Legal Specialist Line: A bi-weekly information service brought to you by The Florida Bar’s Board-Certified Lawyers
FIVE WAYS TO CUSTOMIZE THE STANDARD RESIDENTIAL REAL ESTATE CONTRACT by Kurt E. Lee, Board Certified Business Litigation Attorney
When you find the perfect house and your real estate agent is pushing you to make an offer, take time to customize the “standard” real estate contract to help avoid problems down the road. Here are five possible modifications:
1. Specify remedies to protect both seller and buyer for breaches of contract. Most standard contracts include a default paragraph specifying remedies available if either party fails to perform as promised. Keeping a buyer’s earnest money deposit often is the only practical relief available for sellers, so a seller might want to eliminate all other remedy language and seek a greater deposit. Buyers might want remedies that ensure a return of deposits or “specific performance” remedies to compel sellers to convey the property. Ambiguities in the remedy paragraph don’t benefit either party and generally lead to litigation.
2. Clarify the “as is” language to protect your interests if problems arise after closing. Florida law requires residential sellers to disclose to prospective buyers any “facts materially affecting the value of the property which are not readily observable and are not known to the buyer.” Standard contracts generally include language to this effect, but can also state that the property is taken “as is” by the buyer if inspections do not reveal problems. Sellers should consider eliminating the contractual warranty and adding an “as is” addendum because buyers who purchase “as is” property are less likely to bring later claims. Buyers should consider eliminating the “as is” language in the contract because inspections might not reveal problems known to the seller (e.g., flooding at the property during the rainy season).
3. Include information about mold, the potential for mold growth in the home and the need for preventive maintenance to avoid mold growth. An increasing number of legal actions in Florida involve claims by buyers contending sellers failed to disclose the presence of mold. Sellers might want to include language to encourage buyers to conduct mold inspections. Buyers, again, should consider eliminating any “as is” provisions in the agreement. Buyers’ mold inspections should note connections between mold growth and water intrusion and observe that undisclosed water leaks may contribute to mold growth.
4. Carefully review provisions that mandate dispute resolution by arbitration. Standard contracts routinely state that disputes will be resolved by arbitration and that the parties will bear their own attorneys’ fees and costs. How these provisions should be altered, if at all, largely depends upon the financial position and risk tolerance of the parties. The cost savings attributed to arbitration are largely anecdotal and there is no meaningful right of appeal from an arbitration award. Arbitration will, however, generally produce a result in less time than litigation and the process gives parties the opportunity to have someone with expertise in real estate law decide the dispute.
5. Specify an adequate cost allowance and description of conditions included for repairs discovered during the inspection process. Most standard contract forms provide that the seller will make certain repairs discovered during the inspection process so long as the repairs do not exceed a certain sum. Sellers generally prefer a low repair limit. No matter what the limit, buyers often are frustrated by the exclusion of “cosmetic conditions” from the repair provision and by the breadth of the definition of cosmetic conditions. Buyers may want to consider greater repair limits and the elimination of some of the excluded “cosmetic conditions.”
Buying or selling a home generally is the largest and most important financial transaction in which a person will be involved. It is therefore a good idea to seek legal advice before signing any “standard” real estate contract to ensure that your contract meets your needs.
Kurt E. Lee is a board-certified business litigation lawyer in Nokomis, Florida. Certification is the highest level of recognition by The Florida Bar of the competency and experience of attorneys in the areas of law approved for certification by the Supreme Court of Florida. Mr. Lee has successfully represented clients in mediations, arbitrations, settlement negotiations and trials in diverse areas of law. Contact him at 941/486-8783 or kurtlee@kurtleelaw.com.
CONTACT: Lisa Garcia, APR
DATE: Feb. 21, 2005
TELEPHONE: 850/561-5769
|
|
|
|
|
FLORIDA BAR SPEAKERS BUREAU OFFERS SPEAKERS ON FAMILY LAW
|
TALLAHASSEE, Feb. 21, 2005 -- The Florida Bar Speakers Bureau provides volunteer attorneys speakers for cultural, professional, civic, and community organizations throughout Florida, at no cost to your organization.
Among the more than 1500 speaker volunteers are attorneys who have experience in family law. Subjects included in this topic are: premarital agreements, advice to newly marrieds, adoption, family mediation, divorce, and shared parenting.
Speakers are also available on topics ranging from purchasing a home, to legal guides for new adults, what to do if you are arrested, and health law.
Speakers go into cultural organizations, senior citizens centers, assisted living facilities, schools, churches, condominium associations, professional organizations, libraries, civic and community organizations, and other meeting places to provide education. To schedule a speaker for your organization, call Gail Grimes at 850/561-5767, or email ggrimes@flabar.org.
CONTACT: Gail Grimes/The Florida Bar
DATE: Feb. 21, 2005
TELEPHONE: 850/561-5767 |
|
|
