Homeowners, landlords, tenants and business owners sometimes rely on trust and verbal commitments, only to discover that enforcing those promises creates serious complications. New York law does recognize exceptions that may allow an oral real estate agreement to hold up in court.
The reason for a written real estate agreement
New York follows a legal principle known as the Statute of Frauds, which requires buyers and sellers to document real estate agreements in writing. Under state law, you can only enforce an agreement to sell real property if you provide written proof of the deal that the person you are asking to honor the contract actually signed.
This rule exists to reduce fraud risk and prevent misunderstandings in high-stakes transactions such as real estate sales and long-term leases. Without a writing requirement, disputes would often come down to one party’s word against another’s.
The exception to the written contract rule
The doctrine of part performance is the most well-known exception to the Statute of Frauds in New York real estate disputes. New York’s equity courts retain the power to compel specific performance when a party has partially performed under an oral contract.
For this exception to apply, the actions you took in reliance on the verbal deal must be “unequivocally referable” to the agreement. Courts look for conduct that only makes sense in the context of the verbal contract, such as taking possession of the property or making significant improvements that would not have occurred otherwise.
The burden of proof falls on the party seeking enforcement, requiring clear and convincing evidence that your actions tied directly to the deal and could not be explained by any other arrangement.
The practical steps to consider
If a handshake real estate deal has fallen apart, the most important step is gathering evidence. Text messages, emails and written communications that reference the agreement could prove valuable. Records of payments and property improvements may also help establish that an oral deal existed.
It is also important to know that pursuing a claim based on a verbal contract is often more difficult and expensive than enforcing a written contract. Courts scrutinize these cases closely, and the outcome depends on the quality of evidence you can present.
