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Lottery Tickets for Liability in Real Estate Offers

Written by: Charles Andrew Hillestad

Reputation Level 6

Licensing Real Estate

Posted almost 3 years ago. Applies to Oregon, 0 helpful votes, 0 comments

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Number One - Don’t Be Lackadaisical About Dates

The calendar counts. Make sure the dates you dictate for accomplishing all due diligence are reasonably doable, but most importantly, whatever dates you select, don’t forget to meet them. There is a little clause in almost every form that says “Time is of the Essence.” What’s it mean? It means the dates mean something. For instance, inspection contingencies have cut off times. Even if the blank for time is left blank, the standard Oregon form specifies a number of days within which the contingency must be satisfied or notice given that it is not satisfied. Otherwise, it is automatically deemed waived. Failure to give notice of termination prior to that date jeopardizes the earnest money for the buyer.

Deadly Don’t Number Two - Don't Leave Out Important Parties

Make sure both that you have everyone and that you don’t have more than you need. Be sure to ask for instance why the seller is selling. If it is a divorce or estate or if it is during or shortly after construction, pay close attention. The preliminary title report might not reveal all parties with potential interests. And, at the very least, if you notice some of the names that are mentioned in the preliminary title report as owners have not signed the earnest money contract, it is time to immediately start asking questions. Don’t wait for the escrow agent to send a proposed deed with a signature line for someone who might be dead or disappeared. Find out early. Remember, if something goes wrong, someone will be asking “why didn’t you ask?”

Number Three. Don’t Flummux the Facts

If you are going to be stating anything as a fact, make darned sure either you know for sure the facts you are representing or have a damn clear disclaimer about them. You’re gonna get blamed, as sure as the sun comes up, if you said something and it turns out to be wrong. So, stop making assumptions. And, if you do a disclaimer, do it in writing if you expect to be able to prove it. It is almost a sure bet the person who receives your warning will not remember it later, especially if they bet wrong on something.

Four - Don't Use the Wrong Form

Use a friendly form unless you want to end up in the forum of a court. For instance, consider using only forms that include an alternate dispute resolution clause. If nothing else, add the language in an addendum. Alternate dispute resolution procedures tend to be quicker, cheaper, less hostile and less formal than litigation, particularly if the ADR provider relies on skilled real estate law specialists to be the mediators and arbitrators. One nice thing about mediation in particular is that it results in the parties hearing opinions on the pros, cons and possible outcomes unfiltered by their own attorneys. It might be the first time that someone says to them, “You could lose and end up paying the attorney fees for the other side as well as your own.”

The Final Folly - Forgeting Your Limits

Generally, brokers should stick to filing in the blanks on the forms. In Oregon, when brokers start providing extras like leases, easements or other types of legal documents related to the transaction, that is a potential mine field. In a same vein, brokers shouldn’t give financial or accounting advice. That’s not what they were trained or licensed to do. It is too easy to make a mistake. And, it may be not merely a claim against the broker’s errors and omissions carrier, but potentially the illegal practice of law.

General Preventive Law Tips

Whatever you do, get it ALL in writing. It is not only a key component of proof later when memories fade or people have died, disappeared or divorced, many things are not enforceable unless in writing. And, when drafting, don’t get anxious. While it is understandable why but speed can seem critical to making a deal, but it is often a recipe for making mistakes.