Home > Uncategorized > Estate planning, Real Estate, Family and… Any Place For Lawyers?

Estate planning, Real Estate, Family and… Any Place For Lawyers?

 

I had a client call me recently.  His father passed away and left him and his siblings a large amount of real estate to share equally.

My client wanted me to draft some deeds since  he and his siblings all “had already decided who gets what

What my client was referring to, is that his father left the Property to his children, as tenants in common. He and his siblings understood that they each shared a complete and undivided equal interest in the whole land.

 

My thoughts?

Red flag.

 

 

Don’t hear me wrong, I get my client’s rationale.  My client thought he and his siblings got along just fine and therefore they didn’t need anything in writing in order to agree to divide up the property. Or if they did decide to put something in writing, they would just do it themselves.

My client’s scenario reminded me of a 2013 Court of Appeals  case that came out quite differently…

Everett Schram Living Trust ex rel. Schram v. Smith, 312500, 2013 WL 5630038 (Mich. Ct. App. Oct. 15, 2013)

Facts of Everett Schram Trust:

Everett Schram (“dad”) owned 3 parcels of land.  Dad divided the land into three parcels and deeded one parcel to each of his children, Plaintiff Lawrence Schram, defendant Julie T. Smith, and defendant Diane L. Tudor.

Dad passed away.

After dad’s death, plaintiff, Smith, and Tudor discovered that the land deeded to each of them was inconsistent with their expectations.

After discussions, all three signed an agreement (Agreement) to redistribute the property in November 2010.

(My interjection – this might have been a great place for siblings to discuss the matter with a lawyer)

The Agreement, in its entirety, states:

I Larry Schram give a gift of money to my sister Julie Smith to move her west property line back to the east.Adjacent [sic] to Yearmans [sic] east property line out to Trask Lake Rd. Sister Diane Tudor is in agreement to have her property run north and south 770 feet wide on Trask Lake Rd.

Generally, the agreement involved a portion of Smith’s property becoming plaintiff’s.
Problem solved, Right?
Wrong.
However, Smith instead sold almost all of her property through a land contract to defendants Craig and Nicole Johnston in March 2011.
Plaintiff filed a lawsuit, requesting specific performance of the Agreement and alleged that his interest in the property was superior to the interest of the Johnstons.

Everett Schram Living Trust ex rel. Schram v. Smith, 312500, 2013 WL 5630038 (Mich. Ct. App. Oct. 15, 2013)

Law: “specific performance” of a real estate sales agreement.
In Michigan, courts have the equitable power to compel a party to go through with the sale/purchase of real estate. This relief is known as “specific performance.” This means that a court would force the sale of the land.   Courts can grant this equitable remedy because Michigan law recognizes the fact that land is unique.  No piece of real estate is the same.
The Problem in this case: The Agreement did not have all the necessary parts of an enforceable contract.
The Court noted that the agreement was “subject to the requirements of general contract law that ‘there must be a meeting of the minds regarding the essential particulars of the transaction.'” citing Zurcher v. Herveat, 238 Mich.App 267, 276–279; 605 NW2d 329 (1999) (quotation marks and citation omitted).
The “essential provisions” to be identified and included in a contract for the sale of land are the property, the parties, and the consideration. Id. at 290–291.
Regarding consideration, to be enforceable the contract must include either the price to be paid or a basis to determine the price. Id. at 282.
 In the Agreement at issue in the instant case, there is no question that neither the price nor a basis to determine the price is provided. Everett Schram Living Trust ex rel. Schram v. Smith, 312500, 2013 WL 5630038 (Mich. Ct. App. Oct. 15, 2013).
Conclusion:
The Agreement did not indicate an amount of consideration – so it was unenforceable. 
Take away:
In family matters, even when family gets along just fine, there is a place for sound legal counsel in matters of estate planning and real estate.

Questions? Comments?

 

Jeshua@dwlawpc.com

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