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 is 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 the 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. Which 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 lawyer prior to signing. No matter how simple or straightforward you may believe the Agreement to be. 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). All the way to incorrectly describing the property or land. Ultimately, minor mistakes can become costly in the end.
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 copyrighted and licensed by the Real Estate boards or brokerages. For example, in Ontario, OREA licenses its forms to their members and the OREA purchase and sale form is used as a standard by Real Estate agents across Ontario.
Even though they are readily available by doing a simple Google search, you may 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 other 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 licensing process, by their brokerage, or through experience of putting together many Agreements.
They are also insured by an errors and omissions policy. Say your agent made a mistake on the Agreement, which 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 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. A lawyer can either review an Agreement you have put together prior to signing, or offer to draft an Agreement for you from scratch.
How Much Will it Cost to Review an Agreement?
It is probably less than you think. Especially if considering the peace of mind and potential risks you may be taking. At Deeded, we would be happy to help review and/or draft your Agreement and provide you with a quick turnaround.
Important note: This article is not Legal Advice. No one should act, or refrain from acting, based solely upon the materials provided on this website, any hypertext links or other general information without first seeking appropriate legal or other professional advice.