All of us in the real estate world, regardless of experience or sophistication, have been guilty of ignoring Exhibit A. Like the emperor who believed his invisible cloth clothing could be seen by intelligent people, our unread “invisible” exhibits can leave us exposed.
Prevention is easy:
a. Read the exhibit
b. Have someone who has read it send you an outline or summary of what they have read
Cure is difficult:
a. Change the exhibit by amendment or separate agreement
b. Convince a court to reform the exhibit by proving that both sides intended a different result, proving so-called mutual mistake of fact
The developers of New Hampshire’s Mt. Sunapee ski resort signed a lease with the State in 1998, but did not discover until two years later that the lease area was smaller than they had originally thought. Thirteen years after that, the New Hampshire Supreme Court told the State that it was not the automatic winner of this fight and the developer was entitled to a trial on whether there was a mutual mistake. Win, lose or draw, that’s thirteen, going on fifteen, years of litigation exposure that no emperor wants.
Engage experienced real estate counsel to read and summarize the exhibit for you; or, be prepared to engage experienced real estate litigation counsel for an extended period of time.
Today’s real estate tip is brought to you by Rick Smith, a LEED Accredited Professional and member of Bernstein Shur’s Real Estate Practice Group and Green Building Team. Stay tuned for more useful tips for real estate professionals.