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A Broker’s E-mail Might Prove BINDING!

The ease and convenience of negotiating real estate transactions electronically may come with hidden pitfalls. Details and terms communicated in a broker’s e-mail or text might be considered by a court to be binding. Brokers and their clients want immediate responses regarding Offers to Purchase, amendments, or due diligence requests, especially in a fast-paced market. Some say we live in an “instant gratification” era; but at what risk?

A real estate contract must be a written agreement, signed by all parties, and then the fact that it has been signed must be communicated to all parties in order to satisfy the Statute of Frauds and contract law. However, many transactions today are negotiated quickly via e-mails and texts between listing brokers and buyer agents and between those brokers and their clients, before being reduced to writing on contract forms. Communications go back and forth between brokers expressing their client’s offer, counter offer or responses to the proposed terms of the transaction. Even after a contract is signed, negotiations continue about additional items including extensions of various dates, repair requests, additional inspections, and possession of the property.

The danger is, what a broker communicates electronically might be deemed binding. E-mails and electronic communications can become the subject of lawsuits and damaging to the parties involved. In a 2012 Massachusetts case, Feldberg, et al. v. Coxall, the buyer alleged that the emails exchanged by the buyer’s and seller’s attorneys evidenced the creation of a contract. The judge cited the Massachusetts Uniform Electronic Transactions Act saying “an e-mail signature block or even the “from” portion of the email may constitute valid electronic signatures in cases where the parties are conducting the transaction electronically.” Even though the seller argued that no contract was signed, the ruling opened up the possibility for a court to look at whether the e-mails constituted a binding agreement. (The parties eventually settled the matter out of court).

In North Carolina, the Uniform Electronic Transactions Act, Article 40 of Chapter 66 of the North Carolina General Statutes, can be found at the following link:  https://www.ncleg.net/enactedlegislation/statutes/html/byarticle/chapter_66/article_40.html

According to this statute, when deciding if the parties have agreed to handle the transaction electronically, the context and surrounding circumstances, including the parties’ conduct, is considered. The Act also states the requirement for a contract to be “in writing” may be satisfied if the provider delivered the communication in an electronic record capable of retention. 

Although to date, we know of no North Carolina Court that has held that electronic communication between brokers constituted a binding contract, by negotiating the possible terms of a transaction electronically, real estate brokers might be putting themselves and their clients in jeopardy and not realize it until it is too late.   

So, how can brokers protect themselves when negotiating electronically on their client’s behalf? Consider the following when communicating via email: 

You may want to include in your communications that your client must approve the terms of the transaction; negotiations are simply preliminary until all parties sign the agreement and properly communicate their acceptance. You might also state that your email or text does not create acceptance or a binding contract.  

At one time, Offers to Purchase were delivered by hand, in their entirety, initialed, signed and dated.  Counter offers with clearly marked changes, initialed and signed by all parties, were also hand delivered.  Today, most negotiations take place electronically, so taking steps to communicate clearly and safely by electronic means is essential. 

When a broker proposes or responds electronically to possible transaction terms on behalf of their client, it is imperative they use non-binding language to protect both themselves and their clients from possible pitfalls.

Additionally, once that written contract is signed and acceptance is communicated, don’t assume that subsequent negotiations are handled differently than the initial contract negotiations. Any changes to the written contract still require signatures and communication of acceptance. If your buyer client has submitted a Due Diligence Request and Agreement, and through emails the Listing Broker has described what the seller will repair, but the seller has not signed the document, don’t assume that the seller is bound to the terms of the agreement or to do the repairs. Because it is possible that the brokers’ communications could bind the parties, it is best to take care that the parties are not bound to repairs or other agreements by the brokers’ electronic communication. Instead, make sure that the contract documents are modified to reflect the parties’ agreements.

Resources at your Fingertips

Have you checked out the Commission’s website (ncrec.gov) recently? Did you know the website offers a wide variety of resources for brokers and consumers?

Resources for brokers include:

Resources for consumers include:

Also, the Support page provides brokers and consumers with responses to frequently asked questions.

For more information, contact the Education & Licensing Division at ls@ncrec.gov or 919.875.3700.

Current Stats: Monthly Licensee Count as of October 1, 2021

Disciplinary Actions

PATRICIA FRITZINGER (GOLDSBORO) – By Consent, the Commission reprimanded Ms. Fritzinger effective September 14, 2021. The Commission found that Ms. Fritzinger acted as the listing agent for residential property. After a buyer terminated their contract to purchase, they shared their home inspection report with Ms. Fritzinger. The owner of the property addressed some, but not all, of the material issues noted on the inspection report. Ms. Fritzinger failed to advise the owner to update the property disclosure form to include items that were not repaired and failed to otherwise disclose the non-repaired items to subsequent buyers prior to offers being made. Ms. Fritzinger did provide the home inspection reports to the subsequent buyers during their due diligence period.

JAMES GARLAND HARRIS III (ROXBORO) – By Consent, the Commission suspended the broker license of Mr. Harris III for a period of 30 Days effective September 10, 2021. The Commission found that Mr. Harris III used an Instagram account that was tied to his real estate business, to comment on an Instagram post unrelated to real estate. Mr. Harris III’s comment was inappropriate and not professional in nature. He has since deleted his comment to the post.

PHILLIP M PRICE (GREENSBORO) – The Commission accepted the voluntary surrender of the broker license of Mr. Price effective September 8, 2021. The Commission dismissed without prejudice allegations that Mr. Price violated provisions of the Real Estate License Law and Commission rules. Mr. Price neither admitted nor denied misconduct.

ODELL WILLIAMSON JR (DURHAM) – By Consent, the Commission suspended the broker license of Mr. Williamson Jr for a period of 36 months effective January 31, 2020. The Commission found that Mr. Williamson Jr acted as the listing agent in a residential purchase transaction. Mr. Williamson Jr failed to provide and review a Working with Real Estate Agents brochure with an unrepresented buyer at first substantial contact. Mr. Williamson Jr acknowledged on the purchase contract that he received the $6,000 due diligence fee from the buyer, however he failed to deliver this check to his seller client. Instead, the check was made out to an unlicensed person who cashed the check, keeping 1/3 of the fee for himself, remitting 1/3 to the seller, and disbursing the remainder to Mr. Williamson Jr. The buyer also entered into a lease, which listed Mr. Williamson Jr’s company as the agent, although rent payments were made to an unlicensed person who never remitted rent proceeds to the seller.

Staff Appearances

Sheryl Graham, Consumer Protection Officer, spoke at The Real Estate Group’s meeting on September 8.

Jean Hobbs, Auditor/Investigator, spoke the Charlotte NARPM’s Chapter Meeting on September 15.

Employment Opportunities Available

Are you interested in joining the staff of the North Carolina Real Estate Commission? From time to time, employment opportunities become available. They are posted on the Commission’s website under the “About Us” tab.

We currently have opportunities available for the following positions:

Click here for more information.

Why Test Your Well Water? – New Brochure

The Commission is pleased to make available the new “Why Test Your Well Water?” brochure.  The brochure was created by the UNC School of Law, Law Student Well Water Pro Bono Project in conversation with the UNC Superfund Research Program, the NC Department of Health & Human Services (NC DHHS) Division of Public Health – Private Well & Health Program, and the NC Real Estate Commission.  It describes relevant laws, possible well water contaminants, testing resources, and recommended testing schedules, and provides links to online resources where homeowners and home buyers can get detailed answers to their questions about private well water issues. The brochure is available on the Commission’s Publications page: here. Look for the Spanish language version coming soon!

Update Courses for Specialty Practice

Do you specialize in commercial brokerage or residential property management?  Did you know that there specialty versions of the Update course that focus on these practice areas?  

Each year, the Commission determines what topics will be addressed in the next license year’s General Update (GENUP) and Broker-in-Charge Update (BICUP) courses, and Commission staff develops course materials based on the Commission’s directives.  Once the course materials are finalized, Commission Rule 58H .0403(f) permits education providers (EPs) and approved instructors to create specialty versions of the content. 

Per the rule, the development of a specialty Update course is a joint effort between the EP/instructor and the Commission, and all content is jointly owned.  The EP or instructor must receive the prior written consent of the Commission to make modifications to the content, and all modifications must relate to the same subject matter and educational objectives as the prescribed Update course content.

When developing a specialty version of the Update course, an EP or instructor must evaluate the subject matter to determine if the prescribed Update course content meets the needs of their targeted group of brokers.  For example, if the prescribed course includes a topic like cybersecurity, the topic would be applicable to brokers in all specialty areas, so it would remain in the specialty versions.  However, the examples and/or discussion questions might be altered to make the topic discussion more relatable to a targeted group of brokers.  

In contrast, if one of the topics in the prescribed Update course is not directly applicable to the targeted group of brokers, an entirely different topic may be substituted.  For instance, if a prescribed Update course focuses on home inspections, the subject matter may not be applicable to commercial brokers. Therefore, another “commercial-specific” topic would be substituted in the commercial specialty version.  

Commission Rule 58H .1702(a) requires brokers to complete eight credit hours of real estate continuing education (CE) courses each year, comprised of a 4-hour Update course, either GENUP or BICUP, and a 4-hour elective course.  

Whether a broker takes the standard version or a specialty version of the Update course, the broker must ensure they are taking the appropriate version based on their license status.  Provisional brokers and “full” brokers who do not have BIC Eligible Status must take a GENUP course.  A broker with BIC Eligible Status must take a BICUP course to retain BIC Eligible Status.

Currently, there are two specialty versions of the Update course, Commercial and Property Management, and there are GENUP and BICUP versions of both.  

Brokers may choose to complete multiple versions of the Update course in a license year, but they will receive credit for only one Update course. The completion of additional Update courses will not satisfy the elective course requirement or provide “rollover” credit.

Are you interested in registering for a specialty version of the Update Course?   Go to the CE Course Schedules page on the Commission’s website to search for upcoming courses.  Update courses are delivered in-person and via synchronous distance delivery (aka, “live-online”).

The current GENUP courses are titled:

The current BICUP courses are titled:

Commission rules do not limit the number of specialty versions that can be created. EPs and approved instructors who are interested in developing a specialty version of the Update course should contact the Education & Licensing Division at educ@ncrec.gov or 919.875.3700.

Do you have ideas for Update course topics?

The Commission welcomes your ideas and suggestions.

The Commission will discuss topics to be included in the 2022-2023 General Update and BICUP courses during their October and November 2021 business meetings. If you have a suggestion, please send it via email to educ@ncrec.gov.

For more information about the Update Course, contact the Education and Licensing Division at educ@ncrec.gov or 919.875.3700.

Current Stats: Monthly Licensee Count as of September 1, 2021