"The Additional Terms" - A Cautionary Tale...

There are few things in purchasing a home more complicated than the real estate purchase agreement. To most, these contracts are pages upon pages of complex terms, definitions, and conditions that seem never ending, but hold the key to the next major event in their life. These contracts are methodically drafted by the Florida Realtors Association and the Florida Bar to include every conceivable scenario related to the purchase and sale of a real property. Once one successfully navigates through the first 19 sections an abyss of seventeen blank lines appear in Section 20 titled “Additional Terms.”

The “Additional Terms” section appears in every FR/BAR contract for the purchase of a home. This section allows parties to include terms not contemplated by the standard language of the “AS IS” and “Standard” contracts. This section is often used to include further conditions or requirements on the part of the Sellers to make repairs to the home, provide a credit to the Buyer, impose additional financing terms on the Buyers, outline if the Buyers receive any of the furnishings or appliances in the home, and can include any other agreement the Buyer and Seller may conceive as part of their transaction.

What most parties to a transaction do not realize is that unless precautions are taken to methodically include language in the Additional Terms section, their actions can create an ambiguous and contradictory term that makes the obligations of one or both of the parties unclear or may impose conditions that in reality may be very difficult to fulfill by the closing date.

Let’s say after viewing a home a potential Buyer falls in love with the house and the incredible living room table. The contract is executed and includes as an additional term: “Buyer will keep living room table.” The Buyer performs her final walk through the day before closing to find out that the living room table was replaced with a cheaper unappealing knockoff. Per the language of the additional terms, the Buyer is receiving a living room table but not THE living room table they bargained for. This dispute can hold up the closing and lead to potential litigation in resolving the dispute and entitlement to the escrow deposit if the deal falls through.

Another example exists when the Buyer, in Section 12 of the contract, elects to have 0 days to inspect, effectively waiving their inspection right. A skim through the Additional Term section then shows a contingency of closing for the Buyer to have pest and termite inspections on the property. Which clause controls at that point? Does the Buyer still have any inspection and right to cancel rights?

The takeaway to this cautionary tale is when including any additional terms in a contract to sell or purchase a home, one should consult with their trusted local real estate attorney to ensure that the terms added will not lead to confusion and heartache down the road.
Sincerely,

Conrado Gomez Jr., Esq. cgomez@berlinpatten.com
Berlin Patten Ebling, PLLC

This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.

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