Oral agreements can be enforced


1 partner in property deal died before paying share

September 01, 2002

Dear Mr. Azrael:

I seek your advice on what recourse there is to establish clear ownership of a property.

Three people decided to jointly purchase a 10-acre lot on which to build their individual houses.

Partner A was short of funds, so the other two agreed to put in his share of the cost, with an oral understanding that he would pay his share when funds were available.

When the property was purchased, all three signed the papers, but Partner A died several months later without paying his share.

Partner A's widow has offered to let the other two partners buy her share for one-third of fair market value. Her name is on the deed.

Do the two paying partners have any recourse in this matter?

[Name withheld]

Glen Burnie

Dear Reader:

In general, oral agreements among partners are legally enforceable. Although a written partnership agreement might have avoided the dispute with A's widow, the fact that you don't have a written agreement is not a show stopper.

The facts, as you relate them, raise a number of legal issues. For instance:

Was a partnership ever formed? You suggest that A's widow was named on the deed along with her deceased husband. This form of titling is inconsistent with a partnership among A and his two acquaintances.

If there was a partnership, was it terminated by A's death?

Is A's widow bound by A's agreement to pay one-third of the costs of the l0-acre lot?

Can the original 10 acres be subdivided so that a separate, unimproved lot could be conveyed to A's widow?

All of the relevant factual and legal disputes could be resolved in a court action, but it is likely that the legal fees will be costly for everyone. When all is said and done, A's widow probably will not be entitled to one-third of the current fair market value of the property, since this would be grossly unfair to the other owners.

In my opinion, a fair resolution is for all parties to agree that the land will be valued by an independent appraiser at its current fair market value, excluding the value of any improvements (such as buildings, driveways and electric service) paid for exclusively by the surviving owners. A's widow should sell her interest in the property for one-third of the appraised value, less one-third of the original cost of the land and one-third of any property taxes paid by the other owners since the land was acquired.

Whatever agreement is reached with A's widow should be put in writing, prepared by an attorney.

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