Is an Additional EMD “delivered” when it’s dropped in the mailbox?

QUESTION: My seller client and an out-of-town buyer put the seller’s property under contract using the Offer to Purchase and Contract (2-T). There is also a back-up contract on the property. The primary contract provided for the payment of an Additional Earnest Money Deposit by a specified date. The date came and went yesterday. Today, my seller terminated the primary contract using form 352-T based on the buyer’s failure to timely deliver the Additional EMD, and has notified the back-up buyers that their back-up contract has become primary, using page 3 of the Back-Up Contract Addendum (form 2A1-T)

I emailed the signed termination form to the buyer agent. She responded an hour later by texting me photographs of a bank check for the Additional EMD and a USPS Certified Mail Receipt with my name and firm address on it and a postmark bearing yesterday’s date. She contends that according to the mailbox rule, the primary buyer timely delivered the Additional EMD. She further stated that the seller and I would be in big, big trouble if the seller proceeded with the back-up contract. Have I done something wrong?

ANSWER: Neither you nor your seller have erred in our view. As stated in the NC Real Estate Commission’s North Carolina Real Estate Manual, “[t]he mailbox rule basically operates only as a method of communicating acceptance of an offer. It does not apply to any other situation.” The contract provides that an Additional EMD must be delivered to the escrow agent by the specified date. Since the mailbox rule is inapplicable, delivery did not take place when the check was deposited in the US Mail, and the check won’t be considered delivered until it reaches your office. Since the contract further provides that time is “of the essence” with regard to the date that the Additional EMD is to be delivered, we believe the seller was within his rights to terminate the primary contract and notify the back-up buyers that their contract has become primary.

Regarding the mailbox rule, as the Commission’s Manual notes, the rule “is of less importance in today’s world of instant electronic communication than it once was, but the principle of law remains the same.” The principle of the Rule is that once an accepted offer has been mailed, it is considered accepted as of the date and time of the mailing. Thereafter, the offeror cannot revoke his or her offer and the offeree cannot revoke his or her acceptance.

Release Date: 06/07/2018

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Filed Under: Contract Law,