Best Practices - Those Ever So Important Initials

 Make Sure You Have EVERY Initial Before Commencing Celebrations!

-Best Practices Series-

The requirement for initials on each page of the Sales & Purchase Agreement, should NOT be treated as optional.      Let's find out why.

So, the image above is near and dear to every agent, because it represents an impending commission. This same ASP Agreement is also a minefield and far too many agents have fallen foul to treating it lightly and later wishing they had not done so.

Here we will examine one small, but highly explosive bit... the "Initials". For our purposes here we will not need to enlarge these pages, but the orange boxes, at the lower right corner of all but one of the pages is our target.

Wait, did I just say all but one page? Yes, but can you guess why page 10 isn't included? That's because there will be signatures and no initial is needed, as long as no additional material changes have been made on that page.

So, back to the remaining nine pages. Has anyone ever touched on this, during your original license course, or perhaps in training by your firm? If you were able to say yes, "good on them". But...

Let's perform a very brief mind experiment and the answer should become obvious. In presenting this agreement to a prospective buyer, you are required to review the agreement, before obtaining their signature and let's further imagine that you have reviewed all ten pages and have obtained their signature. The sale goes forward and the contract is subsequently accepted by both parties... Happy Days, right?

Not so fast, just moments before settlement you are notified by the buyer's solicitor that a tenant, not mentioned in the ASP, has produced some significant damage, but that the time allotted the purchaser to inspect the property has now passed and accordingly, the vendor has no intentions of making any adjustments.

Threats are exchanged by both solicitors, based on the language in the agreement, however, the purchaser now holds the position that no view of the contract clauses relevant was provided by the listing agent. The listings agent's position is that such a review was provided and the purchaser could be held responsible for any delay  in settlement.

In the end the conflict produced a complaint to the REA. Without a set of initials or some other evidence, the agent may find themselves in a very weak he said, I said situation. So,  those few minutes saved in not reviewing the contract and or failing to obtain initials of both parties, may cost real dollars and leave the agent's REA record with a three year negative finding.

Our position for Best Practices is therefore quite clear. Review the entire contract and obtain initials on each page, even if no alterations to the contract have been made. If you find yourself being told to ignore this advice, we suggest pointing the individual to:

Complaint Number:  C21752

 The REA has now acknowledged the Best Practice of initialling each page in the 2021 CPD course on Sales and Purchase Agreements:

Best practice

• Have the party clearly initial at the bottom of each page of the sale and purchase agreement and any changes, ensuring a methodical and thorough process is followed and that the party confirms they agree to all parts of the agreement, including amendments.

Do keep in mind that the initials at the bottom of each page creates an assumption that the agent has reviewed these pages, with each signatory.

Shortcuts can often save time, but can also cost dearly!