You’ve heard the old adage: A verbal contract isn’t worth the paper it’s written on. This is particularly accurate when it comes to real estate transactions. Taking the time to prepare a foolproof contract can save you time, money, and sanity. Make sure you consider the following potential pitfalls.

Indefiniteness
Be precise – a contract that lacks certainty is not enforceable. In other words, draft your contract so that there is no doubt as to the subject matter, the time for performance, or the essential terms of the deal. 

Ambiguity
Choose your words carefully. If portions of the contract can be interpreted in different ways, then you risk being exposed to provisions different than what you intended. In fact, if a court finds that the document is ambiguous, it is free to determine the meaning by applying the “rules of construction,” which allows for such considerations as business custom or other documents. This is particularly problematic, for example, if the deal is meant to tailor to unique circumstances or changed substantially between prior negotiations and the final agreement. 

Merger Clauses
Look for language about the “entire agreement;” if the language is not there, insist upon it. A merger clause states that the parties’ agreement is fully stated in the written document and protects the parties against claims of fraud. In other words, a party cannot claim that you promised anything other than what the contract states. While a merger clause cannot completely insulate you from liability for misrepresentations or fraudulent conduct, it goes a long way toward defining the parties’ obligations.