Are Oral Statements Binding in Real Estate Transactions?

Based on this writer's experience, situations such as this one are frequent in residential real estate. (Fei Meng)

Dear Monty: Are oral statements binding in real estate transactions? The seller requested 30 days after close. She moved out before closing and has a new residence. At closing, she made a verbal agreement with everyone in the room. The title officer, both real estate agents, and I heard her say she would be out in 14 days. When the time limit passed, she asked for another seven days, but now that has passed. She is asking for another five days. I have made arrangements based on her verbal agreement. I hired painters and carpet installers, and I gave the notice to vacate my apartment. I will have an extra month’s rent plus a penalty. All her furniture is gone. All that remains is miscellaneous stuff. Does her verbal agreement stand?

Monty’s Answer: When the agents wrote the purchase agreement, the contract stated the seller would be out in 30 days. In the states I am familiar with, oral representations are not enforceable. With the extensions she is asking for now, despite the oral representation, it appears by contract that there is no default.

Both real estate agents were reticent in not requesting an amendment to the contract of sale at the time the buyer made the statement. Under the law, real estate brokers and agents have a responsibility to reduce oral conversations such as the one you described into a document memorializing the event. Had that taken place, you would not have the financial loss you may now experience. Most states have online resources to help. Here is an example in my home state: DSPSComplaintForm.wi.gov/dspslsconlinecomplaint.aspx

Some Options to Consider

No. 1: Contact your agent, preferably by email, and suggest that they reach out to the listing agent and ask the two of them to solve this problem for you. Ask for the broker’s email address as they may not be aware of the situation. It is unclear if you have done this. Some real estate agents will resist the idea. Some will recognize that they erred and help. If they waffle, consider pushing back and threaten to file a complaint with state regulators.

No. 2: Contact the seller by email (the listing agent will have it). Tell her that if her belongings are not out by a specific date and time, you will put them out on the curb, and she can pick them up anytime. This action is a demand letter, and option No. 3 below is a more powerful demand letter.

No. 3: Consider contacting your attorney and ask them to write the demand letter. Most people will respond to such a letter. Your attorney will review the documents and advise you who should receive the demand letter.

No 4: As a last resort, incentivize the seller. Offer her cash (other than a lawsuit) to remove her belongings immediately. It sounds counterintuitive under the circumstances, but it may save time and be more cost effective.

Based on this writer’s experience, situations such as this one are frequent in residential real estate. There are fundamental reasons mistakes are common in this business. The culprits are low entry-level requirements, high agent turnover rates, and lack of proper training and supervision. Many industry practices are flawed, and your story is an example of the financial risks to be wary of when buying or selling a home.