Fact Pattern: You are the buyer’s agent. On August 1, you submit to the listing agent your buyer’s offer written on a 16-page C.A.R. Residential Purchase Agreement (RPA). Your buyer initialed both the Liquidated Damages and Arbitration of Dispute paragraphs. On August 3, you receive a one-page Seller Counter Offer (SCO) concerning the purchase price and the seller’s selections for escrow and title. Also on August 3, your buyer counter-signs the SCO, and you deliver it back to the listing agent. You also immediately follow that up with a phone call to the listing agent who confirms receipt. On August 5, you receive the original 16-page RPA counter-initialed and counter-signed by the seller. On page 15 of the RPA, the seller indicated that the seller’s acceptance is subject to the “Seller Counter Offer.” The seller’s signature on page 15 of the RPA is dated August 5, 2022.

Multiple Choice Question: Is there a valid contract between the seller and buyer as of August 3? Pick the best answer:

A. Yes, most likely.
B. No, most likely.
C. It depends on whether an email address was inserted as the listing agent’s Designated Electronic Delivery Address (DEDA) on page 16 of the RPA.
D. It depends on whether the seller initialed both the Liquidated Damages and Arbitration of Dispute paragraphs. 

Answer: Answer A is the correct answer. The words “most likely” were added to Answer A because whether the parties have a valid contract is a legal determination ultimately made, if needed, by a judge, jury, or arbitrator, and not by us. However, there does appear to be a valid contract as of August 3. Although the original 16-page RPA did not accompany the SCO on August 3, the SCO nevertheless incorporated the RPA by referencing it. The boilerplate language at the top of the SCO specifically states that it is a counter offer to the Purchase Agreement, and that “The terms and conditions of the above referenced document are accepted subject to the following:” (see paragraph 1). The SCO is also signed by both the seller and buyer, and it has been delivered back to the seller’s side by August 3.

Answer B is most likely wrong. It’s true that the original 16-page RPA had not yet been signed by the seller as of August 3. However, the seller nevertheless appears to have accepted the RPA anyway by incorporating the RPA by reference in the SCO (as explained above).

Answer C is wrong. If the listing agent has a DEDA, then the delivery of any document to the seller’s side shall be deemed to occur upon the sending of that document to the DEDA, regardless of when the listing agent personally receives the document. In our situation, however, a DEDA is irrelevant, because the Fact Pattern says that the sending of the signed SCO to the listing agent, and the listing agent’s personal receipt of the signed SCO, both occurred on the exact same day of August 3.

Answer D is wrong. The boilerplate language of the SCO addresses the non-signing of the Liquidated Damages and Arbitration paragraphs. The SCO states that, “If either of those paragraphs is not initialed by all Parties, that paragraph is excluded from the final agreement,” unless otherwise provided (see paragraph 1A). Yet, in our situation, the only new terms in the SCO were the purchase price and the seller’s selections for escrow and title. Nothing was mentioned about including the Liquidated Damages or Arbitration paragraphs.

Stay Tuned Next Week: Does the final agreement include the Liquidated Damages and Arbitration paragraphs?

-Thank you to Marilyn Simon, Manager, and Daniel Garcia (Pasadena Office) for suggesting this week’s legal tip!

Copyright© 2022 Berkshire Hathaway HomeServices California Properties (BHHSCP). All rights reserved. Any unauthorized reproduction or use of this material is strictly prohibited. This information is believed to be accurate as of August 1, 2022. It is not intended as a substitute for legal advice in individual situations, and is not intended to nor does it create a standard of care for real estate professionals. Written by Stella Ling, Esq.