Generally, under New York law, real estate transactions must be in writing and signed by the parties to be enforceable. General Obligations Law § 5-703(3) states that a contract to transfer real property is void unless the contract or some note, or memorandum thereof is in writing and signed by the “party to be charged therewith.”. However in the age of electronic signatures and email correspondence between attorneys, there are a line of cases which give rise to the possibility that an actual signed contract is not required to enforce the agreement.
In Aristone Realty Capital LLC v. 9E 16th Street LLC, the parties’ attorneys engaged in email negotiations regarding the sale of real property. The purchaser signed the contract sent by email but the seller did not. Subsequently, the purchaser sued the seller for specific performance, asking the court to compel the seller to go through with the sale. The seller made a motion to dismiss the lawsuit on the ground that there was no fully executed written contract. The lower court denied the motion to dismiss and the seller appealed.
The New York Appellate Division, First Department affirmed the lower court’s decision. The Court determined that there were various issues of fact created by the emails exchanged between the attorneys for the parties that should be decided at trial precluding dismissal of the case at this point. The decision noted the actions of the seller’s attorney in forwarding an “execution version” of the contract without any language qualifying that the contract was subject to his client’s review and modification. Further, the purchaser signed and returned the contract and paid the deposit creating an issue of fact regarding whether the purchaser was entitled to specific performance of the contract.
The Court also found that a triable issue of fact existed as to whether the seller’s attorney had apparent authority to act on the seller’s behalf given that the seller had been “cc’d” on the various emails between counsel and had voiced no objection. Finally, the Court determined that the requests by the purchaser’s counsel for the return of the deposit did not, as a matter of law, evidence an intent to cancel any contract which was formed but rather was more done out of concern regarding the integrity of the deposit.
The end result is that the case went back to the trial court and the seller was required to submit an answer to the complaint. It seems quite apparent that the Court in Aristone wanted to give the purchaser the opportunity to pursue its claim although based on the case law prior to the Aristone decision, the case should have been dismissed.
What the Aristone case and other cases which are being decided in this electronic era show is that in dealing with a real estate transaction or any transaction in which a written contract is generally required, you need legal representation in order to properly protect your interests.
If you have any questions regarding a transaction in which you are involved, please contact one of our attorneys.