From: "Bubba" 
Newsgroups: misc.invest.real-estate
Subject: Re: Legal question on Offer&Acceptance
Date: Sun, 10 Oct 2004 07:30:14 GMT


"Marek Williams"  wrote in message
news:sobhm0penvleje2c7cihm29gchfuu80lc8@4ax.com...
> On Sat, 09 Oct 2004 12:38:55 -0700, James W
>  dijo:
>
> >My understanding of the law is that "a counter-offer IS a rejection".
> >Given that understanding, I believe that if I offer to buy a property
> >for $100K, and the seller counters at $105K, my original offer has now
> >been rejected. i.e. the seller cannot later "accept" my original offer.
> >
> >Does anyone disagree? Trying to decide if this is worth a call to my
lawyer.
>
> Your understanding is generally correct in most situations, but not
> necessarily always.
>
> Start with the fact that a *rejection* of an offer always extinguishes
> the offer. No exceptions. Of course, the rejection must be
> communicated, etc., but once rejected, the offer is dead.
>
> Now think about a typical *counteroffer*. What the offeree is really
> saying is "no, but I will take ..." It's the "no" in that expression
> that is key. The "no" is a rejection of the offer. Therefore, the
> counteroffer is really a rejection of the original offer, coupled with
> a new offer back. Since it is a rejection, it extinguishes the
> original offer as surely as if it were an outright rejection.
>
> But now let's take a new twist on the scenario. Let's suppose a buyer
> makes an offer for $200,000 and in the offer agrees to leave it open
> for a while, say a couple weeks. Let's further suppose that the seller
> responds that the seller will continue to consider the offer for the
> remaining couple of weeks, but in the meantime will take $225,000.
>
> Is this a counteroffer? Most people would call it a counteroffer. Does
> it reject the original offer? No, it does not. Does the original offer
> still exist then? Yes, it does. What we have now is two offers on the
> table. One is from the buyer for $200,000, and the other is from the
> seller for $225,000. Neither offer has anything to do with the other
> except that they deal with the same property. A contract can be formed
> as soon as one of the parties accepts the other's offer.
>
> The point here is that in ordinary situations a counteroffer is a
> rejection of the offer and therefore extinguishes it. But, depending
> on exactly what the offeree's response is, a counteroffer can be made
> which does not extinguish the original offer.
>
> Oh, and before someone jumps in and says that they were taught in
> their prelicense classes that in [insert name of state here] a
> counteroffer always rejects an offer, let me advise that your
> prelicense class instruction was incorrect. The preceding discussion
> is from the Uniform Commercial Code, which applies in all states.
> Sometimes prelicense classes abbreviate things to the most common
> situations without bringing up the exceptions.
>
Let's take the next step.  After you have an accepted offer and the contract
is subject to an inspection, survey or some other weasel clause.  If a
roofing inspection indicates that the house needs a new roof you better be
very careful how you approach the seller.  If you want $5,000 towards a new
roof, do not go back and write an acceptance stating that you will accept
the property, if the seller will lower the price by $5,000.  At this point,
you will have extinguished your original contract.  The seller owes you no
response and he is free to enter into a contract with someone else.
Instead, simply accept the property as long as the seller is willing to
issue a credit at closing of $5,000 to compensate for the problem roof.
IOW, do not ask the seller to re-negotiate the contract price.  It remains
the same.  All you are asking is to move $5,000 from one column to another
on the closing statement.