Contracts are essential in any consulting business. It documents the scope of work and the terms of payment, and how the stakeholders agree to the terms contained within it. It safeguards the interests of the stakeholders while minimizing the financial risks that can affect the profitability of a business.
A real estate consulting contract is no different. It involves the agreement of the real estate consulting firm and its client. It outlines their relationship and defines the terms of service
Lifestyle Equities is a responsible real estate consulting firm delivering exceptional services in real estate dealings. We ensure that the client expectations and our scope of real estate consulting services are well-documented in the form of a contract. It helps us to streamline our operations and increase efficiency.
Whatever our category of service, we make it mandatory to draft a well-structured contract that safeguards the business interest of us and our client.
What should you include in a real estate consulting contract?
A well-written contract is beneficial to both the real estate consulting firm and the client. It provides a reference for the expectations by both the involved parties. The main parts in the real estate consulting contract are-
1. Recitals
Also known as the ‘whereas clause’, the recital clause is the opening section in any real estate consulting contract. It has information regarding-
- Name and information of the stakeholders- the real estate consulting firm and the client.
- Start and end date of the contract
- Acknowledgment of entering into an agreement
The recitals explain the reason for the real estate consulting agreement.
2. Scope of Services
The main objective of drafting a real estate consulting contract is to describe the real estate consulting services provided to the client. This section describes the scope and breadth of the services from a general standpoint. It includes details of the description of services clearly.
3. Payment
The payment section is the main section of a real estate consulting contract. It outlines the consulting fee and all other information related to payment. It also defines the modes and period of the payment. Many of the conflicts between real estate consultants and clients arise due to payment disputes. Hence, it is advisable to spend a considerable amount of time drafting the payment policies. Different clients have different needs. So, draft the agreement to address the specific situation rather than copying a template.
4. Dispute resolution
It is highly unlikely that the stakeholders will resolve a dispute or legal action without hiring an attorney. The dispute resolution clause addresses the types of problems and their protective measures. It includes problems and solutions related to non-payment of services, breach of contract, arbitration, and mediation.
5. Termination of services
Sometimes, the project or services may not go as per the plan. If any of the stakeholders wish to terminate the contract, for whatever reason, the termination of services clause lays out the terms and conditions related to it.
6. Methods of communication
This section describes how the parties involved handle the notices if any of them wishes to terminate or modify the contract. An email is sufficient for the purpose. But for high-value projects, it is advisable to include a letter mailed to the business address as physical proof.
7. Confidentiality
A real estate consulting firm may need access to many of the client’s business secrets for providing services. This clause is to reassure the client that none of the confidential information will be disclosed or shared with others. If there is any breach, the client has the right to initiate legal action.
8. Indemnification
The primary purpose of the indemnification clause is to protect the real estate consulting firm from the actions of third parties. A real-estate consulting firm may require to hire the services of third parties and then pass on the work to its client. The indemnification clause protects the firm from any potential breach action caused by third parties.
9. Limitation of liability
The real estate consulting firm takes responsibility for the services it provides. But it is necessary to shelter the business from any unwanted lawsuits. The limitation of liability places restrictions on the claims during a breach of contract. Any negligent actions, third-party actions, or client profit loss are excluded as outside control and the stakeholders cannot claim any damages on these.
10. Non-compete
You may include it in the real estate consulting contract for large commercial and residential real estate projects. Here, the real estate consulting firm cannot offer similar services to the client’s competitors till the completion of the project or after.
11. Enforceability
The enforceability clause is related to the legal aspects. It protects the consulting firm and the client from unnecessary disputes and contract terminations.
12. Signatures and dateline
A genuine signature and date line signed by the client and the real estate consulting firm makes the contract lawful and enforceable. The parties sign it with the name of the signer, the title, and the seal of the company.
Benefits of drafting a real estate consulting contract
A real estate consulting contract identifies the stakeholders involved, the terms with which the services will be carried out and the agreement of the stakeholders for the payment, and the terms of the contract. Many contracts include additional sections and clauses to protect the business interests of the real estate consulting firm and guarantee to provide the services required by the client.
- It defines the scope of work as needed by the client. It is a written record to manage expectations and avoid confusion regarding the fulfillment of the assigned tasks.
- It opens up opportunities for the stakeholders to identify problems and rectify them if they decide to work again together in the future.
- Other than defining the services required by the real estate consulting firm, it clarifies the responsibilities of the stakeholders.
- It sets the terms of payment as agreed upon in writing to avoid conflicts when the work gets completed
- The real estate consulting contract describes how to handle the resolution of a conflict so that you can avoid unnecessary litigation.
- It reduces the financial losses that can affect both the consulting firm and the client’s business profitability.
- If any of the involved parties initiate a civil dispute, a real estate consulting contract will help the attorneys establish the fulfilled or unfulfilled contractual obligations.
Conclusion
At Lifestyle Equities, a rich real estate consulting contract is critical to a successful business practice with our clients. Through it, we ensure that they get their due and we open the doors to future stronger relationships.
