drafting flaws. the avoidable cause of rejection.

Beyond the price and closing date, a typical offer to purchase might include ten to thirty pages of standard conditions. Attorneys participate in building the form REALTORs use to draft purchase proposals. Attorneys know every word and every sentence, and every punctuation matter to the interpretation of the parties’ intent. Brokers, licensees, and government officials on form committees have input too. With so many cooks in the kitchen, there’s a good chance the soup they produce will have flaws. 

Given the choice home sellers are wise to commit to buyers who submit offers that can become enforceable contracts. Ambiguity is one reason for a judge to determine an agreement is not a contract. Alternative meanings the parties didn’t agree to is another. I’ve seen enough to know four out of five offers have a flaw that may render them unenforceable, or insufficient for the owner to accept. A counteroffer to clear the deficiencies or errors is unlikely when an acceptable alternative offer is in hand.  

Company Addenda are frequently modified to fit with the current versions of an approved Offer to Purchase document. The creators have the best intentions in mind. And still, the forms go into use with flaws that will cause some sellers to accept another Offer over one that would have been accepted had it not had the defect. I’ll give you a few examples from a 2020 Version of one firm’s Addendum.

  • Financing letter: Buyer shall deliver to Seller written verification that Buyer has been Preapproved for financing, which may be based on criteria such as satisfactory credit history, employment verification, buyer income, and debt ratios. 

What does the company mean by “…which may be based on criteria…”? Is the better word SHALL? I don’t know if may means, might be, or is permitted to be.  Is this ambiguous? Ask a lawyer. The answer might depend on which side is paying the legal bill. 

  • Personal Property: Parties agree that all appliances and personal property included in the sale will be in working order at the time of closing…All personal property in the Offer has no monetary value…

Check with an attorney to decide whether it is safe to prepare a document where the parties agree that personal property left on site has no value to either party. Is it logical to assume if a person wants the thing to be in working order that it does have value if it’s working? I don’t know. I have an opinion. And if the parties do believe there is value, why am I having them sign a form that says something contrary?

  • Earnest Money: If this offer is rejected by the Seller, withdrawn by Buyer prior to acceptance…then the Earnest Money shall be returned to Buyer within 3 days of rejection, withdrawal, or termination. 

A licensee must promptly deposit Earnest Money in a trust account. Let’s say a buyer submits an offer for a property and includes a $10,000 Earnest money check. An agent receives the check. The clock begins ticking on the time the broker has to deposit the check. Assume the check is received on January 11 and deposited on January 12. Later on January 12 the Seller rejects the Offer and accepts a competing offer. Buyer and Seller agreed the $10,000 will be returned by the end of the day January 15. Who has the money? The Seller doesn’t. Maybe the listing broker has the $10,000. Maybe the check has not cleared within 3 days. Can the Buyer take action against the Seller, and does the Seller have a complaint against the listing broker?

An agent who reads and comprehends the terms of the contract should catch these issues. When I present offers with suspicious terms I suggest the Seller get a lawyer’s opinion. As a broker, I will protect my firm from any complaint arising over a dispute related to drafting. These issues may appear to be small. They’re not small when they cause the Seller to move on to the next Offer. That’s unfortunate for the clients. 

Review your addenda and the addenda that comes with an Offer for flaws and ambiguity. Sure it could get cleaned up on a counter. To be the Buyer to beat, you want to be the Offer that doesn’t need fixing.