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 REAL ESTATE BINDERS
by Thomas S. Tripodianos
Q. Is a “binder agreement” for the sale and purchase of real property owned by a husband and wife enforceable by purchaser if only the husband signed the agreement?
YES. To be enforceable, the purchase deposit agreement or as it’s commonly called the “binder” must satisfy the statute of frauds. In other words, it must be in writing, identify the parties to the subject real estate sales transaction, described the realty to be sold with reasonable particularity, and state the purchase price of the realty, the down payment called for as well as its due date, and the balance due upon closing. In the case at hand the binder also provided for a closing date, and stated that the transaction was not subject to mortgage financing. The additional fact that the agreement stated that a more formal contract was to be signed does not render the purchase deposit agreement unenforceable
Generally, where spouses own real property as tenants by the entirety, an agreement of sale signed by only one spouse is ineffective to convey title. However, if it is shown that the wife was aware of and actively participated in the transaction, the wife will be stopped from denying the husband’s authority to execute the contract on behalf of the wife. The wife’s contention that she did not sign the purchase deposit agreement, while true, does necessarily mean that the binder is not enforceable. The same reasoning applies if the roles of the husband and wife are reversed.
That being said, the better practice is to have all title owners sign the binder thus eliminating any questions as to who is authorized to do what.
If you would like more information regarding this topic please contact Thomas S. Tripodianos at TTripodianos@wbgllp.com, or call him at 845-294-5500 x 317.
Please understand that this column provides general information only, and should not be construed as legal advice to anyone under any circumstances. The author reserves the right to modify any questions submitted so as to broaden their appeal. While we encourage you to contact us, you should not disclose to us any information that you consider confidential unless and until we have formally established an attorney-client relationship, and agreed to represent you in your particular matter. The opinions expressed in this column are of the individual author, and not necessarily those of the Builder’s Association of the Hudson Valley.
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