Buying or selling real estate is a significant undertaking that usually involves a substantial financial investment. Indiana statutes and case law provide a structure for these transactions, but the information can’t be found in a single place. An Indiana real estate lawyer is the ideal partner to help buyers, sellers, and lenders navigate Indiana real estate contracts.
Key Legal Requirements for Indiana Real Estate Contracts
Indiana real estate transactions are governed by statutes and case law, rules that develop from appellate court decisions. Of the many rules and laws that govern Indiana property law, the requirement that the agreement must be in writing is the most significant. And even that requirement has exceptions. Read on to learn more about when written agreements in Indiana real estate transactions are and are not required.
Indiana Real Estate Contracts: The Written Requirement
Indiana law requires written agreements for Indiana real estate transactions, such as purchases, sales, and lending. Known as the statute of frauds and found at Indiana Code § 32-21-1-1, this rule of law requires certain contracts to be in writing, signed by every party with a duty to act under the contract, with sufficient detail to explain the parties’ agreement. Its purpose is to prevent fraud and other injury that could arise from a disagreement. While oral agreements can be enforceable in other circumstances, when the agreement involves the sale of real property, it must be in writing.
Knowing what to put in contract
A Case Enforcing the Statute of Frauds for Indiana Real Estate Transactions
Although the statue of frauds is Indiana law, disputes still arise about whether it applies. In 2015, in the case of Huber v. Hamilton, 33 N.E.3d 116 (Ind. Ct. App. 2015), the Court of Appeals of Indiana agreed with a trial court decision that an oral agreement was unenforceable because it was not in writing.
The parties had entered into an Indiana real estate contract for the sale of commercial real estate. The land contract required monthly payments with a balloon payment at the end of the term. When the buyer was unable to make the balloon payment, the parties orally agreed to extend the term. The parties later had differing opinions on the exact details of the oral agreement.
On appeal, the court acknowledged that there are exceptions to the requirement that Indiana real estate transactions must be in writing but held that none of the exceptions applied in this case.
Promissory Estoppel: When Oral Agreements Can be Enforced
Although oral agreements for real estate transactions fall under the Indiana statute of frauds, agreements for the sale of real estate can still be enforced in certain circumstances. The doctrine of promissory estoppel says that a person cannot make a promise and then deny the promise when the other party has changed his or her position in reliance on the earlier promise and would suffer loss if it weren’t enforced.
In the case above, the trial court had been unable to determine the details of the parties’ oral agreement to extend the time for making payments. On those facts, the appellate court held that there was no promise to enforce the oral agreement and, as a result, promissory estoppel did not apply.
It’s possible to think of scenarios where promissory estoppel might save the day, but the lesson is that default rule is best: all agreements for Indiana real estate transactions should be in a writing that details the complete agreement.
Need Help with Indiana Real Estate Contracts?
As demonstrated by the case of Huber v. Hamilton, Indiana real estate contracts can be complicated, especially when modifications to the contract are necessary. An Indiana real estate lawyer from Camden & Meridew, P.C. specialize in Indiana real estate and are available to assist you. Contact us online or by calling 317-770-0000 to set up a free initial consultation.