In Idaho, Make Sure Your Deal Includes an Exact Description of the Land Involved

by Stoel Rives LLP

Stoel Rives LLP

Two recent opinions from the Idaho Supreme Court demonstrate the risks you take when you document a real estate deal without an exact description of the land.  In Hoke v. Neyada (Docket No. 43343) (Idaho 2016), the seller of a mobile home park tried to get out of the deal less than a month after it was signed based on the fact that the lease and option to purchase that the parties signed lacked a sufficient description of the land.  The trial court agreed that the seller should be let out of the deal, but on appeal the Idaho Supreme Court ruled that the doctrine of “part performance” applied, allowing the buyer to fit within an exception to the normal requirement of an exact description, which Idaho courts have long read into Idaho’s statute requiring certain real property agreements to be in writing (sometimes called the “Statute of Frauds”). The Court summarized the law as follows:

Under the doctrine of part performance, when an agreement to convey real property fails to meet the requirements of the Statute of Frauds, the agreement may nevertheless be specifically enforced when the purchaser has partly performed the agreement. What constitutes part performance must depend upon the particular facts of each case and the sufficiency of particular acts is matter of law.  The most important acts which constitute a sufficient part performance are actual possession, permanent and valuable improvements and these two combined. Acts constituting part performance must be specifically referable to the alleged agreement.

The Court in Hoke acknowledged that the buyer had hardly paid anything toward the purchase price when the case commenced, but noted that the buyer had done all that it was required to do up to that point and the seller had turned over possession of the property under the lease arrangement.  That was enough for the doctrine of part performance to apply. The Idaho Supreme Court sent the case back to the trial court so the buyer could continue to pursue its claims against the seller.

Contrast the case of Nicholson v. Coeur d’Alene Placer Mining Corp. (Docket No. 43440-2015) (Idaho 2017). The Nicholsons bought some buildings located on land owned by a mining company and then leased the land under and around the buildings pursuant to a one-year lease.  The lease required the Nicholsons to remove the buildings from the property at the end of the lease term.  The parties annually agreed to renew the lease for nearly 20 years, during which time the Nicholsons used one of the buildings for their residence, made some improvements and cleaned up the property.  Eventually, the mining company sold the leased land, as part of a much larger tract, to a timber company.  The timber company then informed the Nicholsons that it was not interested in selling or leasing the land to them any longer.

The Nicholsons sued, alleging that the mining company had breached an oral contract giving them a right of first refusal to purchase some of the land.  A right of first refusal to purchase is a contractual right to match an offer from a prospective third party purchaser if the seller wants to accept the third party’s offer.  Given that the alleged agreement had been in place for many years, while the Nicholsons possessed and improved the property, you might reasonably expect the doctrine of part performance to come into play.  After all, the court in Hoke said that possession and improvements are the most important factors.  Unfortunately for the Nicholsons, it was no to be. 

The Idaho Supreme Court in Nicholson restated the basic rule that “[t]he description of the real property must adequately describe the property so that it is possible for someone to identify ‘exactly’ what property the seller is conveying to the buyer.  Then the Court concluded that “[t]he alleged agreement that the property subject to the right of first refusal was ‘the property currently used and occupied by [the Nicholsons]’ was too vague to be enforced.”  In reaching this conclusion, the Court cited several of its prior rulings, including this one:  “Like any contract for the sale of land, an oral agreement ‘must be complete, definite, and certain in all its terms, or contain provisions which are capable in themselves of being reduced to certainty,’ before it will be specifically enforced by operation of the doctrine of part performance.”

So, in Nicholson the Court says that the doctrine of part performance will not save an agreement that lacks certainty as to its terms, and concludes that the alleged agreement suffers from an inadequate description of the land, while in Hoke the Court uses the doctrine of part performance to overcome an insufficient description of the land.  If you have a little trouble squaring these two opinions, you are not alone.  We suspect the key difference is that, in Hoke everyone understood that the land involved was everything the seller owned in the area, whereas in Nicholson the land involved was a vaguely defined and ever-changing portion of a larger tract.  In Nicholson, it was going to be a lot harder for the court to figure out what the parties had in mind, if indeed they ever had a common understanding. 

One thing remains clear: You take a big risk if you expect a court to enforce a deal that lacks an exact description of the land involved.  That is probably why such descriptions have come to be known as “legal” descriptions.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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