There are two types of people in the world:
- The ones who click on "I have read the terms and conditions, and I agree to them," without ever reading them, and
- Liars (we're sure we're guilty, too)
Even though most don't have the time or the interest needed to read the fine print in real estate contracts, there are several circumstances in which you should. When closing a deal, the list of items and clauses you should worry about can seem endless. Not paying heed to the fine print in real estate contracts can have considerable ramifications that you'd want to avoid at all costs.
Considering the Chattels
Here's an example. A landlord was trying to close a real estate deal. Since they were selling the home, they no longer needed an alarm system, which was why they tried cancelling a two-year contract with the provider. However, eight months remained on the contract, and according to the merchant, they'd have to pay a considerable amount (the penalty) to cancel their contract.
If the landlord does not want to pay, they can use the service for the period left (eight months). Since the landlord could not do anything about their contract, its status was never determined when it was time to sell the home. This is where the concept of chattels comes in. A chattel is an asset or property the seller can take back in the real estate industry.
For instance, an RV could be considered a chattel. Similarly, contracts with home security providers can be chattel, too. To put it simply, it's an obligation that can be passed from the buyer to the seller. More importantly, from the real estate perspective, it's an obligation you must pay attention to before you close the contract.
It Helps Save Your Time and Money
Even though reading through the fine print can be time-consuming and soul-draining, it can go on to save you ample time and money (usually large). If you've ever signed a loan application or an agreement, you're putting yourself at the risk of compromising your assets in the case you can't hold up your part of the bargain.
For instance, several contracts for a loan can have provisions stating that one party can take whatever amount they want to if they feel they are entitled to it. In these situations, opinions can vary, and you may end up losing more than what you should.
It Can Protect You Legally
People sign several contracts for different reasons in the real estate industry, whether they're buying a house, getting their mortgage approved, or renting out their home. In theory, a contract is signed to protect the interests of both parties; however, it can be skewed towards the party presenting the contract. Remember: in some cases, you can negotiate certain points on an agreement to honor and improve both parties while staying fair.
If the party involved asks you to agree to something drenched in technical jargon you can't fathom, don't ignore these terminologies. Get legal counsel or a real estate agent to decipher what's written. Proceed only when you have a crisp understanding of the subject. This prevents you from assuming or misunderstanding anything written on the contract.
Avoiding Complex Estoppel Letters
A buyer may want an estoppel letter from their tenant to confirm the commitments of a lease. Estoppel letters don't change the conditions of a lease, but they can solidify the deposit, the rent and other such obligations. A sales agreement is often contingent on getting an estoppel agreement from every tenant. Some stubborn tenants may forcefully complicate a simple deal. This is when sellers should limit the estoppels required.
Even in the world of real estate, the pen is mightier than the sword; and you're the one holding the pen! Don't sign anything unless you're 100% sure of the technicalities involved.
Each and every one of them.
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