Texas Causes of Action & Affirmative Defenses

Texas Causes of Action & Affirmative Defenses

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Saturday, September 5, 2009

RELA Statute of Frauds

Statute of frauds provision of the Real Estate License Act (RELA) requires commission agreement to be in writing. A person may not maintain an action in this state to recover a commission for the sale or purchase of real estate unless the promise or agreement on which the action is based, or a memorandum, is in writing and signed by the party against whom the action is brought or by a person authorized by that party to sign the document.Tex. Occ. Code Ann. § 1101.806(c). To comply with this section, an agreement or memorandum must: (1) be in writing and must be signed by the person to be charged with the commission; (2) promise that a definite commission will be paid, or must refer to a written commission schedule; (3) state the name of the broker to whom the commission is to be paid; and (4) either itself or by reference to some other existing writing, identify with reasonable certainty the land to be conveyed. Knight v. Hicks, 505 S.W.2d 638, 642 (Tex. Civ. App.-Amarillo 1974, writ ref'd n.r.e.). Strict compliance with RELA is required; the agreement to pay a real estate commission must be in writing or it is not enforceable. Brice v. Eastin, 691 S.W.2d 54, 57 (Tex. App.-San Antonio 1985, no writ). When RELA applies and its requirements are not met, courts have denied recovery when fraud, conspiracy, deceit, quantum meruit, and breach of contract have been pleaded. McKellar v. Marsac, 778 S.W.2d 573, 575 (Tex. App.-Houston [1st Dist.] 1989, no writ). See Trammell Crow Co. No. 60 v. Harkinson, 944 S.W.2d 631, 634 (Tex. 1997) (in broker's claim against lessors for tortious interference with exclusive representation agreement with lessees, claim rejected as “wholly derivative of [broker's] unenforceable oral commission agreement” and “translates only into the loss of the expectancy of receiving a commission at the end of the lease negotiations”). A broker “cannot do indirectly what the law says he cannot do directly.” Harkinson, 944 S.W.2d at 634. Whether a contract falls within the statute of frauds is a question of law. Vermont Info. Processing, Inc. v. Montana Beverage Corp., 227 S.W.3d 846, 853 (Tex. App.-El Paso 2007, no pet.) SOURCE: 05-08-00394-CV (trial court grant of motion for summary judgment based on the statute of frauds provision of the Real Estate License Act (RELA) affirmed)