You hear about it all the time in real estate. An issue arose during escrow and the seller promised the buyer something that would fix it. When the deal closed, however, the seller refused and the buyer was left hanging.



One of the things we are taught early on in life is that we have to keep our word. If you went to Catholic school, this lesson was often enforced with a whack on the knuckles!

This rule is, frankly a good one that we should all follow. If you are reading this real estate article, you are probably an adult and know the world just does not work this way. It is a sad, but accurate truth that the notion means nothing in court either.

After 15 years, it comes time to sell your four bedroom home. After a month, you reach a deal with a buyer. A home inspector reports the presence of mold in one room. The parties quickly agree to an allowance to fix it.

As the days of escrow tick off, the buyer serves me with a $45,000 demand for the fix. I am outraged because I think it should only cost $8,000. We cannot agree on a middle point, the deal fails and into court we go to resolve our differences.

The trial in this matter is going to be very quick. Why? Well, the only evidence is the testimony of each party. There is nothing in writing for a jury or judge to latch onto in making the decision. As such, how is a decision going to be reached?

A flip of the coin has as much of a chance of coming up with the right decision as a judge or jury does in this case. Instead of deciding on the merits, the decision will be based on who testifies better. This is not a good way to decide cases.

To avoid these situations, the concept of the statute of frauds has been enacted in nearly every state. This statute simply says any oral promise that has a value over a certain dollar figure is void as a matter of law. In most cases, the dollar figure is $750.

So, how does this impact you? Well, you have to realize that anything that is promised to you during a real estate deal is worthless unless it is in writing. If it is in writing and signed by the other party, it is enforceable.

Ah, but what if the other party takes offense at your lack of trust? The cold, hard fact is that is their problem, not yours. Do you really want to risk thousands of dollars in potential losses? If not, demand they put it in writing.