Nobody Reads This Stuff. Until Somebody Does.

[Drago Stanimirovic]

There is an enormous amount of business that functions on a peculiar assumption: "Nobody is actually going to check."

People sign documents they haven't read. Licenses expire. An LLC isn't structured quite the way everybody assumes. Somebody has been using a property a certain way for twenty years, so everyone concludes that the use must be permitted.

Most of the time, nothing happens. And that's exactly what makes it dangerous.

After enough years, we start confusing “Nobody has checked” with “This is allowed.” Then somebody checks. A lender. An underwriter. An insurer. A title company. A municipality. A buyer's attorney. Suddenly, the harmless technicality everybody ignored becomes the thing holding up a six-figure transaction.

But there's an uncomfortable other side to this. If you tried to follow every law, regulation, procedure and administrative requirement literally, all the time, you could probably sabotage your own business.

Anybody who's actually been responsible for getting things done knows the feeling. Something interesting happens when you become the person in charge. You may have spent years complaining about people cutting corners. Then suddenly there's payroll on Friday. A closing on Monday. A contractor waiting. A client depending on you. Three other people have done their jobs, and now everything depends on you getting this thing across the finish line.

And you find yourself thinking: Just get it done. Not necessarily because power suddenly turned you into a bad person. Because responsibility creates pressure.

You want the deal to close. You need to earn the money. You want the people working with you to get paid. You don't want six months of everybody's work destroyed because somebody discovered that Box 14 should have been checked instead of Box 13.

That's when “by any means necessary” starts sounding considerably more reasonable than it did from the sidelines. And that's also where people get themselves into trouble.

Usually not because they woke up one morning and decided to become criminals. There was one shortcut. Then another. Each seemed reasonable under the circumstances.

Nothing happened. So the shortcut became normal procedure. Until somebody checked.

That's why I don't think the lesson is “follow every rule blindly.” Nor is it “everybody cuts corners, so don't worry about it.” The useful skill is knowing which corners you're cutting - and what happens if somebody looks at them.

“The previous owner did this for fifteen years.” Fine. Was he allowed to?

“Nobody has ever complained.” Also fine. But that's an answer to a different question.

I know an investor who actually sat down and read every page of his closing documents. Buried in them was a use restriction that materially changed what he could do with the property - and therefore changed the economics of the investment. He didn't uncover it through some brilliant piece of financial analysis. He simply checked.

You can't examine every paragraph of every document with the intensity of a Supreme Court justice. Business would grind to a halt. But you should know where the bodies could be buried.

Ownership. Use restrictions. Personal guarantees. Insurance. Financing obligations. Deadlines. Zoning. Anything where being wrong could fundamentally change the deal. Read those parts assuming that one day somebody else will read them too.

Because there's a dangerous sentence in business: “We've always done it this way.”

Sometimes it means you've found a perfectly sensible way of getting things done. And sometimes it means: nobody caught it yet.

(What corners usually get cut in your neck of the woods - and which ones would you never risk cutting?)