Think Before You Sign !

by PJ Wade, moneysense.ca

PJ Wade is a leading authority on the Maturing Marketplace (Boomers and Seniors), author of several books including "Have Your Home and Money Too" and "Caring for Your Aging Parents," and a popular speaker on retirement issues.

Have you ever been told, "Don't worry about the small print, it's just a formality"? Have you ever discovered, too late, that you're not going to get what you thought you'd agreed to?

Contracts commit you to what you sign, not to what you thought you had signed. Unless the agreement specifically includes a "cooling-off" period or legislation allows you to change your mind, once you sign there is no backing out. For instance, in Ontario, the Condominium Act allows a 10-day cooling-off period for buyers of new condominiums but none exists in resale purchases.

Real estate and contracts go hand in hand. Contracts are at the heart of every aspect of real estate and include mortgages, insurance policies, listings, leases and renovation agreements.

A wise real estate investor -- and that includes a home buyer or homeowner -- understands these five basic rules about contracts:

1. Don't sign until you are sure what you're signing. If you are not prepared to learn to read the legal jargon used in most agreements, spend your time and money on the most knowledgeable advisers your can find. For example, check with a lawyer, a realtor, an insurance broker and an accountant. Ask a lot of questions, listen to their answers carefully and check things out yourself.

2. Don't assume you that you will be protected. Don't assume that you'll get what was discussed or that you'll get your money back if things don't work out. In fact, don't assume anything. Take the time to be sure you know your rights, obligations and legal recourse. Use the laws that are there to protect you.

3. Don't be afraid you'll ask stupid questions. The only stupid questions are those you don't ask and later wish you had. Ask for clarification of the obligations of both parties in a number of "what would happen if" scenarios. Tape the discussion or at least take notes that you'll be able to read later.

4. Don't think the only danger rests with unscrupulous individuals or fraudulent presentations. If the salespeople you talk to do not understand what they are selling, how can you understand what you are buying? If your adviser has a hidden agenda, perhaps a bonus to earn or a quota to make, how can you be sure your interests will come first? Ask for written disclosure of all conflicts of interest. Be careful you don't confuse salesmanship with friendship.

5. Don't forget that if something seems too good to be true, it probably is.