Critical Insights on Oral Agreements for Real Estate: Understanding the Third District Court of Appeal’s Decision in Mowder v. Smith

In general, real estate transfers must be in writing to be valid. However, an exception to this general rule is when one party performs or acts in accordance with the terms of an oral agreement to transfer real estate, as recognized by the Third District Court of Appeal in Mowder v. Smith, 390 So. 3d 106, 108 (Fla. 3d DCA 2024).

The Case’s Background

The dispute centered on a waterfront duplex in Monroe County, Florida, known as “Yellowtail.” Robert Mowder, Jr., the owner, and Jeremy Smith, the appellee, entered into an oral agreement wherein Mowder promised to convey the property to Smith if Smith satisfied the existing mortgage.

Relying on this promise, Smith paid off the mortgage, took possession of the property, paid utilities and property taxes, and made substantial improvements. Despite these actions, Mowder did not transfer the property and later sought to evict Smith, leading Smith to file a lawsuit seeking specific performance of the oral agreement.

The Legal Issue and Decision

The central legal question was whether the oral agreement to transfer real property could be enforced under the doctrine of part performance, thereby circumventing the statute of frauds, which typically requires such agreements to be in writing.

The court reaffirmed that while the statute of frauds mandates written agreements for the sale of land, the doctrine of part performance can remove an oral contract from this requirement. To invoke this exception, certain criteria must be met:

1. Payment of Consideration: Smith satisfied this when he paid the mortgage on the property.
2. Possession: In this case Smith took and maintained possession of the property.
3. Improvements: Smith made valuable and permanent improvements to the property.

The court found that Smith’s actions satisfied these elements, thereby justifying the enforcement of the oral agreement through specific performance. The court emphasized that its role was not to reweigh evidence but to affirm the trial court’s findings if supported by competent, substantial evidence.

Implications for owners of real estate

This decision underscores that, under Florida law, oral agreements to transfer real property can be enforceable if the party seeking enforcement demonstrates part performance through payment, possession, and improvements. It highlights the importance of documenting real estate transactions in writing to avoid reliance on exceptions to the statute of frauds.

For individuals and legal practitioners, this case serves as a reminder of the potential enforceability of oral agreements in real estate under specific circumstances and the necessity of thorough documentation in property transactions.

For more information regarding real estate transactions or real estate litigation, contact one of our experienced attorneys at 305-570-2208. You can also email our founding partner Eduardo Maura directly at eduardo@ayalalawpa.com.

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[The opinions in this blog are not intended to be legal advice. You should consult with an attorney about the particulars of your case].