Thanks to all who helped out.

wsteed311 said:

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I recently listed a vacant lot for sale. Yesterday, I came to a verbal/text agreement with a potential buyer. A TREC contract was drafted and sent to the buyer for signature, we (the sellers) have not signed it yet. Today, another individual came forward with a much better offer. Is my verbal/text agreement with the first buyer binding in Texas or can I accept the second offer? Just need advice before moving forward. Thanks!

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Likely there is a moral answer and a different legal answer.

I would like to know the answer to this as well. My understanding is that real estate transactions is one of the areas where verbal agreements are not legally binding...they have to be in writing (per Statute of Frauds).

I agree, I haven't moved one direction or the other yet, just want to know what the law states.

I'll give you the traditional lawyer answer: "It depends."

I'm actually litigating a case like this right now. Almost exact same fact pattern.

The statute of frauds requires that a contract for the sale of real estate has to be in writing. A text or email or other electronic writing can satisfy the SOF, and under certain circumstances can also be considered an electronic signature. So, it's really going to be a fact-intensive analysis. Was the property described in enough detail, and did you agree to enough core terms that it can be considered a contract? Maybe.

I suggest hiring an attorney to review your texts and give you a real analysis and legal opinion*.


*I am not your attorney and this is not legal advice. Consult your own attorney. (If you'd like me to be your attorney and give you a legal opinion, let me know.)

Thanks! Where are you located? I am in central Texas. Also, another aspect is that there are 4 owners of the property, I am only 1 of them. Not sure if it matters to have all 4 agree to it as the text was from me alone.

Email me: username @ outlook.com

Sent

Interested to hear what happens here.

I have seen many non-binding letter of intents and "handshake deals" in principle be forgotten quickly when a better buyer or someone with a higher price comes parachuting in at the last moment.

Not a lawyer but it's an interesting question.

if the purchaser felt the terms of the contract were covered sufficiently via the verbal/text communication, why did they feel the need to send a TREC contract?

Would the submission of the formal offer not be considered a counter since it would most likely contain terms not covered via the verbal/text negotiation?

Diggity said:

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Not a lawyer but it's an interesting question.

if the purchaser felt the terms of the contract were covered sufficiently via the verbal/text communication, why did they feel the need to send a TREC contract?

Would the submission of the formal offer not be considered a counter since it would most likely contain terms not covered via the verbal/text negotiation?

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You have to have a contract. Also sounds like he listed it and his realtor would be require to use a TREC form.

I imagine this is a smaller residential lot.

Not an attorney FYI.

dubi said:

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wsteed311 said:

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I recently listed a vacant lot for sale. Yesterday, I came to a verbal/text agreement with a potential buyer. A TREC contract was drafted and sent to the buyer for signature, we (the sellers) have not signed it yet. Today, another individual came forward with a much better offer. Is my verbal/text agreement with the first buyer binding in Texas or can I accept the second offer? Just need advice before moving forward. Thanks!

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Likely there is a moral answer and a different legal answer.

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I sold my business 15 years ago and retired to the Woods. At what point in the last 15 years did a Man's word and a handshake become worthless? I can't imagine posting a question like this.

I agree and was prepared to move forward with the original deal. I mentioned the higher offer to them just to be transparent as the additional owners of the land naturally wanted to go with the higher offer regardless of what was discussed in a text message. I am only 1 of 4 who own the land. I was then immediately threatened with a lawsuit. I am arguing to keep the original deal but am getting out voted, just posting here to see where we stand legally, that's all. Thanks to all who have contributed.

Probably an easy work around. Make the earnest money deposit 100% of purchase price, due diligence and closing 1 day, etc. Basically draft terms they will not agree too then go to offer #2 and make a traditional deal.

The Statue of Frauds is very strong in Texas. I think you are in a good position saying there was no binding, enforceable agreement that would stand up under the statute. Sending an unsigned TREC form or any other written document is really just opportunity for them to submit an offer with terms you might accept.

Here ya go, try this:

Example for original offer you did on your own: $750,000

Example of fair value: $1,000,000 divided 4 ways is $250,000 per person. You forego your 1/4th so that the other 3 get their fair value and go with the original offer.

This whole thread is interesting to me. There are so many terms/negotiating points to purchase a property.

I don't see any situation where you could have a deal over text message that is anywhere close to a done deal.

Price, timing, EM, closing. Ya. Maybe you could get basic numbers in an LOI agreed to but those non binding still have language you'd have to look at.

I agree with poster above that if you talk things out and agree in principle with someone you should honor it and I always would but agreeing to a price to sell over text doesn't seem like anything to me.

I obviously don't know any context here. Just been thinking about this.

dubi said:

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wsteed311 said:

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I recently listed a vacant lot for sale. Yesterday, I came to a verbal/text agreement with a potential buyer. A TREC contract was drafted and sent to the buyer for signature, we (the sellers) have not signed it yet. Today, another individual came forward with a much better offer. Is my verbal/text agreement with the first buyer binding in Texas or can I accept the second offer? Just need advice before moving forward. Thanks!

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Likely there is a moral answer and a different legal answer.

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I've learned too many things can go wrong in a real estate transaction in my recent history, contract or not. For most transactions, I agree with this sentiment. Real Estate though? Nope... no deal unless it is in writing and formally bound.

Case in point, I can't legally hold somebody to closing on actual contract because they sent me a text message saying they would.

I see nothing morally wrong going with the better offer at this point so long as you give the other person an opportunity to match it.

There's too many ways for either party to agree to terms and not close for the moral and legal answer not to be the same thing in my opinion.

After discussions with the ownership group and our real estate attorney (a fellow Ag) we decided to honor the original deal. We did not want to go back on our word as we felt the integrity of our family was more valuable than additional profit from the sale. My text to them stating we would accept their offer was "probably not" legally binding as nothing was signed, however there was risk taking this into a courtroom as there are cases where emails and texts can be viewed as contract agreements.

A few lessons learned from this one:

1) In any informal communication to a potential buyer (text, email, phone conversation) if you agree to something always close with "once all parties have signed the contract" or "pending the review and signature of the contract by all parties"
2) Don't list all details of a contract in an email or text (for example, closing date, financing terms, closing costs, etc.), this can be interpreted as a "contract" if enough detail is laid out. A better approach is to keep it basic and let the details only be listed in the official contract.
3) If you do several real estate deals a year, an LLC may be worth your time, not only for legal protection, but also to give you the ability to state that any offers have to be reviewed by our "board" and cannot be approved or agreed to by a single person.

Hope this helps, thanks again to all who contributed.

Merry Christmas you Filthy Animals!

This was really interesting, thanks for sharing as a lesson for others. Should be some good karma coming your way.

Thx for sharing. Interesting info.

Kudos to y'all for accepting the original offer.

No contract is binding until both parties have signed. Also on the TREC form there is a blank for execution date. That must be filled in as well. Yes, I am a realtor.

You can literally sign a "contract" on a bar napkin.

mgreen said:

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No contract is binding until both parties have signed. Also on the TREC form there is a blank for execution date. That must be filled in as well. Yes, I am a realtor.

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I'm genuinely trying to say this as nicely and professionally as possible, so please don't take offense. Your post is wrong (or at least my interpretation of what you're saying is wrong).

"No contract is binding until both parties have signed." This is a very broad statement, and factually incorrect. For instance, oral contracts are not written or signed, and yet in most circumstances are very much as binding and enforceable as written and signed contracts. Maybe what you're trying to say is that real estate contracts must be signed. That is true. The Statute of Frauds requires that any contract for real estate be in writing and signed. However, what I posted above, and the OP also later wrote, is that texts and emails can, under certain circumstances, constitute a writing and a signature for purposes of satisfying the Statute of Frauds.

The Texas Uniform Electronic Transactions Act legalizes the use of electronic writings and electronic signatures to satisfy those requirements. That's why many, if not most, real estate agents and brokers use programs to collect electronic signatures on TREC and other contract documents these days - because the UETA allows it. Several courts of appeals in Texas have found that electronic communications, such as email or text, can constitute a signature even without "signing" a party's name. Under the UETA, an electronic signature is "an electronic 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." The 1st Court of Appeals in Houston is one of those courts, and stated in one case: "We hold that the email name or address in the "from" field satisfies the definition of a signature under existing law." Khoury v. Tomlinson, 518 S.W.3d 568, 579 (Tex.App.--Houston [1st Dist] 2017).

"Also on the TREC form there is a blank for execution date. That must be filled in as well." Yes, the TREC form is the most widely used standardized real estate contract in Texas. Yes is has a blank for execution and asks Broker to fill in the date. However, the execution date being filled in isn't a prerequisite for a binding contract. The TREC form would still be a valid contract if signed by the parties but the execution date were left blank. I agree that it is an important part of TREC form contracts because other dates in the contract are calculated based on their relation to the execution date, but the core terms of the agreement would still exist and the contract would be binding and enforceable without that date.

"Yes, I am a realtor." I know you had to demonstrate some working knowledge of Texas real estate law to become a licensed realtor, but you're also prohibited by law from providing legal advice. Your post is arguably exactly that. If the OP were your client and you gave him the information in your post and he relied on it, you would likely end up on the wrong side of a lawsuit.

Again, I'm genuinely not trying to flame here, but you should really be careful. I felt the need to respond to this post because I don't want the readers of this forum to make any decisions based on false information and find themselves in a similar position to the OP. You really need to be careful when communicating with a potential buyer or seller via email or text. You can create a binding real estate contract using those methods, sometimes unwittingly.

TxLawDawg said:

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mgreen said:

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No contract is binding until both parties have signed. Also on the TREC form there is a blank for execution date. That must be filled in as well. Yes, I am a realtor.

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I'm genuinely trying to say this as nicely and professionally as possible, so please don't take offense. Your post is wrong (or at least my interpretation of what you're saying is wrong).

"No contract is binding until both parties have signed." This is a very broad statement, and factually incorrect. For instance, oral contracts are not written or signed, and yet in most circumstances are very much as binding and enforceable as written and signed contracts. Maybe what you're trying to say is that real estate contracts must be signed. That is true. The Statute of Frauds requires that any contract for real estate be in writing and signed. However, what I posted above, and the OP also later wrote, is that texts and emails can, under certain circumstances, constitute a writing and a signature for purposes of satisfying the Statute of Frauds.

The Texas Uniform Electronic Transactions Act legalizes the use of electronic writings and electronic signatures to satisfy those requirements. That's why many, if not most, real estate agents and brokers use programs to collect electronic signatures on TREC and other contract documents these days - because the UETA allows it. Several courts of appeals in Texas have found that electronic communications, such as email or text, can constitute a signature even without "signing" a party's name. Under the UETA, an electronic signature is "an electronic 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." The 1st Court of Appeals in Houston is one of those courts, and stated in one case: "We hold that the email name or address in the "from" field satisfies the definition of a signature under existing law." Khoury v. Tomlinson, 518 S.W.3d 568, 579 (Tex.App.--Houston [1st Dist] 2017).

"Also on the TREC form there is a blank for execution date. That must be filled in as well." Yes, the TREC form is the most widely used standardized real estate contract in Texas. Yes is has a blank for execution and asks Broker to fill in the date. However, the execution date being filled in isn't a prerequisite for a binding contract. The TREC form would still be a valid contract if signed by the parties but the execution date were left blank. I agree that it is an important part of TREC form contracts because other dates in the contract are calculated based on their relation to the execution date, but the core terms of the agreement would still exist and the contract would be binding and enforceable without that date.

"Yes, I am a realtor." I know you had to demonstrate some working knowledge of Texas real estate law to become a licensed realtor, but you're also prohibited by law from providing legal advice. Your post is arguably exactly that. If the OP were your client and you gave him the information in your post and he relied on it, you would likely end up on the wrong side of a lawsuit.

Again, I'm genuinely not trying to flame here, but you should really be careful. I felt the need to respond to this post because I don't want the readers of this forum to make any decisions based on false information and find themselves in a similar position to the OP. You really need to be careful when communicating with a potential buyer or seller via email or text. You can create a binding real estate contract using those methods, sometimes unwittingly.

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Thank you.

I think the running assumption was the topic was on real estate contracts, not contracts in general. True, realtors cannot give legal advice without potentially violating law against giving legal advice. Always good advice to get advice of attorney who has several years of real estate experience when dealing with real estate. It is often one of largest transactions of a person's life. There are good zag real estate attorneys that are happy to assist.