Want to decrease your chances of ending up embroiled in a lawsuit when you buy or sell property? Then I strongly advise you not to rely on verbal agreements.
Real estate deals are usually some of the most complicated, expensive transactions in people’s lives. Yet, time and again, misunderstandings occur. Buyers think sellers promised to make certain repairs. Sellers assert that the buyers said they could stay in the home after closing. It doesn’t matter if you’re outlining your relationship with an agent, making an offer on a home, negotiating repairs, or some other element of a real estate transaction. Get it in writing.
The easiest way to obtain a written record of an agreement in a real estate deal is to fill in the blanks of a form specifically created for your type of transaction. This form, when filled out properly, provides a clear statement of everyone’s intentions and responsibilities. Such contracts, forms and addenda exist for many types of real estate transactions, and you can access forms for common activities related to real estate from the Texas Real Estate Commission’s (TREC) website (www.trec.texas.gov).
As public records, these forms are available to anyone who wishes to view them. However, you shouldn’t use these documents unless you know what you’re doing. Filling out the forms incorrectly can put you at risk of losing money or creating an unenforceable contract; a mistake on just one blank can put a deal worth thousands of dollars in jeopardy or expose you to liability in a lawsuit.
An improperly used form could end up as unenforceable as a verbal agreement, so make sure your written agreements are prepared by someone trained to handle real estate transactions.
While TREC puts out forms that cover some real estate transactions, the commission has some holes in its forms library — no listing or buyer-representation agreements, property management contracts, forms for commercial property, or residential leases.
Many of these types of forms are created by attorneys and associations. For example, Realtors — those real estate agents and brokers who choose to join the Realtor association and abide by a professional Code of Ethics—regularly use the approximately 30 forms promulgated by TREC. However, Realtors have almost 100 additional forms in their arsenal for every type of real estate situation imaginable, created to help them from unintentionally practicing law. These additional forms are only available to members of Texas Realtors.
For example, Realtors have at their disposal forms that:
Detail what items convey with the sale of a property
Specify whether a buyer walked through the property and accepted its condition prior to closing
State any contingencies (such as the sale of one property being contingent on the buyer selling his existing home) or provide notices to remove or waive contingencies
So, Realtors have more forms. What’s the big deal? The big deal is that these forms don’t exist in the TREC library and are designed specifically to support transactions and situations that the commission’s forms simply don’t address.
When you work with a Realtor, you benefit from his or her access to all those forms. You can put in writing all the details of your transaction exactly as you want them on a form specifically created for your type of deal. That means that your intentions and responsibilities are clearly stated for the record.
If you want to avoid surprises, hassles, misunderstandings and lawsuits, get it in writing. Remember, verbal agreements are not worth the paper they are written on! Your Realtor has the form designed for your transaction and the expertise to fill it out correctly.
For more information about buying, selling or renting property, or to find a Realtor, I encourage you to visit HAR.com.
John Nugent, with RE/MAX Space Center, is 2020 chairman of the Houston Association of Realtors/HAR.com.