In society, people are always rushing. We download our videos fast and our music fast. We like fast food. We’re always in a rush. The last place I can assure you that you ever want to feel compelled to rush is right before you sign on the dotted line for an agreement.
The agreement can be a purchase agreement, employment agreement, a sales agreement, etc. If it’s in writing, it’s important enough for you to take a moment and not endorse that document until you take 24 hours to either review it or go through the document with an attorney.
Review Written Agreements
At least once a week I get a phone call or someone comes to me because they’ve endorsed an agreement, and they’re panicked because they didn’t know what was in the agreement before they signed. And I’m not here to laugh—quite frankly, to me, it’s the gift that keeps on giving. But I’ll share with you just one story. Recently, I had a young man who was buying a newer construction home for around $600,000, and he had an earnest money deposit he had already put down on the home for approximately $30,000. He didn’t read the contract and he was having second thoughts about a week to two later. He called me in a panic to see if he could get out of the agreement. I said, “Well, did you read your agreement? “He says, “honestly, no.” And while that’s a very big investment, it doesn’t surprise me.
Upon review, I saw that he had missed the inspection period contingency. There’s a time frame that people have to inspect a property. If they don’t like something that comes up in the inspection; they can back out of the contract without any reason being given. He had missed that time frame. That was not a contingency he could invoke. But within the contract, in the financing section, there was a contingency that if he did not get approved within a 30-day period, he could back out of the contract. I asked him what the reason was; that he suddenly changed his mind. He’d found out that his job was not as secure as he thought. I told him that would be a good reason to back out of the contract as his mortgage company would not approve him if he didn’t have a position.
So, if you’re rushed and don’t know what you’re signing, you may have a problem later, and it can be expensive. It costs less to sit with an attorney to review documents that you want to engage with if you’re going to be legally bound at some time.
Read Entire Contract
The first 20% of most contracts usually have positive things in them, such as consideration, meaning how much you’re going to get or how much you’re going to give in exchange for an item or a thing or a service. That’s exciting! People are usually moving forward when they’re signing a contract. That’s what they’re looking forward to. You know, I want to buy a home; I want to buy a car, I want to get a job, whatever it is.
The other 80% of contracts usually have default provisions. Those provisions are the document. Pardon me? If you breach the contract and fail to meet your obligations, you give the opposing party the rights under the contract. Make the time to follow the 24-hour rule.
If you’re not sure about a provision, don’t sign it until you do.