Real Estate Blog

Appeals Court Rejects Buyer’s Attempt to Enforce Seller’s Conditional Acceptance

By Sherin and Lodgen on April 7, 2014

10174843 sThe Massachusetts Appeals Court in Host v. Gray recently affirmed a Land Court decision dismissing a buyer’s claim seeking specific performance of his offer to purchase real property.  In March 2010, the seller subdivided her property into three parcels, two of which became known as “Lot 18” and “Lot 19.”  Thereafter, the seller, through a broker, listed Lot 19 for sale.  The buyer viewed Lot 19 in October 2010.  At that time, the seller’s broker advised the buyer that any sale of Lot 19 would require the purchase of some or all of Lot 18 in order to provide access to Lot 19.

On October 22, 2010, the buyer tendered a written offer for both lots in their entirety.  Three days later, the seller’s broker responded by e-mail stating that the seller “is accepting the offer” but that the seller would need to retain a portion of Lot 18 to build a garage on the third, adjacent lot and that the parties would need to “work out the conditions” of how Lot 18 would be divided.  The parties later learned from the building inspector that Lot 18 was not necessary for the seller’s proposed use.  On November 1st, the seller accepted an offer to convey Lots 18 and 19 to an unrelated third-party.  The initial buyer brought suit in Land Court for specific performance of the sale of Lots 18 and 19.  The Land Court dismissed the buyer’s claim at summary judgment.

The Appeals Court noted at the outset that “an acceptance which varies substantially from the offer does not make a binding agreement.”  Here, the buyer had offered to purchase all of both Lots 18 and 19.  Although the seller’s broker advised the buyer that the offer had been “accepted,” in reality, it had not.  The broker described her communication as a “conditional response,” then proceeded to explain that further negotiation was necessary with regard to how Lot 18 would be dealt with.  The Court therefore rejected the buyer’s focus on the words indicating the seller’s purported “acceptance.”  The Court found that the broker’s response amounted to a “new offer, or counter proposal, and in order to become a contract would have to be accepted by the [buyer].”

The Court also rejected the buyer’s claim that a contract was formed once the parties learned that the seller did not need to retain any of Lot 18 to develop the adjacent property, as this did not come about until after the broker’s October 25th email inviting further discussion.  Simply put, “the buyer never agreed to purchase less than all of Lot 18 and the seller never agreed to sell all of Lot 18.”  Absent an agreement on a material term, i.e., the amount of Lot 18 to be included in the sale, no contract could be formed.

This analysis may be rendered moot to the extent the transaction requires an execution of a formal purchase and sale agreement.  Nevertheless, a prospective buyer of real property would be wise to ensure that the seller does not vary the terms of an offer, lest the buyer be left with an unenforceable agreement.  Alternatively, a prospective seller should be mindful that an unconditional acceptance is likely binding, and that specific performance is a long-recognized remedy available to a buyer.