Often when a real estate agent works with a buyer, the buyer will mention what they intend to do with the property if they were to buy it. The buyer may say something like they want to install a swimming pool, store a recreational vehicle or raise horses on the property. These seemingly innocuous statements could cost a real estate agent big money if not further explored and documented.
Whenever a client mentions a particular intended use for a piece of property the real estate agent needs to inquire more about the statement. Is the intended use a requirement for the buyer to purchase the property? What happens if they cannot use the property for that purpose? Would the buyer still want to buy the property?
If the buyer’s intended use is a condition to the client buying the property, the real estate agent needs to make the contract contingent on the client being able to use the property in that manner. The ability to use the property in a particular manner may not be just limited by restrictions. Rather zoning rules, utility easements and other governmental regulations could prohibit a buyer’s intended use. Blair Cato has seen swimming pools denied because of utility easements, RV storage denied because of city ordinances and horses denied because of restrictions.
If the client only wants the property because of their intended purpose and they cannot do what they intended, the real estate agent could find themselves buying the property back or paying money to settle a dispute. Therefore, ask questions. Document your conversations in writing. Include the matter in the contract as a contingency if the client must be able to do what they intended. DO NOT ASSUME that a comment made in passing is irrelevant. Because once the client is told no after closing, the comment to the agent quickly becomes evidence that the buyer told the agent it was the only reason they wanted the property.
COMING SOON: BLAIR CATO VIDEO SERIES “BROKERS IN CARS TALKING CONTRACTS” WILL PREMIER IN JUNE. WE WILL DRIVE AROUND IN SOME PRETTY COOL CARS (LIKE FERRARIS AND BENTLEYS) WITH SOME SOMEWHAT COOL REAL ESTATE BROKERS TALKING ABOUT THE CONTRACT. MORE INFO TO COME.
Photo by LuAnn Snawder Photography