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Emails May Become a Contract in Texas!

By
Real Estate Agent with Brown Realty, 210-789-4216, TREC #0492321

Emails between computersEmails 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.

 

WrittenContractsEmails 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. 

Comments (83)

Morris Massre
Pembroke Pines, FL
Real Estate Instructor Broward County Florida

Now this is scary.  I know in Florida just saying something verbally can be interpreted as a binding contract, so this doesn't surprise me.

Oct 28, 2014 12:47 AM
Wayne Zuhl
Remax First Realty II - Cranford, NJ
The Last Name You'll Ever Need in Real Estate

Hi Jerry,

This is very intersting.  I'm wondering how this would fly in our litigious state.

Oct 28, 2014 01:47 AM
Kevin Mackessy
Blue Olive Properties, LLC - Highlands Ranch, CO
Dedicated. Qualified. Local.

That is an interesting point.  If that's enforceable in Colorado I will definitely put that disclaimer in my email signature when working with other brokers.  

Oct 28, 2014 03:53 AM
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

And the echos of "robo-signing" rear its ugly head.  LOL  I wonder if we'll be able to write with pen & ink in the next 100 years.  Texting, typing and e-sigs . . . will make handwriting a thing of the past?

Oct 28, 2014 04:23 AM
Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

next thing you know and a Facebook post will constitute a contract.  I'm a firm believer of signing the "actual" contract (electronic or with a pen) for a a deal.

Oct 28, 2014 06:35 AM
Jennifer Shenbaum
Jennifer Buys Houses - Redondo Beach, CA

Very interesting.  Great idea to add a disclaimer under your signature line!

Oct 28, 2014 07:05 AM
Kathleen Daniels, Probate & Trust Specialist
KD Realty - 408.972.1822 - San Jose, CA
Probate Real Estate Services

Jerry, my first reaction was "that might be a very slippery slope."  Many agents treat their transactions like they are their own personal transactions. There is a lot said, and written in emails that the actual party to the contract has no awareness of. I would never agree to conduct transactions by electronic means.

Oct 28, 2014 07:21 AM
Jeff Jensen
The Federal Savings Bank/Lending in 50 states - Greenwich, CT

It is not surprising with texts beginning to take on legal stature.

Oct 28, 2014 07:49 AM
Patricia Kennedy
RLAH@Properties - Washington, DC
Home in the Capital

Jerry, this sounds way complicated!  It will be interesting to see what the local lawyers will have to say about it.  This should liven up continuing ed down there!

Oct 28, 2014 01:08 PM
Claude Labbe
RLAH / @properties - Washington, DC
Realty for Your Busy Life

Jerry....yes, regulations are changing similarly here as well (DC, Maryland, Virginia).

BUT....I still prefer signed documents.  Electronic signatures, sure.  But signed documents.  Emails are simply too open to interpretation and mis-interpretation.

I'm not trying to be difficult, but....it scares me.

While I'll accept an email that confirms my showing time, I will continue to follow up more significant emails with more significant documents.

Oct 28, 2014 01:22 PM
Jerry Newman
Brown Realty, 210-789-4216, - San Antonio, TX
Texas REALTOR, San Antonio Military Relocation

Yes, Joan. The disclaimer is being used by many brokers/agents today.

Hi Praful Thakkar I think the problem may be whenever emails have something different than what was actually on the legal written documents.

Hi Debbie, That doesn't surprise me about Colorado, since other states are saying the same things about emails and electronic communication.s

Yes, Michelle, I am sure California will follow along with other states.

Oct 29, 2014 02:45 AM
Jerry Newman
Brown Realty, 210-789-4216, - San Antonio, TX
Texas REALTOR, San Antonio Military Relocation

Hi Rich. It just may be! Only time will tell how most of the states will be handling this issue.

Thanks for the Shout Out, Wil!

Hi Morris. I believe Florida has something in place to address this concern.

Yes, Wayne and Jean Marie. I am sure your state will have this issue. After all, I believe the buyer in this Texas case was from your state.

Yes, Kevin. Adding that disclaimer is a good idea.

Hi Carla. LOL. Your projection of the future seems like a great possibility. Pen & Ink may become extinct.

 

Oct 29, 2014 02:54 AM
Jerry Newman
Brown Realty, 210-789-4216, - San Antonio, TX
Texas REALTOR, San Antonio Military Relocation

Hi Tammy, Let's hope no one is crazy enough to do any transactions over Facebook.

Yes, Jennifer, It may help, but no one really knows how the courts may decide a case.

Hi Kathleen, Sometimes, we might not have a choice when our clients are not local. Electronic signatures may become very necessary with some transactions.

Jeff, I know at some time in the future "Texting' will become a real concern too.

Yes, Pat. I am sure some Continuing Education is a great idea in all the states. This issue is not going away anytime soon.

Yes, Claude, I know it's very scary whenever the courts start interpreting any emails between brokers, who are representing their clients.

Oct 29, 2014 03:07 AM
Robert Vegas Bob Swetz
Las Vegas, NV

Hello Jerry ... very interesting post, congrats on the feature from the Gods and your post has been featured to the group:

LATE NIGHT - EARLY MORNING AT ACTIVERAIN 

Oct 30, 2014 03:57 PM
Jerry Newman
Brown Realty, 210-789-4216, - San Antonio, TX
Texas REALTOR, San Antonio Military Relocation

Thanks,Vegas Bob. It's an Honor to get Featured in your Group.

Oct 30, 2014 11:35 PM
Keith May
Keller Williams Realty - Edmond, OK
20 Year REALTOR, Broker Associate

wow

Oct 31, 2014 05:19 AM
Jerry Newman
Brown Realty, 210-789-4216, - San Antonio, TX
Texas REALTOR, San Antonio Military Relocation

Thanks, Keith. It's something to be concerned about.

Oct 31, 2014 05:36 AM
Margaret Rome Baltimore 410-530-2400
HomeRome Realty 410-530-2400 - Pikesville, MD
Sell Your Home With Margaret Rome

Jerry, This is something to stay on top of. Thanks for sharing what's happening in Texas.

Oct 31, 2014 07:01 AM
Will Johnson
Hendersonville, TN
The Sell and Stage Team

This is very interesting and a good thing to keep in mind.  I like your solution of the clause that you add to your emails.  If there have been negotiations via emails, another good thing to include is a "four courners" clause in the final contract.  This basically says that anything outside of the contract is null and all parties only agree to what's explicitly stated in the contract.  Thanks for great informion!

Oct 31, 2014 08:02 AM
Janis Borgueta
Newburgh, NY
Retired RE Salesperson

Important to fully understand how this works in your area Jerry. Clients are smart to hire you to work with them in these transactions.

Dec 03, 2014 06:50 PM