By Darren Richards
It’s my contention that a successful and prosperous relationship with your lawyer (and indeed all those professionals on your team, as well as those you make deals with) starts and ends with honesty. It’s rare to find people that are humble enough to share their struggles or questions, honest enough to ask the ‘embarrassing questions’ (note: there really aren’t any), wise enough to know they are safe to confide in their lawyer, and prudent enough to know they win when they negotiate with integrity. English playwright Noel Coward once said, “It's discouraging to think how many people are shocked by honesty and how few by deceit.”
Courage is key in building a great relationship with your legal team. American Presbyterian leader A.A. Hodge said “It is easier to find a score of men wise enough to discover the truth than to find one intrepid enough, in the face of opposition, to stand up for it.” And American poet Robert Frost observed that “The best way out is always through”. These guys understand that value of courage.
I have found most clients keen to ask questions about their predicaments - but relatively few who are willing to hear the answer. The blame game (the trouble is always someone else’s fault), fighting for the sake of fighting, fighting for the sake of pride, and generally not having the courage to take responsibility or work through the tough solution, will always result in destroyed relationships and less than successful business dealings. And it hamstrings your advisors (aka realtors, brokers, lawyers). Perhaps an honest answer to your realtor about a deficiency will result in some questions from a buyer, but it likely reduces risk, and gives both the realtor and your lawyer an opportunity to provide valuable and cost-effective advice and solutions proactively.
A simple example - a husband and wife try to hide the fact that changes to their property have occurred between the date of the last survey (real property report) and a coming sale (i.e. a new shed or expanded ground level deck). But fearing the cost of a new updated survey, they didn’t advise their realtor who could have easily modified the agreement to stipulate the buyer would agree to accept the survey ‘as is’ or at the very least obtained one during listing phase at reduced cost or arranged for title insurance in lieu. Inevitably the buyer and her lawyer find out the survey is not up to date, and require, at the eleventh hour, an updated one. The cost is higher now for a rush survey. The lawyer is forced to agree to a holdback until it is provided or is forced to negotiate some other last minute alternative. Fear of disclosing that simple fact results in less than ideal outcomes.
A successful relationship also requires simplicity. Someone once gave this sage advice: “You only need two tools in life: WD-40 and duct tape. If it doesn’t move and should, use WD-40. If it does move and shouldn’t, use duct tape”. While investing in real estate is not easy or simple, effort should be made to make it as simple as possible. In other words, don't pursue a complex course of action or a complex set of agreements where a simple one would suffice.
For example, when negotiating a contract to purchase property, the temptation is to avoid potential problems (see courage above) rather than to simply deal with them head on. The deal then gets complicated, with multiple levels of patches (holdbacks, amendments, tasks) that could very well have been avoided with a phone call to the other side. Or even with just a phone call to your lawyer - “Hey, I have this problem and need your advice”. To be clear - avoiding an issue does not equal simplicity. Addressing an issue (even if it means adding some terms to the offer) does not equal complexity.
Creating a successful relationship also requires specificity. The devil’s in the details after all. Here is an apparently true quote (must be true - it was found on the internet!) from a high school essay: “Her vocabulary was as bad as, like, whatever”. Lack of specificity not only causes failing grades, but is the cause of most legal disputes and litigation.
For example, if you wish to be the only Director of your real estate holding corporation, you would not want to instruct your lawyer to ‘draft a standard unanimous shareholder agreement’. That imprecision will likely result in a USA that binds the shareholders to appoint a Director representative from each shareholder. Or, if you knew your residential property didn’t comply, inserting a clause simply stating that ‘seller will provide title insurance in lieu of compliance’ won’t be specific enough to accomplish your goal. Your representations and warranties about compliance also need to be deleted (and could be enforced post-contract). And the clause itself should be more precise: the seller can’t actually provide insurance. He can only pay for it (the buyer must purchase his own policy). Further, it should specify how much he is willing to pay or credit the buyer for that insurance. The cost can vary greatly.
It’s likely you’re already a fantastic client and one that every lawyer, including myself, would love to have in our fold. So pass this along to those who may need this advice.
Darren Richards is a partner with Richards Hunter Toogood. He focuses on both residential and commercial Real Estate and Corporate/Commercial Law serving both small and medium sized owner-managed business in the Edmonton and surrounding region. Mr. Richards also acts for major banking institutions and other lenders in relation to their commercial loan facilities. Reach him at: email@example.com or www.rht-law.ca.