Texting has become so common in real estate transactions. Clients text their agents, and agents text each other regarding showings and offers. What no one really thinks about are those text messages creating binding contracts. According to a recent court case, text messages can be legally binding in real estate deals.
About the Precedent-Setting Case
The recent court case was St. John’s Holdings, LLC. vs. Two Electronics, LLC. It involved a commercial deal but certainly applies to residential real estate. The two agents in this case texted back and forth about a letter intent, which was essentially an offer. After a price was agreed upon, text messages were sent regarding the signing of the document. The listing agent asked the buyer’s agent to have his client sign first. They then arranged to meet to exchange the documents. Before the seller signed, another offer was received and ultimately accepted.
The buyer in this case argued that the text messages sent between the two agents created a legally binding contract. The court ruled in favor of the buyer!
Why Text Messages Can be Legally Binding in Real Estate Deals
Generally, contracts are not enforceable until they are made in writing. However, the definition of “in writing” has changed given the common use of email and text messaging these days. As social behaviors and common practices change, interpretation of laws and contracts has adapted as well.
Tips for Real Estate Agents
Real estate agents must therefore be more cognizant of the information they send via email and text. As a general rule, NH agents should consider adding a disclaimer to email communications in a transaction. Secondly, agents should minimize contract discussions made via text (or add a disclaimer to that as well). For example, if a seller is accepting an offer, rather than saying “seller accepts”, it might be better to text “seller accepts, pending signing by both parties” or something along those lines. Consult with your broker about office policies and best practices given the court decision that text messages can be legally binding in real estate deals.