Words Matter. A Lot.

[Great Office Meeting Topic] Scary stuff, negotiations via email and text.  We’ve heard a few stories where agents have made simple, thoughtless statements during negotiations via text or email that they don’t realize obligates their client to perform.  Even texts can and will be held against you… and your client.  In 2016, MA Land Court ruled that a series of text messages between agents satisfied the Statute of Frauds and bound the parties to a real estate transaction. Yup, you heard that right.  Here is a summary of what went down:

During real estate negotiations, two real estate agents exchanged several emails and texts about a large, complicated deal.  An email indicated that the seller was “ready to do this,” then a text that said…  “[the seller] wants you to sign first, with a check, and then he will sign. Normally, the seller signs last or second. Not trying to be stupid or to the contrary, but that’s the way it normally works. Can Rick sign today and get it to me today? Tim”.  The buyer did what the seller’s agent advised, and the buyer’s broker gave the seller’s agent the signed offer and deposit check as expected.

The problem? Earlier that day, the seller had signed a different offer on the property – and therefore didn’t execute the documents as the agent promised.  The buyer sued and the court determined that the agent had created a binding agreement to sell.  In fact, the judge emphasized that when the seller’s agent signed his name “Tim” at the end of the critical text message, he sufficiently “signed” under the Statute of Frauds to constitute a binding agreement at the culmination of a series of communications.

Please remember that what you say is directly tied to your client – you are their fiduciary representative and as such, hold a very, very important position in the transaction.  Protect them, and use your words wisely.  Disclaimers in your email signature help for sure, but the best protection is to stop making blanket statements on behalf of your client without their express permission.  Now you know that text and emails can be considered written instruments that are many times court enforceable – chose your words wisely.  Thank you.

Article by MAR Legal Counsel Mike McDonaugh with signature suggestions.