The following is relatively common: we review a P&S and send a Rider to the Listing Agent. After a day or two, the Listing Agent responds that the Buyer/Seller has decided to retain an attorney because “your rider is 5 pages long!!!” We’re often left scratching our heads, wondering: “what would the Buyer/Seller have done if the Rider was only 3 pages? 2? 1?” We’ve already explained the top 5 provisions of the P&S to understand, (for new readers, click this link to read: Five Top Provisions to Understand While Reading a P&S), so we’ve decided that it’s about time to dispel the confusion regarding it’s twin brother–the Rider. We’re going to throw back the shades, sweep away the mystery, and hopefully unlock what is actually a completely decipherable document.
There is an important fact to realize: besides Real Estate Professionals and the occasional, highly-experienced home Buyer, most people don’t deal with contracts, let alone Purchase and Sale Agreements, on a regular basis. Clearly, the best way to deal with this unfamiliarity is to hire a top-notch real estate attorney to help you review, negotiate, and understand the P&S and Rider(s). The next best thing is to understand the basics of a Rider and to apply a surprisingly simple technique to review the documents.
- First things first, what is a Rider? The answer to this question is the first step toward getting comfortable with this document. A rider is simply an addition to the P&S. A common misconception is that its provisions do not carry the same weight (or that it carries additional weight) as those found in the P&S. This is simply untrue (unless the Rider says so explicitly). In effect, a Rider is the P&S.
- Why do attorneys insist on using Riders? Attorneys like to use a Rider to either fill in the gaps or to change the terms of the P&S. Changes range from extending dates and fixing typos to replacing entire paragraphs to better reflect the deal that’s already been struck between the parties. The simple truth is that the standard form P&S used by most parties in Massachusetts real estate transactions are Seller-sided. Buyers often seek to make changes and additions to draw the document as a whole into balance. Most Sellers will want to add provisions to the P&S through a Rider to address additional areas that are not addressed by the standard form document.
Here’s a (Surprisingly) Simple Technique to Review a Rider:
- Read the document as though it’s a stack of small documents. Consider each paragraph individually-one at a time;
- Read the paragraph all the way through;
- Read the paragraph again, focusing on things you don’t understand. If applicable read the paragraph in the main body P&S that is being modified by the Rider and make note of precisely what is being changed;
- Summarize the paragraph in a few short words in the margin of the document so that you can better remember what it means;
- Jot down, questions, comments, or requested revisions; and
- Repeat with the next paragraph until you’ve reviewed the entire document.
Yes, you read that correctly: we said requested revisions. The parties must agree on the final P&S; this inheres a certain degree of negotiation. Some terms are unchangeable as a practical matter or as a matter of custom–the buyer or her attorney isn’t going to agree to give you the money ahead of closing (practically impossible), have the Buyer pay the Broker’s commission, or pay the Seller’s deed stamps (both customarily impossible in Massachusetts), but they are likely agree to limit the number of visits the Buyer can make to the property or the amount of money the Seller’s obligated to spend to clear title. Just remember that this is certainly the case where “it never hurts to ask.”
Some of you out there might be wondering right about now: “why is this lawyer telling me how to do his job?” You’ll note that we said the best way to negotiate a P&S is by retaining an attorney. An attorney will have a good sense of what needs to be added to protect their client’s interest, what is negotiable, and what isn’t negotiable. You probably won’t have this experience or expertise. That being said, a party to a P&S who feels comfortable going it alone should have the tools to do this most important work.
While this review process may be time consuming–dare I say a bit boring–reviewing the P&S and Rider is incredibly important. It sets the terms for the transaction, acting as a guide post for the parties. Using this review framework makes it clear that the number of pages is immaterial to the party’s ability to review it. A Rider is not designed to hide dubious contractual terms; rather, it’s designed to better express the essential agreement between the Buyer and Seller.
Stiles Law, with offices located in Boston and Marshfield, Massachusetts, is a firm concentrating in real estate conveyancing and mortgage lending services, representing buyers, sellers, borrowers, banks, mortgage companies, investors, builders and developers in all of their real estate and mortgage transactions. Stiles Law serves all areas of eastern Massachusetts–the North Shore, Boston, and Cape Cod, in addition to the entire South Shore, including: Plymouth, Kingston, Duxbury, Hanover, Pembroke, Marshfield, Scituate, Norwell, Cohasset, Hull, Hingham, Weymouth, Braintree, and Quincy.
Copyright © 2014 Stiles Law, All rights reserved. Stiles Law is a Massachusetts licensed law firm and all content is based on Massachusetts law. The information presented above is meant to be used for general informational purposes and it should not be construed as legal advice or legal opinion on any specific facts.