As a general rule, agreements need not be in writing to be enforced although proof of an agreement, and its terms, are obviously far easier when the agreement is reduced to writing. Some agreements, however, must generally be in writing to be enforced under California’s statute of frauds. Among those are agreements respecting the purchase and sale of real property, real property leases for in excess of one year, and agency agreements respecting purchases and sales of real estate and leases of real property for in excess of one year. As a recent California case drives home, when it comes to California real estate transactions, make sure any agreement is in writing.
In Westside Estate Agency, Inc. vs. James Randall, the Court held that licensed real broker Stephen Shapiro, the principal of Westside Estate Agency, Inc., was not entitled to a $925,000 commission because the agency agreement between Shapiro and his friends, James and Eleanor Randall, was not in writing. Shapiro had agreed to represent the Randalls in their quest to buy a home in Los Angeles but failed to obtain a written agreement to that effect. While the Randalls ultimately purchased a $46.25 million Bel Air property Shapiro had located for them, Shapiro’s lawsuit seeking payment of his commission was dismissed by the courts because of the lack of a written agreement between Shapiro and the Randalls.
There are limited exceptions to the general rule of unenforceability of contracts that fall within the statute of frauds. As the Westside Estate Agency case underscores, however, anyone entering into an agreement respecting the purchase, sale, or leasing of real estate in California, or respecting payment of a commission for such transactions, would be very wise to memorialize the agreement in a writing signed by the parties. Otherwise, and as the broker in the Westside Estate Agency case learned the hard way, there is a very good chance the courts will refuse to enforce the agreement.
Thank you for joining us on ClarkTalk! We look forward to seeing you again on this forum. Please note that the views expressed in the above blog post do not constitute legal advice and are not intended to substitute the need for an attorney to represent your interests relating to the subject matter covered by the blog. If you have any questions about agreements respecting the purchase, sale, or leasing of real estate in California, or respecting payment of a commission for such transactions , please feel free to contact David Olson by email at firstname.lastname@example.org or telephonically at (213) 629-5700.