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"LOL!" Property Sale Via Text Messages "SMH!"

Posted by Mark W. Litchford | Sep 23, 2019 | 0 Comments

Once you push send, you can never take it back.”  You've probably heard this phrase 100 times, but have you ever considered it in the context of a real property contract?  Most likely not, but it almost happened in Tennessee as evidenced by a recent Tennessee Court of Appeals opinion issued in August. 

 In Gatlin v. Scott, No. 83CC1-2017-CV-189, __ SW3d __ (Tenn. Ct. App. Aug. 6, 2019), plaintiffs (“Buyers”) Don and Dora Gatlin filed a lawsuit in Sumner County General Sessions Court claiming that a series of text message exchanges with defendant (“Seller”) formed an enforceable contract in satisfaction of the Statute of Frauds relative to real property located in Sumner County.  Specifically, Buyers inspected property for sale to evaluate its condition and estimated costs of renovation and sent a text message stating

 Hi Linda. It was very nice to meet you yesterday. I put together budgets to fix up your house and I feel comfortable with 100,000. I am not going to get rich off of it but it will keep me and my guys busy for a couple of months and should be ok. I will offer a cash deal, no contingency or inspection and close as soon as it clears title search. I use a closing attorney that is very reasonable. His name is Tim Ferguson here in Hendersonville. Please let me know if you want to move forward and I'll get a contract to you

 Seller responded as follows:

Good morning Don – thanks again for your interest in my home. I had three more people that wanted to look at it, however, after meeting with you on Thursday and receiving your offer, we no longer feel it necessary to prolong this any further......We will gladly accept your offer and look forward to working with you. Thanks again……I hope you have a nice day

 Buyers responded with the following text:

 I'm [glad] to hear this. I will get Tim to draw up a simple real estate contract next week and we will get this done asap. My wife comes back Monday so we can possibly get this closed next week depending on Tim's availability for title search and closing and your schedule on finishing up moving your stuff. I will swing by today and say hi.

As you likely guessed, Seller received a better offer and sold the property to another party and Buyers sued.  The General Sessions Court ruled that the text message exchange formed an enforceable contract and awarded monetary damages to Buyers.  Seller appealed to the Circuit Court which ruled in favor of Seller, holding that a contract had not been formed because there was no present offer and acceptance.  The Circuit Court explained its ruling as follows:

 “[T]he parties' text messages, which utilize the future tense, constitute a discussion or negotiation regarding a potential real estate contract to be memorialized by paper writing prepared by [Plaintiffs'] attorney, Mr. Tim Ferguson, and executed by the parties. These text messages do not evidence an agreement or contract arising from a present offer and acceptance by the parties.”

On appeal, the Court of Appeals ultimately ruled that the text messages in this case utilized the future tense regarding a potential real estate contract and did not evidence a present offer and acceptance sufficiently definite to be enforced.  Specifically, the Appellate Court held that “circumstances presented here show that the agreement was a preliminary negotiation and not a final agreement to which either party intended to be bound.”  While the Court negated the potential sale, the important take away is that the Court acknowledged the Uniform Electronic Transaction Act, which governs transactions made via electronic means can be a platform by which enforceable contract may be created provided the essential terms necessary to form a contract exist. 

 WHAT LESSON IS TO BE LEARNED?  IMVHO (in my very humble opinion), Be Very Careful! #SMH (shaking my head)

Notwithstanding the Court of Appeals' holding (which some might disagree with), it is clear the potential ramifications for texting can be catastrophic.  Consider this same above scenario but modify the facts slightly such that the texts contained a present offer and acceptance and the offer number was $10,000 instead of $100,000.  If the recipient Buyer had not noticed the missing zero but had accepted, the property could have sold for exponentially less than its true market value.  It is certainly not unheard of for texters to be lackadaisical in their message.  While presumably one would be more careful when issuing an offer via text message, texting generally occurs in a very quick, informal, and rapid method meaning the appropriate attention to detail is generally lacking.  Further, it is unlikely legal disclaimers will accompany short text threads. 

 FINAL THOUGHTS: CYA (cover your….tail)

In the world we live in today, watch what you say and type via texting, including instant messaging, Facebook, Twitter, etc.  A simple Google search on this topic reveals that these types of situations are prevalent and, more importantly, potentially life-altering.  At Litchford, Pearce & Associates, PLLC, we advise our clients to always be careful in the actions they take and to include disclaimers on e-mails that the electronic communications do not constitute an offer and/or acceptance of a binding contract in the absence of a fully signed written agreement. 

In the text messaging word, disclaimers are impractical.  Thus, this is all the more reason to be careful when texting.  We recommend that before pushing “send” on any text message, always take a moment to consider the content of the text and the potential subsequent ramifications of the message.  In other words, double, no, triple-check what you are sending.

About the Author

Mark W. Litchford

Mark is a founding member of Litchford, Pearce & Associates, PLLC, and licensed to practice in Tennessee, Georgia, the Federal Eastern District Court of Tennessee, and the U.S. Court of Appeals for the Sixth Circuit. Mark concentrates his practice in government law, commercial litigation, estate planning, real property, personal injury, and business transactions. Mark is recognized as a multi-nominated Best Lawyers in America and Mid-South Super Lawyers, and is a member of the executive board for the Chattanooga Bar Association.


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