Get it in Writing

By Lisa Scoble posted 01-22-2019 06:07 PM


192159-1-XL-EO-BLOG-MO.jpgGet it in Writing: Failure to Follow Proper Office Procedures Could End in a Lawsuit

You’re eager to close your transactions. So when a buyer falls through, you’re obviously ecstatic when a second buyer places an offer. But when you have an indecisive buyer and you don’t get the initial contract termination in writing, you could find yourself with two open contracts for one listing (and all-around angry clients).

Here’s a real-life scenario that demonstrates the importance in following proper office procedures.
A real estate agent listed a piece of residential property for sale. The buyer entered into a purchase and sale agreement with the seller but decided later to back out of the transaction. The agent located a second buyer who also entered into a purchase and sales agreement with the seller. However, after the second contract was accepted, the first buyer changed his mind and wanted to purchase the property.
The property was under contract to two separate buyers who both sought performance under their specific sales agreements. In other words, both buyers were asking for what was promised in their sales agreements, instead of requesting a monetary settlement.
The real estate agent failed to have the first buyer communicate in writing his initial desire to terminate the sales agreement.
Both buyers filed suit against the seller seeking specific performance and against the real estate agent claiming negligence. The seller also brought the real estate agent into the lawsuits and demanded a defense and indemnification in the underlying actions brought by the buyers.
By failing to obtain the first buyer’s written intent to terminate the sales agreement, the contract remained in force. This over-sight left the real estate agent’s seller/client exposed to a possible breach of contract claim from not only the first buyer, but from the second buyer as well. The seller was not sure how to proceed and had no option but to seek legal advice. Obviously, if the real estate agent had followed the proper procedures established under both contract law and office policy, the problem could have been prevented.

In cases like this when property goes under contract to two separate buyers, it is typically resolved when one of the buyers agrees to accept a settlement to voluntarily terminate his purchase and sales agreement. When both buyers remain adamant about purchasing the property, the legal fees can be tremendous.

To put it simply, the lesson learned here is to get everything in writing. It’ll save you the headache and financial strain of a potential lawsuit.

For more information about E&O coverage and other risk management topics, visit

This article was produced in conjunction with AXA XL and is not to be taken as legal advice.