The Sanctity of Contract--We're not in Kansas anymore, Dorothy!!!

By
Real Estate Services with Topkins & Bevans-etopkins@topbev.com

This post is written with no intended offense to people who live in the Sunflower State. It certainly is not meant to offend the Dorothy's of the world, especially since Dorothy is my only sister's middle name. What I am extremely upset about, and cannot seem to find a solution for, is the total insouciance people demonstrate when they have made a written commitment to do one thing, and then just ignore the commitment when what they agreed to does not fit into their plans.

A great example these days is Lenders and Commitment Dates and Closing Dates. I have been closing loans for a long, long time, and I never have seen things this bad for purchases. I practice law in a "time is of the essence" state, and there was a time when the date set forth in a purchase and sale agreement was sacrosanct and "by hook or by crook", the Lender got the deal done, and on time. That is simply not the case these days, and it has gotten so bad, that I have tried to develop strategies for Buyers and Sellers to prepare for the almost certain eventuality of not closing on time. I have written before about same day sales and purchases. They are really risky, and I do all I can to discourage them.

So, I now have dusted off my Use and Occupancy Agreements and normally put a 2 week Use and Occupancy in all my purchase and sale agreements. That is one solution, but it can cause many problems in actual usage.

I am extremely interested in knowing what my fellow real estate professionals are doing to deal with this epidemic of "I don't care". My sense is that there are fewer transactions being completed, and there should be better delivery. That is not the case, in most instances, and it causes stressful deals almost always. I will not even go into my last allegedly "quick cash transaction" where the purchase and sale agreement was supposed to be signed on October 8, 2010 with a closing on October 15, 2010. The quickness of the deal is the main reason my Seller client accepted the offer. We do not even have a signed purchase and sale agreement, and the deal may crater. What happened to all those written promises?

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closing delays

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Rainmaker
763,958
Mike Jaquish
919-880-2769 Cary, NC, Real Estate
Realty Arts

Elliott,

It is a little archaic and quaint even, but shouldn't folks have somewhat of a personal code they honor in exchange with others?

October 13, 2010 04:58 PM
Rainmaker
231,805
Elliott S. Topkins
Massachusetts Real Estate and Title Atty
Topkins & Bevans-etopkins@topbev.com

Mike--I used to think that. I was reluctant to put things in writing I could not do. I am not sure people feel that way anymore.

It is regrettable.

October 13, 2010 05:07 PM
Rainmaker
420,953
Jean Hanley
Specializing in Folks Who Want To Buy/Sell Homes
Coldwell Banker Kivett Teeters

No one is held accountable today.  Simple as that.  If they were, this would not be happening.  I do, however, find it interesting, that the lenders can break their deadline dates easily, without recourse, but let a buyer take a couple of extra days for something and see what happens.

October 13, 2010 05:25 PM
Ambassador
418,619
Larry Lawfer
"It's all about you. I listen for a living."
YourStories Realty

I am still working an REO in TX and have my third buyer for the property.  The first two fell out because the seller didn't repond in a timely fashion and I was told, too bad!  It is so hard to go back to a buyer's agent who, in turn, has to go back to the buyer and say they need more time after the buyer had to jump through a ton of hoops with time limits to get to that point.

Since there is no person to speak with it is very easy to slip into a negative mode with this scenerio.  I get notes from my asset manager telling me I have to keep this new buyer in line.  I sent a note back asking her to do the same with the seller.  I was chastised for such insouciance (great word by the way).

We are right to be outraged, but let us stay focused on best practices and try hard to piss downwind.

October 13, 2010 08:14 PM
Rainer
103,435
Larry Riggs
Your Frederick County Specialist
Re/Max Achievers

In the CEC classes I teach I do my best to hammer home one clear message. As licensees we must follow the letter of the law and the letter of our documents. NO WINGING IT. I've even thought about contacting NAR and telling them to take the "golden rule" out of the preamble to the COE. We don't follow the golden rule we follow the law.

October 16, 2010 09:54 PM
Anonymous
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Rainmaker
231,805

Elliott S. Topkins

Massachusetts Real Estate and Title Atty
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Additional Information

Realtor's Resource Blog is dedicated to furnishing current strategy and information to the Massachusetts real estate community of professionals and to out of state realtors and REO and relocation companies who need excellent representation in Massachusetts. My law firm, Topkins & Bevans, can cover the entire state of Massachusetts. I hope to use my 40 years of hands-on real estate experience to assist you and your Massachusetts Buyers and Sellers.