I have two friends who bought a half-million dollar rowhome in Baltimore, MD without a contract.

That’s right, they entered into a business transaction for a half million dollar asset with no contract, no agreement (more on this later), no nothing. Half a million bucks.

They did have what they considered an agreement and it was that they agreed to discuss what they would do with the home in three years. For three years, neither one could move out the agreement was to keep status quo for three years. It’s now three years later and one of their two roommates is moving out… and they’re not sure what they’re going to do. One guy likes the status quo and wants to get another roommate. The other doesn’t want to deal with the headache of another roommate and would prefer to eat the rent difference.

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There was once a time when a handshake and a person’s word were all that was needed to formulate an agreement. If promises were broken, the only recourse was through thoughtful deliberation and six shooter. Okay, I’m just romanticizing the Wild West but I do think the point still holds true. Nowadays you see contracts here, signed documents there, notarize this page and initial there. When push comes to shove, contracts are scrutinized every which way and even English grammar comes under fire. However, when all is said and done, it ultimately comes back to building relationships, reaching an understanding and then putting it on paper.

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