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Property descriptions critical to drafting enforceable contracts

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In her latest blog, Tiffany Dowell Lashmet discusses a case that emphasizes the importance of clear, precise descriptions when drafting contracts.

A recent opinion in Dayston, LLC v. Brooke, offers a good reminder of the importance of clear, precise descriptions when drafting contracts and a good overview of the requirements of the Statute of Frauds.  [Read opinion here.]

Background 

In October 2017, Dayston, LLC (the seller) and Brooke (the buyer) entered into an agreement for the purchase of land.  The parties executed a Farm and Ranch contract (Contract) and Brooke paid the required earnest money.

The Contract described the property as follows:  “The land situated in the County of Erath, Texas described as follows: 3379 FM Hwy 913, 515 Tennyson Dr., and +/- 81.50 AC of A0681 Smith Hancock and A0057 DW Babcock or as described on attached exhibit A.”

Exhibit A further described the land as follows:

3379 FM HWY. 913 STEPHENVILLE, TX 76401
To Include:
Legal: Acres: 8.290, A0057 BABCOCK D W; & HOUSE
Legal: Acres: 1.740, A0057 BABCOCK D W;

515 TENNYSON DRIVE STEPHENVILLE, TX 76401
To include:
Acres: 8.246, S8010 SIMS CREEK SUBD, TRACT 1;
Legal: Acres: 10.290, A0057 BABCOCK D W;

81.50 Acres – Part of A0681 SMITH HANCOCK & A0057 D W
BABCOCK (1.91 ACS) Parcel.
*Please note the 81.50 acre parcel is being surveyed and renamed.
Title company will convey the new legal address once completed.

 

Brooke argued that the property description was insufficient under the Statute of Frauds and sought to have the Contract deemed void.

Dayston argued that the contract allowed him to provide a survey within 5 days of the effective date, which satisfied the Statute of Frauds. He also offered seven exhibits, including affidavits, emails between the parties, and the survey. He also argued that Brooke knew what property the Contract included as the parties had visited multiple times.

The trial court granted Brooke’s motion for summary judgment, finding that the description was inadequate and, therefore, the contract was void. The court ordered all escrow money be returned to Brooke. Dayston appealed to the Eastland Court of Appeals making two arguments: (1) the description in the Agreement, which incorporated the land survey, was sufficient to satisfy the Statute of Frauds; and (2) the extrinsic evidence offered in response to the summary judgment motion was sufficient to raise a genuine issue of material fact as to whether a person familiar with the area could locate the land with certainty.

Opinion

The Eastland Court of Appeals affirmed based on the Statute of Frauds.

The Statute of Frauds requires that certain agreements be in writing in order to be legally enforceable. An agreement for the sale of real property is one of the types of agreements subject to the Statute of Frauds. Pursuant to the Statute of Frauds, “the writing must furnish within itself or by reference to other identifies writings then in existence, the means or data by which the particular land to be conveyed may be identified with specific certainty.” An agreement does not have to list metes and bounds, but it “must furnish data that identifies the property with reasonable certainty.” The description must furnish enough information to locate the general area by tract survey and county and it must contain information regarding the size, shape, and boundaries of the property.  The knowledge and intent of the parties is irrelevant to the validity of a contract.

Courts may look at multiple writings in making this analysis, but any documents referred to and incorporated in the contested agreement must exist at the time the agreement was executed.  If the agreement and other incorporated writings fail to sufficiently describe the property, then the conveyance violates the statute of frauds and is voidable, if one of the parties so desires. Parol evidence–meaning documents outside the contract itself–may be considered, but may not supply the location of description of the land. Instead, parole evidence may only help identify the land from the data in the writing.

Here, the description was insufficient. It names three parcels of land. Two street addresses and an estimated number of acres within a larger tract. The fact that the parties had visited, or even may have known what was intended, is irrelevant as the knowledge and intent of the parties does not give validity to an agreement that contains an invalid description. With regard to the survey, despite Dayston arguing that it did exist when the contract was signed, the terms of the contract indicate differently, as it says a survey “is being conducted” and that the new legal address will be provided “once completed.”  Further, even if the survey was in existence at the time the contract was signed, it was parol evidence and could not be looked to for essential elements of the agreement.

Thus, the court held that the Contract violated the Statute of Frauds and was voidable. The Court of Appeals affirmed.

Why Do We Care?

This case offers important reminders for landowners, realtors, and anyone else drafting contracts involving the sale of land. Keep in mind that property descriptions are critical to drafting an enforceable contract. If the language itself does not adequately describe the property, any documents used to help do so must be in existence at the time the contract is signed and cannot supply the essential terms. Further, just because the parties know the intent, does not make the description sufficient.  Growing up and now living in a rural area, it is common to hear references like “the Smith place” or “the place where Billy grew up.”  Everyone in the county may know what that means, but that is irrelevant for Statute of Frauds purposes.

Source: is Texas Agriculture Law Blog, which is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.
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