Red Flags in Form Contracts / Why You Should Use Custom Real Estate Contracts

When you’re buying or selling real estate, it’s may be tempting to grab a standard form contract (often provided by a realtor or real estate commission, generated by ChatGPT, or downloaded online), simply “fill in the blanks”, and proceed. After all, form contracts are inexpensive and easy to use.

But here’s the hard truth: form real estate contracts often don’t cover your unique risks or needs, they may include ambiguous or one-sided clauses, and they expose you to potential losses, disputes, and surprises down the road. Every transaction is “routine” until an unanticipated issue occurs.

Custom-drafted real estate contracts significantly reduce your risk and protect your interests, and illustrate how working with a full-service real estate law firm (serving lenders, investors, professionals, individuals, and families) can streamline the process. We handle all phases of real estate transactions, from negotiation and drafting to closing and, if needed, contract dispute resolution.

Your real estate contract is the legal foundation of your transaction

If the contract is simply a standard form with boilerplate language, minimal negotiation, and one-size-fits-all terms, you may be signing up for risk rather than protection. Your contract will control:

what you are buying or selling (and what you are not buying or selling)
who is responsible for inspections, repairs, disclosures, closing costs, deadlines, and contingencies
what happens if someone fails to perform, if a financing contingency fails, if there are title issues, or if the property doesn’t meet expectations
what rights you have if something goes wrong, and what obligations you undertake

When should I use a custom real estate contract?

If you have a distressed property or buyer/seller situation, etc., a contract drafted specifically for your unique deal would offer significant legal proteciton.

You are an investor acquiring multiple properties, or you are doing commercial deals rather than a simple residential purchase.
You have special financing situations (private lender, hard money, seller financing, creative structure, 1031 tax deferred exchange).
You are purchasing or selling property “as is” or with unusual uses (mixed-use, redevelopment, zoning changes, non-traditional holdings).
You want to allocate risk differently than the “standard,” for example shifting inspection or title risk, customizing indemnities or repair obligations.
You foresee a possibility of dispute (e.g., tenant-occupied property, property being marketed for redevelopment, tight timeline).

The risk comes in using a form contract comes from what is in the contract – which is likely not tailored to your risk tolerance or unique situation – and what is not in the contract – missing terms that really should have been included.

Top Red Flags in Real Estate Contracts

Here are common “red flags” that show up in uniform contracts (or any contract) and deserve your attention or modification. If you see these items, you should engage legal counsel and consider a custom contract:

Vague or ambiguous language. One big warning sign is language that is unclear or open-ended. For example, phrases like “in a reasonable time,” “satisfactory condition,” or “subject to financing” without defined benchmarks. Ambiguity opens the door to disagreement and litigation.
Lack of clear contingencies or deadlines. A contract lacking clear contingencies (for financing, inspections, approvals) or failing to set firm deadlines is a red flag. For example, if the “time is of the essence” clause is not clearly outlined, someone may delay or fail to perform without consequences.
Unclear property description, title, or survey protections. If the contract contains an incomplete or incorrect description of the property (missing address, boundary lines, fixtures included), or if title/survey review sections are weak (no express right to review title/survey and object), that is a significant risk.
No inspection or review period (or waived rights). Sometimes buyers waive inspection rights to “lock up the deal” or use a form that omits an inspection contingency. Contracts that skip or shorten review rights expose buyers to unknown property defects or unexpected liability for repairs.
Tight closing or completion timelines. If the contract imposes a closing date or performance deadline that is too short (not giving the parties sufficient time to secure financing, inspections, approvals, title), that can pressure the parties and increase risk of breach. For example, a seller may demand a “7-day close” without allowing enough time for loan underwriting or title commitment review, which will most often require subsequent agreement for an extension unless everything is cleared by all stakeholders in advance.
Hidden fees or vague allocation of costs. Contracts should clearly state who pays which costs: inspections, title searches, closing costs, prorations, escrow fees, survey, environmental site assessment, etc. A “miscellaneous costs may apply” clause or lack of specificity is a red flag.
Misalignment of financing terms or appraisal risk. If the buyer agrees to purchase subject to financing, but the form contract fails to define what happens if the appraisal comes in low, or if the financing is delayed, that is a risk.
No protection for environmental, zoning, or use issues. Especially in commercial or investor transactions, if the contract does not include adequate review for zoning, environmental hazards, or legal use of property, it’s often a red flag.
Lack of termination or default remedies. If the contract fails to define what happens when a party defaults, or lacks clear termination rights (for example, if the seller fails to deliver clear title or the buyer fails to secure financing on time), you’re left in a vulnerable position.
One-size-fits-all, and ignoring your particular risk profile. Because many form contracts are “standard,” they may fail to address your specific scenario (an investor acquiring multiple properties, seller financing, tenant-occupied property, special purpose facility, etc.).

Why a Custom Real-Estate Contract Can Be Worth the Investment

Why can’t I just rely on the form contract my real-estate agent uses? The answer is that you can, but you do so at your own risk. If you want to reduce surprises, optimize terms for your interests, allocate risk intentionally, and create a smoother path to closing (and if needed, dispute resolution), a custom contract makes sense. Here are the benefits of a contract drafted or reviewed and edited by experienced real estate counsel:

Tailored to your transaction and risk profile: A custom contract enables you to include or amend clauses specific to your situation, If you’re an investor, you might include specific rent-roll or tenant-lease review contingencies. If you are purchasing a rehab property you might include hold-harmless language for pre-existing conditions and structure repair obligations. If you are seller financing, you’ll include clear payment/purchase-money mortgage terms.
Clearer protections and defined milestones: Instead of ambiguous phrasing, your contract can say: “Buyer must deliver loan commitment by [date], Buyer may terminate if commitment not delivered by [date]; Seller must deliver title commitment and survey by [date]; Title objections must be waived or satisfied by [date]; Closing to occur on or before [date]; Time is of the essence.” These defined deadlines reduce uncertainty.
Stronger negotiation leverage and clarity: By showing your counter-party that you have a well‐drafted contract and legal counsel behind you, you often improve your negotiating position. The seller may respond with more reasonable deadlines, inspection terms, clearer disclosures, and more cooperative behavior.
Risk allocation customized for you: For example, you may want the seller to carry out certain repairs, or release you if financing fails, or allow assignment, or limit your penalties if you walk away timely. A custom contract lets you choose those terms rather than accept the default.
Reduced litigation and smoother closing: A well-drafted contract anticipates the issues that often become disputes (title issues, survey/encroachments, zoning/use, inspections, financing, environmental matters). By including clarity up front, you reduce the chance of the deal derailing or ending up in court.
One-stop integration with your law firm services: If you engage a full-service real estate law firm (one that handles not only drafting and negotiation but also closing services, title review, surveys, and contract-dispute resolution), you save time and align all phases of the transaction under one roof. This holistic approach reduces risk of miscoordination between separate providers.

How Avenue Legal Group Can Help: Oklahoma’s Real Estate Attorneys

We serve real estate investors and professionals, individual home-buyers and families, offering a full-service approach. We draft and negotiate custom real estate contracts aligned with your strategy; we coordinate closings; and if a contract dispute arises, we handle enforcement, termination, or litigation.

For investors and professionals: We understand portfolio acquisitions, rehab projects, commercial deals, seller financing, assignment structures. Your contract needs are complex and we tailor your documents accordingly.

For individuals and families: Even a single-family home or investment property should be protected. Whether you’re a first-time buyer or upgrading, we ensure your contract reflects your financing, inspection, title, and closing rights.

One-stop service: From contract drafting, negotiation, title/survey review, closing coordination, to post-closing matters and dispute resolution, we handle it all so you don’t have to juggle separate vendors.

Risk-mitigation first: We identify red flags early, advise clients on strategies and options, and help craft a contract that aligns with your risk tolerance and goals.

Dispute ready: Should the worst happen, we are positioned to enforce your rights and resolve disputes swiftly.

If you are ready to move forward with a real-estate transaction or you already have a contract you want reviewed, contact us today for a consultation. Contact Avenue Legal Group by phone (405-938-3107), text message (405-938-3107), or email (max@avenuelegalgroup.com). Don’t leave your biggest asset or investment to chance.

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