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Real Estate Transactions
University of San Diego School of Law
Horning, Duane S.

Real Estate Transactions Horning Fall 2017

Statute of Frauds

California has four Statute of Frauds

If the contract is in writing, there is less likely to be a dispute later

Cal. Civ. Code §1624(a)

“Party to be charged”: party action is being brought against
Contracts are voidable/unenforceable
Subscribed = signed
(3) leasing for a longer period than one year

e.g. Commencing: August 21, 2017; terminating: August 21, 2018

This does need to be in writing
One year and one day
01/01/2017 – 12/31/2017 = one year period
One year ends on the day before the anniversary

Equal dignities rule: can be signed by an agent if the agent’s authority is also in writing

(4) agreement authorizing or employing an agent, broker

Considered an absolute statute of frauds

Promissory estoppel does not apply

Cal. Civ. Code §1624(d)

Electronic message is sufficient unless it is of an ephemeral nature (i.e. disappears)
Text message/instant message insufficient unless you have a written confirmation

Cal. Civ. Code §1624(b)(3)(B)

If someone sends a text, send a confirmation email no later than five business days

Cal. Civ. Code §1698

A modification must also be in writing if it is within the provisions of §1624

Cal. Civ. Code §1091

An estate in real property (an estate that involves possession, e.g. fee simple, life estate, etc.)
Can only be transferred by operation of law (e.g. probate)

Cal. Civ. Code §1971

Redundant

Covers:

Contracts for the sale of interests in real property
Leases for greater than one year
Deeds

Exceptions:

Signature need not be full name
Signature need not be handwritten

Stamped, typed
Key is intent
Can be electronic

Signature does not need to be on all the documents

Can be piecemeal
But problem with vagueness; construing

Signature need not be by the principle – can be by Agent

Equal dignities rule
Agency relationship needs to be in writing
Agent, by the nature of the agency, has discretion, has authority

Signature need not be by the principle – can be an amanuensis (e.g. secretary, administrative assistant)

Signature in a ministerial capacity is sufficient
This relationship does not need to be in writing
Amanuensis has no discretion
No judgment – for convenience

Partial performance

Payment of purchase price not enough

But see promissory estoppel
Possession or improvements may be enough

Promissory estoppel/detrimental reliance

Promisee agrees to something to their detriment

Wilk v. Vencill:

Husband signed, the wife did not
Wife orally said she would sell the house
Buyer gave up the opportunity to buy another property that was like this property in price
Buyer made improvements on the land – going to sell the house to someone else for $9,000
The husband’s signature, combined with everything else, was enough

Promissory Estoppel has four elements:

Promise
Reliance
Reasonableness of the reliance
Damages

**Promissory estoppel does not work for real estate brokers

Bed, Bath & Beyond of La Jolla v. La Jolla Village Square:

Signed by BBB but never signed by La Jolla Village Square
Building not built yet
Interference with existing contract relationship

E.g. sports team offers to pay a coach more – encourages him to break his contract with another team
There must be an independently wrongful conduct

Interference with perspective economic advantage

More speculative – potential
Likes competition

Granadino v. Wells Fargo:

C

d in another document, this letter is still binding”

Form 4:G (Nonbinding Letter of Intent):

Absent the express terms that say it is nonbinding, everything else is there to make letter binding

The 3 Ps:

Parties
Property
Price

Agreement to Agree:

Not enforceable
Missing essential term

Agreement to Negotiate:

Pitfalls and how to avoid them
What terms make them work
Why have them in the first place
Exclusive Negotiation Agreements
Potential for interference claims
Damages

Parties have no obligation to negotiate, even if they have already been negotiating, no obligation to keep negotiating absent an express agreement to keep negotiating

Contract covenant: Implied covenant of good faith and fair dealing

No party will do anything to prevent the other party from obtaining the benefits of the agreement
Just as an express covenant can be breached, an implied covenant can be breached as well
Exists in every contract, but ONLY in contracts

If the parties are negotiating but have not yet formed a contract, there is no implied covenant

There are circumstances where the parties are bound to negotiate:

Contract
Reliance

Rennick v. O.P.T.I.O.N. Care:

Court relied heavily on the document that said there would be further board approval

Fivepage single spaced agenda
Agreement to agree without more is not enough

What are they agreeing on?