When is a Contract of Sale enforceable?
I have had several situations where contracts were not fully executed or where some of the terms of the contract were not fully complied with by one or both parties and the question has come up as to exactly when a contract is truly enforceable. The ultimate answer to any specific situation is unique and can only be determined by a court of law, however, some general thoughts can help.
Technically, a contract is not valid until all of the changes (if any) have been initialed by all parties to the contract. This means that if the Buyer and the Seller are married couples then you will need four sets of initials on each and every change that is made to the contract. The problem can easily arise when a lot of changes have been made that one or more of the parties do not place their initials on every single change. Exactly when the failure to initial constitutes an invalid contract that is unenforceable is often asked.
Often, contracts that are missing a few such initials are presented to Title Companies and proceed through the entire closing process without issue. Occassionally, such contracts are disputed and the missing initials become points over which the parties contend as to whether or not the contract is enforceable. It is very important to carefully review the contract and make sure that all changes are initialed by all parites to prevent such disputes in the future and possibly derail the closing.
It is my understanding that some initials may not be required under certain circumstances. A good example would be if the Option Fee was changed from $50 to $100 and the change did not have initials for all parties but the Option Fee Check was made out for the right amount and then accepted by the Seller then the need to initial those changes would become a moot point and not a sufficient reason for invalidating the contract. The point of this example is to demonstrate that it is NOT an absolute truth that failure of all changes to be fully initialed will invalidate the contract.
If you are involved in a contract as either the Buyer of the Seller and you are caught in a dispute as to the enforceability of a contract that has been 'almost' completely executed the only person who can fully advise you as to the validity and enforceability of the document is an attorney. The Agent or Broker who you are working with is not qualified to render an opinion unless they are an attorney and you should not rely on their opinion even if they are foolish enough to provide one.
Agents and Brokers work with contracts on a regular basis. I have dealt with over 900 contracts of sale on the over 1200 properties that I have listed in the last 18 months and I still constantly see version of documents that have issues that I have no direct personal experience with. I routinely recommend, in such situations, that my clients seek the counsel of an attorney.
Be very careful when you sign a contract to make sure that all changes are initialed and that you understand the ramifications of all aspects of the contract.
Technically, a contract is not valid until all of the changes (if any) have been initialed by all parties to the contract. This means that if the Buyer and the Seller are married couples then you will need four sets of initials on each and every change that is made to the contract. The problem can easily arise when a lot of changes have been made that one or more of the parties do not place their initials on every single change. Exactly when the failure to initial constitutes an invalid contract that is unenforceable is often asked.
Often, contracts that are missing a few such initials are presented to Title Companies and proceed through the entire closing process without issue. Occassionally, such contracts are disputed and the missing initials become points over which the parties contend as to whether or not the contract is enforceable. It is very important to carefully review the contract and make sure that all changes are initialed by all parites to prevent such disputes in the future and possibly derail the closing.
It is my understanding that some initials may not be required under certain circumstances. A good example would be if the Option Fee was changed from $50 to $100 and the change did not have initials for all parties but the Option Fee Check was made out for the right amount and then accepted by the Seller then the need to initial those changes would become a moot point and not a sufficient reason for invalidating the contract. The point of this example is to demonstrate that it is NOT an absolute truth that failure of all changes to be fully initialed will invalidate the contract.
If you are involved in a contract as either the Buyer of the Seller and you are caught in a dispute as to the enforceability of a contract that has been 'almost' completely executed the only person who can fully advise you as to the validity and enforceability of the document is an attorney. The Agent or Broker who you are working with is not qualified to render an opinion unless they are an attorney and you should not rely on their opinion even if they are foolish enough to provide one.
Agents and Brokers work with contracts on a regular basis. I have dealt with over 900 contracts of sale on the over 1200 properties that I have listed in the last 18 months and I still constantly see version of documents that have issues that I have no direct personal experience with. I routinely recommend, in such situations, that my clients seek the counsel of an attorney.
Be very careful when you sign a contract to make sure that all changes are initialed and that you understand the ramifications of all aspects of the contract.
posted by DallasFlatFee at 11:07 AM
0 Comments:
Post a Comment
<< Home