Monday, August 25, 2008

Buyers Agent Beware

Contra proferentem is a rule of contractual interpretation which provides that an ambiguous term will be construed against the party that imposed its inclusion in the contract - or, more accurately, against (the interests of) the party who imposed it.

Here is what is interesting, a number of preprinted “standard form” agreements still incorporate “ambiguities” that were intended to protect the sellers, at a time when it was mistakenly believed that everyone must work for the seller.

It was thought that in order to forestall a buyer from alleging misrepresentation, in relation to minor discrepancies in the dimensions of the property and escape from what was otherwise a binding contract, it was decided to insert the following (more or less) ambiguity. “having a frontage of .....(insert).... more or less, by the depth of .....(insert).....more or less...... etc..”

Supposedly this would allow the seller to claim that any discrepancy was only minor, but this only led to buyers claiming the discrepancies were major and is seeking the contract be declared void or seeking a reduction in the purchase price and it was left up to the courts and the ensuing litigation costs to decide who was right.

Fast forward to the day of “buyer’s agents” where the accepted agreement (contract) in a real estate transaction is deemed by the courts to be the buyer’s agreement, drafted by his “buyer’s agent” and therefore all ambiguities contained therein are interpreted against the interest of the buyer.

Buyer’s Agent Beware, because you were negligent in failing to apply your due diligence in confirming the properties dimensions and/or in removing all ambiguities from the contract, you therefore breached your fiduciary duty to the buyer, who is now suing you and seeking compensation for his original loss together with his litigation costs in relation to his unsuccessful suit against the seller.

There is no known cure for experience. I invite you to contact an experienced Buyers Agent to your next home purchase.

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