Boy, we have all been down this road a few times! This can be one of the most frustrating, emotionally draining aspects of a NYC apartment purchase. We recently went through a rather troubling situation that really gutted our client which I recently blogged about here. This is a nice legal explanation from REBNY:
Legal Line Question: Best and Final Offer
Q. I represent a purchaser who is looking to purchase a condominium unit located in New York City. There were several offers placed on the unit and the seller’s real estate broker, who is a REBNY member, requested that all prospective purchasers submit their “best and final offer.” My purchaser’s “best and final offer” was accepted. A few days later, I was informed that the seller elected not to sell the unit to my purchaser. What, if any, binding effect does the acceptance of a “best and final offer” have on the seller?
A. The acceptance of a “best and final offer” does not have any binding effect upon the seller. Pursuant to New York State General Obligations Law (the “GOL”), an agreement for the sale of real property will not be binding or enforceable upon the parties unless the parties enter into a signed written agreement setting forth the “essential terms” of the real estate transaction. In support of the GOL, New York courts have stated that until a written agreement is fully executed by the parties, the seller is free to sell the property to another party and the real estate broker is free to negotiate with other prospective purchasers on behalf of the seller. Towards that end, courts have articulated that the purpose of the GOL is to distinguish provisional agreements (like a term sheet) from a final and binding contract. Important Tip: The term “best and final offer” should not be used by real estate brokers as the term is misleading and may imply that the seller will be bound by the acceptance of the “best and final offer.” Instead of using the term “best and final offer”, real estate brokers should consider using a term such as “highest and best offer”. Real estate brokers should also make it clear to all parties to the transaction that the parties will not be bound by any agreement unless and until a written contract of sale, setting forth the essential terms of the transaction, is signed by both parties. less