As we posted here previously, the first home Elvis Presley ever owned was up for sale on eBay. A couple of weeks ago, psychic Uri Geller and his business partners won the auction. Or, at least he thought he did. Now, Reuters reports that although Mr. Geller won the auction, he didn’t get the home.
The sellers did not close with Mr. Geller and instead sold to a foundation set up by Mike Curb, a music producer. An eBay spokesperson points out that real estate auctions on eBay are not binding contracts, but rather marketing vehicles to generate interest in real property sales. eBay’s real estate rules and policies confirm that real estate auctions on eBay are intended as nonbinding, but serious expressions of interest. When an auction is “won,” the winning bidder and the seller are to proceed in good faith to conclude the transaction.
Real estate law has many documentation requirements for completing a sale of real property. Each U.S. state has a statute of frauds, which requires that contracts for the sale of land be in writing. Generally state law will require notarization and/or witness signatures as well. A primary motivator for these requirements, dating back to the original statute of frauds in England in 1677, is to make sure buyer and seller really mean to conclude the transaction. The formal written document can be seen as a ritual that ensures all parties understand that this is a serious transaction with significant real-world consequences.
Innovations like eBay are creating new rituals where people assume they are concluding a transaction online. A number of companies, including DocuSign, VREO, and LSI are creating more sophisticated electronic closing systems that enable much (but not yet all) of a typical house purchase to be managed online. Until then, a house does not belong to you till you get all the signatures on all those pieces of paper (and file with the county land record!).