These days, texting has become acceptable shorthand for communicating with almost everyone. Often, the content of a text doesn’t even include actual words; why type out a word when you can express yourself with an ever-growing collection of emojis? However, in this hot real estate market, the Massachusetts Land Court recently reminded us that while texting may be an acceptable way to confirm dinner plans with your friend, text messages between real estate agents do not necessarily constitute a valid and enforceable contract for the sale of real property.
Judge Howard Speicher’s decision in Donius v. Milligan, 2016 WL 3926577 (Mass. Land Ct. July 19, 2016), highlights the pitfalls of using text messages in place of a traditional contract. In Donius, the disappointed buyer alleged that text messages between his real estate agent and the seller’s agent constituted a valid and binding contract obligating the seller to sell the Property. The real estate agents for the buyer and seller exchanged text messages addressing the sale price and the closing date. Subsequently, the buyer’s agent emailed the seller’s agent a Contract to Purchase. The text messages were not signed by either agent, and it was not clear from the texts that the seller’s agent had actual authority to bind the seller to a contract.
The court determined that the text messages indicated that the parties had reached the stage of “imperfect negotiation” prior to formalizing the contract, but that they had not yet reduced their agreement to terms. The most important consideration for the court seems to be that, while the text messages addressed the sale price and the closing date, the subsequent documents inserted new material terms that were not considered in the text message exchange. The court reiterated long-standing principles of contract law, establishing that failure of the parties to agree on material terms may prevent any rights or obligations from arising on either side due to the lack of a completed contract. The court was not persuaded by the buyer’s argument that the additional terms inserted into the contract to purchase were customary and therefore did not need to be negotiated. Rather, the court determined that adding new terms after the text message exchange indicated that the texts merely represented the parties’ intent to negotiate and did not create an enforceable contract. Thus, the court allowed the seller’s special motion to dismiss, and the buyer was forced to continue his real estate hunt.
The Donius decision did not go so far as to say that the exchange of text messages could never constitute a valid contract for the sale of property. Judge Speicher concedes that text messages and emails can potentially satisfy the Statute of Frauds, “provided that they, like other writings, contain the essential terms of the transaction and are signed by the parties to be bound or their authorized agents.” In fact, previous decisions by Massachusetts courts have found text messages and emails sufficient in certain circumstances. In St. John’s Holdings, LLC v. Two Electronics LLC, 2016 WL 1460477 (Mass. Land Ct. Apr. 14, 2016), the Land Court found that signed text messages incorporating a detailed letter of intent were sufficient to withstand a special motion to dismiss. And the Superior Court in Feldberg v. Coxall, 2012 WL 3854947 (Mass. Super. May 22, 2012) held that an email exchange that included the material terms and electronic signatures and demonstrated a clear intent to be bound satisfied the statute of frauds to create an enforceable contract based on the parties’ conduct.
The takeaway here is that there is no emoji to indicate that you have entered into a valid and binding contract for the purchase of real property. All elements of a contract are still required for the contract to be valid and enforceable, to wit: the texts should state an intent to be bound; address material terms; include signatures; and incorporate by reference any other relevant documentation such as a letter of intent or a purchase and sale agreement. In light of this, it may be wiser, for now, to leave the texting for confirming your dinner plans rather than confirming your purchase or sale of real property.
If you would like any assistance or need more information, please contact the authors of this alert, Julie Pruitt Barry, at 617-456-8090 or [email protected], or Cailin Burke, at 617-456-8049 or [email protected].