General Legal News

By: Bob Ballinger, Attorney at Law,

For the last several years individuals interested in owner (seller) financing and hard money lending have been restricted by a cap on the interest that they could charge by virtue of a low Arkansas usury rate. The Arkansas Constitution set the rate at 5% above the Federal Reserve Primary Credit Rate or 17%, which ever was less. For the last few years the Primary Credit Rate has been .5 and .75 percent, capping the usury at 5.5 and 5.75 percent. Federal preemption exempted banks from the obligation to comply with this rate restriction however private investors have been limited in what they could lawfully charge in interest.

This limit has restricted the profitability of owner financing and hard money lending as an instrument of successful investing. Typically individuals found that the risk was not worth the relatively low return. However, all of that may have changed with the passage of Issue 2 last fall which modified interest rates limits on individuals acting as private lenders. This limit is now restricted to an interest rate not exceeding 17 percent per annum, which is the existing limit for consumer debt under the Arkansas Constitution, and there is no longer a restriction that interest rates charged cannot be greater than five percent above the Federal Discount Rate. This includes an interest rate on a real estate transaction in which an individual finances the purchase.

Conventional financing offers the benefit of the inclusion of a lending professional who is able to walk a buyer through the process and allows the seller to realize the funds in cash at the closing. This cash allows the seller the option to reinvest the equity in other property if necessary and to avoid the potential hassles that can be associated with acting as a private lender. In short, there are real benefits to conventional financing, however not all individuals or properties qualify for conventional financing.
For the transactions that may not qualify for conventional financing, the option of owner financing of real estate becomes viable, and possibly even highly profitable. This is with the road block of the low capped rate removed. This is because there are many advantages to owner financing and hard money lending for both the buyer and seller. Sometimes the benefits are greater for one or the other, but in most cases it is a “win/win” for both parties.

Advantages

Seller:

Sellers want to obtain the most money for their property as possible, and a fast closing with little hassle. Many Sellers also want to pay as little taxes as possible on the gains incurred. In many cases, the seller can have most of his desires satisfied by owner financing sale rather than a traditional cash sale.

1. Highest Price. More often a seller can insist on and receive a higher price when offering flexible owner-finance terms. In many cases, the seller can receive more than the fair market value of the property by offering these “soft” terms. People are often willing to pay a premium for easy-qualifying financing.

2. Cash. Nearly every seller says they want all cash, but few need it. What the typical seller wants is the most net cash from the deal. Often, the seller has to pay closing costs, title insurance, broker fees, and the balance of the existing financing.

In addition, there may be capital gains tax due to the IRS. In many cases, owner financing the transaction (particularly a “wraparound”) will net the seller more future yield than any source from which the cash proceeds were reinvested.

3. Fast Closing. Typically nothing holds up a sale more than qualifying for financing. It can take months for a buyer to qualify and close a new loan to purchase property. Since most standard real estate contracts contain a financing contingency, a seller may end up back at square one if their buyer does not qualify.

Furthermore, if the house is not particularly nice or unique, it may take some time to even find an interested buyer. Since the seller is competing with all of the other houses for sale.

There are very few “assumable” loans and few sellers are offering “soft terms.” Thus, an owner financing and hard money lending makes a house unique. Furthermore, an owner financing and hard money lending transaction can be consummated in a matter of days, since there is no appraisal, underwriting, or other preconditions of closing involved.

4. Tax Savings. On an installment sale, the seller only pays gains to the extent they receive payments each year. This can be particularly advantageous if you have owned the property for several years.

As you can see, the installment sale provides many advantages to the seller of real property.

Buyer

Despite the possibility of an elevated purchase price and higher interest rate, there are many advantages to a buyer who engages in privately financed transaction.

1. Easy Qualification. The buyer, in many cases, prefers a privately financed transaction to conventional financing because it does not require traditional bank income and credit approval. The buyer may have poor credit because of a divorce or recent bankruptcy. He may be self-employed and cannot prove income. He may be new to his job and cannot meet strict lender guidelines.

As you can see, there are dozens of reasons why a buyer cannot (or will not) qualify for a conventional bank loan. The privately financed transaction becomes the perfect solution for him.

2. Credit Rating. An installment sale may give the buyer a chance to improve his credit rating by owning a home and making payments timely.

3. Low Loan Costs. One of the biggest benefits for the buyer is the ability to avoid much of the costs associated with conventional loans. Points, origination fees, underwriting charges, appraisal, credit reports, etc. charged by conventional lenders can amount to thousands of dollars at closing. The buyer may be free from much these expenses with owner financing and hard money lending.

4. Fast Closing. Often a buyer can close and move into a property within days, since there is no third party lender.

In summary, we should all appreciate the lenders who work hard to provide loan products for a variety of individuals with a verity of needs, however there are many individuals and transactions which cannot fit into any loan product available today. For those individuals and transactions, owner financing and hard money lending may be the key to unlock what otherwise would be a dead deal.

By: Bob Ballinger, Real Estate Attorney

“What is Usury in Arkansas?” That is a question that was well settled for years. The Arkansas Constitution set the rate at 5% above the Federal Reserve Primary Credit Rate or 17%, which ever was less. For the last few years the Primary Credit Rate has been .5 and .75 percent, capping the usury at 5.5 and 5.75 percent. Federal preemption exempted banks from the obligation to comply with this rate restriction however private investors have been limited in what they could lawfully charge in interest.

This limit has restricted the profitability of owner financing and hard money lending as an instrument of successful investing. Typically investors found that the risk was not worth the relatively low return. However, all of that may have changed with the passage of Issue 2 last fall.

Issue No. 2, House Joint Resolution 1004, was passed November 2, 2010 as a legislatively-referred constitutional amendment and went into effect on January 1, 2011. The measure modified interest rates limits on loans made by three groups of lending entities:

• Government entities,
• Federally insured depository institutions, and
• All other lenders

The constitutional amendment removed a 5 percent interest cap, but preserved the existing 17 percent cap for consumer credit and also applies it to other non-government debt.

A lawsuit was filed to strike the measure from the November 2, 2010 ballot, however the measure was not taken off of the ballot, due to a ruling by Pulaski County Circuit Court just before the election took place. There was also a lawsuit was filed with the Arkansas Supreme Court, who heard arguments from both sides on October 21, 2010. However, on October 22, 2010, the high court then threw out the lawsuit. According to Associate Justice Donald Corbin in the ruling, “Our review of Amendment 80 and this court’s well-established precedent leads us to conclude that our jurisdiction to hear challenges to amendments referred by the Legislature remains appellate in nature.” However, the separate lawsuit that was filed in Pulaski County Circuit Court was still ongoing at the time of that decision. However, the court refused to keep the measure off of the ballot, with the ruling stating that the ballot title was clear enough for voters to understand.

On June 16, 2011 the Arkansas Supreme Court heard arguments from attorney Eugene Sayre stating that the measure is unconstitutional. The newest legal challenge stated that the measure violated the state’s single-subject rule by including three different topics in one ballot measure. The state’s legislature can only refer up to three measures each election year, which Sayre claimed the lawmaking body tried to get around by putting the alleged multi-topic question on the ballot. According to Sayre: “We maintain these three are disparate and don’t have a common theme, purpose or subject.” At the hearing, Assistant Attorney General Scott Richardson told the justices that three aspects of the measure were related. He claimed that the items all deal with loans and financing. “That test could be used to invalidate a vast array of amendments in our constitution.”

On June 23, 2011, the Arkansas Supreme Court upheld the amendment, stating that the amendment should be allowed, as long as the proposals in the measure were “reasonably germane”.

In summary, under current Arkansas Law, individuals, acting as private lenders, would be restricted to an interest rate not exceeding 17 percent per annum, which is the existing limit for consumer debt under the Arkansas Constitution. However, there is no longer a restriction that interest rates charged cannot be greater than five percent above the Federal Discount Rate. This would include interest rates in a real estate transaction in which an individual finances a portion, or all, of the contract price.

By: Bob Ballinger, Real Estate Attorney and Director of Operations, Kings River Title

In Arkansas, the priority of liens is generally determined by the maxim “prior in time, prior in right.” Dempsey v. Merchants Nat’l Bank, 292 Ark. 207, 210, 729 S.W.2d 150, 151 (1987). The doctrine of first in time, first in right is not always as clear and obvious as it may seem. This basic rule is subject to exceptions in Arkansas, one being the doctrine of equitable subrogation.

The doctrine of equitable subrogation has long been the rule in Arkansas where a senior mortgagee in good faith and without culpable negligence satisfied the lien of his mortgage on the record in ignorance of the existence of an intervening mortgage on the same premises and took a second mortgage as a substitute, equity will restore the lien of the first mortgage, provided it can be done without working hardship or injustice on innocent parties. Home Federal Sav. & Loan Ass’n v. Citizens Bank of Jonesboro, 43 Ark. App. 99, 861 S.W.2d 321 (1993); citing Wooster v. Cavender, 54 Ark. 153, 155, 15 S.W. 192 (1891). See also Stephenson v. Grant, 168 Ark. 927, 931, 271 S.W. 974, 976 (1925). The result under the general rule will not be affected by the fact that the overlooked intermediate lien was on record at the time of the release, provided the mortgagee was not, in so acting, guilty of culpable negligence; but if the mortgagee is chargeable with such negligence relief will be denied, as where the mortgagee had actual knowledge of the intervening lien. Home Federal Sav. & Loan Ass’n, 43 Ark. App. 99, 861 S.W.2d 321. While a court in equity has the power to grant relief from the consequences of a mistake, the application of this power must be largely controlled by the circumstances of each case. Spencer W. Symons, Pomeroy’s A Treatise On Equity Jurisprudence § 856b, at 340 (5d ed. 1941).

So in this age of juggling mortgages there is hope for the hurried mortgage processor who makes a mistake, however it may be best to do business with a careful title company who will update their search before they close on the refinance, rather than hope the mistake fits into this exception.

I would like to take this opportunity to invite you to take part in the upcoming continuing education course for real estate agents being presented at Springdale Country Club next Tuesday, August 10th , 2010.

This course offers Facilitated Discussion, On Line Video Presentations, and Case Studies to assist Arkansas Licensees in dealing with the Current Real Estate Market Conditions / Current Events Relating to The Real Estate Practice in Northwest Arkansas. Analysis of Market using MLS and Local Data will be provided.

Special Guest Attorney Bob Ballinger from Kings River Title will go over changes in Regulations relating to Closing Transactions and Title Insurance Requirements. Changes in Truth in Lending, Good Faith Estimates, RESPA and Lead Based Paint will be discussed.

“The Future is Now” Technology Updates and Tips regarding Internet Marketing, Lead Generation, Agent Efficiency and Effectiveness will be covered. Current Procedures/Marketing of Short Sales, Bank Foreclosures will be addressed

No Out of Town Folks Trying to Sell their programs, No Old Tired Stories that don’t relate, Just Lots of Good Stuff that will help you succeed in these challenging Times.

Completion of the 6 Hour session will meet the requirements for 2011 Arkansas Continuing Education License Renewal.

When = Tuesday, August 10 2010
Time = 9AM to 3:30 PM
Where = Springdale Country Club
COST = $30 [A deal Thanks to Sponsors]
Great Buffet Lunch Provided
Call
479-790-2772

Real Estate Education Center

Note: Seating is limited. Therefore, if you register and later determine that you cannot attend, please call as soon as possible to allow your spot to be filled from the waiting list.

By: Bob Ballinger, Real Estate Attorney and Director of Operations, Kings River Title

In Arkansas neighboring property owners can legally modify the boundaries dividing their properties without any written instrument. This can be done a variety of ways, one of which is by a principal in the law called “boundary by acquiescence.” A boundary line by acquiescence can be inferred from the neighbor’s conduct over many years so as to imply the existence of an agreement about the location of the boundary line. Whenever adjoining landowners tacitly accept a fence line or other monument as the visible evidence of their dividing line and thus apparently consent to that line, it becomes the boundary by acquiescence. Walker v. Walker,8 Ark. App. 297, 651 S.W.2d 116 (1983). Even if there never was an express agreement to treat a fence as the dividing line between the two parcels of land, such an agreement may be inferred by the action of the parties. See Kittler v. Phillips, 246 Ark. 233, 437 S.W.2d 455 (1969). Whether a boundary line by acquiescence exists is to be determined upon the evidence in each individual case. See Hedger Bros. Cement & Materials, Inc. v. Stump, 69 Ark. App. 219, 10 S.W.3d 926 (2000).

Further, boundaries by acquiescence are frequently found to exist at locations other than those shown by an accurate survey of the premises. See Summers v. Dietsch, 41 Ark. App. 52, 849 S.W.2d 3 (1993). A fence, by acquiescence, may become the accepted boundary even though contrary to said survey line. Id. Thus, tacit acceptance of a fence line or other monument as the visible evidence of the dividing line for a long period of time manifests apparent consent. Id. The property owners and their grantees are then precluded from claiming that the boundary line thus recognized and acquiesced in is not the true one, although it may not be on the survey line. Id.

Therefore, if you have an old fence separating your property from your neighbor’s, you can be somewhat confidant that the boundary to your property is along that line.

by: Robert A. Ballinger, Attorney at Law

When purchasing or selling real estate, there are so many details to take care of that the last thing you need to worry about is a problem with your closing. Hopefully, you’ve hired skilled professionals to handle the details and make sure everything runs smoothly.

The behind-the-scenes work begins as soon as contract is executed, which can be anywhere from 30 days to three months before the closing. Here’s how the settlement process typically works.

If you are working with a real estate agent, he or she will place an order with a “settlement agent” as soon as your sales contract is accepted. The settlement agent is typically a title company, but it can be a settlement attorney. Most individuals rely on their real estate agent to select a settlement agent—someone they work with regularly and know to be professional, reliable and efficient. However, individuals have the right to choose their own settlement agent if they wish.

The settlement agent will oversee the closing process and make sure everything happens in the right order and on time, without unnecessary delays or glitches.

First, a contract or escrow agreement is drawn up, which the settlement agent reviews for completeness and accuracy. The agent will also put your deposit into an escrow account, where the funds will remain until the time of closing.

Next the preliminary title work is done. The title company conducts an exhaustive search of the public records to make sure there are no issues with the title such as liens against the property, utility easements, etc. If a problem is discovered, most often a good title agent will take care of it without you even knowing about it. After the title is cleared, they can provide title insurance.

There are two kinds of title insurance coverage—a Loan Policy, which covers the lender for the amount of the mortgage loan, and an Owner’s Policy, which covers the homebuyer for the amount of the purchase price. If you are obtaining a loan, the lender will require that you purchase a Loan Policy. However, it only protects the lender. We always recommend you obtain an Owner’s Policy to protect your investment. Who pays for the Owner’s Policy varies from transaction to transaction.

Once the preliminary title work is complete, the title company will issue a title commitment. Meanwhile, the settlement agent is simultaneously coordinating other important details. If the contract calls for a prior mortgage to be paid off, the agent will order payoff figures from the existing lender. Each closing is unique, which is why it requires a skilled professional to oversee the process.

Any problems or discrepancies discovered by the settlement agent should be reported to the appropriate parties so that they can be corrected. The agent’s role is to facilitate cooperation, coordination, and compliance between all of the settlement service providers.

If you are obtaining a loan on a residential purchase, your lender will provide you with a Good Faith Estimate of your loan costs. The final costs outlined on the HUD-1 Settlement Statement prepared by your settlement agent should be fairly consistent with the fees on the GFE. It is usually provided to the parties prior to closing. Items shown on a typical HUD-1 include costs paid at closing as well as pre-paid costs such as your earnest money deposit or loan application fee.

As closing day approaches, the settlement agent orders any updated information that may be required. Once the settlement agent is satisfied that the paperwork is in order, he or she confirms the date, time, and location of the closing with all the parties involved.

On closing day, all of the behind-the-scenes work is done so that you are able to arrive at the closing and complete the transaction without in additional stress – that is if the process was handle effectively.

by: Robert A. Ballinger, Attorney at Law, Director of Operations, Kings River Title and Abstract

At the heart of most judicial opinions is the question of statutory interpretation. Arkansas law requires courts to apply statutes as they plainly read. For example, the court in Bishop v. Linkway Stores, Inc., declared neither the “exigencies” of a case, nor a “resort to extrinsic facts,” will be permitted to alter the meaning of the language used in the statute. Thus, when a statute is plain and unambiguous, the court is primarily concerned with what the document says, rather than what its drafters may have intended. In Bishop, a consumer purchased furniture by executing a sales contract with an interest rate of fifteen percent. The consumer filed an action against the lender, credit council, and retail merchants association, alleging that the contract was usurious. The court declared the statute was clear and unambiguous and held that the contract was void as to the unpaid interest because it had an interest rate in excess of the lawful rate.

Similarly, in Williams v. Little Rock School District, the Arkansas Supreme Court rejected the use of extrinsic facts when the words of the statute are clear. Williams, a school teacher, informed his principal that he wished to resign. The following morning, Williams asked if he could withdraw his resignation. The principal informed Williams that the administration officials had already decided to accept his resignation. As a result Williams sued in an effort to be reinstated. The court found that there was nothing in the language of the statute that either expressly or impliedly stated that the remedy of an appeal to circuit court was applicable to cases involving a disputed resignation. The statute allowed for any nonprobationary teacher, aggrieved by a decision made by the board, to appeal the decision to the circuit court of the county in which the school district is located. Teacher and district may introduce additional testimony and evidence on appeal to show facts and circumstances indicating that the termination or nonrenewal was lawful or unlawful. The court declared that the statute’s purpose was to protect teachers’ jobs from arbitrary and capricious actions committed by the school district, it was not to protect teachers from their own actions.

When examining an issue of statutory construction, Arkansas’s cardinal rule is to give effect to the intent of the legislature. Where the language of a statute is clear and unambiguous, Arkansas determines legislative intent from the ordinary meaning of the language used. Where the meaning is unclear, Arkansas looks to the language of the statute, the subject matter, the object to be accomplished, the purpose to be served, the remedy provided, the legislative history, and other appropriate means that shed light on the subject.

Federal law also requires a court to look first at the plain meaning of a statute. For example, in the United State Supreme Court case of Griffin v. Oceanic Contractors, Inc., the Court stated, “[i]t is enough that [the legislature] intended that the language it enacted would be applied as we have applied it. The remedy for any dissatisfaction with the results in particular cases lies with [the legislature] and not with this Court. [The legislature] may amend the statute; we may not.” In Griffin, a seaman brought an action against his former employer seeking wages he was entitled to by statute upon his discharge. The Court held that district courts did not have the discretion to limit the period during which the wage penalty was assessed, and that the imposition of the penalty was mandatory for each day that payment was withheld in violation of the statute.

Griffin also declared that legislative intentions should only be controlling “in rare cases” where the literal application of the statute will produce results demonstrably at odds with the intent of its drafters. The Court reserved “some scope for adopting a restricted rather than a literal or usual meaning of its words where acceptance of that meaning . . . would thwart the obvious purpose of the statute.” The Court also noted that if a court resorts to interpretation of legislative intent, the statute should be considered as a whole, and the language should not be interpreted in a manner that leads to “absurd consequences.”

by: Matt Bishop, Attorney at Law, Thurman, Bishop & Flanagin

A new case out of the Arkansas Court of Appeals, T-1 Construction v. Tannenbaum Development gives us some insight into how a real estate contract can be undone when the seller realizes he made a big mistake.

Tannenbaum Development had 5 lakefront lots in Cleburne County it wanted to sell. It listed them with a realtor, and in the listing agreement it stated a total offering price for the 5 lots of $75,000. After they went on the market, T-1 Construction made an offer of $70,000 for all 5, which was accepted by Tannenbaum via its owner. The purchase contract was drafted by T-1 and its real estate agent, presumably on the standard Arkansas Realtors form contract.

Two days before the closing, Tannenbaum’s owner realized that the sales contract said $70,000 total for all 5 lots, rather than $70,000 for EACH lot. He refused to close the deal, so T-1 sued.

The circuit court found that while the mistake was all Tannenbaum’s (a unilateral mistake), it would be unconscionable to force them to close given the price and rescinded the contract. T-1 appealed this decision.

The Court of Appeals laid out the rules for recission (breaking) of a contract due to a unilateral mistake:

(1) the mistake must be of so great a consequence that to enforce the contract as actually made would be unconscionable;

(2) the matter as to which the mistake was made must relate to a material feature of the contract;

(3) the mistake must have occurred notwithstanding the exercise of reasonable care by the party making the mistake;

(4) it must be able to get relief by way of rescission without serious prejudice to the other party, except for loss of his bargain.

Looking at these, the Court first noted two appraisers presented testimony that the value of the 5 lots in total was between $325,000 and $400,000, and the tax assessor valued the lots at $100,000 per lot. The Court then noted a US Supreme Court case from the 1800s which defined an unconscionable contract as “such as no man in his senses and not under delusion would make on the one hand, and as no honest and fair man would accept on the other.” The Court of Appeals thought that phrase fit the bill for the first element, unconscionableness, of the T-1 – Tannenbaum contract.

There was no argument that the price was a material feature of the contract, so the second element was not in dispute.

The third element, reasonable care by the person making the mistake, was in dispute, with T-1 saying that Tannenbaum’s owner had not taken reasonable care to ensure everything was correct. However, the Court cited to testimony by Tannenbaum’s owner that he thought the agent had him it was $70,000 per lot, even though she claimed she was clear that it was $70,000 total in the listing agreement. (Frankly, if the realtor had any experience at all, she would almost certainly have been explicit to her client on this point, for she had to know this was way undervalued). The Court also noted that Tannenbaum’s owner and realtor made several changes to the listing agreement, including retaining mineral rights and negotiating her commission. This was apparently enough to excuse him not paying closer attention to the actual sales contract.

With respect to the last element, T-1 didn’t argue it on appeal, so apparently it felt that there was no other harm it would suffer other than losing out on a great deal. Which, since the deal wasn’t closed, was probably correct. Had they started building on them, however, they might have been able to make more hay out of this part.

Taking all that into consideration, the Court of Appeals agreed to permit Tannenbaum to get out of the contract, saying:

The totality of the evidence supports the circuit court’s finding that it would be inequitable and unconscionable to enforce the contract because of the damages that would be incurred by appellee [Tannenbaum] if the contract were enforced.

So is the moral of this story that you can get out of a bad deal even if it’s all your mistake? Not really. What this case stands for is that you can get out of a bad deal if, despite taking care to make sure things are right, you accidentally enter into a contract that essentially gives away your property.

For example, if you’re hard up for cash and you agree to dump some property, but before you close the deal you come into some money and now want out of the contract, that’s not going to cut it. Likewise if you just sign a sales contract without thinking, or at least attempting to pay attention to the terms, as Tannenbaum had done in negotiating some of the terms of the listing agreement, that’s not going to cut it. Nor do I think you’ll convince a court to get out of a deal with a 10% error in the price. You’re going to have to be a pretty conscientious seller, or for that matter buyer, who just made a fundamental mistake despite some due diligence.

by: Robert A. Ballinger, Attorney at Law, Director of Operations, Kings River Title and Abstract

Arkansas, as well as a few other states, recognizes a peculiar type of marital rights to property called dower and curtesy. Dower is a wife’s interest in her husband’s property, and curtesy is a husband’s interest in his wife’s property. Today, these rights are essentially the same; just different terms to define the gender involved. These rights are designed to protect the spouse in the event of intestacy (the condition of the estate of a person who dies owning property without having made a valid will or other binding declaration). Interests based on dower and curtesy are inchoate (a right contingent on an event) until the death of a spouse.

Dower or curtesy exists in all real and personal property that is seized (owned with the right to possess) during the marriage. This is taken literally. If the property is brought into the marriage, it is owned during marriage and these rights are in effect. If the property is transferred during the marriage, it was still owned during marriage and these rights are in effect.

The extent of dower and curtesy right depends on whether there are descendants or not. In the situation with real property, if there are descendants, the amount of the dower is a 1/3 life estate. This would mean that the surviving spouse will receive one-third of the income generated from the land during his or her life. At the death of the surviving spouse, he or she owns nothing to pass on to someone else. If there are no descendants, the dower is 1/2 fee simple. Fee simple is the most common way real estate is owned in Arkansas, and is ordinarily the most complete ownership interest that can be had in real property, but the decedent’s creditors may reduce this share if the remainder of the estate is not sufficient to pay all debts.

Therefore, when buying real estate in Arkansas, one of the most important questions to ask the seller is “are you married?” If the seller’s spouse does not sign the conveyance, buyer could rescind for failure to provide marketable title. Dower and curtesy interest can be terminated through time, but only after seven years pass from date the interest becomes choate, which is most often the death of spouse. The best way to take care of this is to get the spouse’s signature on the deed.

See, Arkansas Code:

28-11-305. Personalty.

If a person dies leaving a surviving spouse and a child or children, the surviving spouse shall be entitled, as part of dower or curtesy in his or her own right, to one-third (1/3) part of the personal estate whereof the deceased spouse died seized or possessed.

28-11-307. Dower or curtesy when no children.

(a)(1) If a person dies leaving a surviving spouse and no children, the surviving spouse shall be endowed in fee simple of one-half (1/2) of the real estate of which the deceased person died seized when the estate is a new acquisition and not an ancestral estate and of one-half (1/2) of the personal estate, absolutely, and in his or her own right, as against collateral heirs.

(2) However, as against creditors, the surviving spouse shall be invested with one-third (1/3) of the real estate in fee simple if a new acquisition, and not ancestral, and of one-third (1/3) of the personal property absolutely.

(b) If the real estate of the deceased person is an ancestral estate, the surviving spouse shall be endowed in a life estate of one-half (1/2) of the estate as against collateral heirs and one-third (1/3) as against creditors.

18-12-402. Dower or curtesy; relinquishment

A married person may relinquish dower or curtesy in any of the real estate of a spouse by joining with the spouse in the deed of conveyance thereof, or by a separate instrument executed to spouse’s grantee or anyone claiming title under the spouse, and acknowledging it in the manner prescribed by law.

By: Robert A. Ballinger, Attorney at Law, Director of Operations, King River Title and Abstract

Arkansas’ statute of frauds, ARK. CODE ANN. § 4-59-101(a)(4), requires that any contract for the sale of land, or any interest concerning such land, be in writing and signed by the party to be charged. ARK. CODE ANN. § 4-59-101(a)(4). To meet the requirements of a valid contract for the sale of real estate within ARK. CODE ANN. § 4-59-101(a)(4), the written agreement must include the essential terms and conditions of the sale. Tate v. Clark, 203 Ark. 231, 156 S.W.2d 218 (1941); Van Dyke v. Glover, 326 Ark. 736, 934 S.W.2d 204 (1996). Arkansas’ general rule with respect to the statute of frauds also has been stated another way:

Unless the essential terms of the sale can be ascertained from the writing itself, or by reference in it to something else, the writing is not in compliance with the statute; and if the writing be thus defective, it cannot be supplied by parol proof, for that would at once introduce all the mischiefs which the statute was intended to prevent.

Van Dyke, 326 Ark. at 742-743, 934 S.W.2d at 208 (1996), citing Sorrells v. Bailey Cattle Co., 268 Ark. 800, 811-12, 595 S.W.2d 950 (1980), (quoting Williams v. Morris, 95 U.S. 444, 24 L.Ed. 360 (1877)).

Arkansas law mandates that a contract for the sale of land “sufficiently describe the land to be sold.” Van Dyke, 326 Ark. at 742-743, 934 S.W.2d at 208 (1996); Boensch v. Cornett, 267 Ark. 671, 590 S.W.2d 55 (1979). This required description of land must be as definite and certain as that required to be found in a deed of conveyance. Sorrells v. Sorrells, 268 Ark. 800, 809-810, 595 S.W.2d 950, 954 (1980). With respect to the land description requirements for a deed, the Court in Sorrells quoted favorably from Tiffany, Real Property, 3rd Ed. which stated “if a conveyance does not describe the land with such particularity as to render identification possible, the conveyance is a nugatory.” Sorrells, supra; See also Boensch v. Cornett, 267 Ark. 671, 590 S.W.2d 55 (1979). If the document does not identify the land as “being in any county or even in the state. It does not furnish a key by which the land might be certainly identified . . . .” Turrentine v. Thompson, 193 Ark. 253 (1963). Even if the property could be identified by oral testimony, a contract for the sale of land comes within the statute of frauds, ARK. CODE ANN. § 4-59-101, and must therefore be in writing to be enforceable. A document which is in violation of Arkansas’ statute of frauds is unenforceable and void. Sorrells, 268 Ark. at 818.