Tuesday, March 1, 2011

Real Estate Law in the News: E-Mail, Binding Contracts, and Naldi v. Grunberg

In New York, trial and intermediate courts have recently held that e-mail correspondence can satisfy the Statute of Frauds requirement that real estate transactions be in writing in order to be enforceable.

The New York Times has a story summarizing the decision, in Naldi v. Grunberg, here.


In Naldi, the New York trial court and intermediate appellate court agreed that a real estate contract can be both offered and accepted by e-mail.  Now, the case is pending review by New York's Court of Appeals (the state's highest court).


While the Supreme Court of Virginia has not explicitly addressed the question of whether e-mail satisfies the Statute of Frauds in the real estate context, Virginia has adopted the Uniform Electronic Transactions Act, on which the lower New York courts relied in reaching their decision.

The applicable statute in Virginia is Code §59.1-485 ("Legal recognition of electronic records, electronic signatures, and electronic contracts"), which provides as follows:
(a) A record or signature may not be denied legal effect or enforceability solely because it is in electronic form (emphasis added). 
(b) A contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation.
(c) If a law requires a record to be in writing, an electronic record satisfies the law.
(d) If a law requires a signature, or provides for certain consequences in the absence of a signature, an electronic signature satisfies the law.

In the absence of clear guidance from Virginia courts, the New York ruling is a reminder that parties negotiating a real estate transaction by e-mail would be wise to include disclaimer language, in order to head-off an argument that an enforceable contract has been agreed-upon.

For instance, an e-mail could state as follows: "This e-mail shall not be deemed an offer or an acceptance of a contract.  No offer or acceptance shall be binding until documents are executed by hand-written signature."