April 9th, 2018 at 2:14 pm
A. Yes.
B. Yes as long as an SMCO goes out to Buyer #2 today.
C. Yes, if the SMCO to Buyer #1 says there are no other offers right now.
D. No.
Answer: As background, using the SMCO means that no contract is formed until the seller signs in paragraph 5, the buyer signs in paragraph 7, and the seller signs again in paragraph 8. The SMCO merely states that the “Seller is making Multiple Counter Offers to other prospective Buyers” (see paragraph 2). It does not specifically address whether the seller has received any offers from other buyers. However, answer A is wrong. A seller must act honestly when entering into a contract. Using the SMCO is arguably dishonest, because it makes Buyer #1 believe that the seller has received another offer, when in fact, the seller has not. After all, Buyer #1 is much more likely to respond favorably to the seller’s terms in an SMCO as compared to a non-multiple Seller Counter Offer (SCO). Answer B is also wrong. As in Answer A, the seller should not make Buyer #1 believe that the seller has received another offer, when none has been received. Also, logistically speaking, Buyer #2 may not submit an offer this afternoon. Time and time again, buyers’ agents tell us they will be submitting an offer, but they never do. Answer C is the best answer. Informing Buyer #1 in the SMCO that we have not yet received another offer, but we expect one this afternoon, eliminates the possible deception. Answer D is wrong. Nothing specifically prohibits the use of the SMCO as set forth in Answer C.
Next Week: What if, as a buyer’s agent, you receive an SMCO, but you doubt the seller has any other offers?
-Thank you to Stephanie Payab (Encino Office) for suggesting this week’s legal tip.
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