The Curious Case of “Plain Language”

In a nutshell, our purchase contract is the agreement between buyer and seller. Attorneys or third parties are not party to the agreement. Neither are the real estate brokers. Even so, there are a few forms that really have nothing to do with the transaction, but must be included as part of certain real estate contracts. For instance, federal law requires that a lead-based paint disclosure be included with contracts to purchase homes built before 1978.

What is a Plain Language Addendum?

In addition, the State of Hawaii requires a form called a “Plain Language Addendum” to be included with contracts of properties selling for less than $25,000. This form is simply a small dictionary of real estate terms. Wanna know what a “limited common element” is, lessor/lessee or maybe something like marketable title? These are a few of the 74 different terms listed. I suppose for a 2-page document, the explanations are as clear as they can be and yet, I can’t think of a reason why a buyer paying less than $25000 would need to know many of these terms.

When It Doesn’t Apply

The bigger question for me has always been what about the rest of our real estate transactions? Interestingly, the $25,000 limit has not changed in the 33 years I’ve been selling real estate. Back in the day, there were many pieces of vacant land for which it might apply. But as I said, does the buyer of a piece of inexpensive real estate need an explanation of terms more than someone buying an expensive home? I’m not so sure. For this reason, some offices include the list with all transactions. Of those 74 terms, many apply to condominiums…not many $25,000 condos in Hawaii that I know of. Lessor/lessee normally applies to a tenant/landlord or commercial property and yet the explanation of a mortgagee/mortgagor which applies when someone gets a loan is not included…this actually may make sense because there sure aren’t many $25000 houses either.

While many of the terms may be useful, the explanations as written may not be all that clear. And as simple of some terms seem to your agent they aren’t always things the public knows. “Acceptance,” “Deed.” “contingency.” “CCRs” and “convey” to name a few. The thing is both the “Lead Paint Addendum” and the “Plain Language Addendum” seem more appropriate as disclosure documents than part of the agreement between buyer and seller. So, if you are like me and always wondered why they are part of your contract, now you know!