YOU SNOOZE - YOU LOSE!

In two companion cases which were recently decided by the North Carolina Supreme Court, the issue of multiple offers/counteroffers was addressed. The fact situation was as follows: A prospective purchaser made an offer to purchase certain real estate. The seller rejected the purchaser's offer but made a counteroffer which the purchaser did not accept. A second purchaser then made an offer to purchase the property on terms substantially the same as the seller's counteroffer. This offer was accepted by the seller. When the seller's agent informed the first purchaser that the property had been sold, the purchaser protested, believing the property to be "off the market" until he had made up his mind or at least until the acceptance date contained in his original offer. But the seller's agent informed him "You snooze you lose; the property has been sold."

Two lawsuits ensued (Normile v. Miller and Segal v. Miller, 313 N.C. 98 [1985]) which were ultimately decided by the North Carolina Supreme Court. (In analyzing the cases, the Supreme Court relied in large part on the Real Estate Commission's textbook, North Carolina Real Estate for Brokers and Salesmen.) The court determined that since the purchaser's offer had been rejected by the seller, the acceptance date shown in the purchaser's offer did not apply, and therefore, the seller remained under the common law rule that " . . . an offer is generally freely revocable and can be countermanded by the offeror (in this case, the seller) at any time before it has been accepted by the offeree (in this case, the purchaser)."

The court further stated: "Notice of the offeror's revocation must be communicated to the offeree to effectively terminate the offeree's power to accept the offer. It is enough that the offeree receives reliable information, even indirectly, that the offeror had taken definite action inconsistent with an intention to make the contract." The statement of the agent, "You snooze, you lose; the property has been sold", was sufficient to notify the purchaser that the counteroffer had been revoked; therefore, the purchaser's later attempt to accept it amounted only to a new offer which was rejected because the property had already been sold.

CAVEAT

Agents involved in multiple offer/counteroffer situations should be extremely careful to ensure that each offer or counteroffer is properly presented, considered, rejected or accepted, and that the parties are promptly notified of such action.