In this age of technology, many parties in a real estate transaction exchange text messages. They’re quick, short, and sweet. Real estate agents representing buyers and sellers may also exchange messages when negotiating a deal. The assumption is that nothing is binding until an agreement is fully signed by both parties, but that may not be true any more. In a recent case “St. John’s Holdings LLC v. Two Electronics, LLC”, the court ruling made text message communications legally binding.

St. John’s Holdings LLC v. Two Electronics, LLC

In this case, buyer and seller agents communicated via text messages regarding a letter of intent (offer). The text message string was as follows…

Seller Agent: “[the seller] wants you to sign first, with a check, and then he will sign. Normally, the seller signs last or second. Not trying to be stupid or to the contrary, but that’s the way it normally works. Can Rick sign today and get it to me today? Tim”

Buyer Agent: “Tim I have the signed LOI and check. It’s 424 [PM]. Where can I meet you?”

The agents indeed met and paperwork exchanged hands. Before the seller signed the paperwork, they received and accepted another offer. The buyer sued, claiming that the combination of communication between the parties, including the text messages, created a binding contract. The court agreed.

Massachusetts Statute of Frauds

In Massachusetts, there is a Statute of Frauds that requires contracts for real estate transactions to be made in writing and signed by both parties. When all deals were signed in ink on paper, this was much a much easier law to apply. With the use of email and text messages, what is considered “in writing” and “signed’ is open to interpretation.

What Massachusetts Real Estate Agents Should Know | Text Message Communications Legally Binding

Given the court ruling on the case above, Massachusetts real estate agents must be more cautious about what they transmit via email and/or text. First and foremost, they should consider adding an email disclosure that communications are not binding unless accompanied by a fully signed agreement. Text messages are a little trickier.

Remember that a court ruling text message communications legally binding sets a precedent. Avoid performing any critical communications via text. If texting is absolutely necessary, be up-front that it is not binding until a contract is signed (and make sure that your subsequent actions do not imply otherwise).