Print Article

This article addresses the requirement that contracts for the sale of Texas real property be in writing, a requirement called the "Statute of Frauds." Most people are aware that they should have a written contract when real estate is to be bought or sold; the issue of whether or not a signed writing must exist most often arises in connection with modifications, amendments, and extensions to a contract. For instance, lawyers are often asked if an oral agreement (for example) to add 30 days to a contractually-designated closing date is binding. Generally, the answer is no, but there are exceptions.

The Statute of Frauds is found in the Texas Business & Commerce Code:

(a) A promise or agreement described in Subsection (b) of this section is not enforceable unless the promise or agreement, or a memorandum of it, is

(b) Subsection (a) of this section applies to:

Sec. 26.02(b) is also relevant to real estate: "A loan agreement in which the amount involved in the loan agreement exceeds $50,000 in value is not enforceable unless the agreement is in writing and signed by the party to be bound or by that party´s authorized representative." This requirement is particularly important today as many homeowners who are seeking loan modifications find themselves unwittingly foreclosed upon – despite an alleged "oral agreement." These unfortunate homeowners likely have no recourse unless a written agreement signed by both borrower and lender was in existence at the time of the foreclosure.

Additional Statute of Frauds provisions are found in Sec. 2.201, but these apply to the sale of goods, not real estate.

The statutory provisions cited above comprise the general rule. However, a discussion of the requirement of a signed written instrument for the purchase or sale of real property would not be complete without addressing the equitable exceptions. "Equity" is that branch of the law which provides relief in cases where strict application of a statute or common-law rule would result in unfairness or injustice. In the case of the Statute of Frauds, these exceptions apply:

Lawyers tend to encounter Statute of Frauds issues in two contexts: first, when a client inquires whether or not a certain oral agreement is legally enforceable; and second, in litigation when a plaintiff seeks to enforce an oral agreement and the Statute of Frauds must be raised as an affirmative defense. Note that if the Statute of Frauds is so raised, then the burden shifts back to the plaintiff to demonstrate how one of the exceptions would apply – a difficult task, inasmuch as these exceptions are narrowly construed.

An example of the strictness of the Statute of Frauds in Texas is found in a recent Fifth Circuit case where the court denied enforcement of a written contract merely because exhibits to the contract (describing oil and gas leases to be conveyed) had not been finalized. See Preston Exploration Company, L.P.; PEC Partnership; T.S.C. Oil & Gas, Inc.; and Frank Willis, III v. GSF, L.L.C. and Chesapeake Energy Corporation (5th Cir. 2012).

The Statute of Frauds is relevant in determining whether a contract adequately describes the real property to be conveyed. The description must be sufficient. Pick v. Bartel, 659 S.W.2d 636, 637 (Tex. 1983). And how is "sufficient" defined? A property description is sufficient if the writing furnishes within itself, or by reference to some other existing writing, the means or data by which the particular land to be conveyed may be identified with reasonable certainty. Wilson v. Fisher, 188 S.W.2d 150, 152 (Tex.1945). This is Texas' reasonable certainty standard.

What about situations where a contract makes references to other documents? Is that sufficient? Again, the courts are strict. Only in limited circumstances may extrinsic evidence be used and then "only for the purpose of identifying the [property] with reasonable certainty from the data in the [writing]." Pick v. Bartel, 659 S.W.2d at 637 (quoting Wilson, 188 S.W.2d at 152). "The written memorandum, however, need not be contained in one document." Padilla v. LaFrance, 907 S.W.2d 454, 460 (Tex. 1995) (citing Adams v. Abbott, 254 S.W.2d 78, 80 (Tex. 1952)). The Texas Supreme Court has repeatedly held that multiple writings pertaining to the same transaction will be construed as one contract. Owen v.Hendricks, 433 S.W.2d 164 (Tex. 1968); see also Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 840 (Tex. 2000).

"Get it in writing" is not just valid folk wisdom, it is Texas law when it comes to the purchase and sale of real property – subject to very limited exceptions. Even an informal scribbling on piece of scrap paper that is signed by the two parties can be adequate. Consult a lawyer who is a specialist in this area.