Paragraph 11: Exercise Caution when Adding Terms!

Paragraph 11: Exercise Caution when Adding Terms!

A prudent agent should exercise caution when adding terms to a contract in Paragraph 11. A poorly worded clause may lead to disagreements which can crater a transaction.

Law Talk: 

Most agents understand the difficulty in attempting to formulate proper wording for a specific deal point desired by the parties to a transaction. In fact, TREC discourages agents from adding ANY extra agreements to a contract outside of the promulgated contract form. Recently, TREC significantly reduced the physical space allocated in Paragraph 11 for Special Provisions in an effort to limit problems associated with such added terms. Because most agents are not attorneys, they run the risk of being held liable for practicing law without a license, and exposing their client to significant risk, if an added term is challenged.

However, the reality is that many transactions do require that some additional understandings be added to a contract to fully reflect the needs of the parties. In such instances, Par. 11 serves as a convenient tool to document the deal point. But a word of warning: if the added clause in any way conflicts with, modifies or contradicts other clauses contained elsewhere in the promulgated contract, it is critical that agents begin the clause with the following: “Notwithstanding anything else herein to the contrary…” This addition will make clear that the added clause supersedes, and takes precedence over, other parts of the contract that may conflict. Without the suggested preamble, the parties would be faced with a situation where the contract contains two contradictory agreements, neither of which would control over the other. In such a case, the added clause would be difficult to enforce if challenged, and the agent could be exposed to an unwanted liability claim.

The best advice is always to avoid attempting to draft important legal clauses without an attorney.

This Title Tuesday Tip is provided courtesy of Rattikin & Rattikin, LLP, attorneys and counsel for Rattikin Title Company and is not a legal representation or statement of law. Please confer with your legal counsel for any and all legal questions.