STATUTE OF FRAUDS APPLIES TO SALE OF REAL PROPERTY

In law school, one of the first legal doctrines we learn is known as the “statute of frauds.”   The statute of frauds is essentially a defense to a contract enforcement action claiming the contract is unenforceable due to the statute of frauds.  In other words, this doctrine is raised when one party seeks to enforce a contract.  The other party argues, “not so fast,” because the contract is NOT enforceable in light of the statute of frauds.

Common scenarios where the statute of frauds comes into play are with transactions involving real property or agreements where services are not to be performed within one year.

The statue of frauds doctrine is contained in Florida Statute s. 725.01:

No action shall be brought whereby to charge any executor or administrator upon any special promise to answer or pay any debt or damages out of her or his own estate, or whereby to charge the defendant upon any special promise to answer for the debt, default or miscarriage of another person or to charge any person upon any agreement made upon consideration of marriage, or upon any contract for the sale of lands, tenements or hereditaments, or of any uncertain interest in or concerning them, or for any lease thereof for a period longer than 1 year, or upon any agreement that is not to be performed within the space of 1 year from the making thereof, or whereby to charge any health care provider upon any guarantee, warranty, or assurance as to the results of any medical, surgical, or diagnostic procedure performed by any physician licensed under chapter 458, osteopathic physician licensed under chapter 459, chiropractic physician licensed under chapter 460, podiatric physician licensed under chapter 461, or dentist licensed under chapter 466, unless the agreement or promise upon which such action shall be brought, or some note or memorandum thereof shall be in writing and signed by the party to be charged therewith or by some other person by her or him thereunto lawfully authorized.

In Walsh v. Kimberly Abate, Successor Trustee of the 3388 Barrow Island Trust, 47 Fla.L.Weekly D702c (Fla. 4th DCA 2022), the underlined aspect of the statute of fraud was at-issue involving the sale of real property.   Here, a buyer, through an agent, made a written offer to purchase a home for $3.1 Million.  The seller, through an agent, e-mailed the buyer’s agent that the seller would only accept $3.4 Million.  The buyer’s agent responded to the e-mail that the buyer will pay the $3.4 Million with other terms in the written offer remaining the same.  The seller’s agent sent a text to the buyer’s agent that the $3.4 Million was accepted, and the buyer’s agent responded with a confirmatory text.  Days later, the seller apparently had a change of heart.  The seller’s agent notified the buyer’s agent that the property was being sold to a third party.

The buyer then sued the seller for specific performance to force the sale of the property to the buyer.   The seller moved to dismiss the complaint.  The trial court granted the motion, which was affirmed on appeal.

While e-mails and text exchanges between the real estate agents made clear there was an agreement, here lies the problem…the statute of frauds.  When it comes to the sale of real property:

The statute of frauds requires that (1) “the contract must be a writing signed by the party against whom enforcement is sought,” and (2) “the writing must contain all of the essential terms of the sale and these terms may not be explained by resort to parol evidence.”  Additionally, the statute of frauds “should be strictly construed to prevent the fraud it was designed to correct.” 

Walsh, supra (citations omitted).

The seller, in this case, NEVER signed a contract.  The seller never sent back the written offer with a signed counter-offer at the $3.4 Million, irrespective of the e-mails and texts.  On this point, the appellate court noted:

[T]he record reflects an initial offer signed by [buyer] and thereafter only unsigned text messages and emails exchanged between the buyer’s and sellers’ agents. Significantly, the offer of purchase itself contemplated a signed written agreement as it stated that the effective date of the agreement would be “the date when the last one of the Buyer and Seller has signed or initialed and delivered this offer or final counter-offer.” Dispositively, the sellers did not sign the initial contract, and neither party signed the modification of price and closing date.”

Walsh, supra.

When it comes to transactions involving real property, there is a reason why signed written offers are transmitted, and signed written counter-offers are exchanged.  This is why – the statute of frauds.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.s

 

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