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

THE STATUTE OF FRAUDS
RULE: A binding, enforceable agreement for the sale of real property must be stated in a signed writing sufficient to satisfy the statute of frauds (SOF)
A.     General:
1.      Application: to all agreements for the sale of property, even for a settlement agreement, that are longer than a year
a)      An oral agreement within the SOF is NOT invalid; rather it is simply voidable at the election of a party
b)      The SOF is a defense to an action to enforce the K and is waived if it is not timely raised in litigation
2.      Purpose: to prevent fraud and perjury
B.     California’s Statutes of Frauds:
1.      CCP §1624(a)
a)      The following Contracts are INVALID unless they are in writing:
(1)   leasing for a period longer than one year
(2)   for the sale of property
(3)   if made by an agent, then the authority of the agent must be in writing
(4)   an estate in property
(5)   options to purchase
(6)   assumption of a mortgage
(7)   commission agreements (not in statute but need to be in writing!)
2.      CCP§1091:
a)      Estate in real property, or estate not exceeding one year, can be transferred ONLY by operation of law or by an instruction in writing, subscribed by the party disposing of the same or by his agent thereunto authorized by writing
3.      CCP § 1971
a)      No estate or interest in real property, other than a lease for less than year, can be made other than by an operation of law, can be created without a writing.
C.     Exceptions/Limitations
1.      does not require full name
a)      signature may be typed, lithographed, rubber stamp or printed
(1)   it is sufficient that the party to be charged intended there to be an execution
(2)   e-mail or electronic signature are sufficient
(3)   the signature requirement is satisfied so long as the party to be charged signs the writing (all parties to the K are not technically required to sign)
(a)    the party to be charged does not mean the buyer or seller but the person charged in court with performance of the obligation.
2.      detrimental reliance (estoppel)
a)      a party may be stopped from raising the SOF where unconscionable injury would result from denying enforcement of the oral K after one party has been induced by the other seriously to change his position in reliance on the K or where there would be unjust enrichment.
b)      Requirement the other party be aware
3.      part performance
a)      payment of money does not count as part performance
b)      the part performance must consist of acts that unequivocally refer to the K or clearly relate to its terms
(1)   making improvements or taking possession is sufficient
c)      the theory behind the part performance exception to the SOF is that such performance would not have been taken absent a binding K and hence is sufficient to evidence the K.
4.      Judicial Decree
a)      A judge will appoint someone to sign the writing if the losing party refuses to sign the document
5.      Settlements
a)      Can be made binding if they are in the presence of a judge and before the court reporter
6.      Amanuensis [4:269.7](4-63)
a)      Someone signing the principal’s name in a administrative or clerical capacity at the principal’s request
(1)   Oral request is valid
(2)   An amanuensis does not have to sign the document in the presence of the principal
7.      Equal Dignities Rule:
a)      if someone is going to act as an agent, it is ineffective unless there is a writing appointing them by the person to be charged
8.      Signature need not be on all the documents
a)      Piecemeal writings are okay so long as the documents indicate that they are related to the same transaction.
D.     Bed, Bath & Beyond of La Jolla v. La Jolla Village Square Ventures Partners, 1997 (statute of frauds case)
a)      For a contract covered by the Statute of Frauds to be enforceable the contract must be signed by the parties to be bound
(1)   An agreement to lease real property for a term exceeding one year is within the statute of frauds regardless of whether such agreement provides that it may canceled or terminated within one year of the date of its making and prior to the commencement of the lease term
(2)   A cause of action for intentional interference with contractual relations requires an underlying contract
(a)    If there is no underlying contract there may only be claimed for intentional interference with prospective economic advantage
(i)     Don’t need a contract but requires something affirmatively wrongful: fraud, anti-trust, deceit (something more than just competition)
 
CONTRACT FORMATION & LETTERS OF INTENT
I.          Contract Formation:
                                                              i.      Offer
                                                            ii.      Absolute Acceptance (meeting of the minds)
1.      The offer’s terms must be met absolutely, precisely, and unequivocally
2.      a qualified acceptance that purports to accept on new or different terms is simply a counter offer. The original offer cannot be accepted unless reoffered.
                                                          iii.      NOTE: practice pointer: when a K is finally accepted, good idea to execute a single document that incorporates all the agreed upon terms (“four corners” rule)
                                                          iv.      If a K requires a signature, no signature means no acceptance. No particular signing method is required
a.  Essential Terms
                                                            v.      the writing will be enforceable ONLY IF it contains all the necessary and material terms of the parties agreement
1.      Subject matter: must reasonably identify the subject matter of the K
2.      Contractual Intent: must indicate that a K has been made between the parties
a.       contractual intent
3.      Certainty of Terms: must state with reasonable certainty the essential terms of the unperformed promises in the K
                                                          vi.      The essential terms depend principally on the circumstances of the agreement. Minimum elements that need to be fulfilled
1.      The identity of the PARTIES:
a.       Agent can sign without disclosing the principal.
2.      A sufficient description of the PROPERTY:
a.       Parol evidence will ordinarily be admissible to show what property the parties intended to convey and the K will be deemed adequate if the K describes something which is certain or provides a means of identifying the property. 
b.      However, the SOF is NOT satisfied if the property can be identified only be reference to the parol evidence
3.      The purchase PRICE, and the time, terms, and manner of payment. 
a.       As long as the price may be objectively determined from the written agreement, parol evidence can be admitted. 
                                                                                                                                      i.      i.e. I will pay $1,000 more than your highest offer
4.      the time of payment is considered essential but no K will be disqualified for want of the term. If the K says nothing, a reasonable time will be implied.
b.      Oral Agreement
                                                              i.      an oral agreement might include an anticipation that it will later be reduced to writing
                                                            ii.      if you have a binding oral agreement where the parties intend to later reduce it to writing but they don’t; it doesn’t change the fact that there is an agreement
                                                          iii.      Analysis
1.      Do we have an oral agreement?
a.       Matter of evidence (difficult because the fact it is oral)
2.      If there is an oral agreement, is it covered by the SOF?
a.       If the agreement falls w/in SOF, not enforceable w/o a writing
3.      Is there an agreement to reduce to writing?
4.      Is there some written document somewhere?
a.       Are you going to rely on the writing as the contract or are you going to rely on the oral agreement as the contract
                                                                                                                                      i.      If you go with the writing the question becomes: is the writing binding?
1.      If it is binding, you need to determine whether it has all the essential terms: parties, property and price
c.       Parole Evidence:
                                                              i.      General: can be used to clarify or interpret an ambiguous term but not to supply an entirely omitted

                                              i.      Can be mutual or unilateral
                                                                                                                                    ii.      Other party negotiating with someone else à breach
c.       Terms/points to be negotiated
d.      Integration clause
                                                                                                                                      i.      “this supersedes all other drafts” à ‘four corners,’ bans parole/extrinsic evidence unless there is an ambiguity in the document
e.       Choice of law
f.       How many times to negotiate
                                                          iii.      Copeland v. Baskin Robbins
1.      Holding: You can sue and recover for a breach of an agreement to negotiate
a.       only reliance damages (missed opportunity, attorneys’ fees, etc.) can be recovered. A party is only liable if the failure to reach the ultimate agreement resulted from a breach of that party’s obligation to negotiate or to negotiate in good faith.
2.      RULES:
a.      Failure to agree is not itself a breach of K to negotiate. A party will be liable ONLY IF a failure to reach ultimate agreement resulted from a breach of that party’s obligation to negotiate or to negotiate in good faith.
c.       Implied Covenant of Good Faith and Fair Dealing
                                                              i.      RULE: every K has an implied covenant of Good Faith and Fair Dealings
1.      Covenant is non-negotiable between parties
2.      Implied only to supplement the express contractual terms
                                                            ii.      Define: that neither party will do anything to deprive the other of entering/dealing into a K (of the benefit of his or her bargain)
                                                          iii.      Problem: it is subjective and thus difficult to tell if being breached
                                                          iv.      There is no good faith duty to enter into a modified contract.
a.       The covenant of good faith and fair dealing does not apply to contract negotiations.
b.      Absent a contract there is no duty unless there is an underlying agreement to negotiate. They implied covenant is limited to assuring compliance of express terms of the contract and cannot be extended to create obligations not contemplated in the contract.
c.       Covenant cannot be used to prohibit party from doing what is expressly permitted by agreement
                                                            v.      Rennick v.OPTION, 1996 (letter of intent)
1.      Holding: No contract was made. The agenda of the meeting was that the letter was to be nonbinding and the letter of intent itself said nonbinding showed that no contract had been formed despite the parties’ handshake.
a.       A letter of intent is not a contract unless the parties intended it to be so
b.      A handshake may or may not mean an agreement à it is customary to shake hands and rude not to. For it to be binding the parties would have to intend it to be so
 
TITLE, DEEDS & THE RECORDING SYSTEM
INTERESTS, CONVEYANCES & TITLE
I.       INTRO: 
A.     TITLE is the right to determine possession, use, disposition of property and are subject to government and private regulations (easements, CC&R’s, land use restrictions)
a)      Title is an intangible abstract concept.