The Stamp

Your mission, should you chose to accept it, is to figure out how to neutralize buyers in the event of litigation. You are certainly allowed to utilize common business practices. But for something unique, let me relate to you what real estate risk managers, the world's most innovative practitioners of this art, have devised. Of course, if you tell anyone that I told you about The Stamp, the Secretary will disavow my authorship of this essay.

To avoid litigation businesses and professionals include binding arbitration clauses in their contracts. Hospitals and physicians, for example. The professional arbitrator is "judge and jury". The California legislature apparently believes that arbitration provisions are in the public interest - but should not be compulsory in some situations. Therefore, real estate listing agreements SHALL contain a provision for arbitration, in such and such type face, BUT its application shall be optional.

So Listing Agreements, Buyer Broker Agreements, Purchase Contracts, ALL contain Arbitration provisions, to which the parties may or may not agree. There are also provisions for non-binding arbitration, called Mediation.

But this is all standard stuff.

For the really interesting stuff we turn to real estate risk managers, light years ahead of risk managers in other fields. What THEY did was to invent The Stamp, elegant in its simplicity - if not in concept.

The Stamp is just that, a rubber stamp on which are etched the words [Receipt Acknowledged], with blank lines for each buyer's signature. All documents which Buyers receive bear The Stamp. Sometimes, The Stamp is on every page of every report. You can't miss it.

What if the buyer's agent acknowledges receipt of a document from the seller, in writing. Is that good enough? No. No. No. Buyers have got to sign The Stamp on their own.

What if the buyer signs a Receipt for Documents List. Is that enough? Sometimes, yes, usually, no. Most sellers want The Stamp.

What if the buyer gives a 23 page inspection report that the buyer commissioned, to the seller. Since the buyer is giving the report TO the seller, surely The Stamp is not "required." Wrong. Buyers must acknowledge receipt of reports they give to sellers - as if the sellers had given the reports to THEM. And not only that, some sellers request the buyer to acknowledge receipt of the specific number of pages.

And there's more.

Most stamps don't just say [Receipt Acknowledged]. They usually say [Receipt Acknowledged. Read.]. Buyers are "required" to sign a statement that they read what was given to them, and to give that statement to the seller!

Many stamps don't just say [Receipt Acknowledged. Read.]. They say [Receipt Acknowledged. Read. Approved.].

And, believe it or not, some stamps don't just say [Receipt Acknowledged. Read. Approved.]. They say [Receipt Acknowledged. Read. Approved. Understood.]. Understood!!! As Jack Paar used to say, "I kid you not."

Can you imagine a physician telling a patient that they cannot be released from the hospital unless they read and approve everything in their medical chart, in writing!

In the early 90s, in the San Francisco Bay Area, the four publishers of real estate purchase agreements provided that buyers' performance was subject to buyers' acceptance/approval of the "condition of the home". Obvious.

However, two publishers additionally provided that buyers shall "approve inspection reports". While there is not a problem with the Queen's English there is definitely a problem with the Queen's Logic. Buyers are NOT purchasing inspection reports. They are purchasing homes. In my opinion this provision is the basis for the huge "approval" industry that I've been addressing. So, I suppose, it is not surprising that some folks apply The Stamp across the board to every piece of paper that is delivered to buyers: including the listing agents Open House statement, engineering calculations, architectural drawings, water sprinkler instructions, utility bills, etc.

In the framework of a home purchase the buyer's offer is indeed contingent upon his or her acceptance of the condition of the property - NOT ON APPROVAL OF INSPECTION REPORTS with their itemization of many, many deficiencies. If the buyer feels strongly about a particular deficiency THEN the seller must be informed that a given condition is an obstacle to buyer's removal of the inspections contingency.

There is of course NO contractual requirement that buyers acknowledge receipt of documents (other than some statutory disclosure forms), read documents, or "approve" documents - whatever that means. But I suspect that 99% of buyers sign/initial where indicated by The Stamp, page after page, because they are asked to do so.

As a professional courtesy I do advise my clients, buyers, to acknowledge receipt of documents. But nothing else.

Still, one has to admire the ingenuity of whoever invented The Stamp.

Copyright ©1996 through current year, Leopold A Rodriguez
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