Real estate transactions in New Jersey involve more than just a handshake and verbal agreements. The “Statute of Frauds” rule applies here in real estate dealings.
What does “Statute of frauds” mean?
The “Statute of frauds” is a legal rule that demands specific contracts to be in written form to be valid. Common contracts under this statute include:
- Land sales
- Agreements for goods worth $500 or more
- Contracts lasting a year or more
Originally rooted in unwritten common law, many states, including New Jersey, have formalized this rule through statutes. In a breach of contract case, the defendant can raise the “Statute of fraud” as a defense, shifting the burden to the plaintiff to prove the existence of a valid contract.
The rule in real estate transactions
Simply put, the “Statute of frauds” rule says that certain agreements related to real estate must be in writing to be legally valid. Here are some points that you need to know:
- Written agreements: The “Statute of frauds” requires written agreements for certain real estate transactions. This includes agreements for the sale, purchase or lease of real property. So, if you are buying a house, selling land or renting a place for a long time, the agreement must be in writing to be legally binding.
- Essential details: The written agreement must contain essential details about the deal. This includes the names of the parties involved, a description of the property, the terms of the agreement and the price. Without these specifics in writing, the agreement might not hold up in court.
- Signatures: To make the agreement valid, as in any other form of contract, all parties involved in the transaction must sign it.
- Exceptions: While the “Statute of frauds” generally requires written agreements, there are a few exceptions. For example, if one party has partly performed their obligations, like making a payment or taking possession of the property, an oral agreement might still be enforced. Still, it is better to have everything in writing to avoid disputes.
The “Statute of frauds” serves to prevent fraud or harm by requiring written evidence of binding agreements. It prompts parties to be more intentional and careful in their real estate dealings.