Text messaging has gained prestige in the world of communication. It’s expanded from the casual chit-chat of lol’s and omg’s to something that can be used as a binding contract.
Text messaging was once the realm of the teenager and now we are all sending texts, along with awkward selfies and foodie photos. But there’s now legal precedent that should serve as a wake-up call for anyone conducting any part of a business deal by text.
The Inman blog writes about a recent court case out of Massachusetts. It involves a medical marijuana company called St. John’s Holdings, LLC, that wanted to buy property from Two Electronics, LLC, in Danvers, Massachusetts.
The buyer and seller, along with their agents began negotiations in January of this year. They met several times over the next month to work out the terms of the offer.
After that, the seller asked the buyer to submit a written offer based on the terms that they discussed. He also asked that the buyer and the buyer’s agent communicate with him “only” through the listing broker.
The buyer, his agent, and the listing broker then exchanged emails to fine-tune the letter of intent. They agreed on the third version, and then texted each other about the delivery of the letter and the deposit check.
This is when the listing broker texted the buyer’s agent saying the seller wanted the buyer to sign first. He also asked if the letter could be signed and delivered on that same day.
The buyer’s agent then texted the listing broker saying he had the signed LOI and the check and asked where they could meet. They spoke over the phone and set up a meeting to exchange the signed LOI and the check.
Unbeknownst to the buyer, the seller accepted an offer from someone else that same day and set a close date for “that” deal.
The next day, the listing broker texted the buyer’s agent that the seller was “out of town” and would be back the “next” day. Of course, when he returned, the seller refused to execute the deal with the original buyer, and the issue turned into a court case.
The buyer, St. John’s Holdings, filed the lawsuit, and the Massachusetts Land Court ruled that the text messages, along with a signed agreement that contained the “material terms” of the deal, were enough to satisfy the criteria for a legally binding contract.
In this case, the court ruled that the texts alone were not enough to constitute an offer because they were from the listing broker and the listing broker had no power to complete the deal. But the Inman blog writes that: “If the seller had been the one sending the text messages, then the court’s decision would likely have been different.”
Inman writes about another Massachusetts case in July, where text messages between the listing broker and the buyer’s agent did “not” result in a binding contract. The buyer’s agent sent a text to the listing broker saying that he emailed an offer. The listing broker responded saying he wouldn’t hear from the seller until the next day. The next day the listing broker said the seller would split the difference in the price and the buyer’s agent said he’d pass along the information. The buyer’s agent then responded again saying the buyer would accept the seller’s price. The sellers then sold the home to someone else.
In that case, the check was never sent to the listing broker and the listing agreement was never signed. The court ruled in favor of the seller.
The Inman blog included comments about text messages from the National Association of Realtors President William E. Brown. He says the use of text messaging is increasingly common in real estate transactions. But, he says, “It’s unlikely that these interactions will result in a binding contract.” He also says: “Agents should nonetheless keep in mind that they’re representing their client’s interest in the same way, regardless of whether they’re doing business via text, in an email or in person.”
The takeaway from all this is that text messaging can be more than just casual conversation. And, it’s something to be aware of if you are conducting a real estate deal, especially if the deal falls through, and someone’s not happy about it. So keep it in mind, if you want to keep yourself… out of court.
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