06 May Read Those Documents At Closing!
Credit Slips notes that when Carissa Byrnes Hessick appeared as a guest blogger on Prawfsblawg, her post on closing on a house, and the comments to that post, amount to a mini-debate on pros and cons of reading contracts before you sign them. Professor Hessick was greeted with astonishment when she and her husband actually read everything presented to them for signing at closing on their home. The comments reveal some reasons why more people don’t do that: it’s socially awkward, time to read them is not built into the process, it’s pointless for a non-lawyer to try to read them, and even “despair.”
It is boring, it may indeed be socially awkward, it is difficult to understand every word of a contract drafted by a lawyer, and it may even be depressing. I suggest to you, however, that the next time you are in that situation, you deal with the boredom, awkwardness, or difficulty in comprehension, and slog through it anyway. Even if you don’t understand every word of a contract, you should be able to pick out obvious surprises. For example, I have had a number of clients in the last few years express surprise that their mortgage notes are adjustable. Most ARMs are clear enough to let the average reader understand that there is some change in the interest rate, even if you can’t figure out exactly how it works. The same is true for other provisions that you may not have fully understood when negotiating the contract. If enough of us insist on reading contracts, the social awkwardness will be replaced by acceptance and expectation that you will be reading the contract.
It is now many years ago that my Dad went with me to purchase my first “real” car, just after I graduated from law school. As I sat in the salesman’s office, blithely signing at the “x” without any real effort to read the contract, my Dad stopped me. He said that having paid for that law degree, he wanted to see me use it. I still think of that today when I read a contract before signing it. If my Dad and Professor Hessick (who has a law degree from Yale, teaches at Harvard, and seems to be pretty smart) both think it’s a good idea to read contracts before signing them, I am inclined to go along with that.
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