Can Emails Create a Binding Real Estate Contract?

Question:  Can emails create a binding and legal real estate purchase and sale agreement?

That’s a unusual issue and was addressed recently when a court of appeal in New York, which held that emails between a buyer and seller might constitute a formal binding contract.

In that case (Stonehill Capital Management v. Bank of the West 28 NY3D 439, 2016) the court of appeal upheld a contract entered into by parties when the seller “agreed” to accepted the option bidders bid in an email that set forth all the material terms of the deal, including the sales price, specific loan to be sold, timing of the closing and manner of payment and wire transfer information.  In that email, the seller had stated that its acceptance “was subject to mutual execution of an acceptable [loan sale agreement],” which was never executed.

Nevertheless, the New York appellate court found that by establishing these elements, the requirement of “Statute of Frauds” was met.

Currently, there are no cases in California where a court has issued a similar decision on the issue.  However, this could happen if a California court of appeal finds so in a similar situation.

Sellers and buyers of real estate are cautioned that when emailing terms of a proposed contract, they do not establish their agreement to those terms.

It’s also important that real estate brokers and agents may not (unless they have specific authority to do so from their seller and buyer clients) enter into contracts on behalf of their principals (their clients).  That would be beyond the scope of the agency relationship.

Article by Harrison K. Long, real estate attorney at Orange County CA.  Member of the CA State Bar Association #69137.  A member and chairperson this year at Legal Affairs Forum for the California Association of Realtors.  Also a California licensed real estate broker #01410855.

Source of information for this article is Shannon Jones, expert California real estate attorney associated with CRELA, California real estate legal alliance.  This article is the providing of real estate information only and is not the providing of legal services.  If you encounter such an issue, you should consult with an experienced real estate attorney.

About Harrison K. Long

Real estate and business attorney. CA State Bar Association attorney member #69137. Professional real estate representative, REALTOR®, GRI, Real estate broker, CALBRE #01410855. Broker associate, HomeSmart Evergreen Realty, Irvine, CA. Providing real estate legal information and services for property owners, estate trustees, executors and administrators, fiduciaries, bankers, investor group managers, with their best decisions about homes and real estate. Orange County REALTORs® (member and prior service on its board of directors). "Realtor of the Year 2016" award by the Orange County REALTORs®. California Association of REALTORs® (now serving on its board of directors). National Association of REALTORs® member. Contact by cell or or text at 949-701-2515.
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