Fact Scenario:

Buyer A’s REALTOR® submits a signed purchase offer to the Seller’s REALTOR®. To save time and effort, Seller instructs his REALTOR® to counter Buyer A’s offer via email. Buyer A’s REALTOR® responds with another counter-offer, no signature, over email. Seller instructs his REALTOR® to accept! Buyer A’s REALTOR revises the purchase agreement to reflect the provisions agreed upon, sends to Buyer A for initials and signature, and emails the purchase agreement to the Seller’s REALTOR®. While Buyer A is signing the revised purchase agreement, Seller’s REALTOR® receives an offer from another REALTOR® working with Buyer B. Since the Seller’s REALTOR® is legally obligated to share the offer, Seller’s REALTOR® sends Buyer B’s offer to Seller, who immediately accepts by signing the offer to purchase. Seller’s REALTOR® sends the signed purchase agreement to Buyer B’s REALTOR®, and texts Buyer A’s REALTOR® that the Seller has accepted another offer. Buyer A is distraught.

Legal Notes:

In Alabama, a contract for the sale of a house is binding if in writing and signed. Ala. Code § 8-9-2(5). For an electronic name to be considered a signature, Alabama law essentially requires the signer to intend the name to be a signature. Ala. Code §§ 8-1A-7; 8-1A-2(9). For an agent to legally sign a real estate purchase agreement on behalf of his or her client, the client must give written authorization to the agent. Hight v. Byars, 569 So. 2d 387 (Ala. 1990). For a verbal commitment to be valid, the buyer must a) pay at least a portion of the purchase price, and b) be put in possession of the property by the seller. Ala. Code § 8-9-2(5).

Analysis:

In the scenario above, Seller and Buyer A did not enter into a binding purchase agreement. First, Seller never signed Buyer A’s purchase agreement. Second, there is no evidence that Seller’s REALTOR® intended the text message as a signature, and, third, even if the Seller’s realtor’s name was intended as a signature, the Seller’s REALTOR® did not have written authority to sign on Seller’s behalf. Seller is not bound by Seller’s commitment to Buyer A. Buyer B’s purchase agreement is valid and binding.  

Tips: 

1. Keep It Written: Where possible, send a signed, revised purchase agreement with each counter-offer. This is often inconvenient or impossible with fast-paced negotiations but is the best way to ensure a signature is affixed to the purchase agreement quickly. Revisions can be made in handwriting, but your client’s initials should accompany each revision
2. Consider An Electronic Document Service: Minimizing the risk that the other party backs out before signing may entail asking your client to sign a document more often, making a real estate forms software program, like NAR-member benefit ZipLogix or other, similar programs, very helpful in speeding up the process. Remember electronic signatures are just as valid as hand-written signatures.
3. Cover Your Bases: Inform your client of the laws regarding purchase agreements. If, for whatever reason, negotiations must be verbal, or by text or email, tell your client that delays can cause a deal to fall through, and the deal is only binding when buyer and seller sign.
4. Verbal Modifications Too: To be binding, all modifications to the purchase agreement must be in writing and signed by the parties.
5. Communicate Clearly: Even if a text message or email is not binding, both are important if you are not revising the purchase agreement for each counter-offer. When texting or emailing a counter-offer, think about stating “in response to your offer at [insert date and time], all terms remain the same, except…” or some variation so that a term does not fall through the cracks.

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