Christmas nightmare. Employee promised property, now being asked to sign over

[feddy]

So shop owners came to discussion with an employee to relocate them in a particular property if employee works for them for at least 10 years. Not in writing. Shop owner makes paychecks in wife of employee, under the table. Employees parents put 5000 down for property and shop owner paid 5000 CASH. 10000 down. Deed in employees name. Remodel begins. First half of receipts in employees possession. Shop owner one day comes to employee and says we'll how about you just buy the house for 45000? Employee confused due to the initial agreement of 10 years work for the gift of the house. To show appreciation for employment. So the shop owners position now is'sign the deed over to us and we will give you 5000 to employee. Employee is angry, with the deed in employees name, and wants 10000, for all the frustration, or for whatever reason, after all it IS legally his property right? So how does this situation play out? Would shop owner say we'll we are the ones doing the remodeling with no contract or agreement. Would employee pay supplies and labor for remodel and keep the property? What leverage does the shop owner have over an undocumented employee? Isn't it plain and simple, the employee has the deed in his name? Could he in actuality ask for whatever he wants for a price? Instead of just the 5000 or 10000? Side note this is three days before Christmas and they are holding his latest paycheck, avoiding it as sum sort of leverage.... He has the deed, who cares, right? >D

 

[justalayman]

So to start with both the employee and employer are breaking the law (the pay in spouses name thing)


Unless the agreement regarding the house is in writing you’ve already lost. It must be in writing.

Since the title is in employees name he owns it. Whether the employer has any action available to argue the validity of the deed is something not determinable from the info provided.

 

[Mass_Shyster]

This post is very confusing.

Is the shop connected to the work being done on the property?

There is mention of a down payment. Is there a mortgage on the property? If so, who holds the mortgage? Are there any unconventional terms to the mortgage?

It sounds like the employee owns the property, and can tell the shop owner to pound sand, but probably will never collect the money owed.

 

[Taxing Matters]

Unless the agreement regarding the house is in writing you’ve already lost. It must be in writing.

Not necessarily true. It is extremely important to know in what state this is taking place and so far the OP has not given us that information. In many states the contract need not be in writing if one party has fully or partly (depending on the state) performed his/her part of the deal. Here, the employer transferred the property to the employee — thus the employer has performed on its side of the deal. Thus, very likely the contract need not be in writing to be enforceable. If that is the case in the state where this is taking then while the employee does have the deed to the property, the employer may still seek to enforce the contract. The employee would not be able to command from the employer whatever amounts he feels like it.

 

[LdiJ]

Not necessarily true. It is extremely important to know in what state this is taking place and so far the OP has not given us that information. In many states the contract need not be in writing if one party has fully or partly (depending on the state) performed his/her part of the deal. Here, the employer transferred the property to the employee — thus the employer has performed on its side of the deal. Thus, very likely the contract need not be in writing to be enforceable. If that is the case in the state where this is taking then while the employee does have the deed to the property, the employer may still seek to enforce the contract. The employee would not be able to command from the employer whatever amounts he feels like it.

I agree, however its not the employee who seeks to breach the contact, its the employer.

 

[Ohiogal]

Not necessarily true. It is extremely important to know in what state this is taking place and so far the OP has not given us that information. In many states the contract need not be in writing if one party has fully or partly (depending on the state) performed his/her part of the deal. Here, the employer transferred the property to the employee — thus the employer has performed on its side of the deal. Thus, very likely the contract need not be in writing to be enforceable. If that is the case in the state where this is taking then while the employee does have the deed to the property, the employer may still seek to enforce the contract. The employee would not be able to command from the employer whatever amounts he feels like it.

Iowa per the other thread he attempted to start.

 

[justalayman]

622.32 Statute of frauds.

Except when otherwise specially provided, no evidence of the following enumerated contracts is competent, unless it be in writing and signed by the party charged or by the party’s authorized agent:

1. Those made in consideration of marriage.

2. Those wherein one person promises to answer for the debt, default, or miscarriage of another, including promises by executors to pay the debt of the decedent from their own estate.

3. Those for the creation or transfer of any interest in lands, except leases for a term not exceeding one year.

4. Those that are not to be performed within one year from the making thereof.

[C51, §2409, 2410; R60, §4006, 4007; C73, §36

the contract invovles the transfer of interest in lands AND it could not be completed within one year.

Obviously one of the greatest reasons behind the statute of frauds is the problem proving a contract to an enforceable level if it is not reduced to a written contract. What has been posted is the perfect example of why the statute of frauds demands certain contracts must be in writing.

While you argue partial performance ratifies said contract and makes it enforceable, the problem still remains of what does the actual contract demand of all parties.

The guy worked for an employer for 10 years. While it is obviously suggested he was being paid by being given the house. I presume he was paid a regular wage. So where does working for 10 years prove there was a contract regarding the property? Oh ya, the paychecks were made to the wife. Let’s count how many laws were broken in that activity.

Then, if he was being paid with ownership of the house, where does this down payment by the employer and the employee come in?

So does an illegal contract that isn’t in writing somehow become enforceable when the statute of frauds demands then contract be in writing and the performance by the employee is based entirely on an illegal contract?

Obviously the wrench in the whole thing is the property is in employees name. Without the employers input it’s impossible to determine what their claims are but I have to believe there is something other than what the op claims.

 

[Taxing Matters]

the contract invovles the transfer of interest in lands AND it could not be completed within one year.

The statute of frauds you quoted is similar to that of many states; not surprising since it comes from the old English statute of frauds that was a feature of the law prior to our revolution. But just reading the statute is not enough to know how that works. In many states the courts have carved out exceptions for either part or full performance, and Iowa is one of those states. The Iowa Supreme Court stated that about as clearly as you can get: “Under our statute of frauds, it is well established that a party who partially performs under the agreement may avoid the impact of the statute of frauds and introduce evidence of the oral contract.” Gardner v. Gardner, 454 N.W.2d 361, 363 (Iowa 1990)

Here, the employer has fully performed its end of the bargain by conveying the real estate to the employee. Thus, in Iowa that performance of the contract will take this out of the statute of frauds and allow the employer to prove (if he can) the oral contract.

Edited to add: After rereading the original post, it appears the employer might not have deeded the home to the employee directly. Instead, the employee may have bought it from a third party with the employer providing part of the down payment. In that case, the employer providing the $5,000 down payment is the part performance of the employer that would take it out of the statute of frauds. Of course, in that case the question is what was the deal for payment of the mortgage that the post implies exists? That part is never really addressed.

Obviously one of the greatest reasons behind the statute of frauds is the problem proving a contract to an enforceable level if it is not reduced to a written contract. What has been posted is the perfect example of why the statute of frauds demands certain contracts must be in writing.

Not exactly. The purpose of the statute of frauds was to prevent the situation in which a person is held to perform on a contract that actually never existed just based on the oral evidence of the person asserting the contract. The fact that the writing also helps to clarify the terms of the contract is a secondary benefit but was not the main reason for the rule. But where a party has partly or fully performed his/her end of the deal that provides some pretty good evidence that some kind of contract existed quite apart from simply the oral claim of the party. Moreover, refusing to enforce an oral contract when performance has been made by one party would itself open up the potential for fraud and injustice. It would make it easy to prey on those who do not know of the need for a writing. Imagine that Paul orally agrees with Brenda to buy her land worth $100,000 with $5,000 down today and full payment of the remaining $95,000 in six months. She conveys the property to him today as per the deal and gets $5,000. Six months later Paul never pays. When she sues, he laughs and says “sorry, you can’t enforce our deal because its not in writing!” If he was right, he just succeeded in swindling her out of land worth $100,000 for a mere $5,000, aided and abetted by the law. It is exactly that sort of injustice that have lead many states to provide for an exception to the rule for performance, and IMO that is exactly the right thing to do.

While you argue partial performance ratifies said contract and makes it enforceable, the problem still remains of what does the actual contract demand of all parties.

Of course, and I never said otherwise. Certainly a writing would be a big help in sorting that out, which is why it is a really good idea to get any significant contract in writing regardless of whether the statute of frauds or UCC requires it.

The guy worked for an employer for 10 years.

We don’t know that. What we know is that the alleged contract was for the employee to work for 10 years in exchange for the land. We don’t know exactly how long the employee actually worked as the post never comes out and says how much of the 10 years was worked.

While it is obviously suggested he was being paid by being given the house. I presume he was paid a regular wage. So where does working for 10 years prove there was a contract regarding the property? Oh ya, the paychecks were made to the wife. Let’s count how many laws were broken in that activity.

It’s the performance by the employer in deeding the employee the house or paying the down payment that provides the performance necessary to take it out of frauds. There is no need to prove the employee worked the 10 years. I agree that arguing that the work was the performance on the contract would raise a problem if the employee is also being paid a salary since that muddies whether any performance by the employee was actually made. But as it is not necessary for the employer to go down that path to take it out of the statute of frauds this doesn’t present a problem.

So does an illegal contract that isn’t in writing somehow become enforceable when the statute of frauds demands then contract be in writing and the performance by the employee is based entirely on an illegal contract?

Granting an employee a house in exchange for work is not an illegal contract. His wage arrangement is not, so far as I can see, a part of the claimed contract and in any event likely can be separated from the deal for the land and thus the court would not be called on to enforce an illegal contract. That is simply a red herring.

Without the employers input it’s impossible to determine what their claims are but I have to believe there is something other than what the op claims.

Of course determining exactly what the deal was is unclear here and it would be necessary to hear the evidence of both sides to sort that out. That’s what trials are for.

 

[justalayman]

The statute of frauds you quoted is similar to that of many states; not surprising since it comes from the old English statute of frauds that was a feature of the law prior to our revolution. But just reading the statute is not enough to know how that works. In some states the courts have carved out exceptions for either part or full performance, and Iowa is one of those states. The Iowa Supreme Court stated that about as clearly as you can get: “Under our statute of frauds, it is well established that a party who partially performs under the agreement may avoid the impact of the statute of frauds and introduce evidence of the oral contract.” Gardner v. Gardner, 454 N.W.2d 361, 363 (Iowa 1990)

and the problem is the contract, if there is one, appears to be indeterminable so how does one prove partial performance?

Here, the employer has fully performed its end of the bargain by conveying the real estate to the employee. Thus, in Iowa that performance of the contract will take this out of the statute of frauds and allow the employer to prove (if he can) the oral contract.

really? What are the terms of the contract? What is the performance you believe is even a part of the contract? So far there has been very little supporting there is any contract let alone performance of the contract. The op has tossed out a story speaking of many things but nothing that amounts to a full agreement of terms to some claimed contract. There is talk of remodeling. If the contract was the house AND the pay ( that the wife is illegally accepting as wages), what does the remodeling have to do with anything? Op states, although not all that clearly, the employer is footing the bill on the remodeling. Why would they if it was as simple as house in exchange for work?

Not exactly. The purpose of the statute of frauds was to prevent the situation in which a person is held to perform on a contract that actually never existed just based on the oral evidence of the person asserting the contract. The fact that the writing also helps to clarify the terms of the contract is a secondary benefit but was not the main reason for the rule. But where a party has partly or fully performed his/her end of the deal that provides some pretty good evidence that some kind of contract existed quite apart from simply the oral claim of the party. Moreover, refusing to enforce an oral contract when performance has been made by one party would itself open up the potential for fraud and injustice. It would make it easy to prey on those who do not know of the need for a writing. Imagine that Paul orally agrees with Brenda to buy her land worth $100,000 with $5,000 down today and full payment of the remaining $95,000 in six months. She conveys the property to him today as per the deal and gets $5,000. Six months later Paul never pays. When she sues, he laughs and says “sorry, you can’t enforce our deal because its not in writing!” If he was right, he just succeeded in swindling her out of land worth $100,000 for a mere $5,000, aided and abetted by the law. It is exactly the injustice of that sort of injustice that have lead many states to provide for an exception to the rule for performance, and IMO that is exactly the right thing to do.

and it is very easy to claim some action is partial performance of a claimed but truly non-existent contract. Heck, if you picked me up and took me to work a couple days a week You could make a claim I promised to remodel your house in exchange and if I renege you would have a claim for the value of the remodel (which would be equal to the value placed on the transportation proven by the claimed contract) An action by itself does not prove anything but itself.

We don’t know that. What we know is that the alleged contract was for the employee to work for 10 years in exchange for the land. We don’t know exactly how long the employee actually worked as the post never comes out and says how much of the 10 years was worked.

i guess if he hasn’t worked the full 10 years then the entire question is moot since there is nothing suggesting the employer or employee has breached the contract. If the 10 years has not passed then it appears to be nothing more than an attempt to modify the contract. There’s nothing unlawful about that and it provides neither party a right to take any action against the other for a breach. If truly an attempt to modify the contract then the answer is as simple as;

You can enter into negotiations to modify the contract. If you cannot come to terms on a modification then the existing contract stands.

Pretty simple, now isn’t it?


One thing op needs to realize;

I read nothing about the employer guaranteeing employment for 10 years

And

The payments to your wife are a problem for a variety of reasons. Both you and the employer could result in some issues from that.

And

The fact you are an undocumented resident of the US could make all of this meaningless. Even if the employer cannot make a claim to the property, if you are subject to deportation the employer may have the ultimate last laugh by simply turning you in to the immigration folks and letting them provide your defacto punishment for pissing off your employer.

It’s the performance by the employer in deeding the employee the house that provides the performance necessary to take it out of frauds.

ok, so the remaining terms are...? Did the employer actually agree to anything the op is claiming?

There is no need to prove the employee worked the 10 years. I agree that arguing that the work was the performance on the contract would raise a problem if the employee is also being paid a salary since that muddies whether any performance by the employee was actually made. But as it is not necessary for the employer to go down that path to take it out of the statute of frauds this doesn’t present a problem.

but as an attorney you surely would recommend the employer, if they were your client, would be to argue a SoF defense to a claim of there being an existing contract along with any other defense available, would you not? Would that not then place the onus upon the plaintiff to prove existence and terms of a contract?

Granting an employee a house in exchange for work is not an illegal contract.

how do you get the past the wage and hour folks?

His wage arrangement is not, so far as I can see, a part of the claimed contract and in any event likely can be separated from the deal for the land and thus the court would not be called on to enforce an illegal contract. That is simply a red herring.

.

Well, you see it differently than I and given we don’t have all the details I am surprised you’ve made as firm statement as you have. Even if it isn’t s direct term of the contract it can be a part of a twisted attempt to commit fraud against some other party which does make it an illegal contract.

 

[Taxing Matters]

Well, you see it differently than I and given we don’t have all the details I am surprised you’ve made as firm statement as you have. Even if it isn’t s direct term of the contract it can be a part of a twisted attempt to commit fraud against some other party which does make it an illegal contract.

You seem to be assuming that I am claiming more than I have. I have not indicated that I think any party could win. I specifically said as much. The only thing that I have said here is that (1) under Iowa law part performance excuses the need for a writing under the statute of frauds (and many other states allow an exception for full or part performance too) and (2) that given the facts stated by the OP the employer has provided at least part performance. (The employee probably has, too, though that’s less clear.) I can only go by the facts the OP provides. If the facts are not as stated then the answer is no good. Do you have reason to believe the facts stated — that the employee was deeded the house and that the employer provided a $5,000 payment for it, and that this was in exchange for an alleged agreement to work for 10 years? If so, please do tell me why you think the OP has his/her facts wrong — what independent basis do you have for a different determination of the facts?

Now, it is of course true that if challenged the person seeking to avoid the statute of frauds has the burden to prove the part performance. I did not opine that the either party could succeed in doing that. I don’t know if that can be done without actually seeing the evidence that would be submitted to the court for it. But if we take the OP’s facts as true, then the statute of frauds may indeed be avoided. That was my only point here in rebuttal to your earlier statement that “Unless the agreement regarding the house is in writing you’ve already lost. It must be in writing.” I think you will at least agree that given the law I have cited that your firm conclusion that it must be in writing was in error, right? That's the only point I was driving at.

If part performance can be proven (and we can't say for sure one way or the other based on what is here) then there is no need for a writing and the battle then moves on to the classic fight of proving the contract and that the contract was breached. I’ll agree with you that some of the facts stated are unclear and that there appears to be more to it than has been revealed so far. That’s what would be sorted out in litigation as each party brings forth their evidence. We won’t resolve who will ultimately win in this forum. But I am confident that we also cannot make a firm conclusion that the lack of a writing automatically dooms enforcement of the contract. It is not that simple.

 

[justalayman]

That was my only point here in rebuttal to your earlier statement that “Unless the agreement regarding the house is in writing you’ve already lost. It must be in writing.” I think you will at least agree that given the law I have cited that your firm conclusion that it must be in writing was in error, right? That's the only point I was driving at.

Fair enough (and correct).

And with that I must take my leave and attend to Christmas activities. Along with that I would like to say I enjoy your posts and you’re tolerance of my lack of legal knowledge in our discussions. I do learn a considerable amount from you.

So, have a very Merry Christmas TM and hope you have activities of your own to attend. If none, thoughts or you toiling over your keyboard in the spirit of Scrooge come to mind. You don’t seem like a Scrooge to me.

 

[Taxing Matters]

Fair enough (and correct).

And with that I must take my leave and attend to Christmas activities. Along with that I would like to say I enjoy your posts and you’re tolerance of my lack of legal knowledge in our discussions. I do learn a considerable amount from you.

So, have a very Merry Christmas TM and hope you have activities of your own to attend. If none, thoughts or you toiling over your keyboard in the spirit of Scrooge come to mind. You don’t seem like a Scrooge to me.

Thank you for the kind words and I hope you enjoy your Christmas events.