- The Washington Times - Friday, August 24, 2001

The question, "What is 'is'?" may have elicited some guffaws during the Clinton presidency, but it's no laughing matter when it comes to a real estate transaction especially the sales contract.

Most transactions with a Realtor involved will default to using a contract devised by the local Realtor association. (Keep in mind, not all real estate agents are Realtors, just as not every tissue is a Kleenex.) While consumers can draft their own contract, local and state Realtor associations have dedicated hundreds of thousands, if not millions, of dollars to develop their forms to keep their buyers, sellers and themselves out of legal hot water.

The Washington regional sales contract is five pages, and there are 49 other forms available for the sales contract. Realtors are allowed to write these contracts in this region, meaning, fill in the blanks on a standard form and institute handwritten changes as directed by the client. But many other jurisdictions require that lawyers write the contracts.

Nevertheless, there is no standard contract for real estate. Realtor associations on both the state and local levels maintain their contracts. Builders write and require consumers to use their own version of contracts.

Lawyers can write residential sales contracts for a fee.

And, there are programs and Web sites available where consumers can pay for contract forms. My word on these is if you need to sell a car or other property with a contract go for it. But there are so many laws, rules and regulations that contracts require for real estate that buyers and sellers could be in for lots of headaches later if something goes wrong with an online contract form.

Gone are the days of a handshake and word of honor between buyers and sellers. In fact, the contract cannot really stand alone with required disclosures, addenda and contingencies that crop up in a real estate transaction.

If you've never seen a transaction file at the settlement table, it's truly a sight to see more than likely, it will be about an inch thick or more. The real estate sales contract and all the residual forms are only a beginning of the transaction. Then there are the loan papers, which are usually completed before settlement day and add about another inch of paper.

Despite all the pages and pages of information a buyer or seller must trudge through, there are the tricky phrases and paragraphs that must be maneuvered to keep from falling into a legal quandary or money pit.

What "is" is, then, really does matter.

For instance, when a contract says the property is sold "as is," what does that really mean? Some contracts go further to say the property is sold as is, "except as otherwise provided herein," and then lists a bunch of items that must be in working order according to the contract. These items may include a list of appliances, plumbing, electrical wiring and other aspects of the home.

But "as is" can mean different things to different people.

A Virginia judge recently ruled that a home buyer was responsible for repair of termite damage, despite the use of a sales contract that listed the property as "free of termites." There was substantial termite damage on the property, but there was also a handwritten note on the contract stating that the buyer agreed to buy the house "as is" and that the seller was a nonresident owner who had no knowledge of the condition of the property.

Just because a contract is printed one way doesn't mean it will always mean what it says in the end. In fact, during the offer/counteroffer stage of a contract, once either party writes a change on the contract, the original offer is null and void.

If a consumer, seeking to save legal or commission fees, writes his own contract, he better understand what the law requires on such a document.

What does the law require for agency or property disclosure, fair housing and a myriad of other topics? For one, are you using the right font size in the contract? That's right, there is a law in one state that stipulates the font size required in a particular paragraph dealing with the selection of the title company. Put in the wrong font size with the bold button turned off, and you could be violating state law.

Real estate contract law continues to change year after year. Every time the state legislatures in this country meet, there's a change in real estate law and practices, and that means it's even more important to work with professionals who know what t's to cross, what i's to dot and what "is" is.

M. Anthony Carr has written about real estate for the past 12 years. Send comments and questions by e-mail ([email protected]).

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