Be Wary of the Perils of Electronic Communication
September 11, 2015 |
Seventy-seven percent of sellers expect a response from their agent within 30 minutes.[i] Eighty-eight percent of buyers expect a response from their agent within one hour.[ii] Do not expect the same from your attorney! All jokes aside, this puts a ton of pressure on agents to respond in the most expeditious manner or risk losing a client. Currently, emails, text messages, Facebook posts, and Tweets provide agents with the means to meet the client’s expectations. Despite the understandable need to quickly respond to a client or agent, the use of such means must be approached with caution.
Text Message: My buyer is willing to offer $100,000, closing in 60 days for the house listed at 123 Main Street, Anywhere, USA.
Text Message: Sounds good.
Is this a contract? Maybe. Generally, Ohio law provides that a contract for the sale of real estate must be in writing signed by the parties.[iii] The law does not specify the type or form of writing, which has led to enactments of laws like Ohio’s Uniform Electronic Transactions Act (the “UETA).[iv] The UETA and courts nationwide recognize that electronic communications can constitute a written agreement. And. They. Live. Forever. In Feldberg v. Coxall (May 22, 2012), Massachusetts Superior Court Justice Douglas Wilkins ruled that a series of e-mail exchanges between the buyer’s and seller’s attorney, the last one attaching a revised, but unsigned, offer to purchase, arguably created a binding agreement entitling the buyer to a notice of claim against the property.[v] The Superior Court of New York for Kings County likewise held that an e-mail bearing the sender’s typed name at the bottom could create a binding real estate contract.[vi] Electronic communication can also operate to amend existing contracts.[vii]
In cases like those cited above, courts and juries are ultimately left to determine whether the parties intended to enter into a contract. This means a detailed review of all electronic communications concerning the subject matter.
To avoid costly litigation and potential embarrassment, real estate agents should:
- Include a standard disclaimer in all electronic communications that, “This communication is not intended to be legally binding.”
- Refrain from forwarding client’s electronic communications to the other party or agent.
- Refrain from using contract terms such as “offer,” “agree” and “accept.”
- When discussing an already executed agreement, carefully consider language that could be interpreted as a modification or amendment.
- If there is any doubt about whether you would like to read your electronic communication out loud to a jury – don’t send it.
Keeping up with the rapid pace of change together with the demands of clients can be overwhelming. The exercise of due care and diligence is certain to build an agent’s reputation and client base far faster than sloppiness and legal exposure. So, in the chaos of the moment take some time to review electronic communications before pressing send. You’ll be careful, right?
[i] Properties Online, Inc., 2014
[ii] Properties Online, Inc., 2014
[iii] R.C. 1335.05
[iv] Ohio Revised Code Chapter 1306.
[v] Feldberg v. Coxall, 2012 WL 3854947, at *5 (Mass. Super. May 22, 2012)
[vi] Rosenfeld v. Zerneck, 4 Misc. 3d 193, 776 N.Y.S.2d 458 (Sup. Ct. Kings Co. 2004)
[vii] Stevens v. Publicis, 50 A.D.3d 253 (Sup.Ct. N.Y. 2008)