Tuesday, April 15, 2014

Caution:  Even Unsigned Emails Can Bind Real Estate Deals
by Jason G. Howe, Esq.

Careful what you put in an email – it might bind you to a contract.

Real estate and business attorneys deal with this daily, but it is frequently a shock to sellers and buyers, landlords and tenants.

In the recent case McClare v. Rocha, Maine’s highest court found that emails between the parties’ representatives can create a purchase and sale agreement - even without a seller’s signature.

The McClare case reiterates the importance of carefully choosing the words used when discussing not only home sales, but also leases and other contracts via electronic mediums like emails, texts, Facebook, Twitter, etc.  It may not take much. 

In McClare, the seller’s representative wrote: “The assessed value of the real estate is $430,600 . . . Jim [Rocha] believes that in this market, and particularly at that location, the assessed value probably is higher than the actual market value. Jim has offered to acquire the McClare interest for one third of the assessed value . .  . Jim says that he would be happy to speak with the
McClares directly if that would facilitate an agreement . . .”

The buyer’s representative wrote back: “My client accepts your clients offer of $143,533 for his 1/3 interest in the Bangor Tire property. Please let me know how much time you need if any to raise funds. I will prepare the deed.

Look sparse?  It is.  But it was still enough for the Court to overturn a lower court’s ruling that had tossed out the Buyer’s claim that a contract existed.  Now, the case is back in litigation.

Regardless of the electronic medium, words like “offer” and “acceptance,” combined with the property or rental location and a price term can be enough to create a binding contract.  While this can be a handy tool for business and real estate professionals, McClare illustrates that the law (technically called the Uniform Electronic Transactions Act) cuts both ways.

To avoid unexpected contractual obligations, seek legal counsel to clarify electronic communications and/or provide guidance to the real estate professionals representing you in a listing, loan, or business negotiation.

Attorney Howe practices in the firm’s Corporate/Real Estate group.  He is available at jhowe@bergenparkinson.com, and by phone at 207-985-7000.