Do-it-Yourself Lawyering

I spent the better part of the day yesterday working on a legal brief (at my full hourly rate) on the issue of the meaning of the phrase “The State” in a business contract.  Soon, there will be a hearing in the local Circuit Court in which three highly paid attorneys will spend several billable hours arguing the meaning of “The State” before a judge who will be charged with deciding which of us is correct.  As we stand there, each of us attorneys and the judge will all know that, whatever the judge’s decision is, the matter will probably come up again before the Virginia Supreme Court.  The total cost of this argument could run close to six figures by the time we are done.

On the bright side, however, the parties saved themselves a few hundred dollars in legal costs by downloading a contract form from a popular do-it-yourself legal website. 

The law is a structure made out of words.  Those words are not meaningless.  There is no such thing as “boilerplate” or “standard” language in the law.  There are no “fill in the blank” forms. The words selected for use in a legal setting are selected not because they are “standard” or interchangeable, they are selected because they have very specific meanings.  When a lawyer is constructing a contract, an estate plan or a other legal document, the lawyer is choosing words and phrases with skill and precision to achieve a very specific end.

Obviously, one cannot “speak” French just by saying a lot of French and French-sounding words, yet I repeatedly see clients who think that they can speak “legalese” by downloading a form with a bunch of legal sounding words and phrases in it.  When a client tells me that they used a form because they just wanted a “standard” agreement, I like to ask them if they understand what it is they are agreeing to; whether they comprehend the meaning of all of those “standard” clauses and what will happen under various circumstances. 

Of course, understanding the words used in a legal document requires understanding the words NOT used in the legal document.  When a lawyer drafts a legal document, he or she makes choices about what to include and what not to include, because not including something in a legal document has as much significance as what is included.  We make such choices after a careful discussion with the client to ascertain the client’s needs; negotiations with an opposing counsel, if any; and a review of the alternatives.  Only then do we put pen to paper. 

The most frustrating examples always seem to come from small businesses.  In an effort to avoid up-front legal costs, small business owners download “standard” contracts and corporate documents, like the one I am dealing with today.  Such documents are often little more than a parroting of what is already set forth in the state’s legal code, except that the state code has opt-out provisions and qualifiers that allow most small businesses to operate without the need for cumbersome operating documents that the downloadable forms don’t and can’t explain to the user. 

In my case, we are arguing over whether a clause that sets forth which jurisdiction the parties may litigate disputes in refers to the state of incorporation, the state in which the principal place of business is located, or the state in which the company’s investment real estate is located.  Instead of spending tens of thousands of dollars arguing over the meaning of the word “The State,” someone should have asked why they needed to have a forum selection clause in the first place?  That’s not a “standard,” “boilerplate” clause.  It is something I might add to a contract if there is a possibility of confusion over the matter later on or if my client is worried that they could be dragged into costly litigation in some remote jurisdiction.  If I DID add a forum selection clause, I’d make certain that it was clear and unambiguous, not just to other lawyers fluent in legalese, but to the parties to the agreement.

The best compliment I have received in a long while came from a client who called me up to ask if I could scale back some provisions in a contract because he was trying to land a new customer and they were complaining that the document I drafted was too harsh and overprotective of my client.  He told me that the customer promised never to cross him as long as he had me for a lawyer, but could I please tone it down a little.  You can't download that from the internet.

When someone engages in do-it-yourself lawyering, they aren’t saving any money at all; they’re just buying a very expensive legal headache later on.

 

New Construction: Three Traps to Look Out For When Buying a Newly Constructed Home.

Have you SEEN the new homes they're building out here in Loudoun County?  They're stunning!  And they have that new-home smell!  They have master bedrooms with walk-in closets that you could play basketball in and the kitchens look like something out of a magazine...  These dazzling, glorious monuments to suburbia are tempting, indeed.  But before you go running out to buy one, here are some things to keep in mind:

1. The Agent on Site Doesn't Represent you.

Home builders typically hire an agent to sit on site to sell the homes in their new developments.  These folks are incredibly nice and often greet you with a warm smile and a plate of cookies.  They have a wealth of information about the development, the homes, the available options, etc.  But you need to remember that they represent the builder, NOT YOU!  They earn a commission on each home that they sell, and the higher the price, the larger their commission.  There's nothing wrong with that - that's standard practice in the real estate industry.  What most people don't know is that, if you're the buyer, you don't pay your own agent anything - the agent for the builder has to split their commission with the buyer's agent.  In other words, having an agent represent you when you buy a home costs you nothing.  You're going to want an agent representing you because...

2. New Construction Contracts are Heavily Skewed in Favor of the Builder. 

When you decide to buy from a builder, the builder's agent will first quote you a price for the base model house.  That comes with linoleum floors, laminate counters and an unfinished basement.  To get the finished master suite, the marble counter tops, the wood floors, etc., you'll have to agree to buy upgrades.  Under almost all new construction contracts, you'll have to pay extra for those up front.  These can add up quickly - $40-80,000.00 is a conservative estimate.  But what happens if the deal doesn't go through?  Under most contracts, the builder keeps your money and then re-sells the house, plus the options upgrades to the next customer. 

But it doesn't stop there - the contracts are chock full of terms that you probably wouldn't agree to if you weren't so busy salivating over the two story foyer and the four-car garage.  Terms such as: requiring you to go through the builder's lender or to use their settlement agents don't sound that bad (they are and you should never agree to them), but what about terms that require you to pay all sorts of penalties if there is a delay in closing, or terms that allow the builder to change the materials used in construction at their discretion, regardless of which options you actually paid for?  They can get away with those terms because...

3. They are Selling a House to You, Not Building a House for You.

Almost all new construction contracts make clear that they are NOT your builder, but that they are selling you a finished home.  That might sound like a very fine distinction, but it makes all of the difference in the world.  Essentially, you own nothing until the finished house is delivered.  That means that the house and the property it sits on belongs to them and that you have agreed, in advance - sight unseen, to purchase whatever they throw up on the lot.  It also means that they are not your contractor and that will severely limit the types of warranties that are available to you should something go wrong with the house after you move in. 

It also results in some legal quirks that may cause you trouble down the road.  For example, the builder's sales rep might tell you that you'll be able to add a large deck later on or that nothing is planned to be built behind your property, leaving you with a wonder wooded view.  Of course, neither the builder nor the sales rep can be held to account if it turns out that the local zoning ordinance forbids you from building a deck or if a convenience store is erected outside your back gate.  Remember, they didn't agree to build a house for you - they sold you the house they built on the property and the responsibility for checking out what you can do with it or what's going in around it is up to you!

GET AN AGENT!

I like to say that they best way to buy a newly constructed home is to let someone ELSE buy it from the builder, and then buy it from them a year later.  But I will freely admit that the new homes are truly stunning and buying from a builder may be your best chance to get a custom home that meets your specific needs/desires.  If you're going to do it, get yourself an agent!  It costs you nothing but it may save you tens of thousands.  And, as always, if you don't understand a contract or have questions about it, DON'T SIGN!  Have a legal professional go over it with you.  There is no such thing as "standard language that you don't need to worry about."  The minute someone says that to you, your radar should go on high alert.

The Three Flavors of Interstate Guardianship

Adult guardianship, or guardianship for incapacitated adults, is becoming more and more common as our population ages and the younger generation steps up to take care of their parents and elderly relatives.  The guardianship (and its sister, conservatorship) statute is a powerful tool for managing the affairs of an elderly person who has lost the capacity to care for him or herself because, unlike a power of attorney, it carries the weight of a court order.

The process is relatively straight-forward, so long as both the incapacitated adult and the family member caring for them live in the same state.  But these days, that's almost the exception, rather than the rule.  More often than not, the elderly person has retired and moved to another state (such as Florida or Arizona), or their kids have moved across the country for a job or other family reasons.  When it comes to interstate adult guardianships, the law offers three flavors:

Appointment in Another State.  This is the most common situation.  The younger family member petitions the court in the state where their elderly family member resides to be appointed as the guardian/conservator.  Most states do not prohibit an out-of-state resident from being appointed, but you should be prepared to demonstrate to the local court that you have the means and ability to effectively manage the incapacitated adult's affairs.  Appointment places a burden on the guardian to regularly visit the incapacitated adult and to actively manager their care and their financial affairs.  You should also be prepared to post a significant bond or surety with the local court to ensure that you will live up to your obligations.

Transferring Guardianship Between States.  Another common situation is where the family member gets appointed as the guardian in the state where the elderly relative resides, and then moves the elderly relative closer to their own home.  In states that have adopted the Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act, the courts in each state engage in a hand-off of the guardianship to ensure that the incapacitated adult is protected.  The process is somewhat complicated as it requires obtaining alternating orders from each court (much like the hand-off of flight controls between pilots), but the process eliminates the need to re-prove the basic elements (namely, incapacity, need, and appropriateness of the proposed guardian). 

Performing Guardian Duties Out of State.  It is increasingly common for people to own property in multiple states.  In some cases, an elderly person moves out of their residence to live either with family members in another state, or in a care facility nearby.  In other cases, the elderly person may have owned a vacation home or investment property in another state.  In such cases, a guardian or conservator appointed for the person may be called upon to sell the out of state property or deal with taxes or other matters related to the out of state property.  In these cases, the appointment of guardianship or conservatorship may be recognized in the other state for a limited purpose.  This process is much less involved under the Uniform Act and does not require the multiple step hand-off that transferring a guardianship between states does.  However, you'll want to keep in mind that the court recognizing an out of state guardianship cannot grant additional powers - it can only recognize the powers granted by the originating court.  

For example, the courts in some states require a guardian or conservator to get specific permission from the court before selling the incapacitated adult's property.  If that order is recognized in a new state, that court can't authorize the sale without permission from the originating court.

Whatever your specific situation, remember that the laws are there to assist families while also protecting the rights and dignity of people who need help.  With a little planning and the aid of an experienced attorney, getting appointed and serving as a guardian or conservator for an incapacitated family member should be no problem.