Lesson 37: Sold! But Put it in Writing.

From the Real Estate section of How You Can Avoid Legal Land Mines by Joseph S. Lyles (2003).

Two men entered into a written contract for the purchase/sale of an old industrial building for $600,000. They literally wrote the contract on a napkin. When the appraiser was performing the appraisal, which was required by the commercial lender, he found partially buried barrels of what appeared to be hazardous waste.

Needless to say, a dispute erupted over whose responsibility it was to clean up the waste and whether the purchase had to proceed by the date indicated on the napkin or whether the buyer had the right to delay while the wastes were being evaluated.

As a result, both sides hired lawyers and filed lawsuits. They accumulated big litigation bills and neither side was happy with the outcome.

This case is especially amazing because form real estate purchase contracts are easily obtained and specifically cover contingencies like those encountered by these businessmen.

The Lesson: Avoid a costly lawsuit by completing a comprehensively written contract for the purchase or sale of real estate. Have a real estate expert or attorney review all real estate purchase contracts.