FAQ : Brian, now the seller’s spouse won’t sign the contract (or listing agreement).  Do I have a deal?

Answer : No, as long as both were named as parties.  But read on.

This frequently asked question arises when someone refuses at the last minute to sign the contract or a listing agreement.  The answer turns on how the contract or listing agreement was written and who is refusing to sign (but not why they are refusing).  There are two basic facts patterns:
 
First Fact Pattern: Only One Party Named, Someone Not Named But Necessary Refuses to Sign:

Here the answer would be yes.  In this typical fact pattern the agent (and usually the client) writes and signs a contract with just one name as a party (the apparent client) only to later learn that another necessary party, and that party’s signature, is missing and needed.  As we have often noted, this can arise when a spouse thinks he or she got the house in a divorce only to find out the property was never actually deeded to them, but it can also arise with unknown heirs, someone claiming to “represent the estate,” business partners you didn’t think needed to sign, etc.  Wright v. Bryan, 226 Va. 557 (1984) involved such a situation.  In Wright only the husband, who in fact held title as tenants by the entireties with his wife, had accepted the buyer’s offer and he was the only party listed in the contract.  The wife was neither named in the contract nor did she sign. When the buyer refused to close for reasons unrelated to the state of title the seller husband sued the buyer for breach, and the Virginia Supreme Court ruled in favor of the seller.  In doing so the court discussed the rule that despite the wife’s omission on the contract, which meant that wife was not contractually bound to sign a thing, there was in fact a valid contract between the husband and the buyer (but the buyer breached it).  Had the buyer waited until closing and the seller’s wife then refused to sign then the seller would have been in breach.  This rule is why a builder can agree to sell a lot they do not yet own – on the basis that all they do is promise to acquire title by the time they are obligated to sell to the buyer (but this might be a misrepresentation under the REIN contract re joinder or approval of third parties).  And had the buyer waited and then the seller’s wife refused to sign I think the agent could have sued her client for breaching the listing agreement (unless of course the listing agent knew the wife was necessary and chose not to get her permission — which would be a VREB violation among others).

Second Fact Pattern: All Parties Named, But One Refuses to Sign:

Here the answer would be no.  This fact pattern usually involves a situation where you know about both (or all) parties, and so both (or all) names appear on the contract (or listing agreement), but then one of the named parties refuses to sign at the last minute. This, too, often arises with a separating or divorcing couple when one of the spouses just changes his or her mind whether out of spite or just because they change their mind.  The distinction from the first fact pattern is that it is understood from the beginning that you need all parties to sign and all are listed as parties to the contract/offer. G & M Homes II, Inc. v. Pearson, 263 Va. 107 (2002) involved this fact pattern: mom owned one-half of the property and her daughter owned the other half and both were listed as parties.  Mom accepted the buyer’s offer, but daughter refused.  The buyer sued claiming that mom was obligated to sell her half (they tried to get the daughter also, but that failed).  The Virginia Supreme Court said mom was not obligated to sell her one-half on the ground that since both sellers were listed in the contract in was clear both had to accept the offer before there was a valid contract – there was no evidence whatsoever mom was agreeing to sell her one-half when she signed.  The same principle would hold on a listing agreement (any contract really).
 
So, in summary, make sure you always find out who owns an interest in the property.  List them as parties.  And then get everyone to sign.  If someone misrepresents their ability to enter into the contract without others they may be sued if they do not get them to sign.
 
If you need help on this or any other matter, please feel free to email or call me.  Thank you for your support and business.
 
Brian
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Brian D. Lytle, Esq.
Lytle Law, P.C.
11801 Canon Blvd., Ste 200
Newport News, VA 23606
757.595.5655 phone 757.595.4262 fax
http://www.lytlelaw.com

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