December 28th, 2020 at 1:01 pm
Multiple Choice Question: Does Buyer 1 have a binding and enforceable contract with the seller? Pick the best answer:
A. Yes, because $1,510,000 is the highest and best price.
B. Yes if $1,510,000 is greater than the listing price posted in the MLS.
C. No, because the BCO was a rejection of the SMCO and the submission of a new offer.
D. It depends on how the blank lines in the SMCO were completed.
Answer: Answer A is wrong. The SMCO specifically states in paragraph 2 that it is not binding upon the seller unless the seller signs in paragraph 5, the buyer signs in paragraph 7, and the seller signs again in paragraph 8. Yet, in our situation, the seller has not signed again in paragraph 8.
Answer B is also wrong. Some agents mistakenly believe that placing a property in the MLS is the legal equivalent of a seller’s offer to sell the property for the listing price, and that such offer can be accepted by a buyer who submits a full-price offer. In truth, however, a seller does not place a listing in the MLS. It’s the listing agent who places the listing in the MLS. Moreover, placing a listing in the MLS is not an offer to sell. It’s merely an offer from the listing agent to pay compensation to a cooperating broker who procures a buyer in accordance with the other MLS rules.
Answer C is a correct statement. A counteroffer is legally defined as a rejection of the prior offer and a submission of a new offer. The BCO in this situation with Buyer 1’s “highest and best” price of $1,510,000 will not become a binding and enforceable contract unless it is counter-signed by the seller.
Answer D may be a correct statement, but it’s not the best answer in this situation. Answer C is the best answer!
-Thank you to Lyle Elliott (Ventura manager) for suggesting this week’s legal tip.
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