Limit your e-mail liability

Don’t let the informality of e-mail fool you; rules and regulations still apply.

by Tom Morgan   While e-mail creates opportunities to enhance your productivity and communication, it also presents potential legal pitfalls for REALTORS® who do not take precautions to limit liability. The following questions and answers examine some of the potential legal issues raised by the use of e-mail.

Q   May I negotiate contract terms via e-mail?

A   When communicating either electronically or by paper correspondence with parties to a sale, the REALTOR® should only communicate in accordance with the client’s instructions or intentions. When communicating via-email, it seems prudent to treat e-mail the same as you treat any other correspondence. Unless the parties agree otherwise, it may not be the medium of communication (electronic vs. paper) that affects the legal significance of the communication but what is said in the communication.

When writing or responding to an e-mail message, keep the basic elements of contract law in mind to ensure that the e-mail does not create any legal obligations not desired by the client. Until electronic signatures become typical practice, it is probably best to include a disclaimer in the e-mail message that notifies the recipient that the communication contained within the e-mail is not intended to create a legally binding contract. To the extent that the e-mail describes proposed material terms of a contract, include language noting that before the two parties agree to the terms of the contract, the terms must be reduced to writing and inserted into a promulgated contract form that is signed in ink by the parties. Keep in mind that a real estate licensee who writes correspondence that intentionally or unintentionally creates a real estate contract might be accused of the unauthorized practice of law.

A legally binding contract may, however, be transmitted electronically as an e-mail or as an attachment to an e-mail. For example, a REALTOR® may, if a client so instructs, insert material terms into a blank electronic version of a promulgated contract form and communicate that proposed contract to other prospective parties to a transaction. The contract becomes legally binding once all parties have signed in the manner agreed to by all parties. Under both the federal E-SIGN (Electronic Signatures in Commerce Act) and the Texas UETA (Uniform Electronic Transaction Act) statutes, electronic signatures are legally binding if all parties agree to the method used to sign the contract.

Regardless of the medium of communication used, it is critical for the REALTOR® to ensure that the communication is written in a manner that will achieve the client’s instructions. A 1999 Texas case, RHS Interests, Inc. vs. 2727 Kirby Ltd, demonstrates the importance of paying close attention to how contract terms are negotiated in correspondence. In that case, the broker for the owner of an office building entered into negotiations with the prospective buyer of the building. The prospective buyer tendered one written offer, which was rejected, then tendered a second offer. Several phone calls subsequently occurred between the broker and prospective buyer. The broker then sent the prospective buyer a letter that contained material differences such as a new amount for the earnest money and a "free-look" provision entitling the prospective buyer to inspect the property. No sale occurred.

The prospective buyer sued the building owner for specific performance of sale of the office building based on the theory that the broker’s letter constituted "acceptance" of the buyer’s offer. Although the court found that no contract was formed and that the prospective buyer was not entitled to specific performance, this case illustrates the importance of making it clear that the correspondence is not the contract and that the parties must reduce the terms to a written contract.

Q   Should I use a signature file on my e-mail?

A   The Texas Association of REALTORS® Internet Policy Manual recommends that when using e-mail, the agent and employee should include an approved signature as plain text in the body of all e-mail messages. Signature files may be typed manually at the bottom of e-mail messages or automatically included using "signature file" tools within e-mail software. Signature file content should appear in a color and typeface that is easily visible within the e-mail message and can be seen or printed on an ordinary video screen or black-and-white printer. If the agent or employee participates in a chat discussion or instant-message session, the signature file information should be typed at the beginning of the session or included as part of the user profile in the chat event. The signature file should contain:

• The agent’s or employee’s name;
• The company’s name or acceptable acronym;
• The company’s address;
• The company’s telephone number;
• A statement indicating the regulatory jurisdiction(s) in which the agent or employee holds a real estate license, such as, "Licensed as a salesperson in Texas";
• The phase "Equal Housing Opportunity" (suggested but not required).

Q   May I use e-mail to solicit business?

A   Yes, but you need to be aware that any e-mail sent by an agent or employee that could be perceived as a solicitation of business must comply with applicable provisions of the Real Estate License Act, the Texas Real Estate Commission rules, and the National Association of REALTORS® Code of Ethics.

Many REALTORS® now use e-mailed newsletters to promote services and properties. The TAR Internet Policy Manual recommends that e-mail-newsletter mailing lists be created only through a voluntary subscription process such as a sign-up request form on the agent’s or company’s Web site. The agent or employee should not send the newsletter to those who have not asked or consented to receive it. In addition, any newsletter that asks for personal information should also contain either a copy of or a hyperlink to the company’s privacy policy.

Q   May I use e-mail to forward information from other sources?

A   Yes, but the TAR Internet Policy Manual recommends including the following statement: "The information is provided from __________________ (source). I have no reason to believe it to be false or inaccurate. The information or link is for informational purposes only. I do not warrant or guarantee the information for accuracy or completeness. You may wish to independently verify the information."

Tom Morgan is associate counsel for TAR.

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