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Verbal Agreements Are Usually Always Selectively Remembered.

People tend to remember verbal agreements in a way that is selectively beneficial to them. We all know (or should know) that, defined by the Statue of Frauds, to be enforceable,  contracts – especially for the sale or purchase of real estate and lease agreements - must be in writing.

But sometimes, people just verbally agree to things for many reasons - here are a few I've heard:

"I've known them forever - it won't be a problem."

"It's a small thing - it's not worth wasting paper."

"We agreed and planned to get it in writing later but forgot."

In Arizona, there is an exception: verbal leases for up to one year are enforceable and do not need to be in writing.

Is that a good idea?  I don’t think so.  I have several tenants that ask for 6 month or less leases – if it’s agreeable to the owner – it’s confirmed in writing.  This protects the property manager, the tenant and the owner. 

What else does it protect?  Selective memory. 

The most common example of selective memory related to leases:   A tenant agrees to a six month lease, and pays rent for that month.  The following month – the tenant decides to move. Now what? 

As a landlord –trying to do anything other than calling it a lesson learned will be a challenge!  If you try to enforce the verbal lease, you will have to present valid evidence that the tenant really intended to stay for six months.  Your only hope is the tenant, your only witness, saying, “Yes, I verbally agreed to the six month lease, but…”  What are the odds of that happening?

Even though there are exceptions and verbal agreements are binding in many states, best practice?  Always put it in writing if you want to enforce it!

Buying or selling Tucson real estate, Mt Lemmon, Tucson bank-owned homes, Tucson rental homes, or Tucson lease option homes? Visit www.KGCPropertiesLLC.com .

                                                 

 

This blog is written with my opinions and my opinions are  presented with accuracy but not guarantees. Please talk to a professional before making any real estate, financial or agency decisions.    Gabrielle Kamahele Rhind - 2014. If you want to reprint parts of this - just email me for my permission: KGCProperties@gmail.com .

 

Comment balloon 44 commentsGabrielle Kamahele Rhind • October 24 2013 05:30AM

Comments

Good morning, Gab.... it's naive to think that a verybal agreement has a place in any business transaction.... I get everything in writing...

Posted by Barbara Todaro, "Franklin MA Homes" (RE/MAX Executive Realty ) almost 5 years ago

Gab,

I suspect more than a few marriages work this way too 

Rich

Posted by Richard Iarossi, Crofton MD Real Estate, Annapolis MD Real Estate (Coldwell Banker Residential Brokerage) almost 5 years ago

Love the title because it is so true. Instead of calling someone out as a liar say 'you have selective reasoning' on this issue.  ;-)

Posted by Lyn Sims, Schaumburg IL Real Estate (RE/MAX Suburban) almost 5 years ago

Gabrielle - Wow! I think everything including leases in Georgia have to be in writing. Learned something new today, thanks!

Posted by Peter den Boer, MBA,GRI, Associate Broker, Realtor (Atlanta Communities) almost 5 years ago

Boy haven't we all heard the he said, she said of a verbal agreement. Contracts in writing still lead to misinterpretations   but the framework or foundation is at least in place.

Posted by Paul S. Henderson, REALTOR®,CRS,, Tacoma Washington Agent/Broker & Market Authority! (RE/MAX Professionals.) almost 5 years ago

Had to suggest this one.  I don't do property management but I do think a verbal agreement in any type of Real Estate is insane.  I just can't see it working for the benefit of any party in the transaction.  Ugh

Posted by Brenda Mullen, Your San Antonio TX Real Estate Agent!! (RE/MAX Access) almost 5 years ago

Suggested!  Learned something new today, quite scary...verbal agreements...

Posted by Cara Marcelle Mancuso, Call a Marana neighbor, I'm THERE! LONG REALTY (Long Realty - Dove Mountain, Marana AZ) almost 5 years ago

Hi Gab! Very interesting that verbal leases are allowed in Arizona. I would think that just makes things more complicated. Hope all is well with you.

Posted by Dan and Amy Schuman, Luxury Home Specialists (Howard Hanna Real Estate Services) almost 5 years ago

Ah yes...the old verbal agreement and selective memory!  What a lethal combination!

Posted by Mike McCann - Nebraska Farm Land Broker, Farm Land For Sale 308-627-3700 or 800-241-3940 (Mike McCann - Broker, Farmland Broker-Auctioneer Serving Rural Nebraska) almost 5 years ago

Gabi, I don't like verbal anything.  To the point that I now use email for almost all communications just so that it is documented somewhere.  Very helpful and unfortunately often needed for the very reasons you noted above.  

Posted by Kelly Young, Colorado Springs Real Estate ~ 719-226-0126 (The Platinum Group Realtors) almost 5 years ago

Surprised that leases in AZ has verbal agreements acceptable, Gabrielle! Not a good idea - as you mentioned.

Posted by Praful Thakkar, Andover, MA: Andover Luxury Homes For Sale (LAER Realty Partners) almost 5 years ago

Either get a contract or a sizable deposit! :)

Posted by Laura Cerrano, Certified Feng Shui Expert, Speaker & Researcher (Feng Shui Manhattan Long Island) almost 5 years ago

No way here in Florida.  Statute of Frauds is very clear:  ALL real estate must be in writing in order ot be enforcable.  NO EXCEPTIONS!

Posted by Florida Tolbert Team Keller Williams Advantage, Keller Williams Land Division Specialist (Keller Williams Advantage III Realty in Lake Nona) almost 5 years ago

It is possible to negotiate verbally come to an agreement. If the agreement is not set down in writing and signed by the parties making an agreement it is not enforceable in a court of law. At least that is my understanding in California real estate. Verbal negotiations are expeditious and verbal agreements may seem satisfactory…until there is a disagreement over what has been agreed to. If it’s not in writing, it does not count!

 

Posted by John Juarez, ePRO, SRES, GRI, PMN (The Medford Real Estate Team) almost 5 years ago
Gabrielle- I prefer written agreements. It limits the problems and misunderstandings.
Posted by Christine Donovan, Broker/Attorney 714-319-9751 DRE01267479 - Costa M (Donovan Blatt Realty) almost 5 years ago
Must be in writing to be enforceable for real estate in Georgia. Can be on a cocktail napkin, but as long as everyone signs it would be enforceable. Why risk the misunderstanding, put it in writing.
Posted by Aaron Hofmann, aka Mr. Smyrna Vinings (Atlanta Communities) almost 5 years ago

It is very correct: we tend to have selective memory about our past promises.

I know very few people whose promises are as good as gold, yet....with others I prefer to have those promises in writing( at least, in an email)

Posted by Inna Ivchenko, Realtor® • Green • GRI • HAFA • PSC Los Angeles CA (Barcode Properties) almost 5 years ago

I am glad all the tenants that I have rented to had a signed lease.I wonder how the judge decides a case in Arizona when there is a dispute between landlord and tenant.

Posted by Gita Bantwal, REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel (RE/MAX Centre Realtors) almost 5 years ago

GOOD MORNING GITA ... With a verbal agreement - it would be a challenge ...

GOOD MORNING INNA ...  Agree - there are some people you can hold to their word - but it's better to have documentation if you can.

GOOD MORNING AARON ... A cocktail napkin works!  I knew someone who appealed a court decision on a post it note! Judge accepted it because it was in writing!

GOOD MORNING CHRISTINE .. It does, ber much so.

GOOD MORNING JOHN ... and you have a very good point ...verbal agreements always seem great until there is a problem - thanks for the input.

GOOD MORNING KEVIN .. good to know ... even if there were exceptions, would you still put it in writing?

GOOD MORNING LAURA ... I love it - YES!

GOOD MORNING PRAFUL ... It is interesting that we have that exception, I wonder if it's a matter of time before that is changed?!

GOOD MORNING KELLY .. email and text messages ... it documents and is better to avoid misunderstandings.

GOOD MORNING MIKE ... even in the best of cases, and with the best of friends ... I agree!

GOOD MORNING DAN .. it can, and anytime one of my tenants says, "let's shake on it", I do and then ask them to sign and date!

GOOD MORNING CARA .. thank you for the suggest - I appreciate it!

GOOD MORNING BRENDA ... thank you for the suggest and I agree - everything I do with property management is written down!

GOOD MORNING PAUL .. it is a good framework ... I think when something is written down - it makes one commit to the promise more than if its just "said".

GOOD MORNING PETER .. it is surprising to read about "loops" in the law isn't it?

GOOD MORNING LYN ... agreed!

GOOD MORNING RICH ... you always make me laugh - and I agree!

GOOD MORNING B .. as do I!  Thanks for your comment!

Posted by Gabrielle Kamahele Rhind, Broker/Owner (KGC Properties LLC, Tucson Property Management & Real Estate) almost 5 years ago
Gabrielle, Certainly the only way to properly represent a client is to clearly define the terms and conditions in writing.
Posted by Bill and MaryAnn Wagner, Jersey Shore and South Jersey Real Estate (Wagner Real Estate Group) almost 5 years ago

As the old saying goes "A verbal agreement is worth the paper it is written on."

Posted by Than Maynard, Broker - Licensed to List & Sell - 405-990-8862 (Coldwell Banker Heart of Oklahoma) almost 5 years ago

Verbal for one year or less are also allowed in Texas (Statute of Frauds); however I think that would be a very risky transaction for a property owner.

Posted by Richard Weeks, REALTOR®, Broker almost 5 years ago

Hi Gabrielle, I couldn't agree with you more. Trying to enforce a verbal agreement ends up being your word against theirs. You sure are right about selective memory.

Posted by Michael Setunsky, Your Commercial Real Estate Link to Northern VA almost 5 years ago

There's the reason we say if it's not in writing, there's no contract! And without a contract, boy oh boy do memories become selective!

Posted by Nina Hollander, Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor (RE/MAX Executive | Charlotte, NC) almost 5 years ago

Whenever possible I get everything in writing. It's another reason I keep email records for everything as email is admissable.

Posted by Bryan Robertson, Broker, Author, Speaker (Intero Real Estate) almost 5 years ago

Wow, verbal anything is not a good idea, except to say nice things to each other every day, as a habit!

Posted by Jay Markanich, Home Inspector - servicing all Northern Virginia (Jay Markanich Real Estate Inspections, LLC) almost 5 years ago

Thanks for your post and the discussion

Posted by Drick Ward, "RealtorDrick" - Experienced Representation (NEPTUNE REALTY) almost 5 years ago

CYA actually means Get It In Writing. Email and DocuSign make it too easy not to do.

Posted by Steven Barks, Director of Operations (Worth Clark Realty) almost 5 years ago

Good post and relevant to our business too..How about the alluding to things...things that were never said but implied? No room for that in this business...

Posted by Richie Alan Naggar, agent & author (people first...then business Ran Right Realty ) almost 5 years ago

In the past, when we've gottne verbal offers and asked for a written offer the written offer comes in much lower than the verbal offer was.

Posted by Marc McMaster, Putting my clients before myself (RE/MAX Centre Realty) almost 5 years ago

Black and white spell it out. Set expectations.

Posted by Andrew Mooers | 207.532.6573, Northern Maine Real Estate-Aroostook County Broker (MOOERS REALTY) almost 5 years ago

If verbals are true. .

I have all my listings under contract already. . 

the promises of offers coming are music to my deaf ears

Posted by Fernando Herboso - Broker for Maxus Realty Group, 301-246-0001 Serving Maryland, DC and Northern VA (Maxus Realty Group - Broker 301-246-0001) almost 5 years ago

Gabrielle, whenever business is concerned, it should always be in writing. It protects you and it protects your clients, who should always be your first priority. When the going gets tough, verbal agreements aren't as a written agreement. Thanks for sharing!

Posted by Phil Stevenson, CRMP, Reverse Mortgage Expert in Miami and Florida (PS Financial Services 305-791-4874 or 888-845-6630) almost 5 years ago

The good old hand shake days are gone. Getting everything thing in writing is certainly preferred.

Posted by Jerry Newman, Texas REALTOR, San Antonio Military Relocation (Brown Realty, 210-789-4216,www.JeremiahNewman.com) almost 5 years ago

Gabrielle- we're all subject to and guilty of selective hearing and memory.  Get it in writing!!!

Posted by Kathy Streib, Home Stager - Palm Beach County,FL -561-914-6224 (Room Service Home Staging) almost 5 years ago

I can't imagine doing a deal - even for a six month lease as a landlord - without it being in writing. Far too risky for me! The point of having the written contract is to protect all parties involved. Far too easy to be taken advantage of if nothing is written down. Great post!

Posted by Renee White, Renee White (Keller Williams Realty) almost 5 years ago

Looking at all of the responses on this topic, it sounds like many of us have learned lessons that we will remember and pass on to our clients for a long long time.  Many people want to believe in the good of people and then somewhere a kin shows up and everything gets hinky. 

That's why our clients need good Realtors that protect them from the kinks or kinky!

 

Gayle Phillips

Posted by Gayle Phillips (RE/Max Gold) almost 5 years ago

Getting agreements such as those you describe above probably are best done on paper.  Just using a verbal agreement sounds like a problems may arise down the road.

Posted by Andrew Payne Realtor® Richmond VA Homes For Sale~804-938-5257~, Richmond, VA, Real Estate, SRES®, NAR Green (Coach House Realty) almost 5 years ago

Even when a client will agree to something verbally feeling it doesn't need paper, they get a detailed email from me with the context of the conversation. It may have been verbal, but the email was definitely a confirmation and allowed me to protect myself and the client

Posted by Ed Silva, Central CT Real Estate Broker Serving all equally (RE/MAX Professionals, CT 203-206-0754 ) almost 5 years ago

Unfortunately, we aren't living in a time where verbal agreements mean much, even if they are remembered the same way by everyone!  Too many people don't do what they say, so in writing is the way to go!

Posted by Kat Palmiotti, The House Kat (Grand Lux Realty, 914-419-0270, kat@thehousekat.com) almost 5 years ago

Gabrielle, you are so right. People do seem to have a selective memory. I'm a big fan of contracts. 

Posted by Mike Cooper, Your Winchester, VA Real Estate Sales Pro (Cornerstone Business Group Inc) almost 5 years ago

Gabrielle~ ding, ding, ding, "we have a winner" when it is in writing; it's better! (He said she said stuff is for the birds!) AWESOME post!

Posted by Jon Kolsky, Licensed California Real Estate Broker (Kolsky Realty & Management) almost 5 years ago

It is best to get everything on an official contract form to keep everyone honest.

Posted by Edward Gilmartin (CRE) almost 5 years ago
Everything has to be in writing in order for it to be enforceable. As my mom used to tell me, "You can't win an argument unless you have everything in writing.
Posted by Rosie Moore (Serving Sugar Land, Richmond, Rosenberg, Missouri City) almost 5 years ago

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