Oral 'We Have a Deal' and a Backup Offer
A buyer emails a $512,000 offer on a condominium: 10% deposit, 21-day mortgage contingency, 45-day closing. The listing agent texts back, 'Seller accepts-signed copy tonight.' Relying on that, the buyer pays $650 for an inspection, locks the rate for a $1,200 fee, and gives notice to her landlord. The next morning the seller receives a higher backup offer and refuses to sign, saying, 'No contract until I sign.' No deposit has been delivered. The buyer wants the condo or reimbursement and asks whether the texts form a binding contract.
1. Is there an enforceable contract? Analyze the statute of frauds, signature, and the agent's authority.
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Likely no enforceable contract. Connecticut's statute of frauds requires a writing signed by the party to be charged-here, the seller-for a sale of land. The listing agent's text is not the seller's signature, and the agent generally lacks authority to sign a sale contract for the seller unless the seller gave actual written authority.
Even an electronic text can satisfy the statute only if it is attributable to the party to be charged and shows intent to be bound; an agent's 'seller accepts' message usually does not. The deposit was never delivered, and no fully executed contract exists. The seller's refusal to sign means the buyer probably cannot compel the sale.
2. If no contract, can the buyer recover the inspection and rate-lock costs under promissory estoppel or otherwise?
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The buyer's reliance was real, but promissory estoppel is a narrow exception to the statute of frauds. The buyer would need to show a clear promise, reasonable and foreseeable reliance, and injustice that is unconscionable-not just $1,850 in inspection and rate-lock costs. A court is unlikely to force the condo sale on these facts; the buyer may have a small damages claim, but recovery is uncertain and may be limited. The buyer should preserve receipts and consult an attorney.
3. What should the buyer's agent have done to protect the buyer before expenditures?
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The buyer's agent should have obtained a fully executed contract or counteroffer signed by the seller before the buyer spent money, or at least a written confirmation from the seller or the seller's attorney. The agent should have explained that a text from the listing agent is not the same as a seller-signed contract, kept the offer open in writing, and advised the buyer not to order inspections or lock the rate until acceptance was documented. If the seller wanted a backup-offer period, that should have been in writing.