Can a party to a real estate transaction be held liable with just a verbal promise to sign a contract?

Real Estate Agent with CEO - Dale Ross Realty Group 0316603

I just had an experience where we had multiple offers on a property and all parties were told to come in with their highest and best offer. A buyer stepped up and made a full price offer to the seller and the seller promised to sign the agreement. Just before the seller was going to sign, a higher offer came in. Of course the seller wanted the highest offer and did not want to counter the agreement they originally promised to sign. Not only was the latter offer higher but the buyer was much more qualified than the buyer they first agreed to sell to. 

After the seller signed the highest priced offer, the first buyer who lost out contacted an attorney to challenge the validity of the verbal agreement based on the promise to sign the offer. In Texas, the contract states that it is not binding until signed by all parties and communicated as such. After 29 years in the business, I was surprised to learn that if a party promises to sign an agreement and then changes their mind, they could be held liable for damages resulting from actions the other party took based on the promise of the other party to sign the contract. In this case, the buyer apparently did not incur any expenses but they tried to use that scare tactic as an incentive for the seller to come back to their offer. It did not work but could have tied the property up in court and prevented a sale if they could prove damages. Honestly, I have never advised a buyer or a seller to take action that could cost them anything before they have a signed agreement in their hand and I find it hard to believe anyone would do so. I believe that any real state agent who advises their client to take action based on a verbal statement should be the one held liable because they should know that anything can happen before a contract is signed by and delivered to all parties.

 I don't like to see people in this situation but hey, I did not write the laws and it's my job to present all offers up until, and sometimes after, we have a signed agreement. 

Your comments are welcomed.

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Dale Ross

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Linda Powers
Resort Realty - Duck - Duck, NC
On the Outer Banks


I had a similar situation several years ago. We received 2 offers within minutes of each other. My client agreed verbally to accept the higher priced one. The losing agent went back to his client, and within an hour (before my client signed the verbal offer) presented a higher offer.

I explained to my client the legality of verbal contracts, and the long ago custom of a handshake or a person's word making a contract binding.

My client stepped up and signed the verbal offer because he also felt his word was binding.

Was the agent who presented a second, higher offer angry? You betcha! But in that hot market, he perhaps should have given his client better advice.

Apr 23, 2010 02:07 AM #1
Gail Robinson
William Raveis Real Estate - Southport, CT
CRS, GRI, e-PRO Fairfield County, CT

Dale, I haven't experienced this in Connecticut.  I've seen buyers and sellers come to agreement verbally and then a better offer comes in before the papers are signed.  There is always a lot of anger and emotions, but haven't seen anyone file a lawsuit.  I do caution my clients that nothing is for real until both parties have signed the agreement, so let's get the paperwork signed right away.

Apr 23, 2010 02:08 AM #2
David Obbee - Agoura Hills, CA

Dale: In most states there are a number of types of contracts that must be in writing in order to be enforceable.  Real estate contracts are prominent among them- also, contracts with minors, marriage contracts, contracts for employment that exceeds 1 year, contracts for the sale of good over $10,000.00, etc.  I would think that an attorney who recommends a course of action to their client that is in contravention of the law would be subject to discipline.  I'm glad your client was able to move forward without any court hassle.  Thanks for sharing, have a great weekend!

Apr 23, 2010 02:08 AM #3
Edward & Celia Maddox
The Celtic Connection Realty - Queen Creek, AZ

This happens all the time on bank owned homes. The Bank, through their listing agent, asks buyer if they accept their terms before sending bank addendum.  There is a 1-5 day lag before contract is fully executed.

Apr 23, 2010 02:11 AM #4
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Dale....good post for thought & discussion...thank you

I am sure(and have learned) anything in life is understanding is that when it comes to Real Estate, things have to be in writing......the subject is getting so complex how can you risk otherwise? You will end up getting sued for playing outside the box. Doesn't make for a Disney ending......

Apr 23, 2010 02:23 AM #6
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