2 Clauses Most Property Investors Leave Out Of Contracts
If you’ve come across Rick Otton, you may have heard about simple contracts – that is, drafting contracts in a way non-lawyers like the buyers and sellers can understand. It sounds like a great idea to avoid complicated legal mumbo-jumbo.
But for simple contracts to work, you will need a trusted solicitor, to make sure you don’t leave out important clauses that could end up either costing you too much money, time or even the entire deal.
Here are 2 clauses many property investors leave out of contracts that you certainly should keep in your paperwork.
Clause 1: The Cooling-Off Period
Did you know that as a seller you have a 14-day cooling-off period within which you can change your mind without penalty? In many cases, when you contact an estate agent to sell your property, there is a contract to be signed. The same is the case when you sell your property to a private party yourself. Once this contract is signed, it is deemed as binding by law and all signing parties will have immediately entered different sets of obligations, many of which are monetary in nature.
The buyer, for example, will have given a deposit and become liable to a fine should they break the contract. The seller is also under such obligations. The law, however, allows for a 14-day cooling-off period within which each party can change their minds without penalty.
This clause is supposed to be clearly stated in each contract but sometimes, the parties who stand to lose the most ‘assume’ that everyone is familiar with this allowance and thus ‘accidentally’ fail to mention it in the contract. Always be on the look out for this clause; it is provided for in most countries in different terms; it should apply for remote property investment as well.
Clause 2: The Need for an Experienced Solicitor
Although it is common knowledge that the signing of any legally binding document should involve the services of an experienced solicitor, it is not unheard of for people to simply go right ahead and ignore this bit. This matter is so serious that in most cases, there is a provision for the solicitors signature as confirmation that an experienced solicitor was involved.
Of course, when selling your own property to, say a relative, might seem like a friendly enough endeavour, you should never assume that they pair or you can simply sign the deal on a table napkin and shake hands on it. The law requires proper paperwork if any of you are to have any leg to stand on should things get legal. This is something that most people ignore and is a clause that you will not see much of in many property contracts.
For the most part, most omitted clauses are as a result of honest mistakes. The problem is that the law does not treat ignorance as a valid defence. Your best course of action is to always have a professional and experienced solicitor as part of the entire deal. Let them handle the legal paperwork so you are not caught off guard.