Counteroffer by Email, Then a Better Offer: Is There a Contract?
Buyer's agent Nell submits an offer at $395,000 on a $410,000 listing: $5,000 earnest money, 21-day financing contingency, 45-day closing, standard Utah REPC form. The seller replies from her personal Gmail account: 'We'll do $402,000 and I'm keeping the water softener and the garage shelving. Everything else as written.' Nell texts her client, who says, 'Fine, accept it,' and signs the counteroffer with an e-signature that evening; Nell emails the signed document to the listing agent. The next morning the seller says she has 'already moved on' and has accepted $415,000 from another buyer. The seller refuses to sign any earnest money release, and the buyer demands the $5,000 from Nell's broker.
1. Is there an enforceable contract, and what did the seller's email do to the buyer's original offer?
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The email was a counteroffer, not an acceptance. It changed the price and added terms (water softener, garage shelving), so under the mirror-image rule it operated as a rejection that terminated the buyer's $395,000 offer. The original offer is gone; only the counteroffer is alive.
The buyer then accepted the counteroffer unqualifiedly - signed with an e-signature and delivered to the seller's agent that evening. Delivery to the agent is delivery to the principal, and acceptance is effective on dispatch, not when the seller reads it. Electronic records and signatures are enforceable under Utah's adoption of UETA, and intent to sign is shown by the signature plus the audit trail.
Result: a binding contract at $402,000 including the water softener and shelving, with the 21-day financing and 45-day closing terms carried forward by 'everything else as written.' The seller's later contract is a breach - and if the second buyer knew of the first contract, potential interference with contract.
2. Who is entitled to the $5,000 earnest money, and what may the broker do with it?
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Neither party is automatically entitled. Until entitlement is established, the broker is a stakeholder, not a judge. Earnest money may be released only (a) on written authorization signed by both buyer and seller, (b) on a court order, or (c) through a formal interpleader. A buyer's demand or a seller's refusal is not authority.
Practical steps: notify both parties in writing that the funds are being held and why; state the competing claims; keep the money in the trust account with a clean ledger entry; set a deadline for a signed release; if none comes, tell the parties the broker will interplead or continue holding pending written settlement, and point them to the contract's dispute-resolution/mediation clause. Do not move the funds to the operating account and do not deduct a fee from them. Note that where the money ends up may depend on whether the buyer elects rescission or pursues specific performance.
3. What remedies should the buyer's broker explain, and what should the listing agent do about the second offer?
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Buyer's remedies: (1) specific performance if the contract provides for it - often paired with recording a lis pendens so the seller cannot deliver clean title to the second buyer; (2) damages for breach - the difference between the contract price and the property's market/cover value, plus out-of-pocket costs; (3) rescission plus return of the earnest money. On a roughly $13,000 gap, practical leverage is usually a demand letter from an attorney; litigation is slow and expensive relative to the stake.
Listing agent's duties: tell the seller in writing that a binding contract likely already exists and that closing with the second buyer risks a lawsuit and a title cloud; the seller needs independent legal advice. The listing agent must not help paper over the first contract, and should disclose the competing claim to the second buyer's agent and to the title company. A broker who knowingly participates in a double sale faces license discipline on top of civil liability.