In society, people are always rushing. We download our videos fast and our music fast. We like fast food. Some people like to go through a fast-food joint once in a while. And also, you know, eat ramen noodles. Ramen noodles have been around since I was in college. The point is, 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.
At least once a week I get a phone call or somebody comes in 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 that 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 know 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.
So I had him send over the agreement. He had missed the inspection period contingency. So there’s a time frame that people have to inspect a property and if they don’t like something that comes up in the inspection, they can back out of the contract without any reason being given. So he had missed that timeframe. 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. So as I’m talking to him, I asked him what was the reason why now, all of a sudden he had changed his mind and he basically told me, because he found out that his job was not as secure as he thought it was. And I told him that there could be a good reason for him to back out of the contract because his mortgage company would not approve him if he didn’t have a position.
So, you know, if you’re rushed and you don’t know what you’re signing, you’re going to have a problem later on. It’s more expensive. I always like to say, pay me now or pay me later. It’s cheaper to sit with an attorney and review the document that you want to engage with because you’re going to be legally bound to it at some point in time.
The first 20% of most contracts usually have positive things in them, such as the 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. So 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.
But the other 80% of that contract usually has default provisions in it. And those provisions, they are the document. Pardon me? These provisions, if you breach the contract, give the opposing party the rights or what they can do to you if you fail to meet your obligations under the contract. So make the time to follow the 24-hour rule.
If you’re not sure about a provision, if you don’t know what it means, don’t sign it until you do.