Is a Written Offer to Purchase Real Estate Enforceable?
Massachusetts courts have routinely held over the last 20 years that a fully executed and accepted offer to purchase (OTP) real estate is a binding and enforceable agreement if it contains the essential material terms of the deal, which are, generally: a description of the property being sold, the purchase price, a deposit, an agreed upon closing date (or some process for establishing a closing date) and any contingencies. An OTP can be binding on its own and may be enforceable even if a purchase and sale agreement contemplated in the OTP was not executed. Buyers and sellers should also be aware that courts in Massachusetts have held that, in some situations, a collection of emails and text messages that include all of the material terms of the deal and an agreement of the parties can constitute an enforceable contract for the purchase and sale of real estate.
Parties must be careful when negotiating an OTP because there are consequences for breaching a binding OTP. For example, the non-breaching party may be able to bring a lawsuit to force the sale of the property (an action for specific performance), to recover damages and/or to compel the breaching party to forfeit the deposit.