How to Know When Your Realtor Is Cheating You
How to Tell When Brokers are Adulterous You
What actually gets under my skin, are greedy brokers who — for the sake of a larger committee — represent both the heir-apparent and seller (or landlord and tenant), and then ultimately shaft one of their clients merely because the banker created a conflict of involvement for his or her clients.
Before I begin, yous may want to read 2 blog articles I wrote, 1 entitled Commercial Leases: Avert Getting Screwed, and another entitled How to Negotiate Good Lease Terms. Both of these articles set the stage for what I'thou about to tell yous. In item, there are good landlords and bad landlords, and similarly, good brokers and bad brokers.
Brokers are Not Attorneys
Bad brokers are those who represent both parties to a transaction, and then say you tin relieve money considering they volition give you the contracts needed to get the deal done.
When this happens, automatically assume your broker is not looking out for your best interest. That broker is cheating you. Why? Because, they are trying to shut the bargain as rapidly every bit possible, and the last affair they desire, are attorneys who tin can potentially delay or even abolish the closing. Such brokers fear attorneys, but because an chaser could warn their client of significant liability or danger. Bad brokers don't want their client's knowing such things, because such cognition could kill a deal.
Standard Forms are a Joke
Bad brokers volition tell you that you don't demand an chaser, considering they accept access to the "standard real estate contracts" in your state. The only time I've found such contracts acceptable, is when such contracts are used for auction of a residential property, and merely when the buyer has a mortgage. In such instances, yous have state and federal laws governing auction of such property and the mortgages, and you have the lenders looking out for their best involvement, with the underwriters double-checking everything to ensure their security interest (i.eastward. the house) is protected.
In virtually all other cases, these safety mechanisms are only not present. For purchasing commercial holding, instead of residential property, you lot have almost no state (depending on the land) or federal police governing the transaction or the mortgage. You volition have a lender double-checking docs, just not with the same vigor and standards they employ for residential backdrop.
Information technology's even worse if you're renting or leasing a commercial belongings or buying/selling a business. In virtually states, there are no laws governing the lease of a commercial property, and you lot accept no lender watching your dorsum. Buying a business is just equally bad — it's caveat emptor (buyer beware) — unless you happen to have a commercial loan (or SBA loan) equally part of the deal. And so, the lender (particularly the SBA) will help watch your back. With that said, practise y'all recall the SBA will accept "standard forms" from your broker? Absolutely not.
If you're selling a business organization, you really need to exist conscientious almost "seller financing." Seller financing is where the seller agrees the buyer of their business tin can pay over some menstruum of time. The trouble is, unless you (i) run a credit cheque, (ii) have the experience of a lending institution to make credit decisions, and (iii) accept some sort of command over a security interest to reimburse y'all if y'all're non paid, you run a very high-take chances of losing your money. The general rule I requite clients, is to NEVER exercise seller financing greater than l% of the bargain, and to NEVER do seller financing that y'all cannot afford to lose in its entirety. If you lot're relying on being able to swoop back in to accept over the business, what happens if the business is worthless when you take it back?
Exercise brokers know what documents to provide, to create a security involvement in something? Do they know what terms belong in a promissory notation or buy agreement?
Real World Example
The inspiration for this web log article came from a flat-rate contract review I just finished. It was a for a commercial lease. The broker is representing both the landlord and the tenant, and provided the lease to the tenant — who is my client and had the foresight to rent an attorney to review the charter. Hither are only a few of the issues I felt were admittedly unacceptable in the charter, and should never have been produced by anyone getting paid by my client, the potential tenant:
- Landlord is in charge of the HVAC and roof, but Tenant is responsible for all costs associated with repairing and replacing the HVAC, besides as any water impairment resulting from leaks in the roof.
- Landlord gets all attorneys fees paid if at that place is a dispute, even if the Landlord loses the dispute or it'south the Landlord fault.
- If Tenant is fifty-fifty 1-day late on the rent, Landlord tin can come in, kick out the Tenant and has absolutely no duty to find a new renter. And, Tenant is responsible for full term of the lease, even if the Landlord does notice a new renter.
- Landlord tin can utilize force, without legal process or discover, if Landlord wants to terminate the Charter.
- Anything of significance requires "Landlord approving," without the requirement that such approving "shall not exist unreasonably withheld or delayed."
- Rent was miscalculated, of grade in the Landlord's favor.
All also often, this house has to deal with the ramifications of bad contracts thrust upon unsuspecting clients who thought they could trust their broker. I repent to all the good brokers out there, just if y'all're a broker who thinks in your heart of centre that you lot tin can actually stand for both parties in a transaction and the standard forms are fine for your clients, don't fool yourself. You're a bad banker who is only in information technology for the coin.
In a perverse way, I wonder whether I owe a debt of gratitude to all the bad brokers — later all, they are responsible for close to half of this business firm's revenue. If all our clients had well-written contracts, there would be very few disputes and lawsuits. Then how would we attorneys be able to put nutrient on our table??!?
Na. Instead, I prefer to leave this world and reach the pearly gates with a make clean witting.
If your broker gave you "standard forms" to complete your complex transaction, and those contracts ended upward being terrible for you, not representing your best interests and creating problems for you, talk to usa near your options in pursuing a claim against your former broker. It'south a pleasance to go afterwards the bad actors in the small-scale business organisation world, peculiarly those who prey upon the unsuspecting.
Constabulary four Small Business concern. A lilliputian law now tin can save a lot later. A Slingshot visitor.
Author: Larry Donahue
Larry Donahue is an attorney and founder of Law 4 Pocket-sized Business, P.C. He is licensed to practice constabulary in Illinois, New Mexico and the United states of america Patent and Trademark Office.
Source: https://www.l4sb.com/blog/tell-brokers-are-cheating-you/
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