§2.5 - Interests in Land

• Jurisdiction: Washington

§2.5INTERESTS IN LAND

The several statutes composing the statute of frauds for interests in land are RCW 59.04.010 (commercial leases), RCW 59.18.210 (residential leases), and RCW 64.04.010 and .020 (conveyances and encumbrances to be by deed). These statutes are set forth at §2.3(1), above.

(1) Leases

A lease is an encumbrance within the meaning of RCW 64.04.010 and must therefore be created by deed. Family Med. Bldg., Inc. v. Dep't of Social & Health Servs., 104 Wn.2d 105, 108, 702 P.2d 459 (1985); Richards v. Redelsheimer, 36 Wash. 325, 78 P. 934 (1904). Leases for terms not exceeding one year are controlled by RCW 59.04.010 and RCW 59.18.210, however, and need not be created by deed. Leases of more than a year's duration have been rendered void pursuant to the "one-year contract" provision of RCW 19.36.010. See, e.g., Family Med. Bldg., 104 Wn.2d at 108; Port Susan Chapel of the Woods v. Port Susan Camping Club, 50 Wn.App. 176, 187, 746 P.2d 816 (1987). Note that the Richards court held that leases were "encumbrances" rather than "conveyances," but this interpretation has been questioned. See William B. Stoebuck, The Law Between Landlord and Tenant in Washington—Part I, 49 Wash. L. Rev. 291 (1974). Also see Volume 2, Chapter 17 (Landlord and Tenant), of this deskbook.

The Richards court further held that a contract to execute a lease also comes within the statute of frauds, because otherwise an oral lease could be construed as a contract to execute a lease, thus avoiding application of the statute of frauds. Richards, 36 Wash. 325. The court specifically held that a contract to execute a lease exceeding one year must be in the form of a deed, in writing, and acknowledged. Id. ; see also Omak Realty Inv. Co. v. Dewey, 129 Wash. 385, 225 P. 236 (1924);Saunders v. Callaway, 42 Wn.App. 29, 35, 708 P.2d 652 (1985).

A lease required to be by deed must be "signed by the party bound thereby." Generally, the landlord is the party bound. See Stevenson v. Parker, 25 Wn.App. 639, 642, 608 P.2d 1263 (1980). A lease need not be signed or acknowledged by the lessee if the lessee accepts it and acts under its terms. McKennon v. Anderson, 49 Wn.2d 55, 298 P.2d 492 (1956); Cent. Bldg. Co. v. Keystone Shares Corp., 185 Wash. 645, 56 P.2d 697 (1936). See generally Volume 2, Chapter 17 (Landlord and Tenant), of this deskbook. It is, however, standard practice and recommended that the tenants sign the lease. See §2.5(5)(b)(i), below.

A lease required to be by deed must be acknowledged. Garbrick v. Franz, 13 Wn.2d 427, 125 P.2d 295 (1942); Stevenson, 25 Wn.App. 639. However, in certain circumstances unacknowledged deeds have been treated by the Supreme Court as valid between the parties. See 17 William B. Stoebuck & John W. Weaver, Washington Practice, Real Estate: Property Law §7.4 (2d ed. 2004).

Options for renewals or extensions are part of the term of a lease for purposes of determining whether the statute is implicated. Haggen v. Burns, 48 Wn.2d 611, 295 P.2d 725 (1956). Thus, a lease for an original term of one year or less, but which contains an option to renew or an extension, either of which extends the total potential term of the lease to beyond one year, is, for purposes of the statute, a lease in excess of one year. See Labor Hall Ass'n v. Danielsen, 24 Wn.2d 75, 163 P.2d 167 (1945). If the lease is one that is to commence in the future, the time from the making of the lease to the time when it commences is not part of the term of the lease. Pappas v. Gen. Mkt. Co., 104 Wash. 116, 176 P. 25 (1918).

A modification of a lease that was required to be in writing and acknowledged must be in the same form. Franklin v. Fischer, 34 Wn.2d 342, 208 P.2d 902 (1949); Panorama Residential Protective Ass'n v. Panorama Corp., 28 Wn.App. 923, 930, 627 P.2d 121 (1981), modified, 97 Wn.2d 23 (1982). Failure of a modification to conform to the statute of frauds under these circumstances will render the modification unenforceable, but only to the extent that it remains executory. Id. at 930.

Leases for terms of one year or less must be in writing and signed by the landlord; acknowledgment is not necessary, and such leases may be in writing or print or partly in writing and partly in print. RCW 59.04.010. In addition, RCW 59.20.050 and .060 require that mobile home space tenancy agreements be in writing, regardless of the term; again, acknowledgment is not necessary.

A lease failing to comply with the applicable statute of frauds is void. McKennon, 49 Wn.2d 55. However, the operation of the statute of frauds may be avoided under the doctrine of part performance. The doctrine has the effect of making the lease an otherwise enforceable document. The doctrine of part performance is discussed at §2.5(5)(b), below.

Washington does not have a statute that requires a written assignment of a leasehold interest to be acknowledged. Am. Sav. Bank & Trust Co. v. Mafridge, 60 Wash. 180, 110 P. 1015 (1910). RCW 64.04.010 does require a contract evidencing an encumbrance to be by deed, and the court in Richards v. Redelsheimer, 36 Wash. 325, held that a lease was an encumbrance. It would seem to follow that an assignment of a lease would be a contract "evidencing" an encumbrance. In addition, the court has implied that assignments should be acknowledged if the lease itself had to be acknowledged. See Geyen v. Time Oil Co., 46 Wn.2d 457, 282 P.2d 287 (1955); Mobley v. Harkins, 14 Wn.2d 276, 128 P.2d 289 (1942). However, courts in several early cases specifically held that assignments of leases, even those with more than a year left to run, need not be acknowledged. See, e.g., Cravens v. Cravens, 136 Wash. 126, 238 P. 901 (1925). The careful practitioner will resolve all doubt on this issue in favor of acknowledgment of an assignment of a lease if the original lease was required to be acknowledged. This is especially true in light of RCW 65.08.060 and .070, which require, as against third persons, that the assignment of every lease for a term over two years be recorded.

(2) Transfers of real property or interests therein

This section discusses the application of RCW 64.04.010 and .020 (conveyances and encumbrances to be by deed) in cases involving various sorts of transfers of real property interests.

(a) Contracts to convey

Historically, the cases are confusing as to whether contracts to convey specifically come within RCW 64.04.010 and .020. Warren L. Shattuck, Contracts in Washington, 1937-1957: Part II, 34 Wash. L. Rev. 345, 357 n.322 (1959); John L. Neff, The English Statute of Frauds in Washington, 34 Wash. L. Rev. 124 (1959). The interests of a vendor and vendee under a real estate contract have been variously defined under different circumstances. See Cascade Sec. Bank v. Butler, 88 Wn.2d 777, 567 P.2d 631 (1977).

The well-established rule in Washington is that a contract to convey must be in writing, signed by the parties to be bound thereby, and must contain an adequate legal description, but does not have to be acknowledged. See Hedges v. Hurd, 47 Wn.2d 683, 289 P.2d 706 (1955); Phillipp v. Curtis, 35 Wn.2d 844, 215 P.2d 431 (1950); Dunbabin v. Allen Realty Co., 26 Wn.App. 660, 665, 613 P.2d 570 (1980) (adequate legal description required); see also Kruse v. Hemp, 121 Wn.2d 715, 722, 853 P.2d 1373 (1993); Setterlund v. Firestone, 104 Wn.2d 24, 700 P.2d 745 (1985) (discussing the 13 material elements of a real estate contract). Washington has the most strict rule in the nation in reference to inclusion of the full legal description for purposes of compliance with the statute of frauds. Washington appellate courts have made it clear that the instrument must contain a description sufficient to locate the land without recourse to oral testimony. See 18 Washington Practice §16.3 at 225. Although the contract need not be acknowledged, an executory contract for the sale or purchase of real property must be acknowledged in order to be recorded. RCW 65.08.70. Only a recorded contract provides notice to all persons of the rights of the vendee under the contract, presumably affording a contract vendee bona fide purchaser status. See Tomlinson v. Clarke, 118 Wn.2d 498, 825 P.2d 706 (1992); Hoffman v. Graaf, 179 Wash. 431, 439, 38 P.2d 236 (1934); see also Volume 4, Chapter 3 (Bona Fide Purchaser Doctrine), of this deskbook. A simple or unperformed oral contract to convey is not enforceable. Blakely v. Sumner, 62 Wash. 206, 113 P. 257 (1911).

Real estate purchase and sale agreements, or "earnest money agreements," are contracts to convey land, and as such are subject to the rules set forth above, but typically are not acknowledged or recorded. See Dunbabin, 26 Wn.App. at 660. As a result of modern real estate practice by realtors in the state of Washington, more recent cases address problems with missing or after-inserted legal descriptions. Many of the typical earnest money agreement forms used throughout Washington authorize the agent to attach or fill in the legal description after the agreement has been executed by the buyer and the seller. These provisions were thought to be curative of the common problem of unavailability of the full legal description at the time of signing. The ability to insert or attach the legal description has been upheld in a number of cases. Noah v. Montford, 77 Wn.2d 459, 463 P.2d 129 (1969); Edwards v. Meader, 34 Wn.2d 921, 210 P.2d 1019 (1949); Geonerco, Inc. v. Grand Ridge Props. IV, L.L.C., 146 Wn.App. 459, 191 P.3d 76 (2008); Nishikawa v. United States Eagle High, L.L.C., 138 Wn.App. 841, 848 n.2, 158 P.3d 1265 (2007), review denied, 163 Wn.2d 1020 (2008). However, limits have been placed on the ability to later supply the legal description following execution of the purchase and sale agreement. Strict compliance with the actual contract terms has been imposed, such as in Home Realty Lynnwood, Inc. v. Walsh, 146 Wn.App. 231, 189 P.3d 253 (2008). In Home Realty, the...