Fri, October 30th, 2009
Statute of Frauds and Real Estate Improvements
As I mentioned in my last post, there are exceptions to the Statute of Frauds.
California Civil Code Section 1624 provides a list of contracts which must be in writing to be enforceable. Subsection (d) of that section states the following as included in that list: “An agreement for the leasing for a longer period than one year, or for the sale of real property, or of an interest therein; such an agreement, if made by an agent of the party sought to be charged, is invalid, unless the authority of the agent is in writing, subscribed by the party sought to be charged.”
This subsection is well-known for requiring real estate contracts to be in writing. What it does not require, however, is that every contract which involves real estate, in any manner, to be in writing. Take the 1961 California Supreme Court case of Pollyanna Homes, Inc. v. Berney, 56 Cal.2d 676, where the court held that a contract for the installation of off-site improvements adjacent to real property that was also being purchased, did not come within the statute of frauds, since it was not for the sale or leasing of real estate, and it was not to be performed within one year.
In that case, there was a related obligation for the purchase and sale of property, which in my opinion made it a close call for the court. However, the rule is often strictly interpreted when it comes to real estate. Keep in mind that in most cases where there is a written, long-term lease of real estate, which is often the case in commercial as well as residential lease arrangements, the statute of frauds may come into play under Section 1624.
Posted by Nick Yonano at 04:13
Labels: Uncategorized, real estate
