Randy Gilbert

Can Texts/emails Create a Real Estate Contract?

Randy Gilbert, J.D.

Chief Happiness Officer

Florida’s Title Insurance Company

[email protected]

(954) 500-Title (8485)

Issue Presented To The Court. On March 23, 2022, a case of first impression was decided in Florida, answering whether texts and emails between real estate agents sufficiently complied with the Statute of Frauds so as to create a binding and enforceable real estate contract by and between their clients. See, Walsh v. The 3388 Barrow Island Trust, No. 4D21-1463 Fla. 4th DCA 03/23/22) (*note this case is specifically limited to real estate contracts)

Statement of Facts. Using a standard FAR/BAR As-Is Real Estate Purchase and Sales Agreement, Buyer’s real estate agent emailed a $3.1 million offer to close on 01/19/21 which Buyer signed. Line 48-49 of Buyer’s written offer (within the FAR/BAR) defined, “[t]he effective date of this Contract shall be the date when the last one of the Buyer and Seller has signed or initialed and delivered this offer or final counter-offer.” From here on out, neither the buyer nor the seller signed anything; rather the realtors themselves engaged in the following text and email exchanges which by all outward appearances would look like there was an agreement…

Seller’s agent countered Buyer’s $3.1M offer stating, “Sellers would only accept the list price of $3.4 million.” Next, Buyer’s Agent accepted stating, “Buyer would meet Seller’s $3.4M with all other terms remaining the same and a quick cash close, please have the Seller counter the offer on our contract at $3.4M, sign and return and I will get you the contract fully executed today.” The Sellers’ agent texted back, “Sellers accept the $3.4 million and ask to close 2/1/21.” Buyer’s agent texted, “Perfect and confirmed. Thank you!” Seller’s agent reiterated by email, “Seller thanks [buyer] for his patience and accepts $3.4 million.”

Having seller’s remorse, Seller hired an attorney who advised the Buyer’s agent that, “Seller accepted a different offer.” Buyer promptly sued Seller for specific performance, Seller moved to dismiss Buyer’s lawsuit arguing a contract was never formed since the agreement was never “executed,” the trial court agreed with Seller, and the appellate court upheld the decision.

Court’s Legal Analysis. In upholding the dismissal of Buyer’s lawsuit, the court found the Buyer’s offer never matured into a contract and therefore was unenforceable for three (3) reasons.

First, the appellate court succinctly summarized: there was an initial offer signed by the Buyer, and then only unsigned text messages and emails exchanged between both buyer’s and sellers’ real estate agents. However, “in the present case there was no written agreement signed by both parties as required by the statute of frauds.

The “statute of frauds” is an old law which can be traced back to 1677 England. Florida Chapter 725 is entitled “unenforceable contracts.” Florida’s version of the Statute of Frauds states in relevant part:

No action shall be brought . . . upon any contract for the sale of lands . . . unless the agreement or promise … shall be in writing and signed by the party to be charged therewith or by some other person by her or him thereunto lawfully authorized.” Fla. Stat. §725.01.

Second, the court examined the terms of Buyer’s offer, which was written on the standard FAR/BAR As-Is Purchase and Sales Agreement. Based upon the terms of Buyer’s very offer, which set “[t]he effective date [as] … the date when the last one of the Buyer and Seller has signed or initialed and delivered this offer or final counter-offer” the court found it dispositive that Seller never signed the initial offer. Therefore, since the Seller never counter-signed Buyer’s offer, there was no real estate contract.

Third, the court held that the statute of frauds must be strictly construed and requires not only that (1) “the contract must be a writing signed by the party against whom enforcement is sought,” but also (2) “the writing must contain all of the essential terms of the sale and these terms may not be explained by resort to parol evidence.” Parol evidence meaning oral, verbal, or extraneous evidence. In this case, neither party signed modifications to the essential terms such as the “price” change from $3.1M to $3.4M, nor the “closing date” change from 01/19 to 02/01.

What Constitutes a “Signed” writing for Purposes of a Real Estate Contract? So by way of further analysis, if a real estate contract must be a writing signed by the party against whom enforcement is sought, then what constitutes a “signed” writing? According to the above case, the texts and emails exchanged by the parties’ realtors were insufficient.

Well the answer as to what types of signatures may be acceptable can be found in paragraph O of the FAR/BAR, which allows the use of “electronic signatures” recognized by both “Florida’s Electronic Signature Act, and other applicable laws.”

O. CONTRACT NOT RECORDABLE; PERSONS BOUND; NOTICE; DELIVERY; COPIES; CONTRACT EXECUTION: … A facsimile or electronic copy of this Contract and any signatures hereon shall be considered for all purposes as an original. This Contract may be executed by use of electronic signatures, as determined by Florida’s Electronic Signature Act and other applicable laws.See, Florida Realtors/FloridaBar-ASIS-6 Rev.10/21 © 2021 Florida Realtors”‘ and The Florida Bar.

What Constitutes an “Electronic Signature” for Purposes of a Real Estate Contract? Florida appears to treat electronic signatures and physical signatures equally. Florida Chapter 668 broadly deals with Electronic Commerce which is further broken down into Part I “Electronic Signatures”, and Part II “Electronic Transactions.

Part I of Chapter 668, is known as Florida’s Electronic Signature Act of 1996, and states, “Unless otherwise provided by law, an electronic signature may be used to sign a writing and shall have the same force and effect as a written signature.” Fla. Stat. §668.004. An “ ‘ Electronic signature’ means any letters, characters, or symbols, manifested by electronic or similar means, executed or adopted by a party with an intent to authenticate a writing. A writing is electronically signed if an electronic signature is logically associated with such writing.” Fla. Stat. §668.003(4).

Part II of Chapter 668, is known as “Florida’s Uniform Electronic Transaction Act” and states in relevant part,

A record or signature may not be denied legal effect or enforceability solely because the record or signature is in electronic form. A contract may not be denied legal effect or enforceability solely because an electronic record was used in the formation of the contract. If a provision of law requires a record to be in writing, an electronic record satisfies such provision. If a provision of law requires a signature, an electronic signature satisfies such provision. Fla. Stat. §668.50(7). An Electronic Signature means an electronic (“Electronic” means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities) sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record. Fla. Stat. §668.50(1)(e),(h).

SIGNATURES FOR MODIFICATIONS vs. METHODS FOR PROVIDING NOTICES IN THE FAR/BAR. Although the above case did not mention it, both the current and the prior version of the FAR/BAR Purchase Contract have what is called an integration clause. An integration clause (also called a merger clause) is generally a clause inserted usually at the end of a written contract that closes the contract by stating this written contract is the complete and final agreement and understanding between the parties and any and all prior or contemporaneous agreements or representations are merged into this written agreement. However, an integration clause also typically leaves an opening explaining the method the parties must use to modify that agreement. According to Paragraph “P” of the FAR/BAR contract, entitled,

“ P. INTEGRATION; MODIFICATION: This Contract contains the full and complete understanding and agreement of Buyer and Seller with respect to the transaction contemplated by this Contract and no prior agreements or representations shall be binding upon Buyer or Seller unless included in this Contract. No modification to or change in this Contract shall be valid or binding upon Buyer or Seller unless in writing and executed by the parties intended to be bound by it.

So in other words, according to the FAR/BAR Contract, it appears as though changes, modifications, variations, and alterations to the FAR/BAR have to be both in writing and executed (i.e. signed).

Does the 2021 FAR/BAR allow Texting at All? The prior 2017 version of the FAR/BAR allowed notice by any “electronic media,” however in 2021 the ability to use any electronic media was deleted. Instead, of allowing notice by electronic media, that phrase was replaced with allowing notice to be given by “email.” Moreover, the 2021 and the 2017 FAR/BAR requires that its terms be strictly construed. Paragraph O states that “notices … may only be made by….” and then lists the only methods that may be used. Both the plain reading and strict construction of the 2021 FAR/BAR, coupled with 2021’s more restrictive language on how notice may be given, seems to all militate against the use of any texting whatsoever for providing notice.

Both the 2021 and 2017 versions of FAR/BAR Paragraph O, are reprinted below for ease of reference with the subtle difference underlined and bolded:

2021 VERSION:O. CONTRACT NOT RECORDABLE; PERSONS BOUND; NOTICE; DELIVERY; COPIES; CONTRACT EXECUTION: … Notice and delivery given by or to the attorney or broker (including such broker’s real estate licensee) representing any party shall be as effective as if given by or to that party. All notices must be in writing and may only be made by mail, facsimile transmission, personal delivery or email. A facsimile or electronic copy of this Contract and any signatures hereon shall be considered for all purposes as an original. This Contract may be executed by use of electronic signatures, as determined by Florida’s Electronic Signature Act and other applicable laws.” See, Florida Realtors/FloridaBar-ASIS-6 Rev.10/21 © 2021 Florida Realtors and The Florida Bar©.

2017 VERSION: O. CONTRACT NOT RECORDABLE; PERSONS BOUND; NOTICE; DELIVERY; COPIES; CONTRACT EXECUTION: … Notice and delivery given by or to the attorney or broker (including such broker’s real estate licensee) representing any party shall be as effective as if given by or to that party. All notices must be in writing and may be made by mail, personal delivery or electronic (including “pdf”) media. A facsimile or electronic (including “pdf”) copy of this Contract and any signatures hereon shall be considered for all purposes as an original. This Contract may be executed by use of electronic signatures, as determined by Florida’s Electronic Signature Act and other applicable laws. See, Florida Realtors/FloridaBar-ASIS-6 Rev.06/19 © 2017 Florida Realtors and The Florida Bar©.

The drafters of the 2021 FARB/BAR knew texting existed in 2021, and in fact, cellphones are the lifeblood for most realtors, who are not sitting at desks using email. Of course, as a counter-point, there is no reason why a realtor couldn’t simply send the same correspondence from their cellphone using an email app instead of a text. Perhaps the reasoning relates to emails being more reliable, having better storage, and being capable of being authenticated.

When Does the FAR/BAR Require “Notices” to be Given? The 2021 FAR/BAR speaks about delivering written notice relating to: (1) A buyer wanting to cancel due to a lease or landlord/tenant estoppel concerning the property {line 77, 419}; (2) Buyer obtaining loan approval {line 111}; (3) Buyer’s ability to obtain loan approval {line 114}; (4) Buyer cancelling due to inability to obtain loan approval {line 117}; (5) Seller’s ability to cancel if buyer is unable to get loan approval {line 123}; (6) Buyer’s cancellation relating to flood insurance {line 225}; (7) Buyer’s cancellation during its inspection period {line 265}; (8) Buyer’s receipt of a title commitment and then notifying seller of title defects rendering title unmarketable {line 386, 483}; (9) Seller having cured the title defects {line 392}; (10) If Seller cannot cure a title defect {line 395}; (11) If a survey discloses encroachments; (12) A parties desire to cancel due to a force majeure {line 451}; (13) Seller providing utilities and access for appraisers, inspection, and walk-throughs {line 509}; and (14) FIRPTA {line 568}.

So in Conclusion, with regards to how the parties to a real estate transaction should communicate it appears as though: (1) to establish a real estate contract, the contract needs to be in writing and signed by the parties; (2) to modify a real estate contract after it is properly formed, the modification needs to be in writing and signed by the parties intended to be bound; and (3) to give notices under the 2021 FAR/BAR real estate contract, notices must be in writing and may only be made by mail, facsimile transmission, personal delivery or email.

DISCLAIMER: Topics discussed are general concepts, not intended to constitute legal advice, accuracy, nor completeness, and may not be relied upon as such; consult an attorney or accountant. The author Randy Gilbert, J.D. is neither an attorney nor an accountant. FTIC is a national award winning title insurance company known for its white glove customer service and “No Junk Fee Guarantee.” ®

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