Some homeowners or home buyers have contemplated at some point whether they should be buying or selling their home without the help of a Real Estate agent, or privately as it is commonly referred to.
We are not going to debate the reasons for and against buying or selling privately. We believe that Buyers and Sellers need to understand the pros and cons of using certain professionals in their transaction, and ultimately, it is entirely up to the individual Buyer or Seller to decide what resources they may or may not want to use for their purchase and sale.
What we have seen lately are Buyers and Sellers who are completing their transactions privately and are drafting their own agreement of purchase and sale; occasionally using templates and forms from the Real Estate boards and associations, or essentially similar forms to what Real Estate agents are using.
There is one positive aspect about using templates and drafting your own Agreement of Purchase and Sale in order to negotiate your private transaction and that is, it is better than a hand-shake after all. When an Agreement is signed by both parties and consideration is provided, it becomes binding. This means all parties are now obligated to fulfill the terms and conditions of the said Agreement.
While the “do it yourself” (DIY) drafting of a contract method may work for purchasing a used car or some simple low-cost items, a home is one of the largest purchases you will ever make. A mistake or an issue with an Agreement can end up costing you a significant amount should things not play out the way you have expected them to.
That is why it is almost critical to have your Agreement reviewed by a Real Estate lawyer prior to signing. No matter how simple or straightforward you may believe the agreement to be, the slightest of errors can nullify it. If your buyer or seller are looking for a way to get out of a binding agreement, errors in the contract are the first thing they'll point to.
We have seen DIY Agreements that missed inclusions of appliances (imagine moving into your new home only to discover the seller took all their appliances while you were assuming they were included but didn't include them in the correct section of the agreement). All the way to incorrectly describing the property or land. Ultimately, minor mistakes can become costly.
But I’m Using the Same Forms Real Estate Agents Do, What Can Go Wrong?
On a practical level, Real Estate forms are the standard way to contract for a Real Estate Purchase or Sale. However, there are issues right off the bat with using real estate templates.
First, most forms are specific to Real Estate boards or brokerages. For example, in Ontario, OREA licenses its forms to their members and the OREA purchase and sale agreement is used as the standard by Real Estate agents across Ontario. An OREA form would certainly not work if you're buying a property outside of Ontario.
Even though they are readily available to download by doing a simple Google search, you may also be infringing on copyright or licensing agreements if you are not licensed to use the forms. Second, forms that are found online may be outdated or may have been modified, sometimes in undetectable ways.
The third thing to keep in mind is that Real Estate agents are licensed, regulated and insured. When a Real Estate Agent writes up an Agreement, they have been trained to do so through their mandatory education, by their brokerage, or through their experience in putting together many agreements.
They are also usually insured by an errors and omissions policy. Say your agent made a mistake on the Agreement, which in turn, caused you financial damages. Your agent (or their insurer), would be responsible for any claims and settlements.
When it is you who writes the Agreement, no matter if it is on a standard Real Estate form, you are not insured. Therefore, any claims for a mistake you may make, must be paid out of pocket.
Can I put the Agreement Together and Have a Lawyer Review?
Yes you can! An experienced Real Estate lawyer works with Agreements of Purchase and Sale on a frequent basis and has the experience to spot any potential issues. If you are going the DIY route, having a Real Estate lawyer review your is always a great idea. Alternatively, most Real Estate Lawyers will also A put together an agreement for you from scratch.
How Much Will it Cost to Review an Agreement?
It is probably less than you think and well worth the peace of mind. At Deeded, we would be happy to connect you with a friendly Real Estate Lawyer to help review and/or draft your Agreement and provide you with a quick turnaround.