Do you need a witness?
Whether you use a pre-printed Standard Agreement or one of PAR’s electronic forms vendors, you will ultimately have a contract that exceeds 10 pages (commercial agreements have a lower page count). Consider that the original offer is likely to be countered, perhaps by the substitution of one or more pages. Consider further that when using pre-printed forms, you will have many separate pages, times four (the top sheet and the three copies); if using one of PAR’s electronic forms vendors, you will have to make copies for the parties and their brokers. Ultimately, there will be a mess of papers to track, organize and duplicate.
Is it possible that the parties or their brokers will each be in possession of a copy of what is considered the “final” contract – but each has in hand a different document? Usually – and fortunately so – any discrepancies can be tracked to their source and resolved. A substituted page was not attached to the copy given to one of the parties or the brokers or some other simple mistake may have occurred. Unfortunately, there are rare occasions when the parties are in possession of contracts that are not identical and where there seems to be no meeting of the minds as to one or more of the critical terms. This is where a witness can become one’s knight in shining armor by singlehandedly resolving all doubt as to the contents of the agreement that was executed.
If it were only so easy. For the most part, a witness can lay claim to watching a party execute a document. If the witness is an agent who participated in the negotiation of the agreement, that witness may also be able to identify the contents of the agreement at the time of signing.
Because agreements of sale go through so many iterations and because it is not the standard practice to sign as a witness to initials and modifications, the witness may be unable to verify the final contents.
If you have reached the conclusion that, but for the rare exception, a witness to a contract is of marginal benefit, you would be correct. If there may be no strong argument in favor of witnessing a contract, are there any arguments against it? If we are talking about a properly witnessed document, there is no argument against it. If we are talking about signing a witness line without knowledge as to who and when it was signed, then yes, there is danger — particularly so if the witness is an agent who potentially faces being disciplined by the Real Estate Commission. When the parties argue over the contents of the final agreement, your signature as a witness may be your downfall. Were you present at the signing? If not, why sign as a witness?
A problem arises when lenders receive an agreement that has not been witnessed. To some lenders, the absence of a signature on a witness line signifies that the agreement was not properly executed. You could show the loan officer a copy of this article and it may or may not convince him that Pennsylvania law does not require a witness to a contract in order for it to be binding. And if doesn’t so convince the lender (which is likely), what are you going to do? You will do what many other agents have done — and that is to affix your name to the witness line so that the mortgage application can be processed and so that the buyers and sellers expectations can be met! If you do this, a practice that I prefer you avoid, be sure to witness the document in the presence of your client after reviewing each and every page to assure that it is the final version that includes all terms, conditions and modifications. Ask your clients if each signed the contract. The worst thing you can do is witness a contract without having verified the signatures as well as the parties’ understanding of the contents that they are agreeing to. Remember, any discrepancy as to what constitutes the final contract may pose a serious threat to any licensee who claims to have been a witness.
The best practice is to assure that you participate in the execution of an agreement, the terms of which are doubt-free. There are initial lines at the bottom of each page. Be sure they are used. Further, be certain that every change is not only initialed but dated. Substituted pages should be removed and placed in a folder clearly marked to signify that its contents are not part of the final agreement. A strike-out or X across the page may be redundant but will certainly help distinguish those pages that are not part of the final contract. When distributing copies of the final agreement, ask all parties to immediately review each page to assure that there is no doubt as to its status as the final agreement by and between the parties. These simple steps will avoid the need for ever calling upon the witness to establish authenticity.
Another helpful practice is to obtain photo identification of your clients early in your representation. Settlement agents will not conclude a settlement without obtaining identification and there is no harm in your seeking it early. Treat the process as standard and you will likely hear no objection. In this fashion you will have knowledge that your clients are who they say they are and you will have a copy of their signature. That way, as a witness you can clearly state that the signor was whom he purported to be.
Because of the limited benefit of having a witness to the agreement, the PAR Standard Forms Committee is removing witness lines from most of PAR’s forms. This process will be implemented on a rolling basis as each form is reprinted.* You can always witness an agreement and to do so, you should write the word “witness” and sign your name beside or underneath it. We hope that this will make execution of contracts an easier task. Certainly, the Standard Forms Committee is happy to take your comments, criticisms and accolades.
*While this article focuses on the Agreement, the discussion regarding the purpose and necessity (or lack thereof) of a witness is applicable to most PAR forms.
Jim Goldsmith, Esq. is an attorney with Caldwell & Kearns and serves as general counsel to PAR. A substantial portion of his practice is dedicated to providing advice and counsel to real estate licensees and representing and defending real estate salespersons and brokers in civil lawsuits and licensing claims across the Commonwealth. He routinely counsels employers on employee relations issues as one of the voices of the PAR Legal Hotline.