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4 Tips To Prevent Real Estate Disputes From Arising
Disputes can arise right out of the blue where you least expect it. Someone you are dealing with could be using the classic poker face strategy. Many have the full intention to leave you as little time as possible for preparation. But no matter how well you conduct yourself and organize your administration, any little issue can be magnified by a disgruntled party to justify their disputes. This could be with tenants, vendors, suppliers, contractors, service providers, even your own staff.
Prevention is better than sure. At least that is what wise men say. Here are 7 easy yet effectively pragmatic ways to avoid real estate disputes from arising.
Work with experienced agents
If you are a fresh graduate architect, do you think a property developer will hire you to design their buildings for them? Do you even think that you can get to head a project in a small architectural firm? Of course you can… when your father is the firm’s owner.
You are not discriminating anyone by turning away inexperienced real estate agents. One of your hiring criteria is experience, and those who don’t meet your criteria will not be hired. Simple as that. Some people value personal traits like motivation and enthusiasm over experience. Well, that is their call to make. Because when negotiations hit the tipping point, people who have “seen and done that” will be able to identify the moment and act accordingly. While freshies might not even know there is this critical moment to look out for and continues to plough through. It’s like operating a wrecking ball in a development site when it has no reason to even be there.
There are a lot of processes, practices, and regulations to navigate to close off a deal. You want to have someone who has the experience to know what is coming next and possible speed bumps to be prepared for.
Consult lawyers with real estate expertise
Instead of needing a legal professional to clean up your mess later on, it is best to seek legal advice before you even attempt to negotiate a deal. And that person you hire is preferably one who has experience with real estate transactions. The legal profession is like the medical one. Surgeons and doctors have their expertise which they work on. You don’t ask a heart surgeon to remove a brain tumour. And you don’t ask a gynaecologist to do the work of an orthopaedic.
A specific area you need help on is on drafting contracts for you. This is a basic requirement for protecting your interest. Any experienced investor will understand the value that lawyers who know the industry bring. You also need them to perform specific due diligence tasks. Legal mistakes can be costly and time consuming to rectify
Have important terms clearly written in contracts
For one reason or another, we sometimes want to leave certain things vague. One reason is that getting specific on them will limit the advantages you can reap from the other party. But there are also terms that you will not compromise on for any reason. By leaving important terms open to interpretation by third parties, you leave yourself open to be screwed. It is like setting up a silhouette target in the shooting range. Shooters will see it and it will be up to them to hit it with precision.
You will be able to see this more clearly by using a simple example. Mentioning in your contract that rental should be paid by the end of the month can be pretty straight forward to most people. But this can also be disturbingly vague for professionals. The end of the month can be the thirtieth or the thirty-first. Even February can have it’s final day as the twenty-eight or twenty-ninth. If payment is by cheque, should the cheque be sent to you on the final day? Should it reach you by the final day? Or should it be cashed into your account on the final day? As you can see, people can play with words and interpretation to game with you. Think that eviction is a god-given right of the landlord? Think again.
To avoid misinterpretation or abused by word-play specialist, a more specific way to term it is “rental should be paid by cash or cheque by the 25th calendar day of each month”. Another important piece of information to specifically include in your contracts is the remedy process for disputes. What can be done and what cannot.
Of particular concern is the security deposit. Landlords and tenants often assume that security deposits have more uses than it actually does. To avoid confusion, it is best to have everything spelt out.
You should seek professional legal advice from your local attorney if unclear on these matters.
Learn to say no
A lot of people are very uncomfortable turning down others. The thought of having to reject someone else can be very stressful indeed. But in real estate, you do not have the luxury to do that when others are stuffing their requests in your face. The 2 things you need to look out for are problematic deals and problematic people. Remember you do not owe it to anyone but yourself on how you conduct your dealings.
If a deal or a person does not make you comfortable enough to give a green light, err on the side of caution. Walk away if you have to. Some people are so aggressive at getting what they want that your interest can be totally redundant to them. While other deals need you to bend so low that you can wonder who you got into an advanced negotiation phase in the first place.
It is never too late to say no as long as you have not given your endorsement on paper. And in some instances, even a verbal agreement can be binding. So be careful with your commitments. When you do walk out of a deal, you earn more respect compared to losing it. You don’t have to go ahead with a deal where you are on the losing end just so you can maintain your credibility. Signing up as the loser in a deal instead will actually destroy your credibility altogether.
Sometimes, you might feel like you have gotten a good deal as a favourable price has been agreed. And only later, do you find that the terms of the transaction are much more complicated than you first thought. It is times like this where you need to stand up and say no.