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!
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 .