A seller using the C.A.R. RPA receives a Multiple Counter Offer (SMCO) and signs it, returning it to one buyer. Before that buyer signs and delivers the accepted SMCO back to the seller, a second buyer submits a full-price offer. Which statement MOST accurately describes the seller's legal position?
Correct Answer
B) The seller may accept the second buyer's offer because no binding contract exists until the seller receives the signed SMCO back from the first buyer
Under California contract law and the C.A.R. SMCO form, a multiple counter offer does not create a binding contract upon the seller's signature alone. A binding contract is only formed when the seller receives written notification that the buyer has signed and accepted the SMCO without modification. Until that communication occurs, no contract exists and the seller retains the right to accept other offers or revoke the SMCO.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An inspection contingency gives the buyer the right to have the property professionally inspected within a specified time frame and to negotiate repairs or cancel the contract based on the findings.
Liquidated damages are a predetermined amount of money specified in the contract that the non-breaching party is entitled to receive if the other party breaches. In real estate, the earnest money deposit typically serves as liquidated damages.
Novation is the substitution of a new contract for an existing one, or the replacement of one party with a new party, with the consent of all parties involved. The original party is completely released from all obligations.
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