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Legally speaking: Can a buyer get a ‘do-over’ after rejecting a counter?

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By Peg Ritenour, Ohio REALTORS Vice President of Legal Services/Administration

The OAR Legal Assistance Hotline receives an array of real estate-related legal questions — including license law issues, disclosure, contract law, ethics and commission problems, among others. In an effort to help you work within the law, “Legally Speaking” spotlights some of the timely questions that are being asked by REALTORS. This question involves contracts…

Q: A buyer made an offer which the sellers countered. The buyer told his agent he was rejecting this counteroffer and the buyer’s agent communicated this fact to the listing agent. The next day the buyer called his agent and told her he had reconsidered and really wanted the house after all. The agent immediately called the listing agent, only to find out that the sellers were accepting another offer. When the first buyers learned this they hurriedly signed the sellers’ counteroffer and their agent hand delivered it to the listing agent’s office. Do the sellers have a legally enforceable contract with the first buyer?

A: No. The buyer doesn’t get a “do over” or second shot at the apple!

Under Ohio contract law when an offer or counteroffer is rejected it is no longer open for acceptance. The only exception to this is if the person who made the offer (the offeror) is willing to honor the subsequent acceptance. In this situation, once the first buyer rejected the sellers’ counteroffer and that fact was communicated to the listing agent, the counteroffer was terminated. As such, it was no longer open for acceptance by the first buyer. Signing the counter and racing it over to the listing office was a futile act because the seller wasn’t willing to still go forward with the first buyer and chose instead to accept the second offer he received.

This outcome is true regardless of whether the rejection was done verbally or in writing and regardless of whether the expiration date on the seller’s counteroffer hadn’t expired yet (i.e., the counter is rejected on August 26th, but was open for acceptance until August 28th). As most REALTORS remember from their real estate law class, under Ohio’s statute of frauds, a purchase contract must be in writing and must be signed to be enforceable. However there is no similar legal requirement that a rejection must be done in writing or be signed to be effective. Therefore a verbal rejection is sufficient. Of course it is always a good business practice to get a rejection in writing because it documents that the offer was presented and the party’s rejection. However if the offer or counter is rejected and that fact is communicated — even verbally — that offer/counteroffer is terminated. That means it is no longer open for acceptance, regardless of whether the original expiration date hasn’t passed yet. The rejection terminates the offer/counter and it is off the table unless the other party (in this scenario the seller) is willing to put it back in play.

The “take away” for REALTORS should be to counsel their clients to be sure about their decision to reject an offer. Once they direct their agent to communicate to the other party that they are rejecting an offer or counteroffer and that notification is made, there is no “do over!” Because communicating a rejection isn’t something that must be done immediately, sleeping on a decision is sometimes the best advice you can give your client.

 

Legal articles provided in the OAR Daily Buzz are intended to provide broad, general information about the law and is not intended to be legal advice. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney. 

Tags: legal, Legally Speaking