When you review contracts every day, spotting mistakes can
become routine. The number one mistake that most escrow officers see on real
estate contracts involves blank spaces. To be clear – contracts should always be filled in
completely. There should be nothing left blank.
I’m referring to the standard Texas Real Estate Commission
(TREC) contract. Ninety-nine percent of real estate contracts received by title
agencies are written on one of the standard TREC contracts. These are created
by TREC for use in real property transactions in our state. They are frequently
reviewed and are updated every few years based on feedback, requests, and legal
issues.
There is a valid reason for each paragraph and blank space
on these contracts. There are dozens of blank spaces on the most popular TREC
contract. They all should have something on them. Some paragraphs have an
option to choose from two or more boxes to check. One of the choices should be
selected.
Yet, we see smart people submit final contracts that leave
too much ambiguity because they are not fully completed. Obviously, most folks
ensure the contract contains the proper names, address, sales price, who is
paying for what, etc. But often they leave some parts of the contract
incomplete.
How do we know the intention of all parties when a space is
left blank? Perhaps the blank space means zero dollars. Then it should have a
zero written. Or maybe it is not applicable? It should show N/A. Maybe it was
accidentally missed? Or was it intentionally ignored? Even dashes in the space
helps us see that the parties didn’t intend to mean something else.
If a space is blank because buyer and seller are still
negotiating, then the contract should not be executed yet. Once it is executed,
any changes must be made with an addendum. Changes are not allowed on the
finalized contract once it is executed.
The riskiest and most overlooked blank spaces typically
found on contracts include:
Paragraph 2D: Exclusions. If there are no exclusions,
then write None. Plenty of disputes arise when a seller takes an item (like a
favorite light fixture) and forgot to note it in the contract.
Paragraph 6A(8): There are 2 boxes regarding survey
coverage and one of them should be checked. Who is paying for the survey
coverage should also be documented.
Paragraph 6C: Who will provide the survey, when will
they provide it and who will pay for it if a new one is needed.
Paragraph 6D: Put a number in the blank for number of
days that the buyer has to object to title or survey issues. Most folks don’t
think this blank really matters – until it really does.
Paragraph 7H: Will the seller be purchasing a home
warranty for the buyer? If not, put zero in this blank. If so, fill in an
amount they are willing to pay.
Paragraph 12A(1): If the seller is paying any of the
buyer’s closing costs, fill in the amount. Otherwise make it zero.
Paragraph 21: Please, please, please fill in the
buyer and seller contact information. Without it, we have no way of contacting
these people and there is no way to given them notices, documents, etc. The
title company can attempt to track people down. But they may not receive
crucial information in a timely manner if we have no way to reach them. Leaving
this space blank can drive title agents to swear.
Fill in the blanks to avoid turning your document into a
blankety blank contract.
The opinions expressed are of the individual author for
informational purposes only and not for the purpose of providing legal advice.
Contact an attorney to obtain advice for any particular issue or problem. [where: 75230]
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