Emails between brokers/agents may become a binding contract in Texas according to the Uniform Electronic Transactions Act(UETA). Yes, based upon a broad definition of an electronic record, and electronic signatures, real estate contracts entered via email may be enforceable assuming the parties have agreed to conduct transactions by electronic means. There have been a couple of cases that have brought this issue to the fore front. Read the full stories in the October 2014 issue of the Tierra Grande Magazine by Judon Fambrough.
Emails have become an acceptable means of communications by many brokers/agents in our fast paced world of rapidly improving technology. Many of us expect to get a response or reply within one or two hours of contact, and it’s sometimes impossible to reach brokers/agents by phone when you feel you need to speak with them concerning an issue with an ongoing transaction. Besides that, verbal communications when it comes to contracts are still not binding in Texas, but emails have been considered acceptable since it’s in writing, and serves as a record of communication between the brokers/agents.
So whenever brokers/agents are using communications like emails to present offers, counter offers, or any discussions concerning a current or past transaction, does it bind our clients? Yes, according the UETA as stated in the above article. Some of us have out of town, out of state, and even out of country clients, or they may simply live clear on the other side of town. Needless to say, emails have clearly made it easier and faster for brokers/agents to communicate with one another, and even with their clients.
Therefore, since the UETA is relatively new, buyers, sellers, and brokers/agents need to be aware of its provisions and avoid unintended consequences. Upon taking a listing agreement, or becoming a buyer’s broker, the issue of the possible effect of the UTEA should be addressed. If the parties desire to conduct a transaction electronically, have them sign a document or send you corresponding emails to this effect. Make sure both parties to the contract receive copies. If they do not desire to conduct the transaction electronically, generate the same type of documentation to express and to substantiate their intent.
Simply having the parties agree that the final contract will be placed on a TREC(Texas Real Estate Commission) from, and signed by both parties may, in itself, create problems according to Texas case law. See Full explanation of this case law in the Tierra Grande October 2014 issue on page 9. On another note, brokers/agents need to inform the parties that even though they agree to be bound to an electronic transaction, the lenders, and title companies may insist on pen and ink signed contracts before issuing a title commitment, or processing a loan application.
Due to those recent Texas case studies, all my email communications now have an added statement below my signature block, “The Brokers statements in this email do not create a binding agreement for the broker’s clients”. Another one, that I have seen used is, “Client negotiations in this email are non-binding until appropriate contracts are fully executed”. Remember, the Uniform Electronic Transactions Act gives electronic contracts and signatures the same legal status as paper contracts with handwritten signatures as long as certain conditions are met. A series of email messages combined may be construed as a contract in some cases by the courts.
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