Do Real Estate Related Contracts Need to Be In Writing?
In California, the majority of real estate transactions will involve contracts that must be compliant with the Statute of Frauds to be enforceable. This is a legal doctrine which mandates that certain types of contracts must be in writing to be legally enforceable. Now codified as California Civil Code §1624, the law articulates that some contracts are invalid unless the terms are in written document. Specific scenarios are outlined below.
What Real Estate Contracts Must Be in Writing
Under California Civil Code §1624, several real estate-related agreements fall under the Statute of Frauds. These include:
Leases for a period longer than one year (see Civ. Code § 1624(a)(4));
Contracts for the sale of real property or any interest therein (see Civ. Code § 1624(a)(3));
Mortgages (see Civ. Code § 1624(a)(6));
Broker or agent agreements for the payment of commission (see Civ. Code § 1624(a)(4)).
Designed to reduce fraud, ensure clarity, and provide a reliable record of contractual terms, particularly in complex or high-value transactions such as those involving real estate, the Statute of Frauds has translated into precise requirements under the review of the courts.
For example, when forming a contract for “employment of a broker to sell real estate, [it] must be in writing.” McRae v. Ross (1915) 170 Cal. 74, 77. Similarly, in contracts where land is being transferred or leased, the California Court has found that the writing “must so describe the land that it can be identified with reasonable certainty.’ Also the description fulfills the test if ‘it furnishes the ‘means or key’ by which the description may be made certain…” Kingston v. Colburn (1956) 139 Cal.App.2d 623, 624.
Civil Code § 1624 also requires that an enforceable sale of real property agreement in “writing must contain the essential elements of the agreement.” That can be construed in many ways and the Court has vaguely provided that: “What is essential depends on the circumstances of the agreement, including the agreement and its context, the subsequent conduct of the parties, and the remedy sought.” House of Prayer v. Evangelical Assn. for India (2003) 113 Cal.App.4th 48, 53.
Why Statute of Frauds Compliance Matters
Real estate is a valuable asset, which exposes investors, homeowners, brokers, and all involved parties to a high risk of liability if the contract is non-enforceable. When disputes inevitably arise, the risk of having an unwritten or non-enforceable agreement can lead to costly litigation and jeopardized deals.
At Blake Law Firm, our attorneys handle real estate contracts every day and understand how to draft, review, and negotiate agreements that comply with California law. Whether you're buying, selling, leasing, or engaging an agent or broker, we can help protect your interests and ensure your contracts meet all legal requirements. Contact our real estate attorneys to help you ensure that your real estate transactions are secure, compliant, and enforceable.