Can a Verbal Real Estate Agreement Be Enforced in Texas?

In Texas, a handshake is sometimes considered as good as a contract. However, in real estate transactions, parties generally need more than a verbal promise of performance. Texas law imposes strict requirements on real estate agreements to protect buyers, sellers, and other parties involved. 

In most circumstances, verbal real estate agreements are not enforceable in Texas. The requirement that these agreements be in writing helps:

• Prevent real estate fraud
• Create clear evidence of the parties’ intent
• Provide certainty in case of real estate disputes
• Clarify essential terms like price, closing date, and property description

Without a written contract, courts are often reluctant to enforce an agreement, even if both parties agree that a conversation took place. However, there are exceptions, which are discussed in more detail below. 

The Statute of Frauds in Texas

Texas has a Statute of Frauds (Texas Business & Commerce Code § 26.01) that requires certain agreements to be in writing before they are legally enforceable. Real estate contracts fall squarely into this category.

The following contracts must be written and signed by the party being charged.

• The sale of real property
• Leases longer than one year
• Agreements to convey mineral rights
• Options to purchase real estate
• Commission agreements with real estate brokers

A verbal promise to sell property is generally unenforceable unless it meets a recognized exception.

When a Verbal Agreement May Be Enforced

Although the Statute of Frauds generally bars court enforcement of oral real estate contracts, Texas law recognizes several exceptions. These exceptions are fact-specific and not available in every case.

1. Partial Performance Doctrine

A court may enforce a verbal real estate agreement when one party has taken significant steps that unmistakably indicate the existence of a contract. This is known as partial performance.

The claimant typically must show:

• They took possession of the property,
• They made substantial improvements, and
• They paid part or all of the purchase price.

Courts apply this doctrine to prevent injustice when the party’s actions strongly support the existence of an agreement.

2. Promissory Estoppel

Promissory estoppel applies when one party makes a clear promise, and the other party reasonably relies on that promise to their detriment. 

For example, if a property owner verbally promises to sell land, and the buyer spends money preparing the property for development based on that promise, a court may enforce the agreement to prevent unfair harm.

3. Admissions in Court

If a party admits in court that a verbal real estate agreement existed, the court may enforce the contract despite the Statute of Frauds. This is a rare exception.

Common Disputes Involving Verbal Real Estate Agreements in Texas

Verbal disputes frequently arise because verbal conversations are easily forgotten, misinterpreted, or remembered differently by the parties involved. 

These disputes commonly involve:

• Disagreements about essential terms, such as price, acreage, closing dates, or included improvements
• Boundary or easement misunderstandings, often based on informal conversations
• Oral promises to sell or transfer property at a later date
• Verbal lease agreements longer than one year (which are unenforceable without a written document)
• Claims of oral modifications to written real estate contracts

Without written documentation, courts must rely on party testimony and limited evidence, making verbal-agreement disputes harder to prove and more likely to result in litigation. 

Contact an Experienced Real Estate Attorney for Help

To protect your rights and avoid costly disputes, you should ensure that all real estate agreements are detailed, written, and signed. If you believe you have a claim involving a verbal agreement, you should consult an experienced Texas real estate attorney who can help you evaluate your options. Contact Porter Law Firm to schedule a confidential consultation.