Statute of Frauds

Key Takeaways

• The statute of frauds makes certain agreements unenforceable in court unless they are in a writing signed by the party being sued on the promise.
• An oral agreement to sell land is not illegal, it is unenforceable, which means a court will not order either side to go through with it.
• In Washington, the writing requirement for transferring real property comes from RCW 64.04.010 and RCW 64.04.020, and not from the general statute of frauds list in RCW 19.36.010.
• In Washington, an agreement authorizing or employing an agent or broker to sell or purchase real estate for compensation must be in writing under RCW 19.36.010.

What It Means

The statute of frauds is a rule that certain promises cannot be enforced in court unless they are captured in a signed writing. It is a defense, not a criminal statute. If two neighbors shake hands on the sale of a lot and one of them backs out, the deal is not illegal, it is simply unenforceable, and a judge will not order the sale to go through.

The categories are narrow and old. They cover agreements that cannot be performed within one year, promises to answer for another person's debt, promises made in consideration of marriage, promises by an executor to pay estate debts out of personal funds, and agreements that pay an agent or broker for selling or buying real estate. Transfers of the land itself sit in a separate body of law that produces the same result.

The signature that matters belongs to the person being sued, whom the statute calls the party to be charged. A buyer who signed can therefore be held to a deal by a seller who never signed it. Courts also recognize Part Performance, where conduct such as taking possession, paying, and improving the property can rescue an unwritten land agreement.

How It Works in Washington

In Washington, the general statute of frauds is RCW 19.36.010, and what is missing from its list matters as much as what is on it. The five categories are promises that cannot be performed within a year, promises to answer for another's debt, promises in consideration of marriage, executor promises, and an agreement authorizing or employing an agent or broker to sell or purchase real estate for compensation or a commission. A plain contract to sell land is not one of the five.

The writing requirement for the land comes from Title 64 instead. RCW 64.04.010 says every conveyance of real estate, or any interest in it, and every contract creating or evidencing an encumbrance on real estate must be by deed, and RCW 64.04.020 says every deed must be in writing, signed by the party bound by it, and acknowledged before an authorized officer. Together those sections are why a Washington Purchase And Sale Agreement is written, signed, and carries a full Legal Description rather than a street address. The consequence for brokers sits back in RCW 19.36.010: an unwritten Listing Agreement will not support a commission claim.

Example

Ellen owns 20 acres outside Ellensburg. Over coffee she tells her neighbor Ray she will sell him the back five acres for $95,000, and they shake on it. Ray writes her a $5,000 check that she cashes. Nothing is put in writing. Two months later a developer offers Ellen $160,000 for the same five acres, and she mails Ray his $5,000 back.

Ray sues to force the sale and loses. There is no writing signed by Ellen, the party to be charged, and RCW 64.04.010 requires a conveyance of an interest in real estate to be by deed, which RCW 64.04.020 requires to be written and signed. His $5,000 was returned, so he has no out of pocket loss to claim either. Change the facts so that Ray moved onto the parcel, cleared the brush, and put in a well and a fence while Ellen watched, and he has a part performance argument that his conduct makes sense only if a sale was agreed. The working lesson for a broker is shorter: get it on the form and get it signed the same day.

Common Mistakes and Exam Traps

• An oral real estate contract is unenforceable rather than void, so a party who wants to honor it may still perform voluntarily and the completed sale stands.
• The signature the statute of frauds requires is that of the party being sued, so a one sided signing can still bind the person who signed it.
• Part performance is a recognized exception that can save an unwritten land agreement, so an answer stating that no oral land deal is ever enforced is wrong.
• In Washington the RCW 19.36.010 list does not include contracts to sell land; the writing requirement for land comes from RCW 64.04.010 and RCW 64.04.020.