News & Insights

Written Amendments to Land Contracts
February 8, 2016
by Marcellus Lebbin

 

South Bend / Mishawaka, IN – Indiana courts have long applied the principle that an agreement to convey land is subject to the Statute of Frauds’ writing agreement. That is, in Indiana, any contract which seeks to convey an interest in land is required to be in writing. The Statute of Frauds’ writing requirement seeks to serve a two-fold purpose: (1) to prevent fraudulent claims that would likely arise when the word of one person is pitted against the word of another, and (2) to remove the temptation of perjury by preventing the rights of litigants from resting wholly on memory alone. However, the Indiana Court of Appeals has recently explicitly stated the rule that when a contract is required by law to be in writing, it can only be modified by a written instrument.

In the recent case, Huber v. Hamilton, 33 N.E.3d 1116 (Ind. Ct. App. 2015), two parties executed a written land contract for the sale of commercial real estate. The written land contract called for monthly payments, with a balloon payment to be made at the end of the term. When the buyer was unable to make the balloon payment at the end of the term, he approached the seller and made an oral agreement to extend the due date for the balloon payment––the agreement was never reduced to writing. Although the parties agreed that an oral agreement had been reached, the parties presented two different versions of the agreement. The Court of Appeals held that because the land contract was required to be in writing, any modification to it also had to be in writing.  Consequently, the parties’ oral agreement is not enforceable. Therefore, by failing to make timely payments under the written land contract, the buyer had breached the land contract.

For individuals in the buyer’s position, who may assume they are accurately upholding the terms of the agreement, this result can come as a devastating shock. If you are contemplating a real estate transaction or have a pre-existing real estate contract, one of our real estate attorneys would be pleased to assist you in making sure the desired terms of your agreement are accurately documented.

 

The content of this article is for information purposes only, and neither contains nor should be considered legal advice.

 

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