Busted Land Transaction Violated the Statute of Frauds

Co-author Max Brown

In the Estate of Terry Banta presents yet another purported Texas land transaction doomed because of disregard for the Statute of Frauds. Terry Banta and the Herriotts entered into an oral agreement for the Herriotts to purchase a piece of property from Banta. In an unfortunate turn of events for everyone, Banta died before signing the written contract that would have memorialized the sale.  The Herriotts claimed to have made a down payment of $40,000 and regular monthly payments under the oral contract, paid ad valorem taxes, carried homeowners’ insurance while residing there, and made a number of repairs and improvements. (Discuss among yourselves: Why did they do this without a written contract?)

The administrator of Banta’s estate filed an application to sell the property. The Herriotts’ claim to the property was rejected by the administrator, who contended that the oral contract violated the SOF and was therefore unenforceable. The Herriotts cited the the “partial performance” exception to the SOF.  But the Herriotts failed to offer into evidence any exhibits supporting partial performance.  The trial court denied the Herriotts’ claim for a variety of reasons, one of which was their failure to satisfy the SOF, and granted the administrator’s application to sell the property.

On appeal the Herriotts challenged the legal and factual sufficiency of the evidence supporting the trial court’s adverse finding. After analyzing whether it had jurisdiction to review the claims (Appellate nerds: If jurisdiction is your thing, read the opinion), the court reviewed the ruling for an abuse of discretion and affirmed the trial court’s order.

What about the partial performance exception?

It was undisputed that the SOF applied because there was no written agreement evidencing the transaction.  The partial performance exception “requires more than just one party’s performance of some obligation under the alleged oral contract.”

The exception applies only when the following three factors are present:

• payment of the consideration, whether in money or services;
• possession by the vendee; and
• making by the vendee of valuable and permanent improvements upon the land with the consent of the vendor—or, without such improvements, the presence of such facts as would make the transaction a fraud upon the purchaser if it were not enforced.

The Herriotts relied on a letter sent to the administrator (not in evidence), their own pleadings, affidavits and documents attached to their pleadings, and counsel’s arguments at the hearing.  However, none of these things are admissible evidence.  Because the record contained no proof substantiating the Herriotts’ assertions concerning the payments and improvements, they offered no evidence to carry their burden on the exception.

Moreover, the court held that even if the evidence had been entered, the Herriotts may not have met their burden.  The purported evidence showed that their occupancy of the property and payment of nearly $600/month to Banta and his wife was just as consistent with a lease as with a purchase.  Even the alleged down payment, though it be in full, is, by itself, not sufficient.  The repairs and improvements did not necessarily constitute conclusive proof of the kind warranting the partial performance exception.  The judgment was affirmed.  The trial court did not abuse its discretion.

Your musical interlude. Apologies to Elvis for missing the anniversary of his passing. You can’t imagine any better leader of the Heavenly choir that greeted Mr. Banta at the pearly gates … the $40K, the rent and the land in tow.

from Texas Bar Today https://ift.tt/kfP2Zch
via Abogado Aly Website