Unwritten Contracts and Land Sales

Oral Contracts

Unwritten Contracts

Section 15-3-1 of the Mississippi Code lists several contracts that must be in writing in order to be valid. That law is known as the “statute of frauds,” and we wrote about that subject here.

In this post, we will look at the law regarding the sale of land in particular.

Section 15-3-1 states “An action shall not be brought whereby to charge a defendant or other party . . . upon any contract for the sale of lands . . . unless, in each of said cases, the promise or agreement upon which such action may be brought, or some memorandum or note thereof, shall be in writing, and signed by the party to be charged therewith or signed by some person by him or her thereunto lawfully authorized in writing.”

To make that more simple, you cannot sue someone for breach of a contract to sell land unless there is a signed agreement in writing.

Seems simple enough. Even so, there are at least two situations in which the Courts will enforce an unwritten contract to sell land.

When the failure to enforce the verbal agreement would result in fraud or other inequitable conduct.

In Thompson v. First American Nat. Bank, 19 So.3d 784, 785 (Miss. Ct. App. 2009), Thompson claimed that a bank teller promised him that a foreclosure on his property would be stopped.

The Mississippi Court of Appeals held that the alleged verbal agreement was unenforceable under the statute of frauds.

But, that was not the end of the inquiry. The Court then looked to the question of estoppel.

The term “estoppel” is a legal bar to alleging or denying a fact because of one’s own previous actions or words to the contrary. The Thompson court explained:

An estoppel may arise from the making of a promise, even though without consideration, if it was intended that the promise should be relied upon and in fact it was relied upon, and if a refusal to enforce it would be virtually to sanction the perpetuation of fraud or would result in other injustice.

Although this rule of law would allow a party to get around the requirements of the statute of frauds, the Court of Appeals concluded it did not apply to Thompson’s situation.

Imposition of a Constructive Trust

On February 4, 2020, the Mississippi Court of Appeals issued its opinion in White v. White. In that case, William White was having problems paying his mortgage on 22.5 acres of land.

So, he asked his mother, Patsy White, to help him. She agree to take over the mortgage payments, and William verbally agreed to transfer the land to her.

Patsy kept her end of the bargain. But, William then refused to transfer the land.

Patsy sued William in Chancery Court and asked that he be ordered to convey the land to her.

In reviewing the case, the Mississippi Court of Appeals first looked at the statute of frauds. Given the plain language of the statute, the Court ruled that Patsy’s claim was barred because it was not in writing.

The Court then turned to the claim for a constructive trust. “A constructive trust is a judicially imposed remedy used to prevent unjust enrichment when one party wrongfully retains title to property.”

It is “a fiction of equity created for the purpose of preventing unjust enrichment by one who holds legal title to property which, under principles of justice and fairness, rightfully belongs to another.”

Examples of wrongful conduct that may justify imposition of a constructive trust include:

(1) fraud, actual or constructive

(2) duress

(3) abuse of confidence

(4) commission of wrong

(5) any form of unconscionable conduct, artifice, concealment, or questionable means

(6) any way against equity and good conscience.

In light of this law, the Court of Appeals sent the case back to chancery court to determine whether the facts supported the imposition of a constructive trust in favor of Patsy and against the land.

If you are trying to enforce a verbal agreement to sell land, it is worthwhile to have an attorney consider whether an exception to the statute of frauds applies.

Panter Law Firm, PLLC, 7736 Old Canton Road, Suite B, Madison, MS 39110