Good to know: Email Correspondence Could Be Binding!

In today’s modern and busy world it is safe to say that most of the correspondence between Client and Realtor is through email.  For example, your client has placed an offer on a house, negotiated the financing options and emailed you as the agent for a status update.  You reply back “We’re almost there.”  However in the meantime the seller receives another offer and decides to accept the second offer instead which of course upsets your client.

Be careful.  Email correspondence could be considered enough evidence to enforce the deal.  This was the case in a ruling in Massachusetts last year.

Feldberg, et al v Coxall attorneys representing the buyer and seller exchanged multiple emails about the deal including the above referenced email with an unsigned offer to purchase.  When the seller backed out of the deal, the buyer sued claiming the deal had been sealed in the last email.

The seller argued that the nothing had been signed as required under the Statute of Frauds.  This law varies form state to state but generally requires certain agreements to be signed.  Using this argument the seller sought dismissal of the claim.

The judge ruled against this dismissal.  Under a state law called the Massachusetts Uniform Electronic Transactions Act (and similar laws exist in other states) and email signature block or even the from portion of the email may constitute a valid electronic signature in cases where the parties are conducting the transaction electronically.  

The judge denied the seller’s motion to dismiss the case opening the door for the court to look at whether the emails can constitute as a binding agreement.

The buyer and seller settled out of court so the question was never brought before a judge.  But this something to consider.  

Agents, here are steps you can take to protect yourself against inadvertently binding your client to a deal.  

Here are two suggestions:

• Watch what you say in e-mails. If you’re representing the seller, always say that the terms of the deal must be approved by the seller and that negotiations are preliminary until an offer or contract is signed. Conversely, if you are representing the buyer, it’s prudent to push for confirmation that a deal has been reached, to avoid a situation, like the Massachusetts case, in which the seller jumps at a higher offer at the last minute.
• Use a disclaimer. You can insert a disclaimer in your e-mail signature that looks something like this: “E-mails sent or received shall neither constitute acceptance of conducting transactions via electronic means nor create a binding contract until and unless a written contract is signed by the parties.”

Watch what you say and remember that emails could become an exhibit in court!

Excerpt from RealtorMag
JANUARY 2013 | BY RICHARD D. VETSTEIN