Robo-nothing: 9 documents you MUST read before signing
But you may still wonder what exactly "robo-signing" is: staff members at some of America's largest mortgage lenders were tasked with signing 10,000 foreclosure documents per month, by hand. Given that they were also supposed to be reviewing the files and papers before they signed, that's just not humanly possible. Hence, the term "robo-signing," shorthand for simply signing extremely important documents without reading them.
As absolutely inexcusable as the banks' repossession of people's largest asset without verifying the documents is, the fact is that all of us "robo-sign" things without reading them on a daily basis.
Here are nine things you should not sign without reading:
1) Real estate documents (purchase/sale agreements, mortgage and title documents and leases). This may seem like a no-brainer, but if you've ever sat down for a 30-minute appointment at a title company to sign 400 pieces of paper, the reality is that most things do not get read by home buyers before signing. Similarly, one of the most frequently heard outcries from the first wave of homeowners who lost their homes when their adjustable rate mortgages reset was that they didn't realize the loan was an ARM.
Even title documents, which are the simplest of them all, don't get read as a matter of course -- I recently heard of a buyer who "accidentally" was deeded three parcels of land on top of the one he had paid for because of a title company typo and the sellers' failure to read what they were signing. And leases can contain critical information like which utilities are covered, what the cleaning fee is on move-out and whether rent- or eviction-controls apply to your new home.
Stakes are high when it comes to real estate paperwork, so read it. It's highly unlikely that you'll read these documents at the closing table. The better bet is to have your broker, agent and/or mortgage professional obtain copies for you in advance so you can ask questions and get answers in advance. I've even seen buyers catch interest rate typos on the mortgage documents, which were then fixed before closing. With leases, feel free to ask the landlord to e-mail you a copy for review before signing.
2) Medical and health insurance paperwork. You can barely walk into a doctor's office without signing privacy forms mandated by HIPAA, the Health Insurance Portability and Accountability Act. Though the point of this law was, in part, to guarantee the confidentiality of your medical records, often the forms waive privacy protections -- especially if you're planning to have work, school or another health care provider reach out to this doctor.
Similarly, the informed consent forms you sign before having any sort of procedure should definitely be read before signing. My son's eye surgeon provided these forms to me before a recommended surgery; after reading them and researching the side effects and success rates for the operation, we opted to test another course of treatment for a year or two before doing the surgery as a last resort.
Finally, health insurance program and HMO contracts often include clauses in which you waive the right to sue them, ever, even if you or your loved one dies as a result of their medical negligence. HMO members may want to seriously consider alternative insurers who don't force you to let them off the hook, in advance, for their lapses.
3) Private school contracts. Many a parent has decided to move, or opted for public school for their kids, only to be stunned to find out that they are on the hook for the private school tuition they contracted to pay for the entire school year: whether their kid attends the full year or not. In fact, a New York couple found this out last year when one parent lost his job and they decided to place their kid in public school. Here's the catch -- they actually notified the private school before the school year even started, but a court still ordered them to pay the full year's tuition, based on the contract provision. With even grade schools routinely running in the $20,000 annual tuition range, make sure you know what you're liable for under your kid's school contract -- before you sign.
4) Gym and cell-phone contracts. One gives your body a workout, the other just your jaw muscles -- but both hold the potential to overwork your wallet if you don't read the contract in full.
Both gym and cell phone contracts are notorious for having minimum terms and high cancellation fees. Make sure you know what you're committing to before you sign on the dotted line.
One more thing -- most folks who text are aware of the need to get a package offering a high or unlimited number of texts. But new smart-phone owners might not be aware that they need either an unlimited data plan or a trust fund if they want to play internet radio on their handy-dandy PDAs.
5) Warranties on big-ticket purchases. From home appliances to your car, before you pay for a warranty -- or even rely on a "free" one as a selling point in making a purchase decision -- read it. Some require that you register your item to validate the warranty, others require that you refrain from doing something to avoid invalidating it. Home warranties, for example, often don't cover fixes when you call another repair shop before calling the warranty service center. With cars, some warranties become invalid if you have the car serviced by someone other than the dealer, others allow for non-dealer servicing, but become invalid if you don't have the car serviced on the precise schedule recommended or using the particular oil and fluid brands recommended.
On big-dollar items, reading the warranty is a necessity -- if you don't do what it takes to keep it valid, you might just as well have bought them with no warranty at all.
6) Employment agreements. These days, it seems like everyone has a side business. But it also seems like nearly every employer has an intellectual property clause that might just give them rights to the "fruits" of your side business, if you're not careful. If you invent something or start a business that is closely related to your day job and/or uses your employer's equipment (think: laptop) to generate revenue, that invention or business could belong to your employer, under your employment agreement.
These clauses are enforceable in some states; less in others. But employment agreements present one case where reading the fine print could really save you -- most employers who have such clauses in their agreements actually allow you to describe any projects you started before you came there, to protect and exclude them from this clause. Other employment agreement clauses to watch out for are non-competition agreements, which may limit where you can work and who you can recruit after you quit.
7) Terms of auctions, online or off. Auctions sound great, but can be very tricky when it comes to the technicalities involved. You think you're going to get that Van Gough for a buck, but without reading the terms, you may not realize that there is a reserve price set, so the seller won't actually sell it unless and until a minimum price is reached.
And while home auctions tempt with the allure of dirt-cheap real estate, they often add big-time buyer's premiums -- fees added on top of the winning bid that goes to the auctioneer, limit your ability to inspect the property or require cash in full up front; the specific terms and pitfalls vary by the type of auction and the auctioneer, so the only way to be in the know is to -- you guessed it -- read the terms!
Watch out for reserves, buyer's premiums, return policies (or not!) and provisions that carve out your liability to pay in the case of a dispute -- all things you need to watch out for, lest you find that bargain, "gently used" Louis Vuitton costing you more than two new ones!
8) Terms of service on bill payment websites. You log on, you pay, and you click to "sign" the terms of service. Whew -- got in right under the 30-day mark, right?! Not so fast -- many online bill payment systems build in a one, two, or even five-business day cushion between the time you make your payment and the time it will be credited to your account. Make sure you know what that is and are safe on any time frames before you click to sign. If you're on day 29, it might be worth the $3.95 service fee to call and pay it by phone, where it is often credited immediately or the following day, if you make a phone payment late in the day.
9) Credit card slips. It's so easy just to sign the receipt without even a glance at the total or, in restaurants and hotels, the itemized bill. But reading is the only way to find the occasional error in calculation or even an erroneous bill. A friend recently signed the slip at a local barbecue joint, only realizing that her single dinner had been charged as four slabs of ribs after the hefty box of food had been handed to her 20 minutes later! Hotel bills are also notorious for movie or restaurant charges being accidentally assigned to the wrong room -- these are much more difficult to have removed after you get back home.