In Arizona, an agreement to sell real property is not enforceable without a written contract. A.R.S. § 44-101(6). The purpose of this statute is to prevent fraud. But sometimes the statute leads to unfair results, so Arizona courts have recognized exceptions.
One exception, known as the “part performance” exception, applies when a party acts in a way that cannot be explained unless an oral agreement to sell real property exists. In that situation, there is no need for a written contract because the party’s actions are proof enough.
The Plaintiff, Valdez, invoked that exception. He claimed that his friend, Delgado, orally agreed to sell him property. Valdez said the terms were as follows: Delgado would buy a home and then convey title to Valdez after fifteen years; in exchange Valdez would contribute toward Delgado’s initial down payment on the home, continue to pay Delgado in monthly installments for fifteen years, and cover all costs of cleanup, materials, and repairs.
Valdez claimed that he performed his end of the bargain. He said he (1) contributed substantially toward Delgado’s down payment on the home, (2) cleaned, remodeled, and substantially improved the home, (3) moved in to the home, and (4) continued to pay Delgado in monthly installments for fifteen years. But after fifteen years, Delgado did not convey title to Valdez.
The matter went to a jury. Delgado disputed many of Valdez’s factual claims. But the jury believed Valdez, finding his account of his actions true and concluding that Delgado breached an oral agreement to convey title.
The Court of Appeals affirmed. The court first affirmed that the jury’s acceptance of Valdez’s account of his actions was not clearly erroneous. The court then held that Valdez’s actions, as found by the jury, were sufficient to apply the ‘part performance’ exception. Valdez’s actions—including his substantial contribution toward the down payment of the home and substantial improvements to the home thereafter—could not be explained unless an oral agreement to convey title existed. Thus, no written contract was required.
Judge Perkins delivered the opinion. Presiding Judge Howe and Judge Weinzweig joined.
Posted by: Josh Whitaker