Below is the story of a real estate transaction gone wrong.
Almost 20 years ago, Reed agreed to buy about 600 acres from Bill in Kaufman County with Reed making monthly payments for 15 years. Bill later borrowed money from American National Bank, which is primarily located in Kaufman County in Forney. To pay off the loan, Bill assigned the monthly payments to the bank, and Reed began paying the bank. The IRS later had claims against Bill and instructed Reed to pay them. Because Reed was confused on whether payments were owed to the bank or the IRS, he missed at last one payment. As a result, Bill claimed Reed was in default, that the property was forfeited, and Bill sold the property to a third party and paid off the debt owed to the bank.
What Happened in Court?
Reed sued Bill. Bill got the court to dismiss the suit, but Reed got the dismissal overturned on appeal. The case then went back to the trial court, and Bill once again got the trial court to dismiss the case with Reed then appealing the dismissal once again. The basis for the second dismissal was that the property description in the contract between Reed and Bill was inadequate and thus there was no contract formed between Reed and Bill to begin with. Because the court found there was no contract, the agreement to sell the property violated the statute of frauds, which requires a written contract for the sale of real estate.
Why Did the Court Do What It Did?
Below are the three main legal arguments Reed made on appeal and how the court ruled on them.
Adequacy of the Property Description
The law states that the description of the property must provide enough information to identify the property being sold with “reasonable certainty.” In this case, the property description was simply a collection of four tracts of acreage being taken from a larger tract of acreage. There were no metes and bounds listed nor was there any information on the shape of the tracts or the boundaries. As a result, the appellate court found the property description did not describe the property with reasonable certainty.
No exception to the Statute of Frauds
There is an exception to the Statute of Frauds. A sale of land without a written contract can be held valid when the buyer 1) pays for the property, 2) takes possession of the property, and 3) makes permanent and valuable improvements to the property. In this case, Reed obviously made payments for the property, and he took possession of it. However, he was not able to offer any evidence of improvements to the property, so the court found the exception to the Statute of Frauds was not met.
Hey! That’s not fair.
Reed’s last argument was essentially a plea for fairness through the legal doctrine of estoppel. However, the appellate court found that Reed did not properly plead the defense of estoppels and thus did not have to consider the argument
Ultimately, the appellate court rules in favor of Bill on all counts and upheld the second dismissal of the Kaufman County trial court. The facts listed in the appellate court’s decision did not say whether wither party had the assistance of a lawyer when working out the deal for the property. But the way things played out sure make it seem like lawyers weren’t involved from the get-go. But they were certainly involved in the length litigation process this case required. The lesson as always is to seek the advice of counsel when involved in such complex matters.