The Purchase and Sale Agreement
"Don't try this at home I am a professional." We hear that a lot about many things. It can be especially true when it comes to a real estate contract. After all, its just buying or selling a home or land, isn't it? Is it? If you examine the components of a contract to purchase a house I think you will soon find it is much like a jig saw puzzle. In order for the contrct to work, as expected, each piece of the puzzle must fit exactly. The problem we sometimes encounter in the real world is that pieces must often be custom made and, on occasion, a piece pops out and must be pushed back in.
Here's an example from a common form of contract:
"Liquidated Damages: If Buyer shall default in the performance of their obligation under this Agreement, the amount of the deposit may, at the option of the Seller, become the property of the Seller as reasonable liquidated damages."
Imagine you are the Buyer. All contingencies of the contract have been met. You have $10,000 as a deposit. Something happens in your life that makes the purchase no longer possible or desireable. How much do you have at risk? $10,000.00? If your contract reads as above, the answer is a loud NO! No? But...??? "The amount of the deposit may." "May" is the operative word. How does "may" create a problem? If you back out of the deal, the Seller has to find another buyer. That causes the money clock to start ticking. What expense will the Seller now incur as a result of your act? Perhaps the Seller has a contract to purchase another house that now collapses causing a loss of the Seller's deposit. Perhaps the Seller can salvage a sale with another buyer of their home at a lower price. All of these expenses may be sought from you as damages, if the Seller does not elect to accept your deposit as "reasonable liquidated damages."
All of the above could have been avoided by removing six words and adding two. Which ones? Don't try this at home I am a professional.
