(Published by the Idaho Business Review, March 2010)

 The current real estate market has set the stage for some remarkable deals.  However, before you decide to take the plunge to buy (or sell) real estate, make sure you have all your bases covered.  In 2009, the Idaho Supreme Court decided two cases which have significant ramifications for buyers, sellers and real estate professionals alike.  Each of the cases addressed legal descriptions in real estate agreements.  The first case, Ray v. Frasure, addressed legal descriptions in purchase and sale agreements, and the second case, Callies v. O'Neal, addressed legal descriptions in listing agreements.

 An agreement for the sale of real property is unique in the eyes of the law and thus the requirements to have an enforceable purchase and sale agreement for real property are significant.  Among other requirements, the statute of frauds requires an agreement to contain a legally enforceable description of the real property.    

 Agreements for the sale of real property that fail to comply with the statute of frauds are unenforceable.  The reason behind this rule of law is to prevent individuals or entities from fraudulently claiming they entered into a real estate sales contract.

 In Ray v. Frasure, the Idaho Supreme Court ruled that a physical address is not a legally enforceable legal description.  In other words, a physical street address does not adequately describe the property so that it is possible for someone to identify "exactly" what property the seller is conveying to the buyer.  The Idaho Supreme Court laid out two ways in which to identify "exactly" what property is the subject of the real estate purchase and sale agreement.

 First, a description will be sufficient so long as the "quantity, identity or boundaries of property can be determined from the face of the [purchase and sale agreement]."

 Second, the purchase and sale agreement may refer to an external record containing a sufficient property description, like an attachment which recites the correct legal description.  Keep in mind, however, that any attachment referenced in the purchase and sale agreement must actually be attached before the agreement is executed.

 Sophisticated sellers, buyers and real estate professionals must keep in mind that a street address is not legally sufficient under the statute of frauds.  In other words, if the parties choose to use only a street address to describe the subject real property, then the contract is legally unenforceable.

 If a real estate purchase which looked good on paper at one time later turns sour, the buyer may be able to use the insufficient property description to "get out" of the contract.  By the same token, a seller may use the insufficient property description to "get out" of a sales contract when he later receives a better offer.

 The second case addressing the sufficiency of legal descriptions decided by the Idaho Supreme Court in 2009 is Callies v. O'Neal.  The Court ruled in this case that the requirement for a legal description in a listing agreement is more lenient than the requirement for a legal description in a purchase and sales agreement.

In that case, the listing agreement described an entire development as having "32 zero lot line 4 plexes" and identified the property address and complete legal description simply by stating the county, city and zip code.  The agreement also stated that the legal description was attached as addendum #1, but no such addendum was actually attached.  A week after the listing agreements were executed the owner provided the broker with the master plat and legal description of the property.

 The Court held that for purposes of real estate listing agreements, a property description "is sufficient where it is shown that there is no misunderstanding between the property owner and the broker as to the property being offered for sale."  Because the owner had provided the broker with plats and legal descriptions, both parties understood what properties were to be sold.  The listing agreement was thus upheld as enforceable because the descriptions were sufficient to identify the properties between the broker and seller, and extrinsic evidence could have been admitted to cure the defective description.

 It is important for all players in real estate deals to keep in mind the legal description requirements for both a contract for the sale of real property and a listing agreement for real property.  It may seem like a nuisance to provide more than the street address, but it is well-worth the time to ensure that a legally enforceable description is always included in a purchase and sale agreement.  Although not required, to be on the safe side, always include a legal description in a listing agreement as well to prevent any misunderstanding between the owner and the broker.   

Anna Eberlin is an attorney with the law firm Meuleman Mollerup LLP, practicing in the areas of real property acquisition, development, finance, and leasing.  Ms. Eberlin had five years of real estate management and investment experience prior to joining Meuleman Mollerup.  Ms. Eberlin can be reached at 208.342.6066 or by email at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .  More information at www.lawidaho.com.