In Massachusetts, a Signed Offer Can Be the Contract

In McCarthy v. Tobin, 429 Mass. 84, decided March 2, 1999, the buyer had signed an offer to purchase on the Greater Boston Real Estate Board form that called for a purchase and sale agreement to be signed a week later. The Supreme Judicial Court decided which of the two documents made the contract. An offer that described the property and the price, said it creates binding obligations, and used offer-and-accepted language bound both sides the moment it was signed.

What happened

The buyer executed an offer to purchase on the Greater Boston Real Estate Board’s pre-printed form on August 9, 1995, and the seller signed it on August 11. The form described the property, the price to be paid, deposit requirements, limited title requirements, and the time and place for closing. It required the parties to sign the standard purchase and sale agreement by 5 p.m. on August 16, said time was of the essence, and carried an unnumbered paragraph right above the signature line: this is a legal document that creates binding obligations. If not understood, consult an attorney. The lawyers traded drafts past that deadline. On the same day the buyer signed the final version, the seller accepted another buyer’s offer.

What the court held

The court wrote that the offer ‘was a firm offer, the acceptance of which bound Tobin to sell and McCarthy to buy the subject property.’ The form used familiar contractual language: the buyer ‘hereby offer[s] to buy’ and the seller’s signature meant ‘this Offer is hereby accepted.’ Quoting an earlier Appeals Court case, it said that when parties have agreed on all material terms, a final document they agree to execute can serve as ‘a polished memorandum of an already binding contract.’ The buyer’s requested changes to the purchase and sale agreement were ministerial, nonessential terms.

The deadline and the remedy

The later buyers argued the first buyer had missed the deadline for signing the purchase and sale agreement. The court found the seller had waived it through her lawyer, acting as her agent, who produced the first draft too late to meet it, never objected when it passed, and kept negotiating. Once waived, time was no longer of the essence. On remedy, the court sent the case back for a judgment of specific performance, restating that real property is unique and money damages will often be inadequate for the loss of an interest in land. The later buyers had actual notice of the claim. They had closed on the house, and they hold title subject to an obligation to convey it to the first buyer at the agreed price.

The statute underneath

M.G.L. c. 259, § 1, the Statute of Frauds, says you can’t bring an action on a contract for the sale of land unless the contract, or some memorandum or note of it, is in writing and signed by the party to be charged. A signed offer form can be that writing.

What this means when you write an offer

Put every condition you need in the offer itself: financing, inspection, whatever you’d want the seller bound to honor. Take the notice above the signature line at its word. And if anything’s unclear, consult an attorney before you sign, which is what the form in the case said to do. The court also noted that parties who don’t intend to be bound until a more formal document can say so in the offer, and that the form may be redrafted if it doesn’t reflect their intention. That’s something to raise with your attorney before you sign. Writing an offer this fall? Let’s get the terms right first. Diana Kim, REALTOR®, eXp Realty.