“No Haggle” Attorney Approval Provisions: A Better Way for Residential Developers 
Perhaps the most critical (and nerve-wracking) period in the process of selling a residence is the attorney approval period. This period is important, because this is when buyer’s remorse and contentious buyers’ attorneys can undermine the buyer’s commitment to the purchase. Accordingly, the goal is to move the buyer through this stage as quickly and smoothly as possible.
Unfortunately, the prevalent way of preparing form developer sales contracts tends to make the attorney approval a drawn out process. Most contracts provide for a short period during which the buyer’s attorney may renegotiate certain terms of the agreement. In anticipation of this negotiation, most contracts are set up to include some negotiating room. In other words, the terms of the form are designed to be more stringent and onerous to the buyer than the developer’s attorney will routinely concede to during the attorney approval negotiations.
Thus, the stage is set for the haggling process which characterizes the attorney approval period. This process begins when the buyer’s attorney tenders a letter to the developer’s attorney setting forth proposed changes to the contract. Although buyers’ attorneys are diligent about delivering these letters within the attorney approval deadline, often the changes proposed by the Buyer’s attorney are unacceptable and must be negotiated. These negotiations can often drag on. Residential real estate attorneys are often difficult to reach and slow to conclude the negotiations, either because of a heavy workload, or because they perceive the delay to be in their client’s best interest. Moreover, despite protracted delay, the developer feels compelled to hold the buyer’s unit off the market and has little leverage with which to pressure the buyer and his attorney into concluding the attorney approval negotiations. The only real alternative available to the developer is to terminate the agreement, which, of course, is an unattractive alternative.
Moreover, there is no guaranty that at the end of this process the developer will retain the sale. Once the buyer’s attorney tenders his letter with comments, the contract is no longer legally enforceable until a letter resolving the issues has been signed by both parties. During this period, the buyer is free to cancel his agreement without consequence.
A better way to manage this process is the “No Haggle” form contract. The “No Haggle” form contract combines a “Take It or Leave It” provision with “Bottom Line” contract provisions. The Take-it-or-Leave-it provision provides that the contract is terminable, but not modifiable, by the buyer’s attorney for a short period after signing. In other words, the buyer must either accept or reject the agreement in whole, after consultation with his attorney.
A form contract with Bottom Line contract provisions has provisions representing the developer’s bottom line position on each issue covered in the Agreement. That is, any concession the developer’s attorney would routinely give if requested during the attorney review period is already built into the form terms and provisions.
Together, these provisions invite the buyer in consultation with her lawyer to make a simple yes-or-no decision to the developer’s best deal within the attorney approval period. In this way, haggling is removed from the process.
The advantages of this approach are several. First, the purchaser still has the opportunity to confer with his or her attorney and to back out after the attorney has an opportunity to review the agreement. Therefore, the purchaser can feel secure signing the contract in the sales office.
Second, without the haggling, the attorney approval period concludes much more quickly–likely within the original period. As a result, a developer can minimize attorneys fees, minimize terminations and generate faster presales.
Third, the negotiating position of the developer is much more solid during the review process. A buyer’s attorney may still tender proposed changes and the developer may still choose to address those changes. However, he is now doing so from a much stronger position, since regardless of the outcome of these negotiations, the developer always has an enforceable agreement on the original terms to fall back on.
Thus, the “No Haggle” contract retains all of the benefits of the traditional attorney approval process, but is more efficient and keeps the developer in a secure position throughout the process. Try suggesting this approach to your developer clients for their next project.
Laurence J. DeVries
Larry DeVries is the managing principal of DeVries and Associates. He specializes in representing condominium developers.
(If you have any comments or questions regarding this article, please feel free to contact the author at ljdevries@devries-lawfirm.com)
