Real Estate

So what is “RATIFICATION” anyway

This has been a subject of debate and hopefully I can clear it up…(for Virginia at least)

Having a “ratified” contract means that an offer has been made (IN WRITING) and both the buyer and the seller have signed/accepted the contract…AND….delivery has occurred.  What is “delivery” you ask.  Well delivery occurs when the contract has been received by both parties at the addresses (including email addresses and/or fax numbers) listed in the Jurisdictional Addendum.

So what about emails???

Here is a story…

A buyer puts in an offer to a seller who is on vacation.  The seller is unable to view the document so gets the information verbally from their own agent (agent A) and verbally instructs agent A to counter back with different terms and a higher sales price.  Agent A then calls the buyers agent (agent B) and communicates the counter offer to agent B.  Agent B calls his/her client (the buyer) to see if they accept those terms.  In the meantime another offer comes in from a new buyer.  Agent A then calls agent B to give him/her the courtesy of knowing that it is now competitive and to come back with their highest and best offer…at which point agent B says “my client has accepted your client’s counter offer and has written an email to that effect, I will forward it to you and we consider this contract now “ratified”!   Is the house under contract? Is there anything askew?

Well, a few things.  Calls between realtors never count as offers or acceptance of offers…signatures must be obtained by both parties in the sale.  Additionally, an email to an agent then forwarded to another agent does not count as a contract either.  But you say…Kristen, Virginia Law constitutes an email as a legitimate contract if accepted by both parties….you are right!  Buuuuuutttt…each party must write and say that they have accepted for it to be valid.  Even if they are forwarded by agents, it must be in the clients own hand (keyboard).  The emails should have gone something like this

Buyer: “Dear Mr. Seller, I offer A, B, C, D and F for your house”

Seller: “Dear Mr. Buyer…I thank you for your offer but I would like to counter your offer replacing A, B and C with  x, y and z, but accept all other terms set forth in the contract as stated.  Signed–seller”

Buyer: “Dear Mr. Seller…I hereby accept your counter offer and would like to purchase the home under x, y and z terms in addition to the original terms of D and F,  signed –buyer”

(P.S.  I am no lawyer, so the emails may actually need to be worded more formally and clearly, but for illustrative purposes, this gets the point across)

This, in the state of Virginia, could be considered a valid “ratified” contract….a very loose and risky contract, but a contract none the less.  But what happened in the story above was that the counter offer was communicated between agents verbally and that the buyer wrote an email to her own agent which was then forwarded to the sellers agent.  This does not a ratified contract make.  The sellers never countered in writing, therefore, regardless of the buyer’s email, this was not a valid contract.  Additionally all terms of the contract must be agreed upon, not just the sales price if an original offer was made including additional terms that were not addressed in the counter offer.

So, the moral of the story is, get everything in writing and if email must be the primary form of negotiation, have the sellers and the buyers email their terms from their own email addresses with the presentation, acceptance and/or rejection of terms.  Or, get everyone to sign the contracts like they are supposed to.  Otherwise, no house for you…

Hope this made sense :).

Happy Sunday!

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