The appellate court of New York has ruled that an email communication regarding purchase price of real estate is binding, according to the NY Times for Feb. 20, 2011. There was a successful claim of breach of contract because of an email. http://www.nytimes.com/2011/02/20/realestate/20posting.html?_r=1&ref=realestate The case involves a $50 million commercial real estate transaction, so we had... [more]
The appellate court of New York has ruled that an email communication regarding purchase price of real estate is binding, according to the NY Times for Feb. 20, 2011. There was a successful claim of breach of contract because of an email.
http://www.nytimes.com/2011/02/20/realestate/20posting.html?_r=1&ref=realestate
The case involves a $50 million commercial real estate transaction, so we had sophisticated, experienced people on both sides of the deal.
I've added a disclaimer to my email signature, but would welcome any opinions from NYS licensed attorneys about whether that is sufficient precaution, or whether I should just stick to phone calls for price negotiations. I rather like emails because then I know I heard it right, but, uh, forgettaboutit.
I was taught that r.e. deals have to be in writing and signed before they are binding. I believe this is the best approach for everyone, especially residential purchasers and sellers who are not real estate investors or careerists, and who are often whipsawed by a lot of conflicting and strong emotions, not to mention pressures from family and friends.
The Times has a call-out warning to "brokers, clients and lawyers" but the buyer or seller who is negotiating without a broker involved needs to know about this ruling as well. I am *not* pushing using brokers, I am just saying that I believe this ruling ought to apply to FSBOs and direct buyers as well--at least, it's not obvious to me why it wouldn't apply to them, based on the NYTimes coverage.
Karla Harby VP
Rutenberg Realty
kharby@crrnyc.com
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Response by angler7
almost 15 years ago
Posts: 193
Member since: Oct 2007
I'm no lawyer, but I think the specific circumstances of this case suggest a good faith negotiation on Terms that belies the loose interpretation being speculated by the Times. It is a massive stretch to assume that the extension of a "right of first offer," a precise legal term, is equivalent to the preliminary pricing discussions had amongst buyer, seller and brokers.
That said, brokers should always be careful with their puffery because reliance is more easily established when a buyer/seller can point to something in writing.
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Response by angler7
almost 15 years ago
Posts: 193
Member since: Oct 2007
Oh, and the purchase price in this case was not binding; only the opportunity to offer a higher price -- "the right of first offer."
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Response by tina24hour
almost 15 years ago
Posts: 720
Member since: Jun 2008
I read the article with interest, too. In this particular case it applies to the extension of a right of first refusal - a right that may not require a countersignature from the recipient. The seller and listing agent had every right (and responsibility) to continue showing and negotiating offers until the contract was fully executed - we still need a signed and countersigned document to take a property off the market. The buyer was not protected by his unsigned contract, but rather by the right of first refusal extended to him by the selling agency.
Tina Fallon
Realty Collective, LLC
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Response by angler7
almost 15 years ago
Posts: 193
Member since: Oct 2007
Hmm, now I am not so sure. The article does say ROFR, but describes the term as if it were a ROFO. If a ROFR then the holder of the ROFR has a call option at the negotiated price. Interesting.
I'm no lawyer, but I think the specific circumstances of this case suggest a good faith negotiation on Terms that belies the loose interpretation being speculated by the Times. It is a massive stretch to assume that the extension of a "right of first offer," a precise legal term, is equivalent to the preliminary pricing discussions had amongst buyer, seller and brokers.
That said, brokers should always be careful with their puffery because reliance is more easily established when a buyer/seller can point to something in writing.
Oh, and the purchase price in this case was not binding; only the opportunity to offer a higher price -- "the right of first offer."
I read the article with interest, too. In this particular case it applies to the extension of a right of first refusal - a right that may not require a countersignature from the recipient. The seller and listing agent had every right (and responsibility) to continue showing and negotiating offers until the contract was fully executed - we still need a signed and countersigned document to take a property off the market. The buyer was not protected by his unsigned contract, but rather by the right of first refusal extended to him by the selling agency.
Tina Fallon
Realty Collective, LLC
Hmm, now I am not so sure. The article does say ROFR, but describes the term as if it were a ROFO. If a ROFR then the holder of the ROFR has a call option at the negotiated price. Interesting.