Statute of Frauds
As most real estate investors are aware, certain agreements, including a contract for the sale of real estate,” are not enforceable unless the promise or agreement, or a memorandum of it is in writing and signed by the person to be charged with the promise or agreement or by someone legally authorized to sign on behalf of the person. See Tex. Bus. & Com. Code §26.01. The Statute applies to:
A promise by an executor or administrator to answer out of his own estate for any debt or damage due from his testator or intestate;
A promise by one person to answer for the debt, default, or miscarriage of another person;
An agreement made on consideration of marriage or on consideration of nonmarital conjugal cohabitation;
A contract for the sale of real estate;
A lease of real estate for a term longer than one year;
An agreement which is not to be performed within one year from the date of making the agreement;
A promise or agreement to pay a commission for the sale or purchase of:
An oil or gas mining lease;
An oil or gas royalty;
A mineral interest; and
8. An agreement, promise, contract, or warranty of cure relating to medical care or results thereof made by a physician or health care provider as defined in section 74.001, Civil Practice and Remedies Code.
Certain loan agreements must also be in writing. The relevant section states that “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.” See Tex. Bus. & Com. Code §26.02. Although this article’s focus is on the Statute of Frauds referenced above, it is important to note that additional Statute of Frauds provisions can be found in Texas Business & Commerce Code Section 2.201 (applicable to the sale of goods) and in Texas Property Code Section 5.021 (requiring that a conveyance of an estate of inheritance, a freehold, or an estate for more than one year, in land and tenements, must be in writing and must be subscribed and delivered by the conveyor or by the conveyor’s agent authorized in writing). As noted by the Texas Supreme Court in 2020, it has long been understood that to satisfy the Statute of Frauds, there must be a written memorandum which is complete within itself in every material detail, and which contains all the essential elements of the agreement, so that the contract can be ascertained from the writings without resorting to oral testimony. Copano Energy, LLC v. Bujnoch 593 S.W.3d 721, citing Cohen v. McCutchin, 565 S.W.2d 230 at 232. Further, case law has established that multiple documents can comprise a written contract even if the parties executed the documents at different times and the documents do not expressly refer to each other. However, a writing that contemplates a contract to be made in the future does not satisfy the requirements of the Statute of Frauds, nor do writings that state potential contract terms. The Statute of Frauds is generally used as a defense to claims for breach of contract or fraud arising from oral agreements on matters that fall within the Statute of Frauds. Although beyond the scope of this article, there are limited exceptions to the enforceability of the Statute of Frauds. To safeguard against your transaction being barred by the Statute of Frauds it is imperative that you put all material terms in writing. The attorneys at Byers & Taylor, PLLC have the expertise to ensure that your contract, agreement or lease is prepared promptly, properly and oftentimes for a flat rate.