Oral Land Sale, Part Performance, and Risk of Loss
In March, Rosa orally agreed to sell her 20-acre farm to Theo for $300,000. Theo paid $30,000 in cash, took possession in April, built a $40,000 barn, paid the property taxes, and made routine repairs. Rosa signed a handwritten receipt stating: “Received $30,000 from Theo toward the purchase of my farm on County Road 12, 20 acres, total price $300,000.” The receipt did not contain a legal description and was not acknowledged. In August, before closing, a fire destroyed the barn. In September, Rosa died. Her heir, Luis, refuses to convey, invoking the statute of frauds. Theo sues for specific performance and for a declaration that Luis bears the loss of the barn. The jurisdiction has a statute of frauds requiring land sale contracts to be in writing and signed by the party to be charged, but it recognizes part performance and the doctrine of equitable conversion. It has not adopted the Uniform Vendor and Purchaser Risk Act.
1. Can Theo overcome the statute of frauds? Assess both the receipt and the part-performance doctrine.
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The receipt may satisfy the statute if it reasonably identifies the land and states the price. “My farm on County Road 12, 20 acres” may be sufficiently identifiable if extrinsic evidence locates the parcel; courts do not require a full metes-and-bounds description if the writing points to the property. Even if the receipt is deficient, Theo has strong part-performance evidence: payment of $30,000, possession, building a $40,000 barn, paying taxes, and making repairs. Most courts require possession plus either payment or improvements, and Theo has all three. Part performance takes the case out of the statute to prevent fraud. Luis stands in Rosa’s shoes and cannot rely on the statute if the equities favor enforcement. Specific performance is therefore likely.
2. If the court finds the contract enforceable, who bears the risk of the barn fire? Does the answer change if the court denies specific performance?
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If the contract is enforceable, equitable conversion treats Theo as the equitable owner, and he bears the risk of loss to improvements. That result is especially fair here because Theo built the barn with his own funds while in possession. The jurisdiction has not adopted the Uniform Vendor and Purchaser Risk Act, so the common-law equitable-conversion rule applies. If the court denies specific performance because the statute of frauds is not satisfied, there is no equitable conversion; Rosa’s estate generally bears the risk of loss to the realty, and Theo may have a restitution claim for the $30,000 and perhaps the value of improvements. The enforceability ruling thus drives the risk-of-loss answer.
3. Luis argues that Theo’s remedy should be limited to damages because Rosa died before closing. Is that correct?
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No. Death of the seller does not automatically convert specific performance into damages. The seller’s heir takes the property subject to the contract if the contract is enforceable. Specific performance is available for land because each parcel is unique, and damages are often inadequate. The heir can be ordered to convey on payment of the balance. The court may require Theo to pay the purchase price into court or to the estate. If the estate cannot convey marketable title, the court may award damages or rescission. But the mere fact of Rosa’s death is not a defense. Luis’s refusal to convey is a breach if the contract is enforceable.