Texas Causes of Action & Affirmative Defenses

Texas Causes of Action & Affirmative Defenses

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Saturday, March 21, 2015

Statute of Frauds as to Real Estate - Was the Property Sufficiently Identified?


STATUTE OF FRAUDS AS TO REAL ESTATE TRANSACTIONS - SUFFICIENCY OF DESCRIPTION OR IDENTIFICATION OF THE SUBJECT PROPERTY 

Statute of Frauds and Enforeability of Asserted Right of First Refusal  

A contract for the sale of real property must comply with the statute of frauds. TEX. BUS. & COM. CODE ANN. § 26.01(a)(4) (West 2009). An option to purchase contained in a real estate lease is a contract for the sale of real property that must comply with the statute of frauds. See Matney v. Odom, 147 Tex. 26, 210 S.W.2d 980, 982 (1948). Likewise, a right-of-first-refusal on the sale of real property is unenforceable unless it satisfies the statute of frauds. See Reiland v. Patrick Thomas Props., Inc., 213 S.W.3d 431 (Tex. App.-Houston [1st Dist.] 2006, pet. denied); Jones v. Brown, No. 04-99-00775-CV, 2000 WL 1056028 (Tex. App.-San Antonio Aug. 2, 2000, no pet.)(not designated for publication).

THE CRITICAL NATURE OF ADEQUATE PROPERTY DESCRIPTION 

A contract for the sale of real property satisfies the statute of frauds only if the property description is "so definite and certain upon the face of the instrument itself, or in some other writing referred to, that the land can be identified with reasonable certainty." Matney, 210 S.W.2d at 982. When the contract at issue is an option contained within another document, it is the property to be conveyed pursuant to the option that must be identified with reasonable certainty. See Matney, 210 S.W.2d at 982; Ardmore, Inc. v. Rex Group, Inc., 377 S.W.3d 45, 57 (Tex. App.-Houston [1st Dist.] 2012, pet. denied). Whether the property description in a writing is sufficient to comply with the statute of frauds is a question of law. Dixon v. Amoco Prod. Co., 150 S.W.3d 191, 194 (Tex. App.-Tyler 2004, pet. denied).

SOURCE: SAN ANTONIO COURT OF APPEALS - 04-12-00363-CV - 3/20/2013  

The Hasketts' motion for summary judgment asserted the right-of-first-refusal is unenforceable because the description of the property subject to the right-of-first-refusal fails to furnish any means by which the property referred to can be identified with reasonable certainty. The Hasketts submitted uncontroverted summary judgment evidence that the property is located at 470 S. Main and consists of 0.557 acres, more or less, and a building that is approximately 8,210 square feet. They argue there is no information in the four corners of the lease by which the 5188 square feet "premises" in the lease could be located out of the entire property at 470 S. Main. Further, the lease does not refer to any other document from which the specific identity and location of the property subject to the right-of-first-refusal could be ascertained.

OTR first argues that the lease sufficiently describes the property to be conveyed under the right-of-first-refusal as the property being leased ("approximate[ly] . . . 5188 square feet [at] 407 S. Main Street [in] Boerne, Kendall County, Texas 78006"). It argues that anyone familiar with Boerne could identify the property referred to from the address, the identity of the owners, and identity of the lessee. We disagree. The address in the description of the premises in the lease is incorrect and the lease does not identify the owner of the property, only the lessor. See Matney, 210 S.W.2d at 983 ("It will not necessarily be inferred that he owned the land simply because he signed the lease contract as lessor."). More importantly, "a deed purporting to convey land, which describes it only by quantity and as being part of a larger tract, with nothing whereby to identify what specific portion of the larger tract is intended to be conveyed, is void for uncertainty of description." Matney, 210 S.W.2d at 983 (quoting Smith v. Sorelle, 126 Tex. 353, 87 S.W.2d 703, 705 (1935)); See Texas Builders v. Keller, 928 S.W.2d 479, 481-82 (Tex. 1996) (holding description of property as "58,333 square feet . . . at 12050 Rojas" is insufficient to identify the property with reasonable certainty where the property at that address contained 100,000 square feet and nothing in document identifies which part of the property is being referred to); Hereford v. Tilson, 145 Tex. 600, 200 S.W.2d 985, 988-89 (1947) (holding that where lease provided lessee option to purchase part of property at given location, but it could not be determined what part of the property was included without resort to parol evidence, option violated statute of frauds and would not be enforced).

OTR argues alternatively that the "premises" referred to in the right-of-first-refusal is the entire property—the land and building—at 470 S. Main, and that the property is sufficiently described by identifying the street address and the owner. We again disagree. First, nothing in the lease itself suggests the parties to lease were referring to different things when they used "premises" as opposed to "Premises." To make its argument, OTR resorts to parol evidence regarding the parties' intent. However, this intent was not expressed in the lease. Even if parol evidence established the parties knew and understood what property was intended to be conveyed, the knowledge and intent of the parties will not give validity to a contract with an insufficient property description on its face. Reiland, 213 S.W.3d at 437 (citing Morrow v. Shotwell, 477 S.W.2d 538, 540 (Tex. 1972)).

If we assume that "premises," as used in the right-of-first-refusal, refers to the entire property at 470 S. Main, the property description in the lease is still insufficient to comply with the statute of frauds. A property description consisting of a street address may be sufficient under the statute of frauds if the document also contains a statement of ownership and it is shown that the party to be charged owns only one property fitting the property description in the contract. Moudy v. Manning, 82 S.W.3d 726, 728-29 (Tex. App.-San Antonio 2002, pet. denied); see Pickett v. Bishop, 148 Tex. 207, 223 S.W.2d 222, 223-24 (1949) (holding statement of ownership in the body of the instrument is considered part of the property description). When the description of the property to be conveyed is of doubtful sufficiency, ownership is an important element. Wilson v. Fisher, 144 Tex. 53, 188 S.W.2d 150, 154 (1945). The lease does not expressly identify the owner of the property and contains no statement of ownership. Ownership cannot be inferred from the mere fact that a person is a lessor of the property or contracts to sell it. Matney, 210 at 983; Wilson, 188 S.W.2d at 154. Nor may it be supplied by parol evidence. Id. The mere description of the property by its address, without any statement of ownership is insufficient.

We hold the Hasketts met their burden to establish that the statute of frauds applies to the right-of-first-refusal and the property description is insufficient as a matter of law to comply with the statute of frauds, rendering the right-of-first-refusal unenforceable.

SOURCE: SAN ANTONIO COURT OF APPEALS - 04-12-00363-CV - 3/20/2013  

STATUTE OF FRAUDS AS AFFIRMATIVE DEFENSE 

The statute of frauds is an affirmative defense, and it is waived if not pled. TEX.R.CIV.P. 94; Phillips v. Phillips, 820 S.W.2d 785, 791 (Tex. 1991).  



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