The Statute of Frauds was originally enacted in England in 1677 to prevent fraud and perjury in important transactions. For real estate, the statute requires that purchase agreements, deeds, mortgages, leases longer than one year, and listing agreements be in writing. An oral agreement to sell real property is generally unenforceable, even if both parties agree to the terms. The writing must identify the parties, describe the property, state the consideration, and be signed by the party against whom enforcement is sought.
A seller verbally agrees to sell a vacant lot to a neighbor for $50,000, and they shake hands on the deal. When the seller later refuses to sell, the neighbor cannot enforce the agreement in court because it violates the Statute of Frauds — there is no written contract.
This is one of the most heavily tested contract topics on the exam. Remember that leases for one year or less do NOT need to be in writing. An oral real estate sales contract is not void — it is voidable and unenforceable.
Related Terms
Related Concepts
A purchase agreement is a legally binding contract between a buyer and seller that outlines the terms and conditions for the sale of real property. It is also commonly called a sales contract, purchase and sale agreement, or earnest money agreement.
Offer and acceptance is the process by which one party proposes specific terms for a contract and the other party agrees to those exact terms, creating mutual assent. This mutual agreement, also called a meeting of the minds, is an essential element of every valid contract.
A counteroffer is a response to an original offer that changes one or more terms of the offer, effectively rejecting the original offer and creating a new offer. The party who makes the counteroffer becomes the new offeror.
Consideration is something of value exchanged between parties to a contract, making the agreement legally binding. It can be money, a promise to act, a promise to refrain from acting, or anything else of value.
Earnest money is a deposit made by the buyer at the time of the offer or shortly after to demonstrate good faith and serious intent to purchase the property. It is also called a good faith deposit.
Frequently Asked Questions
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