Not reading the fine print is unconscionable

by Chris Markham. 0 Comments

I know Ive said this all before, and, even though this may seem like a repeat, I do not ask for your forgiveness, nor will I apologize. It just seems to me that, in general, people sign all sorts of documents legally binding documents without having any idea what theyre signing, and what the ramifications are if they do sign and the situation goes sideways.

To wit, let me provide you with an example.

A person wants to sell their business, and they engage the services of a Realtor to do so. As to be expected, the Realtor provides the potential clients with an exclusive agency listing agreement, which means that, for a certain period of time (which is listed on the agreement), the putative seller cant list the property for sale with another Realtor. Thats all well and good, and to be expected; however, just when you think things are going well, the situation can turn crazy all in the space of a few paragraphs.

We then get to payment. Should be easy enough

the Realtor sells the property, and, upon the occurrence of that momentous event, the Realtor gets their hard-earned commission. Thats pretty standard, found in all listing agreements the world over. Well, true, but according to this listing agreement, the Realtor seemed to get a commission if the potential seller sneezed.

See, according to the listing agreement, the Realtor received their commission if: they sold the property; if the property was sold during the term of the listing agreement; if the property was sold for five years after the listing agreement expired; if there was any change in the potential sellers limited liability corporation (i.e., if the seller added or subtracted a member from the LLC); if the seller declared bankruptcy; and/or if the seller sold or gave away any piece of machinery on the property. Basically, the way the listing agreement was written, the Realtor would be guaranteed their commission over the next seven years, apparently whether the property was sold or not.

Then it gets interesting.

Concurrent with the execution of the listing agreement, the Realtor required the potential seller to, at said sellers own expense, to file a security interest with the state for the property and fixtures. The practical aspect of this requirement is that the Realtor would then have a perfected lien on the property that would guarantee the commission no matter what happened going forward.

Now, Im sure the Realtor didnt explain any of this to the seller. They said it was a standard agreement that is used in every one of their deals, and theres nothing to worry about. But, if there is one thing I do know, is that if you open the door for a person or entity to collect money from you, they will do it. It may not be pretty and it may not even be legal, but they will get their scratch.

There are a great many of these types of dangerous provisions in documents you sign. When a deal goes sideways, you then want someone like me to get you out of it scot-free, which, in most cases just isnt possible, unless you can prove that you were under the influence of something when you signed the thing, or the document is unconscionable.

As a side note, my contracts professor used to say that you could always argue unconscionably for just about any contract. And like the Boy Who Cried Wolf, once you use or hear the argument so many times, whether or not in this instance its actually true, the words lose all meaning.

Finally, if you tell someone that you would like an attorney to review the potential contract, and they try to talk you out of it, thats a bad sign. One should have the confidence in the credibility of their document to allow it to be examined by a trained professional. If they do allow the review, then tell you that your attorney has no idea what theyre talking about, well then, your attorney might just be on the right track.

Nothing ticks off a scam artist more than to be called out on their scam, and, if you do just that, you wont have to worry about what you sign.

Christopher L. Markham is a general practice attorney based in Frederick. He can be reached at chris.markham7@gmail.com.

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