Expert: liznarr - 12/4/2004

Question
I am settling my father's estate (Georgia) and have property to sell.  I have been approached by an individual I'll call Brad, interested in purchasing two parcels I have to sell to settle the estate.  I have a contract on one parcel and have agreed to terms for sale of that parcel.  "Brad"  has made a verbal offer on the other property which I advised I found agreeable and have asked for a contract.  I have not received a contract to date ( two weeks) and have been approached by others interested in the remaining property.   Brad has advised he will have to obtain financing to purchase second property and now wants me to allow him to sell property he owns (he is not sure how long his sale of property will take) and not wants me to wait for his sale.  I need to sell remaining property to settle estate and pay bills.  My question is, am I bound to sell the property to Brad by verbal agreement to his price although I have received no written contract offer on the second parcel.  I have other people interested in the second, remining parcel of property

Answer
Hi Mike,
Most states have laws called "Statutes of Frauds," the purpose of which is to prevent fraudulent claims from arising.   A Statute of Frauds requires that certain contracts be IN  WRITING, and that they be signed by all parties to be bound by the contract.
 
Although there can be significant variations from state-to-state, a Contract involving the sale or transfer of real property is one of the most common types of contracts to which a Statute of Frauds applies.

The effect of a Statute of Frauds does not of itself render a contract void.  The statute makes certain contracts "voidable" by one of the parties.  In other words, in the event that one party does not wish to follow through on the agreement, the Contract can be voided.  (A contract that is "void" cannot be enforced.  A contract that is "voidable" remains valid unless one of the parties chooses to void the contract.)

You have asked Brad for a Contract and after two weeks have not received one.  In your case you have a voidable agreement.  My suggestion would be to give Brad a call (or better yet, send him a notice in writing) and tell him that you are voiding and rescinding his verbal offer, period, and that your property is available to whomever presents you with an acceptable written offer for a Contract of Sale with terms acceptable to you.

By so doing, you are voiding your agreement, and you will have a paper trail to document your intentions should Brad choose to give you any “lip.”  

In the event Brad then wants to properly present you with a WRITTEN offer for a Contract of Sale to purchase your second property, I would suggest requiring the following from him BEFORE signing any Contract:

1.   A pre-APPROVAL (vs. a pre-qualification) letter from a reputable lender stating that he is a good candidate for a loan.  
2.   I would NOT entertain any offer from Brad with a contingency that he be allowed to sell any property he now owns in order to qualify for the purchase of your property (especially since you know that this may or may not happen in YOUR time frame).
3.   Appropriate earnest money.

I hope the above information answers your questions and points you in the right direction.  

Good luck to you, and write again if you have additional questions.

Regards,

Elizabeth Narr