Real estate contracts must be properly signed and accepted. This applies when offers are transmitted via email communication as well. Careless errors or omissions can cause a contract to be cancelled.
Here’s an example of why.
l estate contracts must be properly signed and accepted. This applies when offers are transmitted via email communication as well. Careless errors or omissions can cause a contract to be cancelled.
Here’s an example of why.
On Sept. 22, 2011, Ian and Anita Pilon put in an offer to buy a home Page Place in Kitchener, from Adrian and Florica Rosu for $400,000. They asked for a closing date of November 16, 2011. This offer was not accepted.
The Rosus changed the price from $400,000 to $420,000 on the front page of the offer. They also changed the closing date to December 16, 2011 because they had a tenant who would not leave before that date. Their real estate agent, Ninoslav Orasanin, then scanned the offer and sent it by email to the buyer’s real estate agent, Clifton van Dincten, on September 23, 2011. However, the counteroffer was missing the actual signing page, so there was no signature of the seller included in the offer that was transmitted.
Van Dicten met with the buyers and they changed the price on page one of the offer to $410,000 and initialed it. He then scanned it and sent it back to the seller agent by email on September 25, 2011. Again, the offer that was emailed continued to be missing the actual signing page. The offer was open for acceptance until 6 p.m. on September 25, 2011.
The seller agent then told the buyer agent verbally that the sellers had accepted the price change of $410,000 and he resent the offer to the buyer agent by email. However, the sellers did not initial the price change on page 1 of the offer.
The sellers later claimed that they never agreed to $410,000 and that they always thought that the sale price was $420,000. The deal couldn’t close because the tenant refused to vacate on December 16 and the parties could not figure out a way to settle the matter. It ended up in court. The buyers sued for $17,000, based on their losses as a result of the sellers’ failure to close the deal on December 16.
In a decision dated January 8, 2014, Deputy Judge Sebastien Winny in the Superior Court of Justice of Ontario Small Claims Court, decided that there was never any valid contract signed and accepted. He found as a fact that the missing page 4 was not correctly inserted into the offer until October 11, 2011, so by then, the buyer’s last offer had expired.
In order to have a valid contract, it must be signed and accepted and the acceptance must be communicated to the person making the offer, before the contract deadline. Real estate agents can sometimes accept this communication on behalf of their clients. However, verbal communication is not good enough. It has to be in writing. In this case, because the offer was missing the signing page and because the last price change was never initialed by the sellers, the contract was cancelled.
It is interesting that the judge ruled that if he had decided that the contract was valid, he would have given the buyers $13,000, being their damages as a result of the sellers not being able to close on time, including moving costs, legal fees, renting alternate accommodations and mental distress.
There are several important lessons from this case:
Make sure that all important terms of a contract, especially the price and closing dates, are initialed by the buyer and the seller
When scanning and sending any offer by email, make sure that all pages are included. It is easy for errors to happen with the scanner, if for example, 2 pages go through together;
Make sure that any tenant on your property will vacate in time for closing, before you sign any agreement.
Mark Weisleder is a lawyer, author and speaker to the real estate industry. You can contact Mark at email@example.com