When it comes to the legal side of real estate, things can seem a little scary. Sometimes, it’s easy to forget that you’re involved in a legally binding contract while buying a house. You get swept up in the emotion of it all and it just seems like everyone is doing everything as if it were just a normal sale. But it isn’t. Those contracts and all that paperwork legally binds you to that sale. It’s not like purchasing a soda at the local convenience store where you can just walk away and end the purchase. Termination is serious business in real estate and knowing that you are signing legal documents is a key piece to the process. And when things do go sideways and you’re heading to mediation or the courts to determine the outcome, understanding the contracts, what you’ve signed, and what it all means to you can make all the difference.
CONSULT AN ATTORNEY BEFORE SIGNING: TREC rules prohibit real estate license holders from giving legal advice. READ THIS CONTRACT CAREFULLY.
Broker cannot give legal advice. READ THIS LISTING CAREFULLY. If you do not understand the effect of this Listing, consult an attorney BEFORE signing.
CONSULT AN ATTORNEY: Broker cannot give legal advice. This is a legally binding agreement. READ IT CAREFULLY. If you do not understand the effect of this agreement, consult your attorney BEFORE signing.
The quotes above are taken directly from some of the forms you may have signed (or will be signing). Each one says the same thing – you’re about to sign a legal document, your broker or agent cannot give you legal advice as they are not attorneys, and if you do not understand what you’re about to sign, you should have a lawyer review it before you sign.
The Legal Side of Real Estate
In the excitement of buying or selling a house (even renting), it’s easy to forget that all those pieces of paper sitting in front of you are a legally binding contract. Sure you know they’re an agreement between you and the parties involved, but we know it doesn’t always sink in that there are legal ramifications to all that paperwork. As we call most of the documents “forms” it gives it a much looser feel – it doesn’t sound quite as scary to sign a form, does it? A form is just something you fill out. A contract is something you need a lawyer to draw up. Our forms are drawn up by lawyers though, so they are carefully worded legal documents. When you read through them, you will see that they contain answers to most of the “what if” questions you might have – they provide guidance and remedies for just about every situation you can think of. They are written and updated by teams of legal experts from the Texas Real Estate Commission, the Texas Association of Realtors, and the San Antonio Board of Realtors (or your local board if you live outside of our area). There may also be some forms that your brokerage or the other brokerage in the transaction requires as well and these are also written by lawyers in order to provide additional safety and protections that have been deemed necessary by the company.
Because you are signing legal documents which become legally binding between you and the other parties, it is important to understand that while your real estate agent deals with these documents day in and day out and knows them intimately, they are not attorneys and as such, can not give you legal advice. When an agent takes their first real estate class and all the way through their careers, this point is hammered into their heads. It’s a delicate line they walk – they deal in legal paperwork all day long, but because they don’t have a license to practice law, they cannot interpret the meaning of the contracts and suggest the outcomes and legal ramifications. They cannot advise you how to proceed, only that you should consult an attorney. Sometimes, clients get a bit frustrated by this, as they know we have seen so much and have a ton of experience with the legal ramifications of these contracts, but for us to give that advice or guidance is against the law in and of itself. Most agents know an attorney or two, so if you have questions, ask them for a referral to a lawyer who specializes in real estate. We even have one that works for Kimberly Howell Properties as an agent – Shann Chaudhry – and we recommend him to many of our clients when they have questions about how the law affects their contractual obligations.
Of course, whenever you sign a legal document, you should know what you’re signing. Ask questions. Read. Pay extra attention to sections in bold and (it goes without saying) always read the fine print. And when in doubt, stop the process and have a lawyer review the documents. Never sign something if you don’t know what it means for you. The legal side of real estate can be a bit scary, but it doesn’t have to be. Know what you’re signing and always seek to learn more about the process and what it means to you.
image courtesy of Sam Howzit