Using Custom Real Estate Contracts

Let me begin this short article by stating that I am not an attorney and I'm not trying to provide any legal advice to you, I'm simply providing potential buyers and sellers of real property with information that they may not find in any other venue.

Having been a licensed real estate borker for over 30 years I can say that I have seen a great deal relating to the actual principles and parctices of real estate agents and brokers, and one relatively common practice of them is the use by agents of custom contracts including custom purchase agreements.  In fact, large brokerage firms often have their own attorney's create purchase agreements rather than use forms developed by others.

While some commercial real estate (CRE) organizations in Las Vegas offer a commercial purchase agreement to their members but some individuals opt out of those forms in favor of their own custom forms.  Reasonably they want to control the outcome of purchasing issues that often destroy a real estate deal.  A couple of provisions that custom purchase agreements attempt to deal with that are not well addressed by standard forms include:

ESCROW - Most real estate agents and brokers are not happy with the standard verbiage included in many standard commercial real estate contracts with regard to the establishment of and cancellation of escrows.  Agents feel that parties should be able to establish and terminate an escorw easily and without the meddling that often occurs by the title company.

CONTINGENCIES - Some custom purchase agreements attempt to allow for an easy termination and refund of earnest money prior to a final hard money date, brokers know that buyers may want out of the agreement without complations if they find problems.

SELLER WARRANTIES - You have to hunt through a standard purchase agreement to find a provision that requires anything of a seller beyond his obvious requirement to close the transaction.  Custom contracts often call for the seller to disclose things like; mechanics liens, unrecorded encumbrances, litigation, existing contracts with third-parties, environmental problems, zoning / planning compliance and foreign status.

CONTRACT TERMINATION - Commercial brokers understand that forcing a seller to sell may be a reasonable theoretical recourse at law for attorney's to pursue but that in the real world it hardly ever happens, so letting sellers out wihout pain and letting buyers out when they default for their earnest money needs to be spelled out and custom contract do get this done.

Can custom contracts go too far?  I would say yes without a doubt, I have copies of broker drafted contracts written and presented to me as a listing broker during real estate booms in the early 1980's and 2005 that were so over the top that attorneys have kept them as collectibles.  While courts may elect to allow parties to make their own agreements, some of the ones that I have seen in the past border on absurd and had they ended up in court they likely would have caught the ire of a judge.

Custom contract provisions also run the risk of being held against the party that draften them, that's why you want to use an attorney, so if you acknowledge as a buyer or seller that you were told to use an attorney and you don't, one of those slick agent / broker written provisions that were supposed to make things easier may come back and bite you.

If your agent or broker wants to use a custom contract I would suggest that you hire an attorney.  Let them write the contract for you if you like but let the legal expert take a look.  Thirty years as a commercial broker may make your broker pompous but it doesn't make him a legal expert and you are at risk not him.

A final word about qualified people is in order.  All attorneys may be "legal experts" but not all of them specialize in commercial real estate contracts.  If you want someone who knows about real estate contract provisions better than your agent who may be involved with them every day it would be an attorney who has years of experience dealing with real estate contract law.

Glenn J. Rigdon, MA, MRICS, ASA is an experienced commercial real estate broker and commercial real estate appraiser located in Henderson, Nevada.  Check out his commercial appraisal articles site at or his profile on LinkedIn at and his website at

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