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Signing A Contract? Check Basics First

Written by Posted On Tuesday, 04 December 2001 00:00

Recently, a new subdivision full of neophyte Canadian homeowners discovered that when it comes to pigs and slaughterhouses, it's what's in the Agreement of Purchase and Sale that counts.

Have you ever discovered, after signing a contract, that you're not going to get what you thought you'd agreed to?

While a written contract is a legally-binding agreement that can allow one party to take the other to court to right any wrongs, legal recourse is not always straightforward, nor is it stress-free.

Early in November, The Toronto Star reported that outraged home buyers had turned on the developer that left them with the impression that the neighbouring pig slaughterhouse was going to move. Screams from dying pigs were terrifying children and giving the new owners nightmares about unsaleable properties.

The builder met city requirements for disclosure by including a clause in the Agreement referring to "sound levels from neighbouring industrial uses." This warning was apparently interpreted by buyers as a reference to heavy traffic noise and many say they were assured by sales people that the pig slaughterhouse would be moving.

The developer's spokesperson insists their salespeople did not indicate the abattoir was moving, contradicting frustrated new home owners.

Contracts commit you and the other party to what you sign, not to what you thought you had signed. Unless the Agreement specifically includes a "cooling-off" period or legislation allows you to change your mind, once you sign there is no backing out. For instance, in Ontario, the Condominium Act allows a 10-day cooling-off period for buyers of new condominiums, but none exists in resale purchases.

Real estate and contracts go hand in hand. Contracts are at the heart of every aspect of real estate and include mortgages, insurance policies, listings, leases and renovation agreements.

A wise real estate investor -- and that includes a home buyer or homeowner -- understands these 5 basic rules about contracts:

  1. Don't sign until you are sure what you're signing.

    If you are not prepared to learn to read the legal jargon that contracts are usually written in, spend your time and money on the most knowledgeable advisors your can find — lawyer, real estate broker, insurance broker, accountant...Then ask a lot of questions, listen to their answers carefully and check things out yourself.

  2. Don't assume you that you will be protected.

    Don't assume that you'll get what was discussed or that you'll get your money back if things don't work out. Everything you want to have happen and want to avoid must be dealt with, in writing, in the contract, or you may have little legal recourse if something goes wrong. Take the time to be sure you know your rights, obligations and legal options. Use the laws that are there to protect you.

  3. Don't be afraid you'll ask questions.

    The only "bad" questions are those you don't ask and later wish you had. Ask for clarification of the obligations of both parties in a number of "what would happen if..." scenarios. Tape the discussion or at least take notes that you'll be able to refer to later.

  4. Don't think the only danger comes from unscrupulous individuals or fraudulent presentations.

    If the salespeople you talk to don't understand what they are selling, how can you understand what you are buying? Get all assurances and guarantees in writing. Be careful you don't confuse salesmanship with friendship.

  5. Don't forget that if something seems too good to be true, it probably is.

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    There are so many ways to create value in your farm while offering solid good services. Get creative and be the solution in your area!

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    PJ Wade

    Futurist and Achievement Strategist PJ WADE is “The Catalyst”—intent on Challenging The Best to Become Even Better. A dynamic speaker and author of 8 books and more than 1800 published articles, PJ concentrates on the knowledge, insight, communication prowess, and special decision-making skills essential for professionals and their clients who are determined to thrive in the 21st-Century vortex of change.

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