A seller in Bloomington receives two written purchase offers on the same day. Offer A is for $310,000 with no contingencies. Offer B is for $320,000 with a financing contingency. The seller's managing broker advises that Indiana law allows the seller to sign both offers simultaneously to keep options open while waiting to see which buyer can perform. Is this advice correct?
Correct Answer
C) No, because simultaneously accepting two offers on the same property would create two binding contracts, which is legally problematic and could expose the seller to liability
The managing broker's advice is incorrect and potentially harmful. If the seller signs and communicates acceptance of both offers, two separate binding contracts are formed simultaneously. The seller cannot deliver the property to both buyers, placing the seller in breach of at least one contract. This exposes the seller to significant legal liability including lawsuits for damages. Indiana brokers have a duty under IC 25-34.1 to provide competent advice, and counseling a seller to accept multiple offers simultaneously is a serious breach of that duty.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Earnest money is a deposit made by the buyer at the time of the offer or shortly after to demonstrate good faith and serious intent to purchase the property. It is also called a good faith deposit.
Equitable title is the buyer's interest in a property after a purchase contract is signed but before closing, giving the buyer the right to acquire legal title in the future. The seller retains legal title until the deed is delivered at closing.
A financing contingency makes the purchase contract conditional upon the buyer obtaining mortgage approval within a specified time period. If the buyer cannot secure financing, they can cancel the contract and receive their earnest money back.
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