Is a Verbal Agreement to Buy a House Binding in British Columbia?

You shook hands on a house, agreed on a price over the phone, or traded a few texts that sounded final. Now one side is having second thoughts, and you are wondering whether anyone can be held to what was said.

In British Columbia, land is treated differently from most everyday purchases. This article explains the basic rule, the two ways the law can still step in, the exceptions, and the practical steps that keep you out of this uncertainty.

This article covers the law of British Columbia.

The basic rule: land contracts need a signed writing

Under the Law and Equity Act, section 59(3), a contract respecting land is not enforceable unless there is a signed writing that shows the contract was made and gives a reasonable indication of its subject matter. In plain words, someone needs to be able to point to a signed document that shows a deal was struck and that identifies the property in a reasonable way.

That means a purely spoken agreement about buying a house is, on its own, generally not something a court will enforce. It does not mean the conversation never happened or that nothing can follow from it. It means the law asks for more than words.

Whether a particular text thread, email or note meets the signed-writing requirement depends on its content and how it was signed. That is a question worth putting to a lawyer if you are in a real dispute.

Two ways a deal without a signed writing may still be enforced

Section 59(3) does not stop at the signed-writing requirement. It sets out two alternatives that can apply even when no suitable signed document exists.

• Part performance: acts by the party who is being held to the deal that indicate a contract was made.
• Reasonable reliance: the other party reasonably relied on the contract, and it would be inequitable (unfair) to refuse to enforce it.

The first looks at what the person being held to the deal actually did. The second looks at what the other side did in reliance on the deal and whether it would be unfair to let it fall apart. Neither is automatic, and each turns on the facts, so you should not assume a spoken deal is safe or safely escapable.

Exception: short leases

The signed-writing rule in section 59 does not apply to a lease of land for a term of 3 years or less, or to a contract to grant such a lease. So the rule discussed above is mainly about purchases and longer-term arrangements, not a short rental.

Deposits and relief from forfeiture

If money has changed hands, the picture can get more complicated. Section 24 of the Law and Equity Act lets the court relieve against all penalties and forfeitures, on terms it thinks fit. This is the statutory basis on which a buyer can ask a court to relieve against forfeiture of a deposit.

That is a request to the court, not a right you can assume, and the outcome depends on the circumstances. If a deposit is at stake, speak to a lawyer early.

What to do next

The simplest protection is to avoid relying on conversation at all. Whether you are buying or selling, make sure the agreement is written down and signed before you treat it as settled.

• Put the offer in writing, with the property clearly identified, and have it signed.
• Keep copies of all signed documents, emails and texts about the deal.
• Do not take significant steps, such as paying money or giving up another opportunity, based only on a spoken promise.
• If a dispute has already started, save your messages and note what each side said and did, with dates.
• Have a lawyer or notary prepare the documents that will be registered.

On that last point, a notary public who is enrolled and in good standing may draw instruments relating to property that are meant to be registered. Drawing such an instrument is also within the practice of law, which is generally for practising lawyers, but the lawful practice of a notary public is excluded. An individual may act on their own behalf without counsel, although the registered documents are normally prepared and filed by a lawyer or notary.

If someone is claiming you agreed to buy or sell on a handshake, or you think you were promised a house, get legal advice before you respond or walk away.

Frequently asked questions