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Somerset Domestic Holdings, L.L.C. v. Fort

A-1192-03T2 (N.J. Super. App. Div. 2004) (Unpublished)

CONTRACTS; STATUTE OF FRAUDS—Absent a description of the real estate, an oral agreement to transfer it is not enforceable.

In 1988, two men agreed to jointly purchase a five-acre lot that included a one family residence. Only one signed the contract of sale. Prior to the closing, the two men signed an agreement under which the man who signed the contract of sale was to convey the property, immediately after closing, to himself and the other man’s nominee, as tenants in common. Under this agreement, the second man had the right to control the future disposition of the property. The agreement gave the first man the right to occupy the property pursuant to a lease, and it required the first man and the second man’s nominee to each pay one-half of the monthly mortgage and municipal assessments.

In 1995 or 1996, the second man orally transferred his interest in the property to the first. Approximately four years after the oral transfer, the second man paid the remaining balance of the mortgage. He then died. A company was then formed as the second man’s successor in interest. The second man’s nominee transferred his interest in the property to this company. Then, the newly-formed company filed a complaint for partition and moved for summary judgment. The first man responded that the company held no interest in the property because the second man, now deceased, had orally transferred his interest in 1996. The lower court granted the company’s motion for summary judgment, concluding that the alleged oral transfer was ineffective for lack of compliance with the statute of frauds. In 1996, under the statute of frauds, a transaction intended to transfer an interest in real estate is not effective unless there is a written description of the real estate, signed by the transferor, or the transferor has placed the transferee in possession of the real estate as a result of the transaction. First, it was undisputed that there was no description of the real estate nor was the transfer signed by the second man. The deceased man never placed the first man in possession of the real estate as a result of the transfer because the first man already had possession under the original agreement and under the 1988 lease. The Appellate Division affirmed the lower court’s decision based on the lower court’s analysis, holding that alleged oral transfer did not comply with the statute of frauds.

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