ALWAYS ATTACH YOUR ADDENDA TO YOUR AGREEMENTS - OR THERE MAY BE NO CONTRACT

This case involves what should have been a "normal" residential real estate deal. The buyer offered to purchase the seller's house at $147,300.00. The parties exchanged counter-offers and ultimately, the buyer accepted the seller's counter-offer to sell the house for a price of $151,000.00. If that was the rest of the story, I would not be writing this account.

It appears that the seller soon realized that the purchase price was not enough to pay all of her costs, including the real estate commissions. So, she refused to close and sold the house to another buyer (presumably at a higher price).

The buyer sued the seller for breach of contract. As this case shows, a written document signed by both parties with an agreed upon price is not always a "contract."

In this case, the parties used a form residential real estate agreement published by the Tennessee Association of Realtors to document the transaction. Like many residential real estate contracts, the form referenced several addenda, including a "Short Sale Addendum." The Short Sale Addendum was not, however, attached to the agreement signed by both parties. We don't know why, but apparently this fact was undisputed. A short sale addendum typically states that the deal is contingent upon the agreement of the mortgage holders to accept less than what they were entitled to receive. But, I digress.

As every law student learns, the elements of a contract are: an offer, an acceptance and consideration. In this case, all three are present. But, there is one element that all contracts must have -- a meeting of the minds.

The court of appeals held that because of the omission of the addendum from the actual contract, "there was no meeting of the minds." The buyer argued that the parties intended to use the TAR form short sale addendum. The court of appeals, however, rejected this argument noting that the "form" agreement does not reference the specific TAR form.

THE MORAL OF THIS STORY:

Always attach your Addenda, or you may lose more than just your mind.

See Casey E. Bevans v. Rhonda Burgess, et al.