A recent decision by the Massachusetts Land Court held that text messages between real estate agents can satisfy the requirements of the statute of frauds and bind parties to a real estate transaction. In Massachusetts, the statute of frauds requires transactions for the sale of real property to be in writing and signed. In its decision, the court noted that the use of email and text has “advanced immensely and become commonplace” in the last decade and accordingly a text message should be considered “a writing” under the statute of frauds.
In the present case, the plaintiff was a prospective purchaser of an office building in Danvers. A “letter of intent” went through several rounds of revisions before being sent to the Defendant/seller for a signature. Unbeknownst to the plaintiff, the seller received an offer from a third party on the same day the “letter of intent” was forwarded to the seller for a signature. The following day, sellers’ broker reached out to purchaser’s broker via text message. Seller’s broker did not object to any of the amendments to the “letter of intent”, but simply requested the purchaser sign the agreement first and return it with the deposit. The text message stated that after the seller received deposit and the purchaser executed document, “Then [the seller] will sign”.
Additionally, seller’s agent urged purchasers agent to return the purchaser executed document before the end of the day. The message included the seller’s broker’s texted name at the end. Unbeknownst to purchasers, sellers accepted the third parties offer that day before the prospective purchaser could return the signed documents. After finding out that another offer was accepted, the purchasers filed a complaint, motion for lis pendens and a motion for temporary restraining order.
In reaching its conclusion, the court stressed the importance of reading the texts in the context of the totality of exchanges between the parties to insure they contain sufficient terms to state a binding contract. Under the statute of frauds, “multiple writings relating to the subject matter of the agreement may be read together . . .”. In the instant case, the court held that “the way in which the parties handled the transaction was sufficient for them to appreciate that the text message would memorialize the contractual offer and acceptance.” The court also noted that the brokers’ texted name at the end of the message was sufficient to meet the statute of frauds, as the requirements for a signature are “relatively minimal”.
By its decision, the court is recognizing the reality of how business is commonly conducted in the modern world.
The moral of the story is attorneys and real estate agents should proceed with caution when using less formal means of communication.