Home > Uncategorized > The Problem with Universal Legal Form Documents, Unaccompanied By Your Lawyer’s Review

The Problem with Universal Legal Form Documents, Unaccompanied By Your Lawyer’s Review

I recently had a real estate client come in the office; she had purchased “universal” legal form documents (for quite a considerable amount of money, I might add) that she intended to use in her real estate investment practice. She was prudent, and wanted to make sure that the documents were legally sound, so she asked me to review them.

Faced with such situation, my first inclination is to tell clients that in many instances, it is simply cost-effective for me to draft a legal document from the ground up, as opposed to scrutinizing a document and revising where need be.

Regardless of the initial cost,  there are several problems with universal form documents:

1. Chances are, the legal document does not comply with all the laws in all the jurisdiction in the U.S. where a consumer might use it.

 

In the instance with my client, I noticed many areas where not only did the contract mistakenly reference the law of another state, it also failed to incorporate necessary provisions under Michigan law. It would have been

simpler and more cost-effective to have me draft a document than to review and revise.

2. Further, it is always advisable to get legal advice before using a form document, because each transaction is unique.

If given the opportunity to review legal documents you intend to execute, your lawyer can issue spot the problem areas and account for them.  Ultimately, the purpose of drafting a document correctly is to concisely memorialize the parties’ intentions and avoid litigation in the case of a dispute.

Case in point:

Behrends v Stupyra

In an unpublished case in October 9, 2012, Plaintiff, Behrends, sued attempting to enforce a legal right to exercise an option to purchase real estate an a piece of property.
Briefly the facts are as follows: in May 2010, Defendants executed a deed that quitclaimed their interest in the Property to Dyami, with a stated consideration of $10. Dyami recorded the deed on May 18, 2010. Plaintiff, Behrends then filed a complaint that asserted that the deed was evidence of a sale, and thus it triggered her right of first refusal.
Dyami responded that no sale occurred, simply put – they didn’t intend any sale. $10 wasn’t really given.
This part is important: “Dyami asserted that the stated $10 consideration was merely a part of the quitclaim form deed from LegalZoom.com, and was never paid. Dyami submitted the affidavit of Sharon Baily of LegalZoom.com, in which she stated that all deeds from LegalZoom.com contain “standard $10.00 considerations hardcoded into the form[.]”  Behrends v. Stupyra, 307551, 2012 WL 4801034 (Mich. Ct. App. Oct. 9, 2012)
What result?
The Court, after entertaining the evidence of the true consideration given, agreed that it was not a sale that triggered a right of refusal.
However, this case illustrates a point that should not go unmentioned:
the Defendants relied on a form deed, likely without having any input from legal counsel. They didn’t really intend to exchange $10, but, it was on the form they purchased, so they used it, and opened themselves up to litigation.
Questions? Comments?  Feel free to contact me: Jeshua@dwlawpc.com Ph: 616 454-3883

 

 

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Categories: Uncategorized
  1. May 9, 2013 at 8:49 pm

    This is so true. At legalbargain.net every document is thoroughly researched per jurisdiction by a law graduate and legal writer before it is sold. You can’t get that with a “universal document” sold at Staples.

  2. Tony Schippa
    May 10, 2013 at 7:02 am

    If people are going to use those type documents, they should go to the local or state real estate board..

  3. June 3, 2013 at 2:28 pm

    Some real estae brokers have been known to draw up a Quit Claim Deed for a friend without any compensation. The difference is that with legalbargain.net one is hiring a law professor who is drafting a customized document according to your intentions and adhering to the laws of your jurisdiction. Only lawyers are allowed to provide legal advice. However, the questionnaire the cleint is asked to answer is extensive and provides the information which is needed to draft a document that is most likely to protect the party it is meant to protect. It is the professional servce that has value, and not the document itself. Also It is not the function of the state real estate board to draft forms on behalf of citizens, however, Tony is correct that such agencies may provide blank forms which can be of assistance, providing that the person filling out the form understands what he or she is doing. Unfortuanely, many such forms more often than not end up in the trash because people generally find them to be too confusing. Or worse, they are filled out and/or filed wrongly which can mean a heap of trouble down the road.

  1. April 4, 2014 at 10:37 am

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