Have you heard about the Statute of Frauds?

Small and mid-size businesses have a lot to consider while forming and operating. Not only do you want to perform the service or work with the products dreamed up, but you’ll also have to think about and make other business decisions. Some of those issues could be employing a staff, business taxes or paying the company bills.

The Statute of Frauds will come into play when your business decides to purchase commercial property. No, it does not relate to fraud in the general sense–that is a common misconception. The statute is directly related to real estate transactions and requires any agreement about real property be in writing. It’s that simple.

Let’s say, for example, you know someone in town who is looking to sell a small building that would be the perfect location and has just the right amount of space for your business. One evening, the two of you discuss the property’s details and you both agree to a purchase price. However, as you are making preparations to take ownership, you realize that it has been sold to someone else.

The Statute of Frauds was designed exactly for this purpose. By law, you and the previous owner never had a legitimate promise or agreement that would be enforceable unless you had that agreement written down in some form of promise or memorandum. Additionally, you, the person making the offer or promise to purchase, would need to sign the agreement.

When conducting a commercial real estate action, it’s important to know all the aspects of that agreement and what you will be contractually obligated to do. Speaking with an attorney who is experienced working with small and midsize businesses will help you avoid costly errors or omissions when negotiating the sale of real estate or making a purchase. Additionally, an attorney can assist you with writing the agreement and making sure the caveats and nuances are accurately reflected. 

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