Exception to Statute of Frauds Validates Oral Contract for Sale of Property

Using the equitable partial performance exception to the statue of frauds, the Dallas Court of Appeals has upheld an oral contract for transfer of real property. In Beard v. Anderson, Cause No. 05-14-00396-CV (Tex. App.— Dallas June 19, 2015), the Court heard a dispute between family members regarding 2.89 acres of real property in Kaufman County, Texas. Plaintiff, Defendants’ aunt, sued Defendants seeking specific performance or, in the alternative, damages associated with transfer of the property. According to Plaintiff, the parties came to an agreement in 2010 to transfer the property from Defendants to Plaintiff, but never signed any documents memorializing the transaction. Plaintiff began living in her RV on the property, spent money to improve the property, and continued to attempt to negotiate a written agreement for transfer of the property. After communications between Plaintiff and Defendants ceased, Defendants served Plaintiff with a notice to vacate the premises. Plaintiff subsequently filed suit.

The statute of frauds requires a contract for sale of real estate to be in writing and signed by the person to be charged. Under the equitable partial performance exception, however, an oral agreement that does not satisfy the statue of frauds, but has been partially performed, may be enforced if denying enforcement would itself amount to fraud. Under this exception, an oral contract for purchase of real property is enforceable if the purchaser pays the consideration, takes possession of the property, and makes permanent and valuable improvements on the property with the consent of the seller or, without such improvements, other facts are shown that would make the transaction a fraud on the purchaser if the oral contract were not enforced. Courts recognize this exception because it would provide sufficient evidence of an agreement and affirmative corroboration by both parties to the agreement.

Plaintiff paid to have a concrete pad installed and then moved her RV onto the pad, which is where she lived while making improvements to the structure. In reliance on the oral contract, Plaintiff made improvements to the septic system of the property and other valuable improvements to the property. The contract that the parties had been negotiating, but could never agree upon, contained a legal description of the property that adequately described the property to be transferred. These facts, taking together, allowed the transfer of the real property to fall within the exception to the statue to frauds and constitute an enforceable contract for the sale of real estate.