Background
Sellers, foreign nationals residing in Iraq and the UAE, owned undeveloped land in Davidson County, Tennessee. In January 2021, they entered a Purchase and Sale Agreement with a buyer for $600,000. After engineering delays revealed sinkholes and geotechnical concerns, the parties negotiated three amendments extending closing deadlines and adding parcels. A Tennessee real estate broker, Hussein Alnuaimi, appended electronic signatures to these amendments without the sellers’ contemporaneous authorization, though cyber forensics confirmed the signatures traced to his office.
The sellers’ representative, Qutaiba, communicated regularly with Alnuaimi via WhatsApp throughout spring and summer 2021, received copies of the amendments, and affirmatively approved the agent’s actions, stating “Good job!” and acknowledging the extended deadline. The sellers later objected when they learned of a mandatory 15% FIRPTA tax withholding required for foreign nationals. As closing approached in September 2021, they refused to execute the power of attorney and wire authorization forms necessary to complete the transaction, preventing closing on the September 30 deadline.
The buyer sued for specific performance in October 2021. The trial court awarded the buyer specific performance and attorney’s fees ($91,360.38), finding the sellers ratified the amendments through their authorized representative’s informed conduct and that the sellers’ refusal to close constituted anticipatory repudiation excusing the buyer’s formal tender of funds.
The Court’s Holding
The Court of Appeals affirmed, holding that despite the unauthorized initial signatures, the sellers validly ratified the amendments through their representative’s full knowledge and affirmative adoption of the contractual terms. The court applied the common law ratification doctrine, finding it consistent with Tennessee’s Real Estate Broker License Act (TREBLA). While TREBLA shields clients from broker misrepresentations, that shield does not apply when the client “knew or had reason to know of the misrepresentation”—a condition the sellers satisfied by receiving and approving the amended terms.
On the tender issue, the court held that formal tender of the purchase price was excused because the sellers’ refusal to execute closing documents made such tender futile. The sellers’ own title attorney testified that closing was impossible without executed power of attorney, wire authorization, and W-7 forms—none of which the sellers provided. The court applied the doctrine of anticipatory repudiation, noting that “a party responsible for the delay should not be thereby enabled to avoid damages for the breach.” The buyer demonstrated readiness and ability to perform: it had secured financing and remained in active communication with the title company regarding closing logistics.
The court further held that the contract was clear, definite, and free from fraud or unfairness sufficient for specific performance. Though electronic signatures were initially unauthorized, the sellers’ subsequent ratification cured that defect. The court found the sellers’ actual motivation for breach was their objection to the FIRPTA tax—a matter they knew about—not any fraud or misrepresentation. The sellers’ fee-shifting clause in the contract entitled the buyer to recover attorney’s fees as the prevailing party, including fees on appeal.
Key Takeaways
- Ratification doctrine can validate unauthorized electronic signatures when the principal gains full knowledge of material facts and affirmatively adopts the contract terms, even if initial authorization was lacking.
- A broker’s liability shield under TREBLA does not protect clients who knowingly adopt or ratify the broker’s unauthorized acts; the statutory exception for actions “known or had reason to know” eliminates the shield in such cases.
- Formal tender of purchase price can be excused when a seller’s actions make tender futile—here, refusal to execute mandatory closing documents satisfied the anticipatory repudiation doctrine.
- Buyers need only demonstrate readiness and ability to perform; protective notices issued during earlier extension negotiations do not negate later readiness to close.
- Specific performance is available for real estate contracts when the contract is valid and enforceable through ratification, curing initial execution defects.
Why It Matters
This decision clarifies the enforceability of electronically signed real estate contracts when authorization is irregular but later adopted by an informed principal. It is particularly important for transactions involving foreign nationals and FIRPTA withholding obligations, as it prevents sellers from using tax disputes as a basis to escape valid contractual commitments they ratified. The ruling establishes that parties cannot retrofit objections to contract terms they knew about and accepted; buyers need not forfeit specific performance remedies simply because sellers later refuse to cooperate with closing mechanics.
The decision also reinforces that broker liability shields under TREBLA are not absolute protections for unauthorized conduct; when a principal learns of and ratifies an agent’s unauthorized act, common law doctrines—particularly ratification—remain available. Courts will not require futile formalities when one party has already prevented performance, applying anticipatory repudiation to excuse strict compliance with tender requirements.