GET IT IN WRITING: THE STATUTE OF FRAUDS

Under the Statute of Frauds, most contracts relating to real estate are not enforceable unless in writing.  California Civil Code Section 1624; California Code of Civil Procedure Section 1971.  The law is called the “Statute of Frauds,” because when an agreement is not put into writing, the parties to it are tempted to lie about the terms of their agreement, if there is a later dispute.

While it is best to have formal, written contracts, an informal written document can be enough for the Statute of Frauds.  To be enforceable, the writing must identify the parties, the subject matter, and state the essential terms of the agreement.   In real estate deals, this generally means that the property must be identified, the purchase price stated and terms of payment set out.  If the basic terms of a deal are written on the back of an envelope, or on a cocktail napkin, and the parties sign it, the courts may find that enough for the Statute of Frauds.

Are e-mails a “writing” for purposes of the Statute of Frauds?  The early cases suggest that courts may consider e-mails to be “writings” if they have enough detail and if they come from the party who is denying the contract.  As a practical matter, if you write e-mails you should assume that the other side will keep them, and that they will be regarded as “writings.”  On the other hand, if you have reached an agreement, by exchange of e-mails, and want to be sure that it is enforceable, it is most prudent to print out a hard copy, and have all parties sign it.

The purpose of requiring that agreements be in writing is to prevent fraud.  The courts of California are fairly liberal in finding exceptions to the statute, where insisting upon the letter of the law would do an injustice.  The practical rule of thumb is that, when you are doing a real estate transaction, it is foolish not to insist upon a written agreement, clearly drafted and signed by both sides.  If, however, you have completed a transaction, and for some reason you do not have a written agreement, do not despair; there is a good chance that one or more of the exceptions to the rule may apply to your situation.  In this latter situation, consult an attorney.

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