Statute of Frauds

Loan modification agreements unenforceable unless in writing

/ Mortgages, Statute of Frauds, Title Issues

An appellate court in California has held that the state’s statute of frauds require loan modification agreements to be in writing to be enforceable. Reeder v. Specialized Loan Serv., LLC, 2020 WL 4345001 (Cal. Ct. App. 2020). This is an expected application of the statute of frauds but it does not mean that some courts, in other factual settings, might make exceptions if the lender engaged in fraud (made a false statement that induces reliance on the part of the borrower), or estoppel (a lender statement that the borrower reasonably relies on in changing their behavior), or that there might be a consumer protection claim for deceptive business practices if something short of fraud but nonetheless deceptive communications wind up hurting the borrower.

Statute of frauds does not prevent recognition of a resulting trust

/ Real Estate Transactions, Statute of Frauds

When one person pays for real property but title is transferred to another, some courts will create a resulting trust. The Massachusetts Appeals Court defined the doctrine this way: “A resulting trust is implied when a transfer of property is made to one person and the purchase price is paid by another; in such a case a trust results in favor of the person who furnished the consideration. Such implication is based on the natural presumption that, in the absence of anything to show the contrary, he who supplies the purchase price intends that the property bought shall inure to his own benefit and not that of another, and that the conveyance is taken in the name of another for some incidental reason. A resulting trust must arise, if at all, at the time of the execution of the deed. The statute of limitations for a resulting trust claim is …

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Part performance as exception to the statute of frauds

/ Leaseholds, Real Estate Transactions, Statute of Frauds, Title Issues

The Idaho Supreme Court reaffirmed the traditional rule that part performance of a real estate agreement can constitute an exception to the statute of frauds. If that is the case, a contract that would otherwise be unenforceable because it does not comply with the statutory writing formalities may be enforced nonetheless. Hoke v. NeYada, 387 P.3d 118 (Idaho 2016). The case involved a lease with an option to purchase. Because the “buyer” had already entered into possession of the property and needed only to make the required payments, the agreement was enforceable despite the fact that the land description was not sufficiently precise to satisfy the statute of frauds.

Fee simple absolute found despite language of “in trust” and “for the uses, purposes” of the YWCA

/ Estates and Future Interests, Real Estate Transactions, Statute of Frauds, Title Issues, Wills and Inheritance

In a standard application of traditional estates doctrine, the Massachusetts Appeals Court has found a fee simple absolute despite language in the grant to the YWCA stating that the property was given “in trust, nevertheless, for the uses, purposes and trusts aforesaid.” Young Women’s Christian Ass’n, Inc. of Boston, Inc. v. Young Women’s Christian Ass’n of Philadelphia, Inc., 90 Mass. App. Ct. 1119, 2016 WL 7162737 (Table) (Mass. 2016). Traditionally any language in a conveyance of a fee simple that explains the “purpose” of the transfer or the “use” to which it is to be put, is interpreted as precatory language that has no legal effect on the title that is conveyed. The interpretive principle of the “presumption against forfeitures” suggests that any retained future interest or right of control in the grantor must be created explicitly and unambiguously. Some courts interpret this language to create an implied trust, or a fee simple …

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Mortgage of joint tenancy interest does not encumber interests of joint tenants who do not join the deal

/ Estates and Future Interests, Mortgages, Real Estate Transactions, Statute of Frauds

In Bac Home Loans Servicing, L.P. v. Savankham, 2016 Mass. LCR LEXIS 86 (Mass. Land Ct. 2016), a mother gave a bank a mortgage on her joint tenancy interest in property she shared with her two children. The children did not know about or participate in the transaction. Apparently, the bank thought it was getting a mortgage on the whole property rather than just the joint tenancy interest of one joint tenant and sought to reform the documents to reflect that understanding. However, because there was no proof that all parties understood the transaction this way, it was a unilateral mistake of the bank rather than a mutual mistake of all owners and the lender. The court refused to reform the documents to reflect the arrangement the bank wanted or thought it was getting. A word to the wise, I suppose. You really need to do a title search to make sure …

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Estoppel by deed does not require reliance

/ Consumer Protection, Estates and Future Interests, Leaseholds, Real Estate Transactions, Statute of Frauds, Title Issues

The Pennsylvania Supreme Court has reaffirmed and applied the doctrine of estoppel by deed in the case of Shedden v. Anadarko E. & P. Co., L.P, 136 A.3d 485 (Pa. 2016) and distinguished it from the doctrine of equitable estoppel. Equitable estoppel “recognizes that an informal promise implied by one’s words, deeds or representations which leads another to rely justifiably thereon to his own injury or detriment, may be enforced in equity” while “[i]n contrast, the doctrine of estoppel by deed precludes one who conveys an interest in land that he does not own, but subsequently acquires the title thereto, from denying the validity of the first conveyance.” In this case, an owner leased oil and gas rights to a 62-acre parcel while actually owning only 50% of them. When the owner later acquired the other 50% of the oil and gas rights, the doctrine of estoppel by deed folded those …

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Informal border change by acquiescence

/ Adverse Possession, Real Estate Transactions, Statute of Frauds, Trespass

The Utah Supreme Court has affirmed and applied the doctrine of “boundary by acquiescence” under which a border is set informally when neighbors recognize a line between their properties. Q-2 LLC v. Hughes, 368 P.3d 86 (Utah 2016). The court noted that title shifts at the point when the parties act to satisfy the doctrine not when the border is recognized by a court. Establishment of boundary by acquiescence in Utah requires (1) occupation up to a visible line marked by monuments, fences, or buildings; (2) mutual acquiescence in the line as a boundary; (3) for at least 20 years; (4) by adjoining owners. The doctrine differs from adverse possession because it is based on mutual permission rather than adverse occupation (occupation that is non-permissive).

Massachusetts courts hostile to easement by necessity doctrine

/ Easements, Real Estate Transactions, Servitudes, Statute of Frauds

In Kitras v. Town of Aquinnah, 49 N.E.3d 198 (Mass. 2016), the Supreme Judicial Court of the Commonwealth of Massachusetts (SJC) refused to recognize easements by necessity for landlocked parcels. Massachusetts accepts the usual presumption that one who creates a landlocked parcel intends to give the owner of the landlocked parcel an easement over remaining land of the grantor to reach a public road. In most states the doctrine is based both on the implied intent of the grantor and public policy considerations that support access to land both to protect the landlocked owner’s right to access his or her land and general welfare considerations of making the land alienable and usable. However, the emerging majority rule seems to be that the touchstone is the intent of the parties and if the parties actually intend to create a landlocked parcel, they will be allowed to do so, and their arrangement will …

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Buyer may sue seller for fraudulent failure to mention flooding problem despite “as is” clause in real estate sales contract

/ Consumer Protection, Real Estate Transactions, Statute of Frauds, Title Issues

When real estate contracts contain an “as is” clause or state that the buyer is not relying on any oral statements made by the seller, some courts hold that the buyer cannot sue the seller for fraud even if the seller lied about the condition of the premises or failed to reveal material facts any reasonable buyer would want to know. But other courts allow claims for fraud on the ground that sellers cannot be allowed to immunize themselves from liability for fraud by contract language. In McNulty v. Chip, 116 A.3d 173 (R.I. 2015), buyers of a home experienced serious flooding within weeks of buying the place. Rather than an all-or-nothing solution, the Court held that the sales contract had not been worded specifically enough to protect the seller from a fraud claim. While the contract said that the property was being sold “as is,” nothing specific was stated about …

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