Is an email a binding contract or commitment to purchase in terms of real estate?
Is an email a binding contract or commitment to purchase in terms of real estate?Disclaimer: I’m not a lawyer, so this isn’t legal advice. For that, you need a lawyer.Answer: No. The email as described would constitute an offer. It wouldn’t (yet) be a binding contract.From Nolo:Most contracts only need to contain two elements to be legally valid:All parties must be in agreement (after an offer has been made by one party and accepted by the other).Something of value must be exchanged -- such as cash, services, or goods (or a promise to exchange such an item) -- for something else of valueBroken down a bit more from I Love Libraries:An offerAn acceptanceCompetent parties who have the legal capacity to contractLawful subject matterMutuality of obligationConsideration.The only things that the second definition adds are (1) lawful subject matter, and (2)competent parties who have the legal capacity to contract.An email sent by Party A to Party B doesn’t (yet) meet those criteria. We have an offer but not yet an acceptance. We’re assuming they’re competent parties who have the legal capacity to contract. We’re also assuming that what’s being proposed is legal.We also have to make sure that there’s a proposed mutuality of obligation, and that it involves something of value.Plus, for real estate contracts to be binding, they must be in writing. (You can come up with a handshake deal and both parties abide by it. It’s legal. But it’s not binding.)Although you can run into problems with any of the requirements for a contract, the most apparent one is that while an offer has been made, it hasn’t been accepted yet. So the offer itself is not a “binding contract.” Further, the offer may be written to expire after a period of time. Or the person making the offer can withdraw it at any time prior to acceptance. The point here is: You need both parties to agree on the contract.It’s in writing so, signed by both parties, it would be binding. If mutuality and consideration are involved and both parties are competent and have the power to enter into the agreement, then you’ve got yourself a binding contract.So something as simple as: “I will pay you $100,000 for the purchase of 123 Main Street, Your Town, Your State” signed by both parties (assuming they’re competent and have the power to make the deal) is a legal binding contract. You don’t need the lot number or square number (though it can help). You don’t need the terms ($100,000 in cash? Owner-financed? Financed by a lender?), though those are awfully important. There are a few more sentences that ought to be in there for protection (so a court doesn’t have to get involved in case of a dispute), but legitimate real estate contracts only need to be a few paragraphs long. (The one I use as an investor is 3 pages.) It doesn’t have to be 20–40 pages or more, like many licensed agents use.There are a few other items that might have to be disclosed or included. For example, because I’m also a real estate agent, I’m required to disclose that I’m an agent. Big deal: That’s a sentence that reads: “Donald Tepper is a real estate agent licensed in Virginia, license number xxxxxxxxx.”I do recommend that a lawyer review the contract. And different states have different “understandings” regarding real estate contracts. Further, in some states (such as New York and New Jersey), lawyers are really considered a necessary part of the process while in many other states, frankly, lawyers are never involved. Protection is always good.But as to the question about whether an email can constitute a valid offer and, if signed, become a binding contract, the answer is yes.