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Oral Contracts to Devise

Posted Friday, July 19, 2013 by John S. Palmer

Washington law permits property to be devised by oral agreement. The doctrine is rarely invoked because of the difficulties inherent in proving an oral contract, particularly where one party to the alleged contract is deceased; however, if proven, an oral contract to devise may control the disposition of property despite provisions in a decedent’s will to the contrary.

The doctrine was recently invoked, albeit unsuccessfully, in the case of Bale v. Allison, decided by the Washington Court of Appeals on February 11, 2013. The case involved a dispute over who inherited a vacation cabin. After the owner died, two of his nephews claimed the decedent had deeded the property to them before his death, while two stepsons (who had made substantial improvements to the cabin over the years) claimed they were entitled to it because the decedent had entered into a binding oral contract to devise it to them, and also left it to them in his will.

The Court of Appeals noted that a party asserting the existence of an express or implied contract bears the burden of proving the essential elements of a contract, including mutual intent:

While equity will recognize oral contracts to devise, they are not favored and will be enforced only upon very strong evidence that the promise was made in exchange for valuable consideration and deliberately entered into by the decedent. To establish the agreement, the claimant must prove that (1) the decedent agreed to will or leave the claimant certain property, (2) the services contemplated as consideration for the agreement were actually performed, and (3) the services were performed in reliance on the agreement.

The court ruled that the stepsons needed to establish each of these elements by “clear and convincing evidence” but had failed to do so. It rejected the stepsons’ claim that a lower burden of proof applies in cases where a decedent leaves a written will consistent with the alleged oral contract, and found that prior cases merely held that the existence of a will constitutes independent, written corroborative evidence to help the court determine if an oral contract exists, which can be helpful because:

Most witnesses in cases of this kind are usually partisan, and, although sincere, they quite often permit their enthusiasm for the litigant for whom they are testifying, to color their testimony. In addition is the fact that the oral contract sought to be established cannot be disputed by the deceased person with whom the contract is alleged to have been made.

Therefore, while the existence of a written will can help the claimant meet his or her burden to prove the existence of an oral contract by clear and convincing evidence, it does not lower this burden of proof.

In any event, the decedent’s will did not help the stepsons, because the court noted that the will’s failure to mention a previous contract with them implied there was no contract. The court also noted that no clear contract terms were established, and that there was evidence other family members had done work on the property over the years, which indicated that any work by the stepsons may have been done as a family obligation or custom rather than pursuant to an oral contract with the decedent.

Most of the court’s opinion was devoted to its finding that the property was validly deeded to the decedent’s nephews before his death. The trial court had found that the deed was invalid because it failed to recite any consideration received for the property. The nephews appealed, and the Court of Appeals reversed, holding that no recital of consideration is required to devise real property by gift. The court also ordered the stepsons to pay the nephews’ legal fees for having to respond to their “meritless” cross appeal.

Perhaps one lesson from this case is the importance of using an attorney for estate planning and probate matters. The nephews found a preprinted deed form online and filled it out with using a lawyer, and the stepsons did not consult with one before the decedent died to formalize any purported agreement to convey the property. As a result the parties were almost certainly forced to incur far more in legal fees litigating both the validity of the deed and the alleged oral contract than they would have spent proactively consulting with an attorney on these issues.

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