April 28, 2016
In both commercial and residential transactions I recently have seen a spate of emailed communications purporting to amend a purchase contract. Many times these are emails among Realtors “confirming” one claimed contractual modification or another.
What is the legal effect of these emailed communications?
The nature of the emails I have seen typically involve changing (delaying) a closing date or waiving certain of the contingencies. As the transaction unravels, the client approaches me and wants to enforce the contract as “amended.” Thus, the question becomes: legally and practically, what effect on the original, signed contract do these emails have?
The answer: Likely none. The original signed contract will likely stand unamended.
As is addressed here, the statute of frauds, which is very similar state to state, requires two things for all contracts for the purchase and sale of real estate: (i) the contract must be in writing and (ii) it must be signed by the party “to be charged therewith,” i.e., the person we are planning on enforcing the contract against.
Because the emails in the cases I have recently seen are not accompanied by the adverse party’s “signature,” they likely will not be enforceable. Thus, the Courts will probably look to the original, unsigned contract to ascertain the rights and responsibilities of the parties to the contract.
What is an amendment?
Most clients and their agents seem to know about the statute of frauds, and do in fact comply with it as to the original contract. Somehow, however, the message has not gotten through that this applies to every amendment or modification to the contract as well.
Changing a closing date, waiving a contingency, adding personal property to what is to be conveyed, or promising to make certain repairs pre-closing or post-closing are all amendments to a contract and need to comply with these basic provisions of the statute of frauds.
E-signatures still allowed.
Many clients and Realtors have adopted use of electronic signatures (such as DocuSign) to allow fulfillment of the statute of frauds by means of email and the internet for the original contract. As is addressed here, this method does in fact fulfill the statute of frauds. Thus, for these fast-developing “minor” amendments to a contract, e-signatures are fine as well.
I suppose clients and their Realtors see memorializing these changes as not worthy of taking the time to properly document the same, or they misunderstand that these are in fact amendments to the contract. This is especially so with respect to fast-moving developments in a modern real estate transaction.
The rule is simple: the contract for purchase and sale of real estate and all amendments thereto must be in writing and must be signed by the party on the other side of the transaction.