Classified technology escrow
Oral Promises During Escrow
People often groan when legal issues are raised during the sale of a home. Legal issues are complex and we are assumed to understand them all. Still, there are some issues that you should know because they protect you.
The majority of real estate transactions go smoothly. If things happen, it is usually during escrow when a problem is discovered. Here is where problems begin. The parties orally agree on a fix, but later argue over the terms of their agreement.
One of the things we are taught early on in life is that we have to keep our word. If you went to Catholic school, this lesson was often enforced with a whack on the knuckles!
This is a noble and honorable thought, but it does not mean much in the real world of real estate transactions. That is pretty sad, but there is a public policy against the enforcement of oral promises. Why? They are nearly impossible to prove in court.
You put your cabin on the market and get a good offer. During inspections, termites are discovered. You and the buyer agree to have them dealt with. You shake on it, but nobody puts anything in writing.
As the days of escrow tick off, the buyer serves me with a $45,000 demand for the fix. I am outraged because I think it should only cost $8,000. We cannot agree on a middle point, the deal fails and into court we go to resolve our differences.
During trial, a funny thing happens. Both of us give our side of the story, but neither has any hard evidence to show we are right. Given this fact, how is a jury supposed to figure out the party that is correct?
It is going to be difficult. At best, the court or a jury is going to pick the party they believe or has the best lawyer. While this will resolve the dispute, it has no bearing on what actually happened and is hardly a just decision.
No state wants to deal with these types of cases, so all have passed a law called the statute of frauds. This law says any oral promise with a value of more than a certain amount is simply void as a matter of law. The dollar figure used ranges from $500 to $1,000.
So, how does this impact you? Well, you have to realize that anything that is promised to you during a real estate deal is worthless unless it is in writing. If it is in writing and signed by the other party, it is enforceable.
What if the other party refuses to put a promise in writing? It means only one thing. They have no intention of following through. This should be a huge warning sign to you. In most situations, you should walk away from the deal.
Hal James is with FSBOAmerica.org - your source for FSBO real estate.