Most of the lawyers involved in drafting real estate contracts, in their professional practice have repeatedly heard from clients the request: “I need to conclude a contract (lease agreement, contract of tenancy, sales agreement, etc.), you certainly have some templates“. In many cases, clients are surprised to hear in response that the lawyer would like to obtain information about the factual and legal status of the property and read its documentation first, and that the process of preparing a contract template may take at least several days. In our opinion, such a response from a lawyer proves only a professional approach to the problem. Therefore, does it make sense to use contact templates, and if so, in what situations? Where to get the contract templates and how to use them safely?
Contract templates are of great importance for the real estate market. They introduce some standardization and schematization, and thus make it possible to conclude more transactions with less time spent. For these reasons, developers, prior to the commencement of a given stage of sale, prepare templates of reservation, preliminary, developer and sales agreements. For similar reasons, real estate agents also use templates when concluding agency agreements with clients. The use of a template of lease agreement may also be considered by people who rent several apartments and, in order to facilitate the service of such a lease, they want the provisions of all agreements to be consistent.
It should be noted that professional entities operating on the real estate market each time create a model contract for the needs of a specific investment or other business purpose. The provisions of such a model, on the one hand, must be precise enough to adequately protect the client’s interests and at the same time comply with the law, and on the other hand, remain flexible enough that the modification of the subject of the contract (e.g., within one investment) does not cause excessive difficulties. Moreover, due to the constantly changing legal regulations and the actual state of affairs, such models are regularly updated. Therefore, preparing and updating a contract template usually requires much more work than preparing a contract that will be used only once.
Each of us is well aware that real estate contract templates are now available on the Internet at no cost. There are also many books on the market that provide model contracts with overviews, not to mention templates in specialized legal software. For these reasons, clients often consider whether, for example, when renting their apartment, they should use contract models already prepared by someone on another occasion. Although the idea of wide availability of basic contracts arouses more and more interest in the real estate market, we ask you to reconsider this solution, as it may not be optimal for those who do not have extensive knowledge in the field of real estate.
Therefore, we recommend that you answer a few basic questions before using a contract template:
- Are you sure that the template you use has been prepared in a professional manner?
- Do you have the right to use this template (copyright)?
- Are you able to assess whether the form of the contract template as well as its provisions comply with the currently applicable law regulation?
- If not all the provisions of the contract model suit you, are you able to modify them so that they still comply with the law?
- Are you sure that this is the best type of contract in your situation (e.g., standard lease agreement, lease of the housing premises, occasional lease, institutional lease)?
- Are you able to independently and comprehensively assess the condition of the rented or sold real estate (land and mortgage register, other registers, etc.)?
- Can you properly describe the parties to the contract, and do you know what effects the conclusion of the contract will have outside or as part of business activity?
- Do you know what tax consequences the conclusion of the contract will have and are you sure that the chosen solution is the most adequate for you for tax reasons?
- Do you know what kind of attachments to the contract you should have and how to prepare them?
If you are unable to clearly answer these questions, or if you found it boring to even read them, it means that using a generally accessible contract template may not be the best solution for you.
In all situations in which we want to perform even a one-time deal, e.g., conclude a preliminary contract for the sale of land, lease agreement for a flat, agreement for the assignment of rights and obligations under a real estate contract, the best guarantee of protection of our interests is not relying on even the best general template, but drawing up a personalized contract by a professional. We think that it is better to prevent than to heal. Each agreement is written primarily for bad times, so it is worth taking care of its appropriate content in order to fully secure your own rights in the future.
In the “Real estate law guide” we introduce you to issues related to real estate ownership as well as real estate transactions in Poland. As part of the series of articles, we explain useful notions related to real estate, present legal regulations associated with the real estate market and show what aspects are worth paying attention to when buying, selling or renting real estate.