By Tim Halbach
Recently, I had a client who leased a farm for many years from a gentleman who was a lifelong bachelor and a retired farmer. During his life, he indicated to my client that he did not have to worry about anything after his death because he had provided in his estate planning documents that my client was going to have the right to lease his farm for as long as he wanted to after his death. Unfortunately, for whatever reason, his estate planning documents did not provide for that. Whether or not my client could continue leasing the farm was going to depend primarily on the Statute of Frauds.
The Statute of Frauds is an ancient legal theory that originated in England. Wisconsin has adopted its own version, and it can be found in Chapter 706 of the Wisconsin Statutes. The purpose of the Statute of Frauds, as the name implies, is to avoid fraud, since in many situations, a verbal contract is a valid and legally enforceable agreement. However, when it came to interests in land, courts have traditionally believed that since land was so important and valuable, any matters involving land had to be in writing to be legally enforceable.
Specifically, in Wisconsin, for an interest in land, including leases that have a term of more than one year, to be legally enforceable, the document has to identify the parties involved, identify the real estate involved with reasonable certainty, identify what interest is being conveyed (i.e. full ownership, partial ownership, a life estate, a lease, etc.), be signed by the current owners of the property, in the case of a lease or an offer to purchase, be signed by the persons leasing or purchasing the property, and the documents have to be delivered to each party. Further, if a person is married but the house that he and his wife reside in is in just his name, and now the house is being sold, both spouses would have to sign the necessary documents to sell the house.
Of course, as is the case with many laws, there are often exceptions, and the same is true with the Statute of Frauds. The main exception is known as promissory or equitable estoppel. This legal doctrine states generally that if someone made an oral promise to a person, and the person relies on that promise to his detriment, he can enforce such oral promise as a verbal contract.
For example, let's say that in my client's situation the bachelor told him he could rent the farm for the rest of my client's life and in reliance on that oral promise, my client spent a lot of money to remodel the barns. In such event, my client has a strong argument that the bachelor's estate or living trust is equitably estopped from using the Statute of Frauds as a defense to avoid having to lease the farm to my client, even though there was no written lease.
As with any complex legal matter, the costs of pursuing your rights (mainly because of those expensive attorneys) and then leaving your situation to the mercy of a judge or jury can be reason enough not to pursue the matter. Of course, the other side faces the same concerns. As a result, it is often in the best interest of the parties to be reasonable, and settle the matter outside of court, which is what my client did.
Situations involving the Statute of Frauds are something I deal with on a daily basis whether a client calls and has a handshake deal with a neighbor to buy land or has planted alfalfa on land that he has leased on an oral basis for many years. Often, the death of a party makes a person wish they would have invested the time in getting an agreement in writing. As always, such agreements or other documents have to be carefully drafted to be legally enforceable.
Halbach is a partner in Twohig, Rietbrock, Schneider and Halbach, S.C., a Chilton law firm that specializes in ag law. Call Halbach at 920-849-4999.