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How checking the wrong box can ruin a real estate deal

Have you even been in a conversation with your partner or friend and your words don't come out quite right so you say, "you know what I mean." You can safely assume that your partner or friend knows what you are trying to say based on the "substance" of your conversation.

Unfortunately, the same principle does not apply to legal contracts. If you are a real estate agent or broker, it's extremely important that the offer/counteroffer/acceptance forms are filled out accurately and appropriately in order to avoid a potentially disastrous result.

Here is an example from a real case that could leave you scratching your head.

Court puts form over substance

On Nov. 2, a buyer made an offer to purchase a property for $41,600 cash, no contingencies, with a close of escrow in 30 days. On Nov. 6, the seller made a counteroffer for $44,000 by returning a form labeled "counteroffer."

The buyer, though his intention was to agree to the terms of the counteroffer, checked the wrong box. Instead of checking the box on the form that said "acceptance of counteroffer" he checked the box that said "counter-counteroffer" and wrote that the close of escrow would be Dec. 6, 30 days from the counteroffer.

The seller, who changed his mind about the sale, decided to use the buyer's mistake to his advantage and refused to sell. The buyer then sued for specific performance and lost. The buyer appealed and lost again.

The court of appeals held that the buyer's form said "counter-counteroffer," and rather than trying to guess what the buyer had meant to say, the court went strictly by the form. This gave the seller the opportunity to refuse the sale because no agreement had been formed without his acceptance.

The difficult thing to swallow in this case is that even though the buyer did not add anything to the agreement with his so-called counter-counteroffer, the court refused to consider it an acceptance.

Moral of the story

Make sure your forms say what you mean for them to say. That means carefully reading them and knowing what the verbiage means before using them. The court could give a form priority over the substance of the situation or even your true intentions.

If you have access to a lawyer, the best option is to have him or her look over the forms, especially if they are new to you. This will give you the greatest safeguard from a potentially devastating mistake.

Check out our video for more on this surprising case.

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