Despite its enactment in 2004 in most all of the 50 states, the Uniform Electronic Transactions Act (“UETA”) has not received the amount of attention one might expect. This is particularly true with respect to real estate transactions, for which it seems an overwhelming majority of real estate agents, brokers, realtors and others in the industry still think that “[t]he statute of frauds … requires some memorandum or note of the agreement relating to real estate to be in writing and signed by the party charged therewith or his agent.” For example, even the first source for legal research in South Carolina, S.C. Jurisprudence, the chapter on the Statute of Frauds, makes no mention of the UETA, its statutory origin at S.C. Code § 26-6-10 et seq., or its potential significance to parties negotiating a contract via email. In 2015, the vast majority of real estate transactions, whether residential or commercial, are handled by email.
According to the NCSL, 47 of the 50 states have enacted the UETA, with New York, Illinois and Washington being the exceptions, and even those states have enacted similar legislation.
Once again, despite the UETA being over 10 years old, and despite the fact that most UETA’s do not provide an exception to the applicability of the Act to “contracts for the sale of real property,” only a handful of cases can be found interpreting the UETA in conjunction with the well known SOF.
A few web searches show more than a handful of states have reported cases addressing the interplay between the SOF and the UETA:
MASSACHUSETTS: As noted by Richard Vetstein at the Massachusetts Real Estate Blog, in Feldberg v. Coxall, 30 Mass L. Rptr. 150 (Sup. Ct. 2012), the court held that an “email signature block” or even the “from” portion of an email may satisfy the requirement of a signature for purposes of the SOF. Alan Lipkind also reported on Feldberg in 2012, in his post quite simply entitled, “Emails can satisfy the signature requirement of the Statute of Frauds.”
NEW YORK: In Naldi v. Grunberg, 80 A.D.3d 1 (N.Y., Sup. Ct., App. Div., 1st Div., 2010), as reported by Kenneth P. Friedman with Hodgson Russ, the court held an email may satisfy the SOF with respect to the sale of real property.
TENNESSEE: In Waddle v. Elrod, 367 S.W.3d 217, (2012), perhaps the strongest of these cases for any party arguing to enforce an agreement for the sale of real property absent a “wet” signature, the Tennessee Supreme Court held:
[T]he Statute of Frauds does not bar enforcement of the settlement agreement at issue in this appeal. The emails counsel for the parties exchanged, along with the legal description of the [subject] property included in the cross-claim, constitute a sufficiently definite writing, note, or memorandum, and the email confirming the terms of the settlement agreement included the electronic signature of the attorney and authorized agent of Ms. Elrod, the party to be charged.
FLORIDA, CONNECTICUT, AND TEXAS TOO: This post by Kenneth Chase in 2014, entitled, “The Statute of Frauds in the Digital Age,” also provides commentary on the SOF and the UETA, as well as numerous case citations from Florida, Connecticut, New York, and Texas.
NORTH CAROLINA: In 2009, Mark Sperling reported on a North Carolina case in which the Court held that an email signature bound the parties, stating as follows:
We note that this was not some barroom conversation between drunken neighbors, agreed to in jest, and written on a random scrap of paper. See Lucy v. Zehmer, 84 S.E.2d 516 (1954). This was an agreement among four parties represented by counsel, in a court of law, supervised by the presiding judge, who inquired of each party whether the terms were agreeable. The party to be charged — plaintiff — confirmed, ‘Yes, that’s my agreement.’
In fairness, the N.C. case also involved an element of judicial estoppel, as would some of these other cases where the sale of the property is part of an otherwise overall agreement to settle a lawsuit which included the sale of property amongst the parties.
Similar to the above cases, as reported by Cynthia A. Lammert, Esquire, in the Winter 2013 Risk Management Reporter:
Real estate professionals who indicate a client’s offer or acceptance via email, or who forward a communication from their client evidencing terms of an offer or acceptance, may unwittingly bind their client to a real estate purchase or lease agreement. While it is still the conventional practice to have an original document executed by the parties, courts nationwide are now considering electronic agreements to have the same legal effect.
None of this should be a surprise to real estate practitioners. For example, even the National Association of Realtors (“NAR”) issued a White Paper in 2010, entitled “Moving Towards an Electronic Real Estate Transaction,” warning of the dangers of relying the generationally engrained SOF requirement of a wet signature of the seller on a contract for the sale of land / real property. As noted in the NAR White Paper, the drafter of the UETA analyzed the need for electronic signatures in view of the SOF and concluded:
There are no unique characteristics to contracts relating to real property as opposed to other business and commercial (including consumer) contracts [that would make it necessary]…. to maintain existing barriers to electronic contracting.
Certainly, the 1970’s fear that, for example, an earnest money deposit check identifying “15 acres, Pickens County,” as was the case in Cash v. Maddox was held to be too vague to identify the property being sold in 1975 are not present when the contract is attached to the email in PDF format. When drafted in 2010, the NAR paper apparently contemplated an e-sign type protocol, which I find quite confusing btw, however, as shown by the holdings in only the three cases cited above, an ordinary email with (or without) an attachment can be binding if the requirements of the UETA are satisfied.
For the UETA provisions to be triggered, all that is required to create an exception to the SOF is:
(1) the “parties agree to conduct a transaction by electronic means,” which may be shown by “the context and surrounding circumstances, including the conduct of the parties,” and
(2) that the “party to be charged” intended their electronic transmission to serve as a signature.
Specifically, the UETA defines, “Electronic signature,” as “an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.” In analyzing the fact situations, the courts have looked at the email signature blocks or even the To: and From: fields of the email to satisfy these requirements.
Some commentators, including Mr. Vetstein noted above, have suggested a “Practice Pointer,” of including in the email signature a “disclaimer” to the effect that no emails from the sender will be considered as binding the sender or his or her principals, however, given the language of the UETA, namely the “context and surrounding circumstances,” even a well crafted disclaimer in the email signature block is no guaranty that a sent email will not bind the sender if the evidence shows an “intent” to be bound.
For real estate brokers and agents negotiating for their clients, the safer practice, if hoping to avoid the UETA provisions creating an exception to “wet” signature requirement of the SOF, would be to advise something similar to the following, “my client has advised me that they intend to execute this contact, however, I am not authorized to bind them to the terms until they have signed it in ink and we deliver it to you.”
To be sure, even the UETA and its “context and surrounding circumstances,” and “intent” requirements, by their very nature, will almost always give rise to disputed issues of fact and, therefore, jury trials, to resolve these disputes. In the event of a dispute, the prospective purchaser need not seek a common law injunction prohibiting the seller from a subsequent sale to a third-party, which can be prohibitively costly and difficult to put together and file, but may instead rely on a legal principle and procedure as old as the SOF, the Lis Pendens.
The requirements to file a Lis Pendens will be set forth in the various state statutes, so any party considering these steps would need to make sure those requirements are satisfied, or else they could be subject to sanctions for improper filing in the public records. See e.g., Pond Place Partners, Inc. v. Poole, 351 S.C. 1, 567 S.E.2d 881 (Ct. App. 2002) (holding the proper filing of a Lis Pendens is privileged if “strict” requirements of statute are met); but see Broadmoor Apartments of Charleston v. Horwitz, 306 S.C. 482, 413 S.E.2d 9 (1991) (holding filing of Lis Pendens under circumstances presented constituted abuse of process due to finding of ulterior motive). In the event the party does not have a sufficient basis for the filing, or an ulterior motive for filing the Lis Pendens as noted in Horowitz, , they could also be subjected to claims for abuse of process and / or interference with contract, whereby the seller, perhaps not so politely, says, hey hey You, Get Off of My Cloud.
Music: LIGHT but more Rolling Stones, Get Off of My Cloud, 1967 version
Legal Links: VERY HEAVY – 6 cases, 3 statutes (SOF, UETA and Lis Pendens), and [added] commentary
Technical Stuff: NONE
History: VERY LITTLE (IN CASES)
Pontificating: LIGHT AS A FEATHER
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