Can a text be legally binding in a real estate deal?

Can a real estate agent bind their client to a contract through a text message or email? The Massachusetts case, Saint John’s Holdings, LLC. v. Two Electronics, LLC., examines this very issue. The plaintiff, Saint John’s Holdings, LLC., sued Two Electronics, LLC. alleging that a text message from the defendant’s real estate broker constituted acceptance of a binding offer from the plaintiff to buy the defendant’s property.

Young woman using cell phone to send text message on social network at night. Closeup of hands with computer laptop in background

The case first examines whether the exchange of emails and text messages can create a binding and enforceable agreement. The Statute of Frauds requires that an agreement for the sale of real property be supported by a writing that contains the essential terms of the agreement. With the advance of technology what constitutes a ‘writing’ has become a gray area. The court examined multiple email exchanges between the plaintiff and the defendant and found that the emails contained the necessary essential terms of a contract including the purchase price, seller financing, the due diligence period, the closing date, and the deposit amount.

The defendant then argued that, even if a contract existed between the parties, the plaintiff’s acceptance of the contract terms by text message does not satisfy the signature requirement of the Statute of Frauds. In order to be enforceable, an agreement for the sale of real property must be signed by the party against whom enforcement is sought. Several courts have found that the requirements for a signature to satisfy the Statute of Frauds can be relatively minimal, including a typewritten, printed or stamped signature. The real estate brokers for both parties had typed their names at the end of messages that contained essential terms but did not type their names on more informal discussions. By signing their names in these exchanges, the court inferred that the parties chose to be bound by their signed communications. The court found that, by signing his name at the end of a text message acknowledging acceptance of the terms of the agreement, the defendant’s real estate broker intended to have the writing be legally binding.

Having found that a writing and a signature existed through the exchange of emails and text messages, the court then had to determine whether a real estate broker has the authority to bind a client to a legally enforceable contract. The plaintiff argued that the defendant’s real estate broker had the authority to bind the defendant to the contract. The court disagreed. The defendant’s real estate broker had never received permission from the defendant to do anything other than pass information back and forth between the parties. In addition, the plaintiff could not recall that the defendant ever informed him that the defendant’s real estate broker was authorized to accept offers to purchase the property or otherwise bind the defendant to a sale of the property.

Even though the real estate broker did not have authority to bind the defendant to the sale of the property, it’s important to note that exchanges in emails and text messages can satisfy the Statute of Frauds writing and signature requirements. Always be careful when sending communications through emails and text messages because you may run the risk of creating a legally enforceable contract.