Gifts That Violate the Statute of Frauds
In May of 1954, Uncle Bob made an agreement with his 2 nieces, Anne and Becky. Under the agreement, Uncle Bob would purchase a house and convey it to Anne and Becky. They, in turn, would provide Uncle Bob with a home as long as he lived. The 2 sisters agreed to make the mortgage payments and pay the taxes, utilities, repairs, and food bills.
Everything was going beautifully until one day in November, when Anne changed her mind. Anne told Uncle Bob and her sister Becky that she wanted no further part of the transaction and that Becky could have the whole property. Anne moved out and refused to pay for any of the expenses. Anne repeatedly told Becky that the property was all hers and to do anything she wanted with it. Anne did not, however, put the gift of her share of the property in writing.
Thirteen Years of Upkeep and Improvements
For the next 13 years, Becky and Uncle Bob lived in the house. Becky paid all of the expenses and upkeep. She also made significant improvements to the property: she added a concrete porch, leveled the house, erected a redwood fence, installed sheetrock in 2 rooms, placed aluminum screens on the windows, and installed a hot-water heater.
Occasionally, Anne visited the property and even stayed one or two nights, but she never moved back in. She was at the property often enough, though, that she could not have missed seeing the improvements that Becky had made.
Then Uncle Bob died.
If you are a regular reader of this column, you can predict what happened next.
Anne Claims Ownership After Uncle Bob’s Death
Anne decided that she still owned one-half of the property. She sued Becky to force a sale of the house so Anne could recover her share of the proceeds.
Anne argued that she had not legally transferred her share of the house to Becky because nothing was in writing. She pointed out that her verbal gift of the house to Becky was void because it violated the statute of frauds.
Anne was correct, of course.
What the Statute of Frauds Says About Real Estate Gifts
The statute of frauds is a legal doctrine that requires certain types of contracts to be in writing and signed by the party against whom enforcement is sought. The primary purpose is to prevent fraud. The statute of frauds applies to contracts for the transfer of real estate. An oral gift of real estate violates the statute of frauds and is void.
The Exception: When Oral Real Estate Gifts Can Be Enforced
But that is not the end of the story. A century or two ago, the courts realized that there are some circumstances where the statute of frauds is too harsh. They carved out an exception: a parol (oral) gift of realty is enforceable if there was a present gift, the donee took possession of the property with the knowledge of the donor, and the donee made permanent and valuable improvements on the property with the donor’s knowledge or consent.
Why Becky Met the Criteria
Becky checked all of those boxes. Anne, as the donor, told Becky, as the donee, that she could have the property. Becky lived on the property, and Becky made substantial improvements to the property that Anne saw.
A parol gift enforceable in equity had been established. As a result, Becky kept 100% ownership of the property.
In 1967, Texas codified the statute of frauds into Section 26.01 of the Business Code.
Final Thought: Put Real Estate Gifts in Writing
If you are thinking about giving a gift of real estate this Christmas, then please put it in writing.
Conclusion: Put Real Estate Gifts in Writing Before You Commit
Before giving or accepting a gift of real estate, take time to review the legal requirements and understand the risks involved. While verbal agreements may feel simple and straightforward, the statute of frauds can render them unenforceable—creating disputes years or even decades later.
At Hammerle Morris Law Firm, we help clients navigate property transfers, understand their rights, and avoid the complications that arise from unwritten agreements. Whether you’re planning to gift property, receive it, or resolve a conflict over ownership, our attorneys can provide the clarity and protection you need.
Schedule a consultation today to ensure your real estate decisions are secure, enforceable, and aligned with your long-term interests.
Virginia Hammerle is an accredited estate planner and represents clients in estate planning, probate, guardianship, and contested litigation. She may be reached at legaltalktexas@hammerle.com. This blog contains general information only and does not constitute legal advice.
