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Dealing with contracts is nowhere near as simple as just signing on the dotted line. Here's some easy advice to help you get your head around them.
Blogger: Cam McLellan, director, OpenCorp
Get things in writing. I repeat, get things in writing. I do this with everything. In business, it’s now habit for me to ask people to email me things in writing, minutes of meetings, verbal agreements, etc. This is also part of my system that keeps me organised. There are no grey areas when things are in writing.
When it comes to property investing and business, I write my own contracts for everything where possible. If you use someone else’s contract to do a deal, it will all be in their favour, not yours.
Don’t sign anything until you understand every part of the deal and contract. Learn to love navigating around contracts. Contracts are like the old Choose Your Own Adventure books. When you see a reference to another section in a contract, stop and go to that section, find out what it refers to. It could say “you will skip through a daisy garden and all will be fine”. But it could say, “you’ve just been eaten by a dinosaur”. Take time to check contracts in their entirety and understand them before signing.
Again, enjoy reading contracts. Legal speak is basic to understand as legal concepts are predominantly logical. Lawyers have developed certain words and phrases that most people don’t come across every day, so it seems complicated at first. But once you pay attention and keep asking questions, you will quickly realise they are just words. Once you learn and understand them, you won’t be fooled. Keep asking questions until you understand everything. Enjoy the learning.
You will start out as the person with all the seemingly stupid questions. This is a good thing. By asking lots of questions, you’ll soon become the person with all the answers.
I've had people who I have dealt with for many years trying to slip additional terms into contracts that were not agreed to verbally in our deal (they never make that mistake twice). Read each and every contract, even if the contracts may look the same as those you’ve seen in the past. Even with something as simple as an agent’s agreement to lease your property, some agents try to add all sorts of ridiculous terms, from exclusive sale agreements to uplifts in fees.
You don’t have to be paranoid, just take your time and tell people that you need to do some research or that you need time to read over and absorb the paperwork before putting pen to paper. Don’t be scared to let a deal go if someone puts a hard close on you. Thank them and walk away. As I mentioned earlier, the world is full of good deals.
If you are not 100 per cent confident with a contract or haven’t the time to read over the detail, email it to your legal team before signing. I still do this regularly.
• Get everything in writing
• Learn to love navigating around contracts
• Don’t sign anything until you understand the entire document
• Consult your legal team before signing