In order to convince their buyers to purchase a water front home site on Lake Nickajack, the listing agents told them would buy the lot back if the buyers ever wanted to sell it. The buyers said they would agree if the agents “would put it in writing” and negotiated a written contract provision that the agents “at any time” would buy back the property at the same price it was sold.
The buyers paid $441,000 for the property, but a little over three years later demanded the listing agents buy back the property. The agents refused, and when sued, primarily argued that the contract was not enforceable because it was not supported by consideration and/or the buyers had not exercised the option within a reasonable time.
The Court of Appeals sided with the buyers, finding that they when entered into the agreement to purchase the land, they “did something they were not legally obligated to do,” which constitutes legally sufficient consideration for option contract. The court also ruled that the buyers were not unreasonable in exercising their option to have the agents buy the property back over three years after the original agreement. Shearer et al. v. McArthur et al., No. M2012-00584-COA-R3-CV (Tenn. Ct. App. Nov. 5, 2012).
The takeaway? If a seller or their agent (or a buyer, for that matter) makes a representation or agreement, make sure they put it in writing.
