The following is the March 2013 Legal Update from Marty Stanton, Esq. of KVS Title, LLC. We've been working with him and his company for years and consider him a trusted partner and ally in the home selling and buying process! He offers some great information in this month's legal update!
Is Everything in The Contract Negotiable?
March 2014 Legal Update from Marty Stanton, Esq.
At this moment the Washington metropolitan area is one of the most competitive real estate markets in the country. With home sale inventory so low and demand to buy so high, an environment has been created where buyers will offer sellers almost anything in order to be the chosen contract in a multiple-offer situation. As all of you know, a contract is nothing more than one party offering to do something in exchange for value and another party accepting that offer in writing which makes it a contract. This article will briefly discuss terms we see negotiated in almost every contract. It will then discuss the terms of the contract that are governed by statute and determine whether they are negotiable as well.
When most buyers and sellers think of a real estate contract negotiation they typically think of only sales price. "How much am I willing to pay or accept for this particular property in this particular area?" All of us in the business know there are many additional terms to consider. Probably the greatest consideration is does the offer have any contingencies? Standard contingencies in most real estate contracts include home inspection and financing. These are rights provided by the contract and a buyer and seller are free to negotiate them. The type of home inspection, the type of financing, and the length of time allowed for each contingency to be met – all of these terms are negotiable.
I was recently asked whether, in order to be competitive, were other parts of the contract also negotiable? A person buying a condominium was interested in reducing the number of days they had to review condominium documents. The number of days provided for a buyer to review condominium documents in each jurisdiction is set by statute. Each respective legislature has passed a Condominium Act which sets out what the seller of a condominium is obligated to provide to the purchaser and the length of time the purchaser has to review the information. In Maryland, the District of Columbia and Virginia each act provides: "Except as expressly provided by this chapter, a provision of this chapter may not be varied by agreement and any right conferred by this chapter may not be waived." Given this statement, the number of days cannot be "varied" from what is required by the statute. So even if the buyer wished to reduce the number of days or waive them for competitive reasons, they would not be allowed to do so. If they did include this in the contract, the point would be moot, as the law requires it.
So as we enter our busy spring market season, remember rights by contract are negotiable and rights by statute are not. When your client asks why, it's important to note lawmakers have put certain requirements in place for the greater good; these requirements are so material in nature to the offer, they may not be negotiated. I often say in this highly competitive market, it's a way for buyers and sellers to be protected from themselves. As you write offers and negotiate contracts, know that the attorneys at KVS are here to answer any contract questions you may have. Looking forward to seeing you at closing this spring!
– Marty
P: 301-605-1423
marty@kvstitle.com
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