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Buyer’s Offer Was Unexpectedly Rejected

If an associate or broker representing a seller says over the phone that a seller accepts an offer, but the seller changes their mind before signing, is there a contract?

ORLANDO, Fla. – Question: I represent a buyer. We found the perfect home and submitted a very strong offer. The listing associate called that same day with a response, saying the seller accepted the offer and would hopefully sign and return the contract within 24 hours. I called the associate three days in a row with no response. On day four, the associate sent a text to inform me the seller signed a contract with a different buyer. My buyer is furious and feels there’s a valid legal claim against the seller, the listing associate and listing brokerage company. Is my buyer right?

Answer: Probably not. Let’s first look at the buyer’s relationship with the seller. As a matter of general contract law, any party who receives an offer can accept, reject, counter or simply ignore the offer. Since this is a purchase and sale contract for real property, the statute of frauds applies, which provides that a contract must be in writing and contain the other side’s signature before it becomes enforceable. While oral contracts can exist for other types of transactions, that’s not the case for the purchase of real property.

Since this written offer only contains the buyer’s signature, there is no enforceable contract against the seller. There was an offer, followed four days later by a rejection. Additionally, from the seller’s perspective, these facts don’t show evidence of fraud, misrepresentation or other actionable seller behavior. Since there isn’t a valid claim based on contract law, and since there are no additional facts that cut against the seller, I don’t see a valid claim against the seller.

What about the listing associate or listing brokerage firm? The listing associate’s main duty in this situation is to present “all offers and counteroffers in a timely manner, unless a party has previously directed the licensee otherwise in writing.” This duty applies to both transaction broker relationships and single agent relationships described in Florida Statutes Section 475.278. It sounds like the listing associate complied with this rule by presenting both your buyer’s offer and the mystery buyer’s offer in a timely manner. 

There can be liability if the buyer can prove there was some form of fraud or misrepresentation by the listing associate and if so, it’s possible this liability carries to the brokerage firm. These are general principles of law that can be used in civil litigation but are also a basis for a Florida Real Estate Commission (FREC) or code of ethics complaint. For reference, license law Section 475.25(1)(b) prohibits “fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, culpable negligence, or breach of trust in any business transaction in this state or any other state, nation, or territory.” 

In your story, you had a phone conversation where the listing associate conveyed that the seller has reviewed the offer, likes it and plans to sign and return it soon. It seems likely that all of that is true. What about the other part where they said the seller “accepted” the contract? Is that enough to win a case, FREC complaint or code of ethics complaint?

The technically correct answer is these questions are always determined on a case-by-case basis, so it would ultimately be up to a judge, jury or hearing panel. That said, there doesn’t seem to be much here. The listing associate correctly conveyed that the offer was not yet signed, but hopefully would be signed and returned soon. These are the crucial facts under the statute of frauds, and they were accurately conveyed.

While a judge, jury or panel could find that the “seller accepts” phrase is misleading, that’s not how I understood it. It sounded like the phrase was meant to convey that the seller didn’t have any objection to the terms and, instead of sending a counteroffer or inviting a buyer to submit a newly revised offer, planned to just sign. It also doesn’t sound like the listing associate was trying to trick the buyer but was just trying to give an informal update.

In the future, you may want to exercise a more guarded optimism when you receive positive initial feedback from a licensee on the other side of the transaction with the understanding that offers and counteroffers are just preliminary steps that might lead to a fully executed and binding contract in the future.  

Joel Maxson is Associate General Counsel for Florida Realtors
Note: Information deemed accurate on date of publication

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