Enforceable Text Messages

Text messages between real estate brokers can give rise to an enforceable contract to sell real estate. In St. John’s Holdings, LLC v. Two Electronics, LLC, the Massachusetts Land Court held that text messages between the buyer’s broker and the seller’s broker constituted a completed and enforceable agreement, notwithstanding the fact that no hard copy of the agreement was signed, and that no deposit had been made by the buyer.

In that case, brokers for the respective parties had engaged in lengthy negotiations regarding the purchase and sale of a commercial property in Danvers via e-mail, text messages, and a draft Letter of Intent. At one point in the negotiations, in response to a set of revised terms from the buyer, the seller’s broker sent a lengthy text message to the buyer’s broker accepting the terms and instructing the buyer to first sign the agreement and deliver a deposit check, after which the seller would sign the agreement. The seller’s broker concluded the message by “signing” the text message with his name, “Tim.” Shortly thereafter, but before the buyer could sign and deliver the deposit, the seller accepted another party’s offer to purchase the property. When the first buyer sued for specific performance (that is, to force the sale of the property to that buyer), the seller sought dismissal of the suit on the basis that there was no enforceable agreement between the parties.

It is a fundamental legal principal that, to be enforceable, an agreement for the sale of real property must satisfy certain criteria set forth in the ancient doctrine known as the Statute of Frauds, one requirement of which is that the agreement be in writing and signed by the party against whom enforcement is sought. This is the basic principal underlying the common Purchase and Sale Agreement, which must always be signed by both seller and buyer.

In finding that the text messages at issue in St. John’s Holdings satisfied the requirements of the Statute of Frauds, the Land Court Judge found that the extensive text messages between the parties (through their brokers), when taken together, were sufficient to state a binding contract. The terms discussed in the series of texts included the purchase price, seller financing, the due diligence period, the closing date, and the deposit amount. Moreover, the Court found that the way in which the parties handled the transaction (i.e. using text messaging as a preferred method for negotiation) was sufficient for them to appreciate that the text message would memorialize the contractual offer and acceptance. Lastly, in response to the seller’s argument that the Statute of Frauds required that a contract be signed by the seller (i.e. the party against whom enforcement was sought), the Court responded that the real estate agents involved were duly authorized representatives of the respective parties, and that the seller’s broker, having signed his last text message with his name “Tim,” demonstrated his intent to have the writing be legally binding.

While St. John’s Holdings presented a set of facts that might differ in substance and form from usual text messages, individuals and their representatives should reconsider the casual nature of most text messages and may want to use disclaimers when texting to negotiate the terms of an eventual agreement.