Court of Appeals Approves E-Mail Signings

   On September 25, 2012, the Arizona Court of Appeals decided that a “Thank you” email could be an electronic signing by a real estate agent of a buyer-broker employment agreement.  Young v. Rose, 1CA-CV 10-0786.

Facts:

   From April, 2006, until October, 2007, a real estate agent (“Agent”) had three  unsuccessful six-month buyer-broker employment agreements with a married couple (“Buyers”) interested in buying a home in the $4,000,000 price range.  The husband was a well-known Scottsdale lobbyist and the wife was a well-known Scottsdale lawyer.

   In early 2009 the Agent and the Buyers exchanged emails relating to the Buyers’ renewed interest in purchasing a home in the $4,000,000 price range.  The Agent emailed a six-month buyer-broker agreement (“2009 Agreement”) to the Buyers.  The Buyers signed this 2009 Agreement and emailed it back to the Agent.  The Agent then emailed “thank you” to the Buyers, but the Agent never signed the 2009 Agreement.

   The Buyers then purchased a home with another agent during the six-month term of the 2009 Agreement.  The Buyers refused to pay the Agent a commission because the Agent never signed the 2009 Agreement.  The Agent sued for the amount of the commission.  The trial judge ruled against the Agent, and the Agent appealed to the Court of Appeals.  The questions before the Court of Appeals were the following:

1. Was the Agent required to sign the 2009 Agreement to earn a commission even though the Buyers had signed the 2009 Agreement?

2. If so, did the parties agree to conduct the transaction by email which would authorize electronic signatures under the Arizona Electronic Transactions Act, A.R.S. §44-7001 et seq.?

3. If so, did the “Thank you” email by the Agent qualify as an electronic signature?

   In answering question #1, the Court of Appeals ruled that, although the 2009 Agreement was enforceable against the Buyers as the defaulting party under the general Statute of Frauds A.R.S. §44-101(7), the Agent was required to comply with the more specific statute, A.R.S §32-2151.02, requiring that “all parties,” including the Agent, sign the 2009 Agreement.

   In answering questions #2 and #3, the Court of Appeals ruled that, depending upon the facts, the Agent was entitled to prove that the parties agreed to conduct the transaction by email.  If so, the Agent was entitled to prove that the “thank you” email qualified as an electronic signature.

   The Court of Appeals then remanded the case back to the trial court to give the Agent the opportunity to prove that there was a valid electronic signature.

   Moral: A real estate agent should always cross the “t’s” and dot the “i’s” with any client in a real estate transaction.  Even more so, if the clients are a lawyer and a lobbyist!