Be Quick but Don’t Hurry: Adam Leitman Bailey, P.C.’s Proficient and Efficient Representation of Transactional Clients
It is crucial for both the prospective purchaser and prospective seller in a real estate transaction to understand the contract of sale as it relates to both the financial terms of the transaction and the respective obligations of the parties pursuant to the terms of the agreement. Parties to a real estate transaction have traditionally been nudged, if not pressured, to finalize the contract as quickly as possible. In the course of searching for a property, a prospective purchaser may make an offer to a prospective seller containing basic terms of the transaction, i.e., the purchase price, the amount of the earnest money deposit, whether there will be financing and a timeframe for when the closing may occur. If the seller of the premises is agreeable to said terms, the parties would then proceed toward entering into a contract. Oftentimes, at this point, the parties are prodded to finalize a contract with all expediency possible. A seller may be advised to have an attorney draft a contract and send out to the buyer’s attorney immediately so as not to lose the buyer. A purchaser may be told of other offers being entertained by the seller, evoking a sense of risk in losing the property if a contract is not finalized posthaste. In the current real estate market beset with low inventory, homebuyers may be persuaded to waive certain protections and safeguards as a means of making their offer more attractive to a seller that may be entertaining others in a competitive market.
With the increased technological capability to electronically sign documents and the acceptability of the same as a means of binding parties to an enforceable contract, parties should be careful not to enter into enforceable agreements with potentially serious ramifications in a hasty manner. Utilizing an E-sign platform for the purpose of executing a contract certainly has benefited from a convenience and efficiency standpoint, but it should not be a substitute for a meeting between the parties to the transaction and their respective attorneys. Whether in person, over the telephone, or via a Zoom meeting, reviewing and discussing the contract is invaluable for both the client and the attorney. During this interaction, the attorney may explain a provision in the contract that may be counter to the client’s understanding. Likewise, the client may raise an issue that the attorney is unaware of and is not addressed in the document. The conference and discussion of the terms of the agreement may result in the need for further discussion with counsel for the other party to clarify terms. At a minimum, it serves to ensure that the client understands what in fact is being agreed to and what rights, obligations, contingencies, timeframes, etc., are pertinent to the transaction and essential for the client to understand and follow. Of course, it is conceivable that during a transaction something completely unforeseen materializes, and then the parties would have to address it. However, for terms that are addressed in the agreement, it would be unfortunate for a client to have misunderstood as a result of bypassing the opportunity to discuss the provisions of the contract with the attorney prior to signing. For circumstances arising from provisions within the contract, an attorney would never want to hear a client begin a sentence with “Had I known that then I would (not) have…” Working through the contract together not only is beneficial to the client in that they are receiving the attorney’s explanation of the terms of the agreement, but it is additionally extremely beneficial to the attorney to be able to ascertain from the conversation whether the client truly understands a certain provision so that further explanation may be provided as needed.
As an illustration, during Adam Leitman Bailey, P.C.’s representation of sellers on a residential real estate transaction, while consulting with the clients it became apparent that the sellers were not in agreement as to the final disbursement of the proceeds at the closing of the transaction. Ultimately, we worked together towards a resolution, and our clients entered into a contract with the purchaser for the sale of their property, and just recently successfully and smoothly closed the transaction. Had the attorney and clients not all discussed the contract, but merely circulated an agreement to be signed, this issue would likely not have surfaced until the closing of the transaction which would have created more of a challenging issue for both the clients and the attorney.
Moreover, in representing a purchaser, Adam Leitman Bailey, P.C. negotiated favorable provisions into the contract allowing contractors and architects to have access to the premises without a cap on the number of visits. When the seller attempted to restrict access, the provision in the contract became crucial as it was carefully drafted to facilitate the client in achieving the completion of the renovations within their tight timeframe, which was discussed between the attorney and client during the initial consultation.
The nature of the real estate market has been and will continue to be fast-paced. Tools have been developed that, when utilized appropriately, assist in consummating transactions in a more efficient manner. Parties to a transaction, however, should be cautious not to skip essential steps along the way. Hall of Fame basketball coach, John Wooden, frequently told his players “be quick but don’t hurry.” This phrase has meaningful applications beyond the basketball court, real estate contracts among them. An attorney should work with the client to fully grasp the transaction at hand in as timely a manner as possible. A client, however, should resist foregoing necessary due diligence for the sake of expediency. Coach Wooden famously asked his players, “if you don’t have time to do it right, when will you have time to do it over?” The harsh reality for parties to a real estate transaction and their attorneys is that there may not be an opportunity for a “do-over.”
Keith A. Bialek, Esq., of the Transactional Department at Adam Leitman Bailey, P.C. handled both transactions.