Commercial Real Estate: The New York Statute of Frauds requires certain agreements to be in writing in order to be enforceable. Among the types of agreements that must be in writing are those conveying an interest in real estate (other than a lease for a term not exceeding a year) and a contract to pay compensation for services rendered in negotiating a purchase and sale of real estate. However, New York, by statute, provides different standards as to what constitutes a writing for these purposes.
Specifically and with respect to a contract to pay compensation for services rendered in negotiating a real estate transaction, an email exchange between the parties will constitute a writing where it contains the essential terms and there is an indication by the sender of the email as to his intention to authenticate this transmission. This is because this section of New York’s General Obligations Law was amended to specifically include a provision that written text produced by electronic signals constitutes a writing.
However, and with respect to an agreement for the purchase and sale of real estate, it appears that an email exchange is insufficient to constitute a writing even if it contains all of the essential terms and the e-mail sender authenticates the transmission. Thus, the revision made to the statute as to the brokerage services was not made to the statute pertaining to a conveyance of real estate.
In this day and age, the use of email to transact and conduct business is commonplace and occurs in a large quantity and variety of transactions. It makes sense for the legislature to deem certain agreements as more important than others and, thus, require a higher standard for them to be deemed “in writing.” However, once this determination is made, it is confusing to the public to render an e-mail a sufficient writing with respect to certain agreements and not others. It will not be surprising if the New York State Legislature clarifies this. Hopefully, this will occur sooner rather than later so that the general public can proceed with certainty as to whether or not they are bound.
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