Real Estate Tip – “But I Didn’t Sign Anything”

How Electronic Communication Can Lead to Unexpected Contracts

In a recent ME case, McClare v. Rocha, 2014 ME 4, the state’s highest court taught us how dangerous email exchanges can be. The issue is whether an exchange of emails between lawyers can create a contract for the sale of real estate that binds the buyer and the seller without either the buyer’s or seller’s signature. The short answer is: yes, that can happen. The result might be the same if the correct email exchange took place between brokers or bankers.

For more than 10 years, the real estate and business communities have worked with the Uniform Electronic Transactions Act (10 MRSA 9401-9420). This law allows anyone to create a binding obligation by email, voice mail, fax or other electronic methods of communication that do not involve original signatures on paper. For the real estate world, this has been a very handy tool, requiring only that each side agree (either explicitly or by implication from their actions) that they intend to be bound by electronic communications.

In the McClare case, more facts will need to be proved in a trial before the buyer knows if he will be required to buy the seller’s property. For the general public, though, that final result may not matter.

Everyone in real estate must now be much more circumspect when choosing their email language. In particular, the words “offer” and “acceptance” appearing in an email exchange that includes a price and an identifiable property might create a binding contract, despite the absence of other details and the absence of a signature. Owners and prospective buyers of property must now be alert to the possibility that their broker, lawyer or banker might inadvertently bind them to a contract.

To avoid unexpected contractual obligations, seek experienced legal counsel to clarify electronic communications or provide instructions to the real estate industry professionals representing you in a listing, loan or negotiation.

Today’s real estate tip is brought to you by Rick Smith, a LEED Accredited Professional and member of Bernstein Shur’s Real Estate Practice Group and Green Building Team. Stay tuned for more useful tips for real estate professionals.

For more information, contact Rick at rsmith@bernsteinshur.com or 603 623-8700 ext. 8829 or 207 774-1200.