A Massachusetts Land Court judge has ruled that a text message can satisfy the Statute of Frauds and seal a real estate transaction.
As reported in Massachusetts Lawyers Weekly, the parties spent a month haggling over the sale of a Danvers office building. The seller believed it was free to accept another party’s offer and proceeded to enter a written purchase-and-sale agreement and set a tentative closing date. But the first purchaser thought it had a binding contract to acquire the property, based on a text message that the seller’s agent had sent to its own. The text message said that the buyer just needed to sign copies of a letter of intent and deliver a deposit check, which it did, only to learn that the seller later signed a purchase and sale agreement with another party.
The first buyer filed a complaint with Land Court seeking to enforce what it felt was a binding contract, along with a restraining order to block the other sale. The Land Court judge agreed, and entered an indefinite restraining order blocking the subsequent sale.
In deciding whether a text message could satisfy the longstanding Statute of Frauds requirement that a real property deal be memorialized in writing, the judge relied on precedent from cases involving email. In the intervening decade, the use of email “has advanced immensely and become commonplace,” he noted. In the case before him, the judge said, the text was “a writing,” and similarly, when “read in the context of exchanges between the parties, it contains sufficient terms to state a binding contract.” The case is St. John’s Holdings, LLC v. Two Electronics, LLC.
The lesson for attorneys and real estate agents is to take great care when sending text messages and emails during negotiations. Where attorneys and agents can add written disclaimers to their email signatures stating that that electronic communications will not create a binding contract until a formal offer is executed, this is not possible to do with simple text messages. So, especially where parties have been in negotiations for a time, and the material terms of the deal have been discussed, agents need to pay significant attention to this relatively informal means of communication that may unwittingly seal the deal.