STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 5427

January 23, 1979

REAL ESTATE BROKERS AND SALESMEN:

Rule prohibiting change in terms of an offer to purchase

After the execution of an offer to purchase real estate which calls for mortgage financing, the buyer and seller may subsequently agree to enter into a land contract; their signatures on the land contract constitutes written approval of the change in the terms.

Honorable James A. Barcia

House of Representatives

Lansing, Michigan 48909

You have requested my opinion regarding an interpretation of Rule 37(3), 1973 AACS, R 338.2737, adopted pursuant to the real estate license law, 1919 PA 306, MCLA 451.201 et seq; MSA 19.791 et seq, where an offer to purchase called for mortgage financing but, because financing was not available from such sources, the buyer and seller entered into a land contract.

1919 PA 306, supra, and the administrative rules promulgated thereunder, provide for the regulation and licensing of real estate brokers and real estate salespersons to provide consumers of their services with protection against fraudulent or incompetent professional conduct.

Rule 37(3), 1973 AACS, R 338.2737 states:

It is suggested that Rule 37(3), supra, prevents a real estate broker or real estate salesperson from adding or deleting a term or condition of an executed offer to purchase after the respective parties have had a 'meeting of the minds' as to all the terms and conditions contained therein. After the execution of an offer to purchase real estate by the seller and purchaser, both parties are fully aware of the terms and conditions of the agreement and realize their respective obligations thereunder. A subsequent deviation from the terms or conditions of the offer to purchase without both parties prior knowledge or approval may result in a fraud upon one or both. However, where both the buyer and seller are aware that the offer to purchase, as originally executed, cannot be performed, they may subsequently agree to different terms in writing without violation of Rule 37(3). Inasmuch as their signatures on the land contract constitute written approval of the change in terms, it is my opinion that a buyer and seller may enter into a land contract for the sale of property despite the fact that the purchase agreement originally called for mortgage financing.

Frank J. Kelley