Ambiguity Kills Your Opportunity

Your offer is more likely to get rejected because of a drafting deficiency than a price deficiency. Drafting an Offer to Purchase that will work as a contract is the highest responsibility of real estate licensees. A well-crafted offer will guide the parties to stay on track from the time of acceptance to the date of the closing. Ambiguities left unattended may cause problems that someone has to pay to overcome. I’ve often been challenged with: “I’ve never heard of that happening.” There are plenty of REALTORS who doubt my opinion about the need to be specific and thorough. Their clients have paid or will pay the price to hear about what they’ve never heard. And the agent may never know what happened.

Errors. Ommissions. Ambiguity.

Each line of an offer to purchase describes the responsibilities of the buyer and seller. Who is going to do what, by when must be written in a way that a reasonable person can interpret the intentions and the action steps. When things go wrong, there must be a clear process of next steps to allow exploration, negotiation, or termination. Real estate contract lawyers know what can go wrong, and they probably can give you examples of when the most obscure problem occurred. When problems occur during a transaction, agents get the opportunity to see where the problem started. Problems that arise after closing give agents the opportunity to see how the legal system operates.

I’ll give you a few examples of some common drafting deficiencies.

Errors. Purchase agreements are 99% prewritten. All you have to do is fill in the proper blanks with numbers or words to make complete sentences and check the boxes to indicate that you intend for this or that provision to be part of the Offer. Some errors are easy to see when you read the purchase agreement. A line preceded by a $ sign calls for a number, not words. The number is not intended to become a percentage and if the drafter makes a dollar amount space a percentage, the sentence will make no sense.

Ommissions. Real estate firms have their own additional contingencies written on the addenda. There is a line on the Offer to Purchase that identifies the addenda which the buyer intends to be included. When the drafting agent fails to include a reference to the addenda where the reference is called for, the addenda may not be considered a part of the offer by the seller. Buyers who expected the protection of a contingency will be concerned to discover the contingency was committed.

Ambiguity. This is my favorite example: Closing Date: The buyer agrees to be flexible as to a closing date. Your idea of flexible might be, you meant moring or afternoon. My expectation might be this month or some date next month. My second favorite: In the event that XYZ occurs, the buyer and seller agree to negotiate a mutually acceptable solution. Who decides whether or not the parties negotiated? How do we arrive at a mutually acceptable solution when the parties do not mutually agree?

Purchase agreements are completed by licensees, lawyers, non-professionals, and paralegals. The range of skill and interest in precision is vast. Most purchase agreements have deficiencies. It’s true that the kind of issues I described may not be a problem in many transactions. But, when one becomes a problem, the problem will be costly.

At Essential Real Estate we take contract drafting seriously. A well-drafted offer can be accepted whereas a poorly drafted offer requires a counteroffer to clean up deficiencies. We’ve been told the difference between our offer and second place was the quality of the drafting. That’s not surprising. I’m sure people often think they got outbid on price when they lose in competition. They’d be displeased to know their offer could have been accepted had the simple Errors, Ommissions, and Ambiguities been fixed before the offer was submitted. The problem is unless the drafter knows better, the errors aren’t seen as errors and the buyer will pay the price.