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Parties’ oral modification of land agreement unenforceable

May 28, 2015

The Indiana Court of Appeals upheld the decision by a trial court finding an oral agreement between a buyer and seller that modified a written land contract had to be in writing based on the Statute of Frauds and that the buyer defaulted on the terms of the agreement.

Terry Huber entered into a written land contract with Roger Hamilton, agreeing to buy commercial real estate in Crawfordsville. The agreement called for Huber to make monthly payments until the end of the contract on Nov. 30, 2010, when the unpaid balance would be due in full unless renegotiated.

As the end of 2010 approached, Huber and Hamilton entered into an oral agreement to extend the monthly payments and delay the balloon payment, although there is a dispute between the parties as to what the two parties agreed to, according to the court record.

Hamilton believed Huber still owed the balloon payment at the end of 2010 and that the additional $300 a month Huber paid was a penalty; Huber believed he was able to make the monthly payments until the property was paid off in 2019.

The dispute ended up in court, with the trial court ruling that the Statute of Frauds required the oral agreement reduced to writing, that evidence presented by both sides was unpersuasive, and that Huber breached the land contract when he failed to make the balloon payment when it was originally due.

“Requiring a writing for transactions concerning the conveyance of real estate is consistent with the underlying purposes of the Statute of Frauds, namely: (1) to preclude 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 the precarious foundation of memory. These purposes are underscored in this case because although the parties had an agreement to extend the balloon payment, the trial court found that it could not determine the details of that agreement,” Chief Judge Nancy Vaidik wrote in Terry Huber v. Roger Hamilton, 54A01-1404-PL-154.

Because the land contract was required to be in writing, any modification also had to be in writing, so the parties’ oral agreement is not enforceable.

The judges also found that promissory estoppel does not apply in this case because neither party can prove there is a “promise” to enforce. They also affirmed that Huber must pay attorney fees based on language in the written contract.

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