You’ve landed the deal, that’s the hard part. But, don’t get lazy. Failing to pay attention to the details of the contract can lead to heartbreaking disaster for you and your clients. Here are a number of common oversights in real estate contracts.
This is one that even the most brilliant minds can forget and it can be a serious deal-breaker. A contract is enforced based on the “effective date” listed. If it’s not dated, it may be void.
Forgetting to list some of the parties
You must list all of the buyers and all of the sellers on the contract. Be sure to make all of them sign it as well. Not including a spouse on the agreement can put the contract in serious jeopardy, since the spouse can later claim that he/she did not agree to sell the property.
Listing their names incorrectly
Make sure that you have the spelling of all of the parties’ names correct. You must write their full, legal names, including their middle initials. Both spouses, even if they share a last name, should be listed separately (John B. Smith and Jane D. Smith, rather than John and Jane Smith). Do not use nicknames or diminutives. Just in case, ask everybody involved what their legal name is –– some people are so used to using nicknames that they practically forget themselves!
No contact information
These days, when everybody is communicating by email and text, providing an actual physical address may seem archaic, but when it comes to contracts, it’s a must. Make sure to provide an address for all of the involved parties. For legal purposes this may be necessary if you have to give a party official notice. A judge will not rule that the Facebook message you sent them counts as official notice, by the way.
Incomplete description of the property
Simply listing the address of the parcel of land being purchased is not sufficient. The document is supposed to describe the land in a way that will endure in spite of changes to the property or even an address change. Be as specific as possible when describing it. According to the American Bar Association, that means “reference to lots and blocks in a subdivision map, by metes and bounds and by aliquot.”
While it is likely that the contract is boilerplate and references a number of things that do not apply to this particular transaction, don’t leave any spaces blank. And of course, when you don’t fill something in, that only increases the chances that somebody else will fill it in for you, potentially to your detriment.
No matter how flexible everybody involved in the deal seems, don’t nail anybody down to a deadline for a mortgage payment or any other type of transaction that they likely won’t be able to consistently keep. Consult with the buyer or seller about realistic timelines. Play it safe.