In a recent Land Court case, the Court held that an unsigned Memorandum of Understanding regarding an ownership interest in a home on Nantucket was not binding upon the parties. In Slover v. Carpenter, Walter Boyd Jr. and his sister Josephine Carpenter owned a house on Nantucket as tenants-in-common. No. 14 MISC 487353 KFS, 2016 WL 54899, at *1 (Mass. Land Ct. Jan. 4, 2016). Ms. Carpenter's daughter Katherine Slover and her husband claimed that Ms. Carpenter had repeatedly promised orally and in writing to transfer her one-half interest in the property to them. Id. Ms. Slover and her husband had been long-time tenants of the property under a ten-year lease signed by Mr. Boyd and Ms. Carpenter, but had held over at the expiration of the lease and continued to occupy the property. Id. Mr. Boyd notified Ms. Slover and her husband that the lease would not be renewed, and that the property would revert to the common family usage. Id. at *3.
At this stage, Ms. Slover and her husband commenced discussions with her mother Ms. Carpenter about conveyance of her one-half interest in the property to them. Id. After negotiations through counsel, Ms. Carpenter's attorney sent the Slovers' attorney an unsigned Memorandum of Understanding (MOU) which purported to represent the agreement approved by Ms. Carpenter and the Slovers and stated that Ms. Carpenter would gift deed her half interest in the property to the Slovers. Id. at *4. Mr. Boyd subsequently sent the Slovers a notice of eviction in the midst of negotiations for the sale of the full property, and Ms. Carpenter stated that she was not able to gift her interest in the property to the Slovers prior to her death for tax purposes. The Slovers then sued for specific performance of the MOU.
The Court found that the MOU was not a signed document sufficient to satisfy the Statute of Frauds. Id. at *7. The Court set forth the requirements for a binding agreement as follows: "A binding agreement is established when (1) the parties manifest the intent, viewed objectively, to be bound at the time of contract formation, notwithstanding either party's subjective intent; (2) the parties agree on the material terms of the contract; and (3) the agreement is supported by mutual consideration." Slover v. Carpenter, No. 14 MISC 487353 KFS, 2016 WL 54899, at *8 (Mass. Land Ct. Jan. 4, 2016). The Court rejected Plaintiffs' argument that the MOU constituted a binding agreement, explaining that the MOU was vague or silent on specific important contract terms, and noting specifically: "The first paragraph of the MOU states that Josephine will gift deed her interest in the Subject Property to Katherine, but does not mention a specific date or timeframe. There is no timeframe indicated by which the Slovers would put the estimated tax payment in escrow." Id. at *9.
The case is an important reminder to buyers and sellers of real estate that all contracts for the sale of real estate should contain all material terms, be signed by the parties, and be supported by mutual consideration. Fitch Law Partners LLP will continue to monitor future litigation in this developing area of the law.