CLOSING EARLY

CLOSING EARLY

So often AREC staff are asked whether licensed agents must secure a written agreement signed by all parties every time a buyer and seller decide to close earlier than the date specified in the sales contract.

AREC will not routinely consider it a violation if a licensee does not secure a signed statement by both buyer and seller to close early.

Of course, there can be exceptions. If all parties to the contract not only agree, but insist on closing early and want the contract to reflect such, by all means, put it in writing and have all parties sign the modification. But then, most of you know this and would do just that.

Generally, everyone agrees that if the closing date is extended to a later date, the licensed agents should get all parties to sign an agreement to extend the closing. Without such, our attorney friends would tell us that the contract may become voidable once the original closing date has passed and the transaction has not closed. That dilemma does not exist with the expedited closing whereby the parties agree to close early.

So let’s consider the more casual situation where one of the parties proclaims that they could close early if the other party wants to and the other party responds that they are “ok” with closing a few days sooner. Of course, you will want to make sure the parties also understand and agree to any changes to the time of possession. If you think the time of possession could become an issue, you may want to go ahead and get everything reduced to writing.

Regulation 10.10(a) states in part “… a licensee, for the protection of the public and of all parties with whom the licensee deals, shall see that the exact agreement of the parties regarding real estate is in writing.” Note the phrase in the sentence, “for the protection of the public and of all parties with whom the licensee deals”. Is that a qualifying condition to getting the exact agreement of the parties in writing? In other words, if it would not necessarily serve to protect the public and all the parties to the transaction, should AREC force the agents to have all parties reduce their agreement to close early in writing and get all signatures? Could AREC actually put the parties and their contract in a more volatile situation by requiring these agreements to close early be reduced to writing in every situation?

Real Estate License Laws, Commission Regulations, and the application of such, should never force agents to put their clients and customers at risk. I’m concerned that if AREC was to absolutely require that any agreement between a buyer and seller to close early be reduced to writing, that, in some cases this could actually be detrimental to the parties to the transaction. I’d rather like to think that real estate agents, especially the veterans of the profession, usually know what’s best for the parties. If you’ve got a solid contract and the parties casually agree to close a few days early, I don’t think AREC should force the agents and thereby the contracted parties, to alter their original agreement. If something goes wrong and the expedited closing isn’t successful, you still have the original contract in place with the original closing date. However, the Principal Broker of a firm could certainly require that all such agreements be reduced to writing.

Bottom line, AREC Investigators will not routinely consider it a violation of Regulation 10.10 if licensees don’t have parties reduce to writing their agreement to close early. However, I can’t make that an absolute statement because, as stated above, there may be that situation whereby all parties to the contract consider the expedited closing essential to the agreement and want the contract to reflect such. In that situation, by all means, put it in writing and have everyone sign it.