“Mixing and matching” commercial and residential forms
QUESTION: I am representing a buyer of a commercial property who has it under contact using the Agreement for Purchase and Sale of Real Property (form 580-T). My client has had some inspections performed and wants to request that the seller take care of several items. I handle both commercial and residential transactions and in the residential transactions I am accustomed to using the Due Diligence Request and Agreement (form 310-T) to negotiate repairs, etc. However, I can’t find a comparable form in the commercial series of forms in the NC REALTORS® forms library.
My question is, would it be a problem for me to use the Due Diligence Request and Agreement form in this commercial transaction?
ANSWER: Using the Due Diligence Request and Agreement form in a transaction that is under contract using the Agreement for Purchase and Sale of Real Property is asking for trouble and should be avoided. Form 310-T was specifically designed for use in connection with properties that are under contract using the Offer to Purchase and Contract (form 2-T) and thus contains references to terms found in form 2-T that don’t even exist in the Agreement for Purchase and Sale of Real Property, such as “Settlement” and “Due Diligence Period,” not to mention references to the Offer to Purchase and Contract itself. It also references the Agreement to Amend Contract (from 4-T), which is also specifically designed to amend a contract entered into using form 2-T, not 580-T. These “disconnects” between the different terminology used in forms 310-T and 580-T are accidents waiting for a place to happen.
Trying to “mix and match” commercial and residential forms in the same transaction—whether it is commercial or residential—may also run afoul of the REALTOR® Code of Ethics. Article 9 of the Code requires REALTORS® to assure that all agreements related to real estate transactions are in writing in “clear and understandable language expressing the specific terms, conditions, obligations and commitments of the parties.”
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