from Local Attorney, Michael H. Wasserman

Thursday, March 27, 2008

Should the Conducter Drive the Train?

Trulia has an interesting feature called Trulia Voices. Real Estate professionals and consumers can pose questions to each other about nearly every aspect of buying and selling property. I've been following the Chicago-centric discussions for the last couple of months and I am enjoying alot of what I am reading. Buyers and Sellers ask for "free advice." Agents self-promote. "Expert" real estate investors pontificate. Good Stuff.

This site is not without its problems. As always, the relative anonymity of the internet affords people who do not really know the answers or even understand the questions opportunity to give answers with an appearance of authority. Hapless consumers are at risk of getting some really bad, even dangerous advice. Its caveat emptor for anyone who uses the web site that is supposed to help them navigate the wacky caveat emptor world of real estate deals.

I am seeing a lot of agents trying to answer legal questions. Some are from out of state and are absolutely clueless when it comes to local custom or practice. The locals? sadly, a mixed bag there too.

Relying on legal advice from an agent is a bit like asking the conductor to drive the train. Sure, she may know the route, and all the stops along the way, but that doesn't mean she knows how to work all the buttons or levers that the engineer engages to run the thing. (Then again, in the Jesse Fuller ditty, Monkey and the Engineer - everything works out pretty well in the end.)

By way of example, a Trulia member asked yesterday whether or not her father would be able to get out of a real estate contract on the premise that he thinks he might loose his job before the contract closes.

Can he get out? Maybe, but how can anyone say for certain? Well one plucky agent can. She boldly states:

"There is always a way to get the earnest money back. If you're using a standard real estate contract in Illinois, there are a few clauses in there. One, if the buyer can't obtain financing ( and your father seems to fall under that due to maybe losing his job, he can't get the loan), another is the home inspection, and there are more".
We were told by the questioner that her father had signed the contract more than two and one half weeks earlier. In all probability, he would be well beyond the typical periods allowed for attorney review and inspection contingencies. No mention of a mortgage financing contingency at all. Even if there was a contingency (that had not expired) would a lender refuse to lend based on the applicant's fear of losing his job?

I sent this agent a private email to follow and she again insisted that a buyer can always get out of a contract, at any time, for any reason. I meant to ask her if that is a guaranty she offers all of her clients. I mean, what is the point of signing a contract at all if it is never enforceable? Why would any of us bother?

Sure that advice might make the buyer and daughter feel better. Maybe the seller will show compassion and let them out of the contract. Maybe there still is a way out. But to blindly rely on that bad/wrong advice - a train wreck waiting to happen.