Two real estate cases in Massachusetts should make real estate agents think twice before sending texts related to potential transactions. Why? Because text message agreements on residential and commercial properties can be binding, according to the rulings.
A Massachusetts judge ruled last April that text messages exchanged by real estate brokers regarding a commercial property may constitute the signing of a binding contract for the property’s purchase, according to an article posted on Lexology.com by Goulston & Storrs PC, counselors at law.
In that case, St. John’s Holdings sued Two Electronics. The parties’ brokers exchanged unsigned but binding letters of intent by email, according to the court ruling. The seller’s broker confirmed by email indicating they were “ready to do this,” and sent the buyer’s agent a text requesting that the buyer sign the letter of intent and submit a deposit check. The buyer did. But when the seller got a better offer from a third party, the seller refused to sign, according to the Lexicon.com piece.
A lot transpired to make the deal happen, according to Marian McPherson, who wrote about the cases in an article published Nov. 17 on Inman.com. Months prior, the buyer, seller, and their agents met on several occasions to arrive at the offer’s basic terms. The parties went through three letters of intent via email before agreeing. And the parties agreed on how the letter and deposit check would be delivered.
St. John’s Holdings, the party that wanted to purchase the property from Two Electronics, filed the lawsuit claiming Two Electronics’ broker’s text created an offer, which the potential buyer accepted by delivering the signed offer and check to the seller’s broker, according to McPherson.
The court agreed, finding that, despite the document’s lack of a signature, the text message can constitute a signed writing under the Statute of Frauds, sufficient to bind the seller to the agreement.
The Massachusetts court in Barnstable County ruled in July on a similar case, but in a different way. It involved a residential real estate sale. In this case, a buyer’s representative and listing broker communicated by text about a signed listing agreement and earnest money check copy, including a text indicating the sellers had accepted the price, according to McPherson.
Court records indicate that the check hadn’t been sent to the listing broker and the listing agreement wasn’t signed. The sellers sold the home to another buyer.
This time, however, the court ruled on the sellers’ side because of the lack of a signed written agreement containing the needed material terms, according to the Inman.com article.
What do you think? Should agreements made via text message be considered binding contracts in real estate transactions? Share your thoughts with us in the comments below!