People often groan when legal issues are raised during the sale of a home. Legal issues are complex and we are assumed to understand them all. Still, there are some issues that you should know because they protect you.

The majority of real estate transactions go smoothly. If things happen, it is usually during escrow when a problem is discovered. Here is where problems begin. The parties orally agree on a fix, but later argue over the terms of their agreement.

One of the things we are taught early on in life is that we have to keep our word. If you went to Catholic school, this lesson was often enforced with a whack on the knuckles!

This is a noble and honorable thought, but it does not mean much in the real world of real estate transactions. That is pretty sad, but there is a public policy against the enforcement of oral promises. Why? They are nearly impossible to prove in court.

Assume that I am selling my home. I get an offer from a buyer. After going back and forth, we agree to a price. The buyer, however, also wants me to throw in money for upgrading all the plumbing in the home. I agree and we shake on it.

As we approach the end of escrow, we start arguing over the plumbing upgrade. I think it should cost $5,000, but he wants five times this amount. With such a large difference, we are unable to close the escrow and he sues me.

The trial in this matter is going to be very quick. Why? Well, the only evidence is the testimony of each party. There is nothing in writing for a jury or judge to latch onto in making the decision. As such, how is a decision going to be reached?

A flip of the coin has as much of a chance of coming up with the right decision as a judge or jury does in this case. Instead of deciding on the merits, the decision will be based on who testifies better. This is not a good way to decide cases.

To avoid these situations, the concept of the statute of frauds has been enacted in nearly every state. This statute simply says any oral promise that has a value over a certain dollar figure is void as a matter of law. In most cases, the dollar figure is $750.

So, how does all of this relate to your particular real estate situation? The answer is simple. You must get everything in writing. Written promises are entirely enforceable. Oral promises are not.

This legal issue is there to protect you. Think it through. If the other party is unwilling to put something in writing, what does that tell you? It should tell you there is something fishy going on and maybe you should pass on this deal.