How to Avoid Fraud in Real Estate

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Posted over 5 years ago. 3 helpful votes

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1

Make Sure the Deal is in Writing

Don't rely on verbal promises. Everything promised to you must be in writing and a part of your contract. If it is not in writing it is difficult and expensive to have to later prove what was promised.

2

Read and Understand the Written Contract

Read the contract, don't rely on someone else to tell you what the deal is unless it is your attorney. If something doesn't make sense to you, it most likely needs to be changed. While some "legalese" must stay in the contract in most cases if you don't understand what the contract says it is becuase it is poorly drafted.

3

Does the Written Contract Contain All of the Promises Made to You?

If the other person does not follow through on their promise will you call a lawyer to enforce the agreement? If so, get it in writing!

4

Don't Assume the Deal Will Work Out

If everyone understands the deal and is honorable a handshake is enough. Unfortunately, it is easy to misunderstand parts of the deal and not everyone is honorable. A good contract is clear and understandable so that both sides understand the deal but also should address the issues that arise if the deal doesn't go well. What are your rights if the other side defaults? Do you have to sue or go to arbitration? Where will the dispute be heard? Will the winning side be reimburse the attorneys fees and costs spent in enforcing the contract? Are there limitations on the types or amount of damages that you can recover?

5

Make Sure Both Sides Sign the Contract

A contract that isn't signed is not a contract. A contract signed by only one of the parties is not a contract. The contract needs to be signed and dated by both parties to eliminate a question as to its validity.

6

If the Deal Changes, Amend the Contract

While we try to anticipate what may arise we often cannot anticipate everything. When the deal changes mid-stream, simply enter into a written amendment of the contract setting out the changes to the original deal. If the change has the effect of changing the contract price that should be clearly set out in the amendment.

7

Store the Contract in a Safe Place

A written contract isn't much good unless you can find it. Don't rely on the other side to find the contract if you want it to prove that they have defaulted.

8

Hire a Good Lawyer

Lawyers are trainer to write contracts so that they are clear and understandable. It is much cheaper to hire a lawyer to avoid a potential problem than it is to fix a problem. Disputes are expensive.

Additional Resources

Nash & Lodge Website

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