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Re: Selling my house part 2
Old 01-04-2006, 06:37 PM   #41
 
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Re: Selling my house part 2

Quote:
Originally Posted by Rich
I'm a bit confused. MJ wrote;

"The following morning, a 2nd buyer knocked on my door and was interested in my house too. He voluntaired to up the price by $30k. I contacted the 1st buyer and he matched the increase. I then contacted the 2nd buyer he again up the price by $30k but said he would not go any further."

So, if he were to take the first offer discussed, he'd be down $60,000 dollars, correct? I think we're asking a lot from MJ....

So, in other words. If the deal involves $60,000 or more integrity is no longer a factor. - I guess we know how the Executives of Enron Think now.
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Re: Selling my house part 2
Old 01-04-2006, 07:11 PM   #42
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Re: Selling my house part 2

Quote:
Originally Posted by MJ
As I mentioned in another thread I started, I am selling my house without a broker. Since this is 1st home that I bought and now am selling, I am new on the proper rules that one should follow. I started speaking to a few neighbors about my intention.
A neighbor brought over a buyer that met the price I was asking. He gave me a large deposit check which I haven't cashed yet. There was no written agreement. I was happy with the deal at that time. The following morning, a 2nd buyer knocked on my door and was interested in my house too. He voluntaired to up the price by $30k. I* contacted the 1st buyer and he matched the increase. I then contacted the 2nd buyer he again up the price by $30k but said he would not go any further.

Who should get the sale, the 2nd buyer who was willing to increase the price or the 1st buyer who only matched the price?
First question: how will you feel about this $30K in 20 years? Will you feel good that you extracted it out of the buyer in the true spirit of capitalism, or will you feel bad that you essentially jacked him up on a handshake? I'm not accusing you of either tactic, but that's how I bet the first buyer feels. Especially if he's buddies with a legal professional.

After 40 years my FIL will STILL tell the stories of the small slights made by careless sellers, realtors, escrow companies, and others. We're talking less than $1000 but it meant a lot to him at the time and it still means even more today.

More questions: pretend for a minute that you'd gotten the first buyer's offer on paper. If you had, did it have any contingencies? Was it a cash offer or was it contingent on his sale of his first home or contingent on his obtaining a mortgage? And then was the second buyer's offer contingent on anything? In the world of written offers, if the first buyer's offer has contingencies then the seller's acceptance reserves the right to request that those contingencies be vacated upon receipt of a second offer without those contingencies.

An ethics textbook will advise selling the house to the first buyer at the original (lower) price. You'll "lose" $30K but if I was in your shoes then I'd consider it tuition at the University of Experience.

A litigious buyer will cost you far more than the $30K that you "gained" from raising the offer. If you go with the lower offer then they'll also feel obligated to cut you a break if any other surprises show up on the home inspection or other paperwork-- because there will be a written offer & acceptance this time, right?

The second buyer can submit his $30K higher offer in writing, too, and you can hold it in reserve in case the first buyer's offer falls apart.
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Re: Selling my house part 2
Old 01-04-2006, 07:16 PM   #43
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Re: Selling my house part 2

Quote:
Originally Posted by justin
I think the common misunderstanding of the Statute of Frauds is being presented here.* "There's no signed agreement" - that would be MJ's defense to the contract from the 1st buyer at common law.* However, the 1st buyer would sue MJ for breach, depose MJ, and ask MJ if the contract was formed in the deposition (or in an interrogatory).* Unless MJ lied and said no contract was formed, the contract would still be upheld*, in spite of the failure to satisfy the writing requirement of the Statute of Frauds.* The statute of frauds is merely an evidentiary law, instead of substantive contract formation law.* All you need is offer - acceptance - consideration.

Disclaimer: I'm not a real lawyer.* I just went to school to be one.

*All this assumes an actual contract was formed between MJ and 1st buyer (but that may be up in the air).*
My gosh, I'm gone 24 hours and we're still hashing this
Once more, there are no legally enforceable
verbal RE contracts.
You can talk until Hell freezes over, but when it comes to RE, it
means nothing (legally)...................unless it is written. *If you
can disregard honesty and honor you are not encumbered.
That is where some of us have trouble.
I know of no exceptions to this rule.

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Re: Selling my house part 2
Old 01-04-2006, 11:44 PM   #44
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Re: Selling my house part 2

I am done with my comments on MJ's situation, but want to comment on the statute of frauds. First of all, it is not federal law but state law. These types of statutes provide that various types of contracts are not enforceable unless in writing. Therefore, I disagree with Justin that a statute of frauds is an evidenciary rule only and the contract is enforceable if you admit there was a contract. Instead, I would view it as a rule which makes certain unwritten agreements voidable by either party.

As in most things in the law, there are exceptions to the rule. If a party has partly performed the contract, the contract may be enforceable. For example, if a seller entered into an unwritten agreement to sell land payable over time, and the buyer made a number of the payments, the buyer may be able to enforce the contract on the theory of part performance.

Another exception would be a situation where a person has changed their position to their detriment in reliance on the contract. For example, in reliance on an unwritten agreement to buy land, and with the seller's knowledge, a buyer has utilities installed on the seller's property. It would be unfair for the seller to back out in those circumstances.



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Re: Selling my house part 2
Old 01-05-2006, 09:21 AM   #45
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Re: Selling my house part 2

Quote:
Originally Posted by Martha
I am done with my comments on MJ's situation, but want to comment on the statute of frauds. First of all, it is not federal law but state law. These types of statutes provide that various types of contracts are not enforceable unless in writing. Therefore, I disagree with Justin that a statute of frauds is an evidenciary rule only and the contract is enforceable if you admit there was a contract. Instead, I would view it as a rule which makes certain unwritten agreements voidable by either party.
Martha,

Let me lay out a fact pattern, for the sake of argument, and see if you agree with the legal conclusion I draw.

Assume that MJ and 1st Buyer did in fact enter into an oral contract for the sale of MJ's house. No writing evidences this contract whatsoever (assume the check that 1st Buyer gave MJ was made out to "pay to the order of CASH"). MJ sells the property to 2nd Buyer at a higher price.

1st Buyer sues, alleging breach of contract. MJ isn't going to perjure himself. MJ, as a witness in the case against him, answers 1st Buyer's question asking "Did you enter into a contract for the sale of your house to 1st Buyer?". MJ says "yes".

I conclude that based on this fact pattern, 1st buyer has a contract enforceable against MJ. No writing required. This fact pattern assumes that MJ is honest.

In my opinion, the Statute of Frauds makes a writing evidencing the sale of real property a sufficient, but not necessary, condition of a valid enforceable contract. In reality, a defendant in MJ's position might deny the existence of the contract, and the case is over - no contract. But from a theoretical perspective, I don't see how the SoF requires a writing, since a valid enforceable contract can exist in the absence of a writing evidencing the formation of the contract (assuming the opposing party admits the existence of a contract).

UCC sec. 2-201 codifies the SoF as it applies to the sale of goods. Paragraph (3)(b) includes the exception that when the party against whom the contract is sought to be enforced admits in "his pleading, testimony or otherwise in court" that a contract was made, the contract is enforceable, in spite of a lack of a writing evidencing the contract. It is my understanding that this same type of exception applies to the sale of real property (obviously the UCC doesn't govern the sale of real property though).

I guess my classification of the Statute of Frauds as evidentiary and your classification of the SoF as substantive may depend on your point of view on the SoF.
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Re: Selling my house part 2
Old 01-05-2006, 09:31 AM   #46
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Re: Selling my house part 2

Justin,

Enough already, my head is beginning to hurt. (and I'm a lawyer -- does that mean I'm still human?)
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Re: Selling my house part 2
Old 01-05-2006, 09:31 AM   #47
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Re: Selling my house part 2

Quote:
Originally Posted by justin
Martha,

Let me lay out a fact pattern, for the sake of argument, and see if you agree with the legal conclusion I draw.*

Assume that MJ and 1st Buyer did in fact enter into an oral contract for the sale of MJ's house.* No writing evidences this contract whatsoever (assume the check that 1st Buyer gave MJ was made out to "pay to the order of CASH").* MJ sells the property to 2nd Buyer at a higher price.*

1st Buyer sues, alleging breach of contract.* MJ isn't going to perjure himself.* MJ, as a witness in the case against him, answers 1st Buyer's question asking "Did you enter into a contract for the sale of your house to 1st Buyer?".* MJ says "yes".*

I conclude that based on this fact pattern, 1st buyer has a contract enforceable against MJ.* No writing required.* This fact pattern assumes that MJ is honest.*

In my opinion, the Statute of Frauds makes a writing evidencing the sale of real property a sufficient, but not necessary, condition of a valid enforceable contract.* In reality, a defendant in MJ's position might deny the existence of the contract, and the case is over - no contract.* But from a theoretical perspective, I don't see how the SoF requires a writing, since a valid enforceable contract can exist in the absence of a writing evidencing the formation of the contract (assuming the opposing party admits the existence of a contract).*

UCC sec. 2-201 codifies the SoF as it applies to the sale of goods.* Paragraph (3)(c) includes the exception that when the party against whom the contract is sought to be enforced admits in "his pleading, testimony or otherwise in court" that a contract was made, the contract is enforceable, in spite of a lack of a writing evidencing the contract.* It is my understanding that this same type of exception applies to the sale of real property (obviously the UCC doesn't govern the sale of real property though).*

I guess my classification of the Statute of Frauds as evidentiary and your classification of the SoF as substantive may depend on your point of view on the SoF.*
Can't believe I'm still posting on this, but I need to keep my count up. *

Even if MJ testifies truthfully, he can simply say *"Yes, I told the buyer
many times he had a deal and yes, I took his money. *Then I changed my mind."
Case dismissed IMHO.

JG
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Re: Selling my house part 2
Old 01-05-2006, 09:32 AM   #48
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Re: Selling my house part 2

Quote:
Originally Posted by Jay_Gatsby
Justin,

Enough already, my head is beginning to hurt.* ** (and I'm a lawyer -- does that mean I'm still human?)
Not necessarily.

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Re: Selling my house part 2
Old 01-05-2006, 09:35 AM   #49
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Re: Selling my house part 2

Quote:
Originally Posted by Jay_Gatsby
Justin,

Enough already, my head is beginning to hurt. (and I'm a lawyer -- does that mean I'm still human?)
I'm not (not a lawyer, that is), so this stuff is still a little fun to me (in a sadistic, intellectual sense).
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Re: Selling my house part 2
Old 01-05-2006, 09:38 AM   #50
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Re: Selling my house part 2

Quote:
Originally Posted by justin
I'm not (not a lawyer, that is), so this stuff is still a little fun to me (in a sadistic, intellectual sense).*
Well, I'm no masochist, so let's not migrate the discussion over to the Rule Against Perpetuities or the Erie Doctrine...
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Re: Selling my house part 2
Old 01-05-2006, 09:41 AM   #51
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Re: Selling my house part 2

Quote:
Originally Posted by MRGALT2U
Can't believe I'm still posting on this, but I need to keep my count up.

Even if MJ testifies truthfully, he can simply say "Yes, I told the buyer
many times he had a deal and yes, I took his money. Then I changed my mind."
Case dismissed IMHO.
Based on MJ's hypothetical testimony as you have presented it, I would say he had admitted that a contract was formed. "I changed my mind" is not a valid defense to a contract. IMHO and the opinion of 93.5% of all courts (there's always those crazy activist judges that you can never count on to interpret the law).



Quote:
Originally Posted by Jay_Gatsby
Well, I'm no masochist, so let's not migrate the discussion over to the Rule Against Perpetuities or the Erie Doctrine...
Enough Jay, enough! I give up!
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Re: Selling my house part 2
Old 01-05-2006, 10:33 AM   #52
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Re: Selling my house part 2

You guys are starting to make my head hurt with all this lawyer talk.

Where is MJ anyway? He could clear up a ton of stuff here with a brief update.

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Re: Selling my house part 2
Old 01-05-2006, 10:41 AM   #53
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Re: Selling my house part 2

Quote:
Originally Posted by SteveR
You guys are starting to make my head hurt with all this lawyer talk.* *

Where is MJ anyway?* He could clear up a ton of stuff here with a brief update.*

I think he sold his house for the extra $60K and moved on.
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Re: Selling my house part 2
Old 01-05-2006, 10:43 AM   #54
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Re: Selling my house part 2

If I were MJ, I might not comment much on the facts of the transaction just yet. Could be used as evidence against him later

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Re: Selling my house part 2
Old 01-06-2006, 03:09 PM   #55
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Re: Selling my house part 2

Isn't this fun Justin?

The Minnesota statute of frauds:

513.01 No action on agreement.

No action shall be maintained, in either of the following cases, upon any agreement, unless such agreement, or some note or memorandum thereof, expressing the consideration, is in writing, and subscribed by the party charged therewith:

(1) every agreement that by its terms is not to be performed within one year from the making thereof;

(2) every special promise to answer for the debt, default or doings of another;

(3) every agreement, promise, or undertaking made upon consideration of marriage, except mutual promises to marry;

(4) every agreement, promise or undertaking to pay a debt which has been discharged by bankruptcy or insolvency proceedings.

For real estate:

513.04 Conveyance of interest in land except up to one-year lease.

No estate or interest in lands, other than leases for a term not exceeding one year, nor any trust or power over or concerning lands, or in any manner relating thereto, shall hereafter be created, granted, assigned, surrendered, or declared, unless by act or operation of law, or by deed or conveyance in writing, subscribed by the parties creating, granting, assigning, surrendering, or declaring the same, or by their lawful agent thereunto authorized by writing. This section shall not affect in any manner the power of a testator in the disposition of real estate by will; nor prevent any trust from arising or being extinguished by implication or operation of law.


Substantive law, not evidenciary. Inotherwords, if there isn't a writing and their isn't another legal theory like part performance, the action would be dismissed on a motion to dismiss. Who cares what was said in a deposition.

As statutes of frauds are a matter of state law, YMMV.


Edit: North Carolina statute of frauds for real estate provides that oral agreements are void:

22‑2. Contract for sale of land; leases.

All contracts to sell or convey any lands, tenements or hereditaments, or any interest in or concerning them, and all leases and contracts for leasing land for the purpose of digging for gold or other minerals, or for mining generally, of whatever duration; and all other leases and contracts for leasing lands exceeding in duration three years from the making thereof, shall be void unless said contract, or some memorandum or note thereof, be put in writing and signed by the party to be charged therewith, or by some other person by him thereto lawfully authorized. (29 Charles II, c. 3, ss. 1, 2, 3; 1819, c. 1016, P.R.; 1844, c. 44; R.C., c. 50, s. 11; 1868, c. 156, ss. 2, 33; Code, ss. 1554, 1743; Rev., s. 976; C.S., s. 988.)

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Re: Selling my house part 2
Old 01-06-2006, 03:41 PM   #56
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Re: Selling my house part 2

Martha,

It seems the NC law, in particular, does state that contracts for the sale of land are void if not evidenced by a writing.

In contrast, the Minnesota statute you cited (513.04) deals with the writing requirements for the conveyance of title (usually called the "deed" around here). This statute does not, on its face, deal with the contractfor the conveyance of land as I read it (the purchase/sale agreement which is executory in nature). I am not knowledgeable of Minnesota case law on this issue. Maybe the judges have interpreted the statute to require a writing for the sales contract as well as the deed itself.

The issue we were discussing here was the validity of a purchase/sale agreement, not the conveyance of title itself. If Minnesota law were to apply, it looks like 513.04 wouldn't control the purchase/sale agreement at all. Your thoughts?

I guess with anything in a country of 50 different jurisdictions with different laws in each, YMMV... Anybody want to look up the NY law for "fun"?
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Re: Selling my house part 2
Old 01-06-2006, 04:00 PM   #57
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Re: Selling my house part 2

Justin, sorry, pasted the wrong statute:

513.05 Leases; contracts for sale of lands.

Every contract for the leasing for a longer period than one year or for the sale of any lands, or any interest in lands, shall be void unless the contract, or some note or memorandum thereof, expressing the consideration, is in writing and subscribed by the party by whom the lease or sale is to be made, or by the party's lawful agent thereunto authorized in writing; and no such contract, when made by an agent, shall be entitled to record unless the authority of such agent be also recorded.

HIST: (8460) RL s 3488; 1986 c 444

I absolutely refuse to look up New York. But I never have heard of a state with a different SofF on real estate.

EDIT. OK, heck with it. According to www.findlaw.com, New York's statute of frauds for real estate:
5-703. Conveyances and contracts concerning real property required
to be in writing. 1. An estate or interest in real property, other than
a lease for a term not exceeding one year, or any trust or power, over
or concerning real property, or in any manner relating thereto, cannot
be created, granted, assigned, surrendered or declared, unless by act or
operation of law, or by a deed or conveyance in writing, subscribed by
the person creating, granting, assigning, surrendering or declaring the
same, or by his lawful agent, thereunto authorized by writing. But this
subdivision does not affect the power of a testator in the disposition
of his real property by will; nor prevent any trust from arising or
being extinguished by implication or operation of law, nor any
declaration of trust from being proved by a writing subscribed by the
person declaring the same.
2. A contract for the leasing for a longer period than one year, or
for the sale, of any real property, or an interest therein, is void
unless the contract or some note or memorandum thereof, expressing the
consideration, is in writing, subscribed by the party to be charged, or
by his lawful agent thereunto authorized by writing.
3. A contract to devise real property or establish a trust of real
property, or any interest therein or right with reference thereto, is
void unless the contract or some note or memorandum thereof is in
writing and subscribed by the party to be charged therewith, or by his
lawfully authorized agent.
4. Nothing contained in this section abridges the powers of courts of
equity to compel the specific performance of agreements in cases of part
performance.


Remember my much earlier post about every law has exceptions (part performance, promissory estoppel). And I am not a New York lawyer. Refer to standard disclaimer below.
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Re: Selling my house part 2
Old 01-06-2006, 04:47 PM   #58
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Re: Selling my house part 2

Quote:
Originally Posted by Martha
Justin, sorry, pasted the wrong statute:

* 513.05 Leases; contracts for sale of lands.

Every contract for the leasing for a longer period than one year or for the sale of any lands, or any interest in lands, shall be void unless the contract, or some note or memorandum thereof, expressing the consideration, is in writing and subscribed by the party by whom the lease or sale is to be made, or by the party's lawful agent thereunto authorized in writing; and no such contract, when made by an agent, shall be entitled to record unless the authority of such agent be also recorded.

HIST: (8460) RL s 3488; 1986 c 444

I absolutely refuse to look up New York.* But I never have heard of a state with a different SofF on real estate.*

EDIT.* OK, heck with it.* According to www.findlaw.com, New York's statute of frauds for real estate:
5-703. Conveyances* and* contracts concerning real property required
* to be in writing. 1. An estate or interest in real property, other* than
* a* lease* for a term not exceeding one year, or any trust or power, over
* or concerning real property, or in any manner relating* thereto,* cannot
* be created, granted, assigned, surrendered or declared, unless by act or
* operation* of* law, or by a deed or conveyance in writing, subscribed by
* the person creating, granting, assigning, surrendering or declaring* the
* same,* or by his lawful agent, thereunto authorized by writing. But this
* subdivision does not affect the power of a testator in* the* disposition
* of* his* real* property* by* will; nor prevent any trust from arising or
* being* extinguished* by* implication* or* operation* of* law,* nor* *any
* declaration* of* trust* from being proved by a writing subscribed by the
* person declaring the same.
* * 2. A contract for the leasing for a longer period than* one* year,* or
* for* the* sale,* of* any* real property, or an interest therein, is void
* unless the contract or some note or memorandum thereof,* expressing* the
* consideration,* is in writing, subscribed by the party to be charged, or
* by his lawful agent thereunto authorized by writing.
* * 3. A contract to devise real property or establish* a* trust* of* real
* property,* or* any* interest therein or right with reference thereto, is
* void unless the contract or* some* note* or* memorandum* thereof* is* in
* writing* and* subscribed by the party to be charged therewith, or by his
* lawfully authorized agent.
* * 4. Nothing contained in this section abridges the powers of courts* of
* equity to compel the specific performance of agreements in cases of part
* performance.


Remember my much earlier post about every law has exceptions (part performance, promissory estoppel).* And I am not a New York lawyer.* Refer to standard disclaimer below.
Martha, are you sure you want to retire? Here you are on a 2 week train trip, and look how you spend your time.*

Ha
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Re: Selling my house part 2
Old 01-06-2006, 04:52 PM   #59
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Re: Selling my house part 2

Martha,

I wonder if the law is the same in California and Florida? Not that you need to look them up, but it would be interesting to find out. We have a lot of forum members in those states that might be interested in knowing the law for their state.





(I'm just baiting you now. Please don't look those up while you are "relaxing" on "vacation". )
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Re: Selling my house part 2
Old 01-06-2006, 06:13 PM   #60
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Re: Selling my house part 2

MJ, see what you started?

Will you kindly end the suspense on this thread before the lawyers put the rest of the board to sleep?
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