Page 94 - Principals of Real Estate

94 California Real Estate Principles

The statute of frauds also affects personal property. Personal property valued
at more than $500 must be accompanied by a written bill of sale.

Parol Evidence Rule

When two parties make oral promises to each other, and then write and
sign a contract promising something different, the written contract will be
considered the valid one. Parol means oral, or by word of mouth. The parol
evidence rule extends this meaning and prohibits introducing any kind of
outside evidence to vary or add to the terms of deeds, contracts or other
writings once executed. Under the parol evidence rule, when a contract is
intended to be the parties’ complete and final agreement, no further outside
promises, oral or written, are allowed. Occasionally a contract is ambiguous
or vague. Then the courts will allow use of prior agreements to clarify an
existing disputed contract.

One of a real estate licensee’s main duties is to make sure all contract language
conveys the parties’ wishes and agreements. Oral agreements have caused
much confusion and bad feelings over the years, particularly in real estate.
Even a lease for less than one year should be in writing, though the statute of
frauds does not require it. (A lease for one or more years must be in writing).
It is easy to forget oral agreements. A written contract is the most reasonable
way to ensure mutual assent.

Determining Conflicts in a Contract

When preparing a contract, if the parties involved want to make handwritten
changes and initial them, those changes control the document.

Order of Resolving Contradictory Statements in Contracts

1. Handwritten content
2. Typewritten content
3. Attached addenda
4. Preprinted material

Handwritten clauses and insertions take precedence over any typewritten
content, attached addenda, and preprinted material. Typed clauses and
insertions take precedence over any attached addenda and the preprinted
material. Attached addenda take precedence over the preprinted material.