It's really crazy out there! You just have to be really careful!
There are a lot of forms and documents to create and complete in real estate, and using a ready-made format is usually a good idea. Undeniably, form purchase and sale agreements save time and complications for both the buyer and seller. But a form unread is a form that’s trouble – for both buyers and sellers. An unread legal document – or a poorly understood one – spells trouble for everyone.
Witness the recent Hartford Superior Court case involving a form purchase and sale agreement with an ‘as is’ property. The trouble in this case was a ‘form’ purchase and sale agreement. This particular form managed to contain conflicting provisions. The seller thought he was selling his property ‘as is,’ and that an agreed-upon inspection was for the buyer’s informational purposes only. But the buyer read the form to say he could have the property inspected and if the results were unsatisfactory he could terminate the contract and have his deposit refunded. So what happened? You guessed it – the inspection turned up problems, the buyer wanted to terminate the contract and the seller refused to refund the deposit because it was an ‘as is’ purchase agreement. And the buyer ended up suing to get his money back.
Not surprisingly, when this went to court, the contract was found to have conflicting provisions. In fact, both the buyer and the seller were right: the contract did state that the property was being sold ‘as is,’ but it also stated that the buyer could terminate the contract and get his deposit back if serious defects were identified. Who won? Well, no one, because this was a real estate deal gone sour due to a faulty form. But the court found in favor of the buyer who was granted the right to have his deposit returned.
So next time you are buying or selling any real estate, read that legal document – especially if it looks like a form – incredibly carefully. - Dagny
P.S. As a matter of fact, I was just filling out a Binder of Sale tonight, and telling the buyer that perhaps we should add an Addendum saying that the deposit was contingent on the results of the inspection being satisfactory. It's a foreclosure.......