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Missouri Realtors’ form contract invites trouble


When real estate purchase contracts do not contain an accurate legal description of the real estate being purchased, there is a substantial risk that the wrong real estate will be conveyed. This situation is usually not present when the transaction involves platted subdivision lots–though it can be a problem if a portion of the lot has been sold by the seller to another party. But with property that is described by other methods than lot numbers, the risk of selling the wrong property is magnified. This problem is not theoretical. I have seen it frequently and it leads to lawsuits, expense and disappointment.

The contract forms that I see that are used by many Missouri Realtors have a checkbox to indicate that the legal description is attached, followed by these words: If no legal description is attached, then legal description on Seller’s vesting deed(s) to govern.

The Realtor, seller and buyer expect the title company that prepares the deed to come up with the correct legal description. Guided by the contract language, the title company looks at the deed or deeds by which the seller obtained real estate. The title company may start with a property address shown on the purchase contract. The title company finds the seller’s vesting deed and uses that legal description to produce a title insurance commitment. In preparing the title insurance commitment, the title company will most likely find whether the seller has previously conveyed some of the property described in the seller’s vesting deed.

But what if the seller’s vesting deed described three parcels, but the seller didn’t intend to sell all three? Or what if the seller was only expecting to sell a portion of his acreage? How would the title company know?

In two recent instances that I know about, nobody checked the closing documents, the seller signed an affidavit stating that the legal description to be used in the deed to the buyer is correct, and the deal closed. In November, the seller tries to pay taxes on his remaining property and finds that it is “owned” by the buyer. It is conceivable that the buyer didn’t know exactly what he was buying, so he refuses to convey back the extra lot. In one case I had, the buyer died a few weeks after the closing, and his heirs didn’t have any direct evidence of his intent.

The authority of a real estate agent to present real estate for sale is based on a broker signing a listing agreement. If the listing agreement doesn’t specifically identify the real estate that the broker is authorized to market, the broker’s authority is not well-defined. The seeds of a dispute have been planted.

My advice:

If you are a seller, do not sign a listing agreement unless a legal description of your property is attached and truly describes what you intend to sell.

If you are a real estate broker, do not accept a listing agreement without a legal description that you have discussed with the buyer and affirmed to be correct by examination of county assessor records, review of the seller’s title insurance policy, and verification that there have been no other conveyances by the seller.

If you are a buyer, do not sign a purchase contract without the legal description attached.

About Harry Styron

I'm a lawyer who lives in Branson, Missouri, whose professional interests involve real estate, construction and local government.

2 responses »

  1. Harry: Very well done. I’ll read more carefully what you’ve written then offer a comment…from the surveyor’s perspective.

    Thanks for writing this.

    Dick

    Sent from my iPhone

    >

    Reply
  2. Mr. Styron’s assessment is correct. The seller and the buyer, perhaps aided by the realtor, must know or decide exactly the lands to be conveyed. There could be an extant boundary description of the tract. If so, after confirming it includes all and only the lands to be conveyed, that description should be used in the real estate contract. If there are questions about the sufficiency of the description, these are several resources available to confirm the boundary description is correct: Mapping available to the public, such as the county assessor’s office or some city offices; surveyors’ offices; title companies; real property attorneys. The time to confirm that the legal description is what the seller intends to sell is at the time the listing agreement is signed, so that the broker’s sales efforts will be only directed to the property that the seller intends to sell for the listing price.

    To say that one may just attach the seller’s deed is too simplistic. Often, perhaps in a majority of transactions, the seller conveys less lands than those described in the acquisition deed. What lands, exactly, are to be conveyed?

    As a land surveyor I can tell you some real horror stories about miss-described and then conveyed tracts, resulting in situations that were very difficult and expensive to correct. A proper, complete, explicit real estate contract should be the required start of a successful real estate transaction, not one wished for after the parties become plaintiff and defendant.

    Dick Elgin, Rolla.

    Reply

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