In today's rush-rush environment - we are often asked by clients to "negotiate verbally" before anyone will move forward with an offer or counter offer. While this can certainly get the ball moving, I always remind my clients that until it's in writing - it's not binding. The below anecdote was just provided in the Texas Association of Realtors newsletter - a good reminder:
A buyer submitted a written offer to purchase my client's home. The parties then engaged in verbal negotiations that resulted in a verbal agreement. While the buyer's broker was preparing the written contract to reflect the changes that the parties had verbally agreed to, the seller received and accepted another offer. I immediately notified the buyer's broker that this had happened. The first buyer is now threatening to sue the seller for breach of contract. Is the oral agreement valid?
No. The agreement must be in writing and signed by all parties to the contract. Since a written contract was not signed by both the seller and the buyer, the statute of frauds will bar enforcement of the first agreement. While verbal negotiations of contracts may be a good and expeditious way to negotiate contracts, oral agreements are not enforceable in contracts for the sale of real estate.
