Most of the time, when you offer to buy something, you can’t be held to that offer. Usually the offer must be accepted, and some form of consideration must change hands to create an enforceable agreement. But an “offer to purchase” can be the exception when it involves real estate.
If buyers submit an offer to purchase (OTP) a property and the offer follows the legal rules and includes the statement that the offer is a “legally binding contract,” then when the seller signs that offer, it becomes enforceable. Even though it is labeled an offer, it is in fact a contract, and a party who breaches the contract will be liable.
Limited Time for Acceptance
Typically, an offer to purchase includes a date and time of expiration. If the seller waits until that time has passed, then the offer is no longer valid. In addition, if the seller retracts the offer before the seller signs, then the offer is also no longer valid. However, if the offer contains a sufficient description of the property and the seller signs it before the deadline and before it is rescinded, then the OTP becomes enforceable.
Counteroffers
What frequently happens after a buyer submits an OTP is that the seller does not accept but instead makes a counteroffer. When that occurs, the initial offer becomes void, and the counteroffer is the only open option. The buyer can accept—and create a binding agreement—or submit another counteroffer.
If the counteroffers are made verbally, they do not generally become binding until they are signed. However, in this day and age, much of the negotiation occurs via text and email, which may be considered to be “in writing” and therefore legally binding.
The Bottom Line
Both sellers and buyers need to read and understand all the terms of an offer to purchase and recognize when they may be binding themselves to particular terms. Working with an experienced real estate attorney is a good way to ensure that you don’t get more—or-less—than you bargained for.
