Ok, so let’s look at your typical Real Estate contract. Smart buyers learn to look at transactions through the seller’s eyes, and of course it is the flip side for the seller with the buyer. Periodically it will be necessary to add a few “subject to” clauses to move the sale forward. The simplest example of this is the “Attorney Approval Clause.” It is standard and mandatory on NY State contracts and It is a good thing for everyone. As an agent, I always insisted on this one even before it was mandated by the Department of State because it seemed like the most obvious, common sense way for me, to protect my client since I had a fiduciary responsibility to do just that. Prior to the mandate, it was optional and very few agents suggested it but I tend to be a purest and went beyond the standard. It grants the principals the right to have their mutual attorney review all of the documents for 3 business days and bless them (or not) as they deem them appropriate. The attorney IS NOT required to even give a reason. I am ok with that too. I would never want a client of mine to not have the ultimate protection of getting the green light from their attorney. But It is also, still technically, what Real Estate practitioner’s refer to as a “Weasel Clause.” It isn’t necessarily a pejorative, it just means that either party can weasel out of the deal.
Seller’s want to see as few weasel clauses as possible. From time to time they will have to request a few themselves. But the more usual scenario is they tend to originate on the buy side. So when we refer to weasel clauses in general we are talking about “subject to clauses” and not the cute furry animal. This being said, a strict rule applies.
YOU CANNOT KILL THE WEASEL, YOU CAN ONLY CONTAIN IT!
In the case of the attorney approval clause, it is written to be self contained. It states 3 business days. One could extend or contract the period by request but it is designed to be a fixed time period that most parties agree to live with quite willingly. Then we have the myriad of other weasel clauses like: subject to a unit being delivered vacant, subject to a zoning change, a home (termite, mold, radon, structure etc.) inspection. Let’s consider the home inspection clause. One could ask for 7 days and that is the default on contracts in Erie County. But I have to tell you I am in the camp with most seller’s who will suggest that that is unreasonably long. I would never allow a buyer of a property to let this weasel run around for 7 days. The buyer is effectively asking me to take my property off the market for 7 days. A week is an awful lot of marketing time for me to lose while you are stroking your beard trying to make up your mind. That’s a helluva long time to let that weasel run around and provides me with no benefit. How about 3 Days? I can live with that and I think that is fair and honorable. This way WE are containing the weasel. A second rule of thumb following this logic is:
THE STRONGEST OFFER HAS THE LEAST NUMBER OF WEASEL CLAUSES.
Seller’s want the cleanest offers available. Cash, No Home Inspection, Quick close; rarely does the seller not want to hear just that. This is as opposed to, FHA financing with minimum down of only 3.5% (now the transaction is subject to getting a mortgage and meeting FHA requirements), also subject to the seller granting $4,000 in seller concessions, with a 7 day home inspection, plus radon, and mold, additionally subject to a tenant being vacated prior to closing, and an extended period for closing since the buyer has a secondary closing on another house from whence the funds to purchase your house will be coming. In this latter case, prudence would dictate lots of cut off dates to help contain those weasels. Granted, sometimes parties will need to come to terms on a lot of these secondary agreements. But both parties should be savvy enough to not let these agreements become open ended so that that slippery weasel can run rampant across the countryside.
Got it? Remember, for safety and security’s sake, you have to contain the weasel as best you can if you want to sleep at night and not worry if the transaction will ever close.
Oh, and it is a great college town too, with over 30 Colleges and Universities.
“Hey, I wrote the book on Real Estate, literally.”
Author Brendan J. Cunningham is a New York Licensed Associate Real Estate Broker, lead of the Platinum Team at HusVar Real Estate, as well as an accomplished writer, Shakespearean trained professional actor, and podcaster.
Start your home search now at www.husvarre.com