Are Verbal Agreements Binding?

By Robert Griswold

Question: Recently I made a verbal agreement with my landlord to purchase the house I have been renting for over eight years. We agreed on the purchase price and that I would pay the closing costs while he would address some cosmetic issues at the house. He agreed to fix the roof that has leaked for over five years and take care of any work that may be needed to get a clear termite report. As part of the agreement I needed to acquire credit approval, which I immediately did. He needed to complete the lot split or division of the property, as there are currently two houses on one lot. He told me he would have it done in 90 days. I fixed all the windows, which where in terrible shape from neglect, and I also sanded and painted the awnings to help with getting a clear appraisal and unconditional loan approval by the lender.

Then a few months ago my landlord approached me about adjusting the proposed boundaries of our properties by taking 4 feet, or approximately 220 square feet, from the back of my property to add to his property. We ultimately compromised and agreed on half of his request, or approximately 110 square feet, and the purchase price would remain the same. I thought everything was settled until he called last evening to tell me he is backing out of our verbal agreement. He said he now thinks that with the lot split, the property is worth twice as much as he originally thought and he essentially wants to cut me out of the deal. Do I have any legal recourse? Can I make him hold to our verbal agreement? Is there anything I can do? Your advice will be greatly appreciated.

Property Manager Griswold replies:

You need to immediately contact an attorney that specializes in real estate transactions. As a real estate professional, I can tell you that a verbal agreement for the transfer of real estate is not valid. Clearly, you and your landlord made a big mistake by failing to reduce your agreement to purchase this property in writing. At this point, I strongly urge you to spend the time and money to obtain competent legal counsel. If you do not have an attorney, then I recommend you contact your local Bar Association Referral hotline as listed in most phone directories. It is highly likely that the owner will prevail in your situation, unless you get an attorney immediately to begin protecting your rights. I wouldn't scrimp on the cost of a competent attorney that has extensive experience specifically in these types of real estate transactions. Not all attorneys have such experience. Remember that it will be your burden of proof and your landlord will steamroll right over you unless you get a good legal adviser to help you. You also may be able to seek additional damages for the property improvements you made in anticipation of purchasing a portion of the property. So be sure you immediately document and put the owner on notice for the work you did in preparing the property for the appraisal. You should ask your attorney about any legal rights you may have to place a lien on the property for your labor and materials.

Copyright 2006 Inman News.