ATTORNEYS HAVE A GREATER DUTY THAN CONGRESSMEN
I forwarded a proposed contract of sale to an attorney regarding new construction property. Things then proceeded the way they should as he faxed me proposed changes to my contract, which I then revised incorporating the lion’s share of what he requested, after consulting my client. His client signed the contract and before forwarding it to my office, he then called me to ask about two more changes, which I approved. Parenthetically, this is the right way to do things, which is to discuss changes without foisting them upon the other attorney.
I received signed contracts and had my client countersign them and returned the contracts along with a cover letter which noted that I was ordering title pursuant to its terms. I was ordering title from the same company that was used for my client’s purchase. My cover letter, along with a copy of the fully executed contract, was faxed to the buyer’s attorney.
I then received an angry call from him two days later that he didn’t agree with my ordering title notwithstanding the clear language in the contract. I pointed out to him that clause in the contract and asked him if he had read the entire contract. I surmised that he probably had since he had requested several changes to various clauses throughout the contract. His response was to become angrier while spewing out wholly groundless threats.
Based on what had occurred, my problem wasn’t who was going to order title
and instead was the door that the other attorney had opened. Indeed, my issue was what other changes he would want to the contract for items that he had previously overlooked. I tried to put the issue entirely to bed by permitting him to order title from a title company of his own choice but also stating in my letter that no other changes to the contract would be made.
The contract is not supposed to be a living, breathing document that is subject to change at the whim of either party where they can cherry pick what they do and don’t like, even after it is signed by both parties. No, that is negotiation, which is supposed to occur prior to the contract being executed by both parties. The contract then is supposed to be a recitation of the bargain struck by the parties after full negotiation of all of the terms contained therein. Indeed, one of the attorney’s most basic and fundamental jobs is to fully review the entire contract of sale.
He cannot fancy himself a member of Congress and permit his client to execute a contract that he hasn’t yet read or fully read. There may be grave consequences that visit his client based on what the contract provides. It isn’t a defense in court to say that your attorney didn’t read the contract or explain it to you or that you really weren’t going to agree to one of its provisions.
The actions by this attorney unfortunately will color how I deal with him for the balance of this transaction as I do not trust that he either understands what his role is or what he is doing.
“ESCROW” IS NOT A TALISMAN
On the heels of the above experience, I had another contract in which I represented a seller who was selling a house that had 2 tenants living there. The buyer wanted the house vacant at the closing. I added a clause that if the seller couldn’t deliver the house empty, then he could terminate the contract and return the buyer’s down payment. The buyer’s attorney came up with the idea of having the seller put money in escrow as a solution. My response was that this was no solution at all as just using the word “escrow” doesn’t magically solve anything. The important question is what are the terms and conditions of the escrow? Thus, in this situation, the relevant questions to ask are as follows:
How much will be held?
How long will it be held?
What are the consequences once the deadline expires?
Will the Seller guarantee payment of rent by the tenants pending their vacatur, even if such tenants don’t pay?
Will the Seller guarantee payment of all or part of the buyer’s mortgage payment pending the tenants’ vacatur?
Can money be released from the escrow to pay for the eviction, mortgage and/or rent?
Can the escrow be used to pay for any violations issued post closing?
Can the escrow be used to pay for damage to the house committed by the tenants?
What if the parties are otherwise ready to close and there are still tenants at the premises? We are not going to yell "escrow" three times and have the problems magically disappear. Instead, we are either going to have to answer all of the above questions, as well as others, or we are going to have to terminate the contract, which was my original suggestion.
It’s clear then that saying that you will “escrow” is just the start and not the end. Thus, if your attorney tells you that the parties are going to escrow to resolve an issue, you must also know what the parameters of that escrow are.
Should you have any questions, do not hesitate to contact us at (718) 803-4113 or by email at SKAFAX@YAHOO.COM.
SUNIL K. AGARWAL, ESQ.
NATASHA S. AGARWAL, ESQ.
NATASHA S. AGARWAL, ESQ.
