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Watch Those Words! – Bay Area Real Estate Law Blog

Watch Those Words! – Bay Area Real Estate Law Blog

Posted on March 7, 2025 By rehan.rafique No Comments on Watch Those Words! – Bay Area Real Estate Law Blog

Stay out of trouble when writing purchase agreements by avoiding these pitfalls

The Standard CAR and PRDS agreements are constantly updated
and vetted in an attempt to ensure that they are clear and avoid dispute.  However, there are times when addendums or
custom terms are needed, and this can be where things go south. 

If a transaction starts to go south, buyers and sellers will
look for whatever advantage they may find in arguing their position.  We have seen those arguments stemming from
poorly-worded addendums countless times, which then leads to the client trying
to point the blame to the agents. 

Examples of disputes that we have seen arise from “custom”
language added beyond the four corners of the standard forms include:

  1. Ambiguous verbiage for agreed upon
    repairs/improvements.  For example, a
    buyer of a spec home wanted the seller to install several TVs and closet
    organizers.  The seller, naturally, opted
    for very basic materials and improvements. 
    The buyer expected the sellers to spend in the order of $15,000 on a
    custom closet.  The language added in the
    addendum had no specifics, no price range etc. 
    A dispute about the scope of the improvements followed, which
    jeopardized the sale and led to both parties seeking the agents chip in to
    resolve the dispute.
  2. Lack of clarity on financing terms.  Issues with seller carry-back terms, taking
    liens on other properties etc. can get quite complex.  The standard forms for the seller financing
    are helpful, but when agents start inserting more complex arrangements,
    nightmares may ensue.
  3. Rights related to use of the property or a
    portion thereof.  Sometimes the standard
    license or lease-back forms do not address what the parties may have
    negotiated.  For instance, what if the
    seller just needs to use the garage (or some other part of the property) for
    storage, or only needs to rent back an accessory dwelling?  Agents may try and craft language to address
    this, without considering all the potential issues and liabilities that may
    arise (for instance, what if there is an injury on the property, break-in, or
    someone refuses to leave)?  If the language
    in the addendum or contract does not address these situations, you can have a
    dispute.

These are not intended to be inclusive of all of the things
that can go wrong, but examples we have seen. 
The bottom line is, anytime you are adding language that goes beyond
“filling the blanks” of the CAR/PRDS etc. forms, be wary of over-stepping your
bounds.  These situations may require you
consult your broker and counsel to ensure adequate protection of you and the
client, and avoiding any claims that the agent was “practicing law” by drafting
contractual terms or otherwise putting the client in a precarious
position. 

Protection of yourselves is critical here.  Clients will look to whoever they can to
blame for contractual issues, and you better believe that the first person they
will look to is the agent/broker.  So,
when encountering an “unusual” contract or custom issue, always be sure to get
a second opinion and assistance on the language to avoid any future dispute.

Simon Offord is the managing partner of Brewer Offord &
Pedersen, LLP, a real estate law firm in Palo Alto.  Simon’s practice focuses exclusively on real
estate matters, and Simon has a long history of representing real estate
professionals and their clients in both litigation and transaction matters.

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