The equal dignities doctrine is a California doctrine that affects the applicability of contracts. The doctrine is a subset of a larger doctrine that is called the statute of frauds which governs contracts for things like the sale of land. Some contracts must be in writing to be enforceable like leases, mortgages, and deeds. If you are having someone enter into one of those contracts on your behalf that authority may also need to be in writing. As such, it is important to know how the equal dignities doctrine operates so you can ensure any sale or transfers of land are binding.
What is the statute of frauds?
As background, the statute of frauds sets standards for contracts dealing with more serious matters. Contracts under the statute of frauds include the sale of goods for over $100,000, or sale of land. A mortgage or deed of trust also falls under the statute of frauds. (Secrest v. Security Nat. Mortg. Loan Trust 2002-2 (2008) 167 Cal.App.4th 544, 552.) To be enforceable the contract must be in writing. This requires the terms of the contract to be in writing, so an oral agreement will not suffice. (Mangini v. Wolfschmidt, Ltd. (1961) 192 Cal.App.2d 64, 72.) The person charged with the contract needs to have signed the contract for it to be enforceable under the statute of frauds. (Ulloa v. McMillin Real Estate & Mortg. (2007) 149 Cal.App.4th 333, 339.) This means for a purchaser seeking to enforce a sale against a vendor the purchaser does not need to have signed the contract but the seller must have. (Id.)
What about property sales?
The statute of frauds applies most commonly in two ways to real estate, both as to what the contract must contain and who it can bind. First, the statute of frauds requires a property description to be included in the instrument conveying land. Essential terms must be stated, but all details and particulars do not need to be. (Sterling v. Taylor (2007) 40 Cal.4th 757, 766.) What is considered necessary depends on the agreement and its context. For example, the description of property by street address in a memorandum for sale would meet the statute of frauds where neither buyer nor seller was confused about the location. (Id. at 773.) The contract must include a description, so the parties know what land is at issue.
Second, the statute of frauds places some restrictions on real estate brokers and agents. California’s Civil Code expands upon the traditional statute of frauds. An agreement that employs an agent or broker to sell real estate or lease it for longer than one year for compensation or commission falls under the statute of frauds. (Cal. Civ. Code § 1624(a)(4).) This means the signature and writing requirements apply for that agent or broker to be bound. It also means those requirements apply for that agent to be able to bind the buyer or seller.
A contract will be sufficient if it shows agency, specific terms of the transaction are not necessary. (Lathrop v. Gauger (1954) 127 Cal.App.2d 754, 764.) Similarly, even the amount of commission and agreement to pay can be shown with external evidence or agreements. (Rader Co. v. Stone (1986) 178 Cal.App.3d 10, 21.) All that is necessary is an agreement showing the broker’s authority to bind the party they are working for.
What is the equal dignities doctrine?
The equal dignities doctrine is rooted in the California Civil Code section 2309. Where you are authorized to enter into a contract for someone else, if that contract must be in writing to be enforceable the authorization must be as well. This extends to land sale contracts and the real estate agent and broker rules in California. The equal dignities rule does not apply where the agent acts mechanically, meaning they just have the purely mechanical authority to sign someone’s name on a contract. (Ellis v. Mihelis (1963) 60 Cal.2d 206, 214.)
If the writing is required only by an agreement the equal dignities rule will not apply. For example, where a lease gives the option to renew with written notice, oral notice by an agent with authority is sufficient. (Ripani v. Liberty Loan Corp. (1979) 95 Cal.App.3d 603, 610.) A purchase agreement for real property by one owner was unenforceable against other three owners absent written authorization for that one owner to sell the property. (Elias Real Estate, LLC v. Tseng (2007) 156 Cal.App.4th 425, 429.)
What is an example?
For example, Julie is going to sell a home to Shawn. If Julie could not get Shawn to go through on the deal after completing the contract. She could bring an action for specific performance that would require Shawn to go through with the sale. The agreement they are entering into is for the sale of land or property so the statute of frauds would apply. This would mean the agreement needs to be in writing and signed by Shawn because Julie is seeking to enforce the contract against him. In California this would also extend to a lease agreement for more than one year, not just a sale.
If Julie and Shawn entered into the contract as buyer and seller for themselves the equal dignities rule would not come into play. If Shawn was acting as a real estate agent or broker on behalf of a buyer, he may need written authority from his “principal” or the person employing them. If Shawn’s services were needed for more than one year, Shawn would need to have his authority to buy on behalf of his client set out in writing.
If Shawn did not have proper authority to enter into the contract, the sale may be deemed invalid and would be unenforceable against the buyer.
Conclusion
The equal dignities rule is important if you are having someone sign a real estate contract on your behalf or if you are using an agent or broker. Making sure their authority is in writing is important, so you do not end up with enforceability issues down the line. The equal dignities rule may complicate future sales and interests in property. If you are experiencing a dispute regarding your interest or liability on property, partition may be a solution. At Underwood Law, our partition attorneys can help you navigate your partition action efficiently and with care. We are here to help.