Dating back to 17th century England, the Statute of Frauds was enacted to prevent fraud between parties where one had an obligation to the other. In short, it requires certain obligations to be in writing and signed by the person against whom enforcement of the contract will be sought. Now enacted by statute in all fifty states, the Statute of Frauds applies at minimum to the sale of goods worth at least $500, marriage, repaying the debts of others, any agreement that takes more than a year to complete, and real estate. For our purposes, we focus on the latter two. See California Civil Code §1624.
Real estate listing and brokerage agreements are also covered by the Statute of Frauds. An agreement authorizing a broker or agent to buy, sell, or lease property on behalf of a client must be in writing to be enforceable — a verbal promise of commission generally cannot be enforced in court. By definition, the rental of facilities must be in writing when the lease is for more than a year, which raises the question of what applies to a month-to-month rental.
Understanding the Statute of Frauds
Although there are some exceptions to the general rule, an agreement enforceable under the Statute of Frauds must be in writing, identify the subject matter of the obligation, include the material terms of that obligation, and be signed by the party against whom enforcement is sought. For an agreement to be valid, the contract itself does not always need to be the writing — but there must be some writing signed by the party to be charged, particularly where the agreement has already been fully performed by both parties, such as when a seller transfers title or a buyer pays the purchase price and takes possession.
Several separate writings can together satisfy the Statute of Frauds when there is a reasonable relationship between them, so a single formal contract is not always necessary. California courts have also read the term “writing” broadly enough to include emails between the parties that summarize terms previously agreed to orally.
Statute of Frauds Exceptions
There are several exceptions in which a court will find a valid contract between the parties despite the absence of a written agreement. Many involve merchants who regularly deal in the sale of goods and can use other evidence to establish the existence of an agreement in court. If one party partially or fully performs the obligations of an oral agreement, that party may be able to enforce it to the extent of their own performance. Courts also apply promissory estoppel where a party made an offer expecting reasonable reliance, that reliance caused a significant loss, and enforcing the Statute of Frauds strictly would result in unjust enrichment.
Short-Term Rentals and the Statute of Frauds
In California, a lease or rental for more than a year must be in writing under the Statute of Frauds. A rental agreement for a term of less than a year, such as a month-to-month rental or a one-day rental for a special event, generally falls outside the Statute of Frauds and may be created orally. However, the length of the rental term itself is not the determining factor — a one-day rental scheduled twelve months from now would still fall under the Statute of Frauds, since the agreement would not be completed within a year of being made.
This same logic extends to unwritten leases generally: any lease for a term longer than one year, or that will not expire until more than one year after the agreement is reached, is unenforceable if it is not in writing. A tenant who enters into possession under such an unenforceable lease becomes a tenant at will.
Electronic Signatures and the Statute of Frauds
Church leases, listing agreements, and vendor contracts are increasingly signed electronically rather than on paper. California’s Uniform Electronic Transactions Act (UETA) generally gives an electronic signature the same legal effect as a handwritten one, provided the parties have agreed to conduct the transaction electronically. A DocuSign signature or similar electronic signing tool will typically satisfy the Statute of Frauds for a real estate contract on that basis. Text messages and instant messages are treated differently: California law specifically excludes an ephemeral electronic message, such as a text, from satisfying the Statute of Frauds for a contract to convey real property, unless it is followed by a proper written confirmation.
Putting the Statute of Frauds in Writing
California courts have both invalidated and enforced contracts lacking some formal element, and the outcome typically depends on the specific facts and evidence presented. Every effort should be made to memorialize an agreement in a signed writing that sets out its material terms as completely as possible, whether that writing is a formal contract or a properly confirmed electronic record. When in doubt, contact an attorney before relying on an oral or informal agreement.
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Disclaimer: Every situation is different and particular facts may vary thereby changing or altering a possible course of action or conclusion. The information contained herein is intended to be general in nature as laws vary between federal, state, counties, and municipalities and therefore may not apply to any given matter. This information is not intended to be legal advice or relied upon as a legal opinion, course of action, accounting, tax or other professional service. You should consult the proper legal or professional advisor knowledgeable in the area that pertains to your particular situation.
