's warranty deed.
Now, that could probably have been fixed fairly readily had there not been one sizeable complication: Turns out the buyer was a tad on the shady side. And, before you ask, yes, we know from subsequent involvement of legal counsel, that he AND his agent, new exactly what the real original intent was.
Anyway, several days after close of escrow, the buyer shows up on the seller's doorstep asking, "So, when are you moving out of my house?" It got even spookier when the buyer's broker, in a later phone call with the seller's broker, said, "You can just get used to it -- my client owns your client's house and all his land!"
And, thereupon followed, as naturally as the sunrise, a whole load of smelly stuff I don't need to elaborate on. You get the picture. Bottom line is that the buyer and his broker calmed right on down and ate some crow right after the seller's broker's attorney sent them a crisply worded letter that mentioned something about an absence of a few little items like, a meeting of the minds, good faith, and the like. And so there was a happy ending: Crooked Buyer went skidding down the road on his backside, Relieved Seller got to keep his house, NOBODY got sued, and everybody learned a thing or two.
The main thing I wanted to point out with this little horror story, is that specificity is a wonderful thing. I wonder what might (or might not) have happened if, AT LEAST the legal description blank on that contract had contained something like this:
"The southern half of the property described in the attached 'Exhibit A' [which was the legal description attached to the existing warranty deed] comprising approximately ten acres, the new legal description for which, shall be determined by a survey to be performed during the inspection period, and immediately thereafter placed in escrow."
OK, I know, it's a bit wordy, and there are probably 50 simpler ways to say it. But do ya think it might have gotten somebody's attention and avoided a whole lot of unpleasant stuff?
Well, for what it's worth, all my agents have heard this story more than once, and they all know better than to let "to be determined" cross the broker's desk.
So, may I conclude with the words of some wise old bearded contract attorney who said, "When writing contracts, AVOID AMBIGUITY AT ALL COSTS."
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