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Dead People Cannot Talk: Get Your Real Estate Contracts in Writing

will and trustThe Supreme Court of Virginia issued an opinion last Friday in the case of Virginia Home for Boys and Girls v. Phillips  that reads like a law school examination question.  The court ruled that a man had no claim against an estate because he had no written contract and no independent verification.  

The basic principles are easy.  The statute of frauds in Virginia generally provides that all contracts for the sale of real estate must be in writing.  The so-called "Dead Man's Statute" provides that in cases where the opponent is incapable of testifying, no judgment shall be rendered if it is founded solely on uncorroborated testimony.  Both of these statutes make it incredibly difficult for a party to make a claim against an estate based on oral contracts, particularly claims involving real estate.

Despite these principles, the claimant in this case actually won at the trial court.  Part performance of the agreement can eliminate the requirement for a written contract.  Phillips claimed an agreement in 1977 that the estate should go to him if he helped on their farm and took over their operations.  The trial court was convinced based on the long history of changes in lifestyle, decades of assistance around the decedent's farm, and refusing to take more lucrative jobs in order to live by his agreement that Phillips story was on the level.  Unfortunately for Phillips, the Supreme Court of Virginia reversed and found there was no independent corroboration.

This case provides a couple important take-aways:

  • All contracts involving real estate should be in writing
  • Do not expect limited exceptions to basic rules to save your case, especially in Virginia
  • Any arrangements that are effective upon death should be confirmed in writing
  • Any business ownership transfer issues should be in writing or you risk estate planning arrangments trumping the oral business deal

 

  • Shareholder

    Timothy Hughes is the managing shareholder of Bean, Kinney & Korman. He also represents clients in construction and commercial litigation, as well as corporate, contracts and general business matters. With over 20 years ...