Dear Forms Committee: I represent a seller who has received a cash offer. The buyer has indicated in Section 5 that they will provide the verification of funds within 3 business days of the Effective Date. The seller is concerned about taking their property off the market and then having the buyer present a form of verification that is unacceptable to the seller. What types of verification would meet (or fail to meet) the objectively reasonable standard?

A legal definition of objectively reasonable would include the following sub-definitions: “Objective” means not influenced by personal feelings or opinions. “Reasonable” refers to being fair, appropriate, and prudent. Put together, “‘objectively reasonable” means determining what a fair and prudent person would do without the influence of personal feelings or bias.

Most people would accept, as reasonable, a copy of the buyer’s current bank statement with the account number redacted.  However, they may object to the same statement where the account holder’s name is also redacted, as this would not represent proof that this specific buyer is the holder of those funds.

Due to the possibility of fraud, many sellers would shy away from accepting a verification letter from a banker, even if printed on what appears to be the bank’s letterhead, without first being able to speak personally with that banker to verify the validity of the letter.  In speaking with the banker, the seller would want to use their own efforts to contact the bank and ask for the representative named as the signer of the verification letter rather than relying on any phone numbers or contact information included in the letter.

If the seller prefers to review the verification of funds prior to accepting the offer, the seller’s agent should contact the buyer’s agent and let them know the seller isn’t prepared to respond to the offer until they’ve received the verification.  Alternatively, the seller could provide a Seller’s Counteroffer to the buyer’s offer and in it specifically say that the offer is contingent upon the seller’s approval of the buyer’s verification of funds in the seller’s sole discretion, which would supersede the “objectively reasonable” language and allow the seller to disapprove for any reason (as long as the seller isn’t discriminating against a protected class).

All comments and responses from OREF or its staff, managers, and volunteers are non-legal opinions made for general purposes. Each Forms subscriber must rely solely upon their Principal broker or personal legal counsel for specific advice and instruction. You and your client should independently confirm that the Form(s) you use are legally suitable for the purposes intended and that they are current with respect to all laws and regulations.