Weasel clauses
Sam Schneiderman, Broker-owner of Greater Boston Home Team continues his Monday series.
Real estate agreements and contracts (including offers, Purchase and Sales agreements, option agreements, leases and letters of intent) must be in writing to be enforceable in Massachusetts. Therefore, an agreement is only as good as its language.
Language in a contract that allows either party to get out of the agreement easily is called a “weasel clause”. Some weasel clauses are very obvious, like “subject to satisfactory review by the buyer’s or seller’s attorney” because any good attorney could find something unsatisfactory about an agreement if her client wanted to back out.
Other weasel clauses are harder for inexperienced readers to fully understand, like a clause that many sellers are including these days; “subject to seller(s) finding suitable housing”. Inexperienced buyers or agents might think that means that the seller will locate another place to live before they can set a final closing date on the seller’s home. What happens if the seller doesn’t find “suitable housing”? The buyer would have spent money on inspections, attorneys and appraisals only to have the seller say “sorry, couldn’t find a suitable replacement home so I am canceling the deal”.
There are three types of weasel clauses that I know of:
1. clauses that allow buyers to cancel deals (like the inspection clause)
2. clauses that allow sellers to cancel deals (like the suitable housing clause)
3. clauses that allow either party to cancel a deal (see next paragraph)
Some attorneys insert seemingly harmless language like “subject to a mutually agreeable Purchase and Sales agreement” into an offer. While it certainly sounds logical, that language allows either party to get out of a deal easily because it is a lot easier to DISagree on Purchase and Sale language than to agree.
I’ve never understood the benefit of signing an agreement that would allow the other party to back out easily. As a broker, I write offers to bind the other party to the deal and insure that my client can count on completing the transaction on the specific terms set forth in the agreement.
Perspective:
If you want to write an offer or Purchase and Sale that assures that the other party can not back out, don’t allow weasel clauses.
If you must entertain a weasel clause, add language that limits how long it can remain in effect. (i.e. “Subject to satisfactory review by the seller’s attorney within two business days of acceptance of this offer”)
Consumers or agents that have concerns about contract language should get legal advice from an experienced real estate attorney before signing.
Readers, what do you think?
Have you ever been surprised by a “weasel clause”?
I’d especially like to hear from our attorney readers on this one.
