The Massachusetts Offer To Purchase Real Estate: A Binding Contract

The first step in purchasing or selling Massachusetts residential real estate is the presentation and acceptance of an Offer To Purchase. You, the realtor, prepares the offer to purchase, most likely on the standard form and presents it to the seller for review, modification, and acceptance. Many realtors are under the misconception that the offer to purchase is merely a formality, and that a binding contract is formed only when the parties sign the more extensive purchase and sale agreement. This is not true. Under established Massachusetts case law, a signed standard form offer to purchase is a binding and enforceable contract to sell real estate even if the offer is subject to the signing of a more comprehensive purchase and sale agreement. So if a seller signs and accepts an offer and later gets a better deal, I wouldn’t advise the seller to attempt to walk away from the original deal. Armed with a signed offer, buyers can sue for specific performance, and record a “lis pendens,” or notice of claim, in the registry of deeds against the property which will effectively prevent its sale until the litigation is resolved. I’ve handled many of these types of cases, and buyers definitely have the upper hand given the current state of the law.

In some cases, the seller may not desire to be contractually bound by the acceptance of an offer to purchase while their property is taken off the market. In that case, safe harbor language can be drafted to specify the limited nature of the obligations created by the accepted offer. A safe harbor clause would look like this:

The purpose of this Offer is to memorialize certain business points. This Offer is not intended to create nor does it create any binding legal obligation on the part of either party other than the obligation to negotiate in good faith towards execution of a mutually satisfactory purchase and sale agreement by [insert date]. If a mutually satisfactory purchase and sale agreement has not been executed and delivered by Buyer and Seller by [insert date], then all deposits paid hereunder by Buyer shall be refunded, Buyer shall have no further rights with respect to the property described herein, and this Offer shall be null and void and neither party shall have any recourse against the other with respect to this Offer.

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This entry was posted on Friday, February 19th, 2010 at 9:45 pm and is filed under Legal Resources, Realtor Legal Resources. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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