Verbal Negotiations – As Good as the Paper They’re Written On
| April 19, 2012
Just the other day, someone asked, “In a real estate transaction, if all offers and counter offers are not reduced to writing, does RECA consider that conduct deserving of sanction?”
Does anyone else find it curious that so many real estate industry professionals feel compelled to put an initial “offer to purchase” in writing but then verbally negotiate it to an outcome? Is there not some irony in this? The industry professional provides competent service, fulfills their fiduciary obligations, practices in strict accordance with the Act, places the interests of their client above everything except the law, and honours the obligations in the Statute of Frauds but only for the initial offer? Sure, it’s a common practice, but that doesn’t mean it’s okay.
In fact, there are a number of common practices in the real estate industry today, rarely discussed with clients, which may be construed as being in the best interests of the industry professional rather than in the best interests of the client. Evidence within some of RECA’s Professional Conduct Review files suggests counter offers are often not written, initial deposits often do not accompany the initial offer, certain elements of the offer are often improperly completed (i.e. financing condition “TBD;” no “open for acceptance” information; or nothing to contemplate a buyer’s pre-closing walk through even though it is expected), and notice is given and/or received by a means other than what was agreed to by the parties. These are a few of the more common examples. However, just because these practices are common does not make them acceptable, especially in the absence of client consent.
Bottom line—put it in writing!
Have you ever seen a deal go sideways because of a conflict between common practices and client expectations?