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03 Nov 2017
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You’ve Got Mail

As we are currently living in the age of technology, is it possible for individuals to rely on an email to be a legally binding real estate contract? Email is one of the most effective and common communication tools in business. It allows people to instantly send new ideas, terms for an agreement, or offers quickly in writing. New York Statute of Frauds General Obligations Law § 5-701 sets forth that all agreements must be in writing and signed by all parties, and § 5-703 goes further to require all conveyances and contracts concerning real property to be in writing[1] (also see Scheck v Francis, 26 NY2d 466, 469—70 [1970], parties to an agreement “are not bound and may not be held liable until it has been written out and signed”). But can a chain of emails make up a legally binding agreement if there is an agreement, contractual intention and consideration?

In 2013, Justice Sgroi of the New York Appellate Division shed light on this issue in Forcelli et al. v. Gelco Corporation et al. 2013 NY Slip Op 05437.[2] The court was asked “whether an email message can satisfy the criteria of CPLR 2014 so as to constitute a binding enforceable stipulation of settlement.”[3] The Court affirmed the previous decision that when:

“an email message contains all material terms of a settlement and a manifestation of mutual accord, and the party to be charged, or his or her agent, types his or her name under circumstances manifesting an intent that the name be treated as a signature, such an email message may be deemed a subscribed writing within the meaning of CPLR 2104 so as to constitute an enforceable agreement.”[4]

If parties do not wish for an email chain to accidentally be held as enforceable, it is important to provide a disclaimer stating the lack of intention to enter into an agreement. More recently in Stonehill Capital Management v. Bank of the West, 28 NY3d 439 (2016), New York’s Court of Appeals held that, in an online auction for syndicated loans, the acceptance of a bid via email “that communicated the terms of the purchase and the date and instructions for the closing … indicated the sale was moving ahead and included references to documents necessary for closing the transaction” was sufficient in demonstrating the parties’ intent to enter a binding agreement.[5]

So can the same decision be applied to real estate contracts? It is already established in Crabtree v. Elizabeth Arden, 305 NY 48 (1953), that for a real estate agreement the memorandum signed can consist of multiple documents “connected with one another either expressly or by the internal evidence of subject matter and occasion”[6] if at least one of the documents of the same transaction, “the one establishing a contractual relationship between the parties”, provides the “signature of the party to be charged”.[7] The same principles apply to real estate agreements over email. If the email satisfies the requirements of the New York Statute of Frauds (see Naldi v. Grunberg, 80 AD3d 1, 908 NYS2d 639 (1st Dept. 2010), all the terms of the contract have been agreed upon, and none of the provisions are open for future negotiations (see Saul v. Vidolke, 2017 NY Slip Op 04485), then it can be binding.

An issue that commonly arises is whether the signature of an email constitutes as a signature of the agreement. In Williamson v. Delsener, 59 AD3d 291, 874 NYS2d 41 (1st Dept. 2009), the First Department held that the attorney’s printed name at the end of the email was sufficient, but in Naldi v. Grunberg, 80 AD3d 1, 908 NYS2d 639 (1st Dept. 2010), the Court failed to elaborate whether an attorney’s automatic “signature block” at the bottom of the email satisfied the subscription requirement for the purposes of the Statute of Frauds. However, in Jimenez v. Yanne, 2017 NY Slip Op. 05677, the First Department clarified that typing the name at the end of the email did satisfy CPLR 2104’s subscription requirement. To avoid confusion, parties should add electronic signatures to agreements to distinguish it from the signature block at the end of an email.

[1] General Obligations Law § 5-701 and 5-703. Available at: https://law.justia.com/codes/new-york/2010/gob/article-5/title-7. Accessed on Nov. 3, 2017.

[2] Forcelli et al. v. Gelco Corporation et al. 2013 NY Slip Op 05437 [109 AD3d 244]. Available at: http://www.nycourts.gov/reporter/3dseries/2013/2013_05437.htm. Accessed on Nov. 3, 2017.

[3] Ib. at 245.

[4] Ib. at 252.

[5] Stonehill Capital Management v. Bank of the West, 28 NY3d 439 (2016). Available at: https://law.justia.com/cases/new-york/court-of-appeals/2016/191.html. Accessed on Nov. 3, 2017.

[6] Crabtree v. Elizabeth Arden, 305 NY 48 (1953) at 55.

[7] Ib. at 55 -56.

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