BROKER RISK MANAGEMENT
WEEKLY PRACTICE TIP
Contract Language from Third Parties
Q: I am a buyer’s agent working on a fairly complicated purchase of a single family residence. The seller is agreeing to complete substantial repair work prior to COE, with my buyer making some choices of finishing materials. My buyer is very particular and went to her brother who is an attorney, but not a real estate attorney, for language to put into the contract. I am not entirely comfortable with that recommended language and discussed it with my buyer. She was very firm in her response that she trusted her brother and insists that I include the suggested language in the purchase agreement addendum. I can’t tell her not to trust a family member although I think the recommended language is somewhat confusing. Help!
A: Frequently, buyers and sellers will consult with attorneys, accountants, financial advisors or other third parties who will give advice on what should be in a contract offer, counter-offer, addendum, contingency removal or other document.
Whether or not this suggested language appears to be well-written or advisable, you should always document the recommended language which is to be included. This is essential if, in the future, there is a claim and that language is the subject of the claim, so that you can distance yourself from that language, and place the responsibility for its inclusion where it properly belongs – with the author.
PRACTICE TIPS:
1. When a party insists that you add language to a contract document which you have received from that party’s attorney, accountant, or other third person, always verify in writing with your client that the specific recommended language is what they want in the contract document.
2. This can be done in an e-mail to the client that contains the specific recommended language and its source/author. Obtain a written reply from your client confirming the inclusion of that language in the specific document. Place this in your broker file.
3. That way, if there is a claim, you can demonstrate that the specific language was not your work product, but that the client relied on other professionals or third parties. This will go a long way to divert liability away from you and your broker.
WEEKLY PRACTICE TIP: DO NOT FORWARD TO CLIENTS. This Weekly Practice Tip is for the exclusive use of clients of Broker Risk Management and their agents. It may not be reproduced or distributed without the express written consent of Broker Risk Management. The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices.