Case reveals risk of using text messages as contract

A Florida court recently dismissed a lawsuit after a seller backed out of a real estate deal that had been committed to via email and text message.

In Walsh v. Kimberly Abate, the buyer made a written offer to purchase a home for $3.1 million. The seller, through an agent, sent an email saying they’d only agree to $3.4 million. The buyer’s agent responded to the email saying the price was accepted with a quick close. At this point, the buyer’s agent asked the seller to counter the original offer and sign it, after which the buyers would sign.

The seller’s agent then sent a text indicating the $3.4 million offer was accepted, naming February 1 as the proposed closing date. The buyer’s agent confirmed the closing date via text. Several days later the seller’s agent sent another email, reiterating that the seller accepted the $3.4 million price and wanted to close by February 1.

Shortly thereafter, the seller backed out and notified the buyer’s agent that the property was being sold to another party. The buyer then sued under “specific performance” to force the sale of the property. (In a sale agreement, when one party breaches a contract the harmed party can sue for performance, requesting that the courts demand a contract be executed according to its terms.)

The seller moved to dismiss the complaint. A trial court granted the dismissal, which was later reaffirmed on appeal. The court found the contract was never fully executed and therefore violated Florida’s statute of frauds, which requires contracts for the sale of real estate to be executed in writing and signed by the applicable parties.

Applicability to other contracts

A statute of frauds has been formalized in most states, meaning similar cases could occur nationwide. Likewise, the finding could have implications for building contractors and others who enter into extended contracts that take more than a year to fulfill. Statute of fraud laws typically apply when contracts cannot be completed in less than one year.

Additional construction agreements made via emails and text messages, exchanged after the initial contract, may also not be enforceable.