If you are flying a plane, the autopilot is a great device to help keep you on course during the flight. However, when a pilot’s expertise is critical in performing certain tasks – such as take offs, landings, monitoring air traffic – an autopilot is never a substitute for human judgment.

In the purchase, sale, and leasing of real property, the industry has created its own version of the autopilot: fill-in-the-blank forms prepared by non-legal real estate trade associations. After all, what could go wrong with a document where the first word in the title is “Standard?” Plenty!

Real estate brokers almost without fail, and many lawyers as well, rely on these forms. They go online to memorialize the basic terms of a deal, such as the purchase price, rent, security deposit, etc. In the interest of time, and the strong if not overwhelming desire by the parties and their broker to get the deal “under contract,” the forms are routinely signed without further thought. And let’s be honest – everyone would prefer to save a buck by not using a lawyer.

The problems with the “autopilot” forms are twofold: how they look, and how they work.

They strain the reader’s eyes because they are written in tiny 10 point type. They challenge the reader’s temperament with huge blocks of text. And, worst of all, they defy the reader’s comprehension because they are written in legalese which gives them the appearance of being legally enforceable when a document written in plain English would actually better serve the parties’ legal interests.

Then there are the potentially costly effects they can have on the deal itself. Every real estate transaction has certain unique aspects. If the parties are lucky, the broker or lawyer may have the foresight to prepare an addendum to the “autopilot” form incorporating those special terms of the deal.

However, what happens when the terms of the addendum conflict with the terms of the form? If there is no provision in the addendum giving priority to that document over the form, or vice versa, there is a significant likelihood that a dispute will arise. And if there is no addendum at all, the odds of a dispute occurring increase exponentially.

Mechanics joke that you can pay them now, or pay them later; now, for preventive services like an oil change, or later, for costly repairs like an engine overhaul. Similarly, in my area of real estate law, clients can pay a relatively small amount for legal advice while they are negotiating a deal, or pay a great deal more if they end up embroiled in a contract dispute.

Here are a few examples from the parade of horribles I’ve had to help my clients untangle recently – all of which could have been easily avoided by not using “autopilot” forms.

A nonprofit organization, pressed for time to find a new location, signed a lease on a building after being assured by the brokers that it would meet its needs. High among those needs were high-speed Internet service, compliant electrical wiring and plumbing, and adequate air conditioning. In addition, the landlord also committed to make certain tenant improvements.

Once the lease was signed and the nonprofit moved into the building, the organization’s management discovered that the required Internet service had not been installed. Rather than risk losing a paying client who needed the greater speed Internet service, the nonprofit rented a nearby executive suite which had the needed service while also incurring the substantial cost and delay of having the space wired for high-speed Internet service. And why did the organization have to bear this entire cost? Because Internet service was not mentioned in the lease.

The nonprofit also discovered that the air conditioning was virtually non-existent in the main conference room and stairwell to the office entrance. The landlord shrugged off the complaints. The lease did not specify the air conditioning capacity. His counter-offer: he would contribute to the cost of installing window blinds in the conference room. The nonprofit has never received the landlord’s contribution.

Lastly, disputes arose immediately over the rent payment because of miscommunication between the tenant and landlord as to where this payment was to be made. Why? The “autopilot” lease form failed to include a provision for this information.

Another client called me in to look at a “standard” purchase agreement for a commercial property. One of its provisions specified that the buyer had a certain number of days to review what are called “exceptions” to the title: easements, liens and other issues.

But what happens if the buyer encounters this kind of problem, or if new title issues arise after the end of the due diligence period? A well-written purchase agreement provides a “give and take” process between the buyer and seller under both circumstances. The “autopilot” real estate form provides a vague and ambiguous process for resolving the former, and is completely silent as to the latter.

I respect brokers for their expertise and the service they perform. However, their objective is to get the transaction done and get paid their commission. If an ”autopilot” form achieves that objective, why would they want to involve an attorney?

But brokers cannot give legal advice, even if they are unaware that they are doing so. One of our clients was handed a “standard” purchase agreement that failed to identify the seller. It turned out that the property was owned in joint tenancy. The seller’s broker told the buyer, “One of the guys has signed it. Don’t worry about the other guy.” The transaction, of course, would have failed, possibly in a blizzard of legal disputes.

The influence brokers have on autopilot forms is apparent in a provision commonly found in “standard” commercial leases for compensating the brokers.

Certainly brokers deserve to be paid. But brokers are not third-party beneficiaries of the agreement, and there is no reason for them to be included in the lease document. The deal between the two parties and the brokers needs to be acknowledged, but in a separate agreement, not in the lease.

Why? Let’s say the landlord is supposed to pay a broker for finding the tenant – you –, and that is included in the lease you sign. If there’s a dispute between the landlord and the broker about the broker’s fee, you could get embroiled in that dispute.

The broker could say he’s a third-party beneficiary of the lease, and if the landlord isn’t paying, the expectation is that the payment is going to come out of the rent. If part of the rent you pay is sent to the broker, you as the tenant are in breach of your lease with the landlord. That simple clause can create a legal quagmire.

Any legal document should be clear and complete. In real estate, the document and the accompanying negotiations can set the tone for the subsequent relationship between the two parties. In a sale, that relationship may only be a few months, until escrow closes. But a lease represents a long-term relationship – five, ten or more years. Both sides should be able to pick up the lease and say, “Okay, I know what my rights and obligations are under this legal document.” With a fill-in-the-blanks form, that almost certainly will not happen.

Ted M. Handel