World of Real Estate

World of Real Estate
World of Real Estate

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One Way To Avoid Shady Real Estate Deals

One Way To Avoid Shady Real Estate Deals

One Way To Avoid Shady Real Estate Deals

The law is something we are all supposed to understand inherently, yet many of us do not. This is particularly true when it comes to real estate transactions. Whether you are buying or selling, there are some legal issues you need to understand.

You hear about it all the time in real estate. An issue arose during escrow and the seller promised the buyer something that would fix it. When the deal closed, however, the seller refused and the buyer was left hanging.

One of the things we are taught early on in life is that we have to keep our word. If you went to Catholic school, this lesson was often enforced with a whack on the knuckles!

This is a noble and honorable thought, but it does not mean much in the real world of real estate transactions. That is pretty sad, but there is a public policy against the enforcement of oral promises. Why? They are nearly impossible to prove in court.

You put your cabin on the market and get a good offer. During inspections, termites are discovered. You and the buyer agree to have them dealt with. You shake on it, but nobody puts anything in writing.

As we approach the end of escrow, we start arguing over the plumbing upgrade. I think it should cost $5,000, but he wants five times this amount. With such a large difference, we are unable to close the escrow and he sues me.

What is going to happen? In court, we are going to each testify regarding our version of events. Neither of us has any evidence other than what we testify to. How is the court possibly going to decide?

A flip of the coin has as much of a chance of coming up with the right decision as a judge or jury does in this case. Instead of deciding on the merits, the decision will be based on who testifies better. This is not a good way to decide cases.

No state wants to deal with these types of cases, so all have passed a law called the statute of frauds. This law says any oral promise with a value of more than a certain amount is simply void as a matter of law. The dollar figure used ranges from $500 to $1,000.

So, how does all of this relate to your particular real estate situation? The answer is simple. You must get everything in writing. Written promises are entirely enforceable. Oral promises are not.

This legal issue is there to protect you. Think it through. If the other party is unwilling to put something in writing, what does that tell you? It should tell you there is something fishy going on and maybe you should pass on this deal.


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