A marriage is a series of agreements. Divorces happen when those agreements start to fall apart. Some of those agreements between the couple (and others) will be upheld and some will be denied. One tool to deny agreements in an Illinois divorce is by invoking the Statute of Frauds.
A Statute of Frauds is “A statute designed to prevent fraud and perjury by requiring certain contracts to be in writing and signed by the party to be charged” Black’s Law Dictionary (11th ed. 2019)
Illinois’ Statute of Frauds contains two clauses that may be relevant to a divorce proceeding.
Any agreement about some action to be performed more than a year from now MUST be in writing.
“That no action shall be brought..[regarding] any agreement that is not to be performed within the space of one year from the making thereof, unless the promise or agreement…shall be in writing, and signed by the party to be charged therewith, or some other person thereunto by him lawfully authorized.” 740 ILCS 80/1 (emphasis mine)
And any agreement regarding real estate MUST be in writing.
“No action shall be brought to charge any person upon any contract for the sale of lands…for a longer term than one year, unless such contract or some memorandum or note thereof shall be in writing, and signed by the party to be charged therewith” 740 ILCS 80/2 (emphasis mine)
Agreements In An Illinois Divorce
Illinois divorce courts are bound by the parties’ agreements for almost everything.
“[M]arital property” means all property, including debts and other obligations, acquired by either spouse subsequent to the marriage, except the following, which is known as “non-marital property:… property excluded by valid agreement of the parties” 750 ILCS 5/503(a)(4)
The court “shall divide the marital property without regard to marital misconduct in just proportions considering all relevant factors, including: any prenuptial or postnuptial agreement of the parties” 750 ILCS 5/503(d)(7) (and a postnuptial agreement can be almost anything)
“The court shall first make a finding as to whether a maintenance award is appropriate, after consideration of…any valid agreement of the parties” 750 ILCS 5/504(a)(13)
“In determining the child’s best interests for purposes of allocating significant decision-making responsibilities, the court shall consider…any prior agreement or course of conduct between the parents relating to decision-making with respect to the child” 750 ILCS 5/602.5(c)(6)
“In determining the child’s best interests for purposes of allocating parenting time, the court shall consider…any prior agreement or course of conduct between the parents relating to caretaking functions with respect to the child” 750 ILCS 5/607(b)(4)
In a marriage, these kinds of agreements are usually never put in writing but are usually oral promises and understandings.
If a party wishes to not be bound by these agreements, they can invoke the Statute of Frauds. The Statute of Frauds defense is especially effective regarding promises to transfer real estate.
Statute Of Frauds Regarding Real Estate In An Illinois Divorce
Promises to give one party (or a third party) real estate fall flat in divorce court.
“Generally, an oral contract to transfer real estate is unenforceable under the Statute of Frauds” Phillips v. Britton, 516 NE 2d 692 – Ill: Appellate Court, 5th Dist. 1987
The only way an oral promise regarding real estate will be enforced is there has been sufficient performance.
For example, if a husband promised his wife, ‘just support me while I get my business off the ground and I’ll put the house I inherited in your name’ and then the wife paid all the bills until the business was profitable, that could be sufficient part performance.
“The courts of this State have long recognized that sufficient part performance of an oral contract to convey land may remove the transaction from operation of the Statute of Frauds.” Phillips v. Britton, 516 NE 2d 692 – Ill: Appellate Court, 5th Dist. 1987
It, frankly, would be unfair to deny the wife in the example any interest in the inherited property if the husband pulled out the statute of frauds like an Uno reverse card.
“When one party to an oral contract has so far performed his part of the agreement that to allow the other party to invoke the statute of frauds would perpetrate a fraud upon him, chancery will intervene to enforce the contract.” Culbertson v. Carruthers, 383 NE 2d 618 – Ill: Appellate Court, 5th Dist. 1978
An oral agreement between married parties will be difficult to prove it was clear enough to be enforced.
“Before a court may exercise that discretion in favor of granting the remedy in the case of an oral contract which would normally be unenforceable under the Statute of Frauds, the court must find that the terms of the contract are clear, definite, and unequivocal [citations], that the contract has been at least partially performed by the party seeking the remedy [citations] and that the acts allegedly done in performance are positively attributable exclusively to the contract.” Blaise v. Stein (1979), 75 Ill. App.3d 793, 796, 394 N.E.2d 836, 839 (citations omitted)
The party seeking to enforce the oral agreement has the burden of proving the agreement’s sufficiency as a contract and the sufficient partial performance.
“The burden is upon the party seeking the application of equitable principles not only to establish the terms and conditions of the parol agreement but also to show that enforcement of the parol agreement is required to prevent fraud or injustice.” Conness v. Conness, 236 NE 2d 753 – Ill: Appellate Court, 3rd Dist. 1968
In the end, courts have the power to do what’s fair in these cases.
“It is well established that the granting of such equitable relief is not a matter of right but rests in sound judicial discretion to be determined from the facts and circumstances of each individual case” Schiff v. Breitenbach, 153 NE 2d 549 – Ill: Supreme Court 1958
Statute Of Frauds Regarding Contracts To Be Performed More Than A Year From Now
Divorces are full of empty promises of what will happen in the future. It seems that these promises would be ripe to be rendered unenforceable by invoking the Statute of Frauds.
There is very little case law regarding this portion of the Statute of Frauds and whether it can be applied in a divorce. It appears that if something COULD have been done within a year (which is practically everything) then the statute of frauds does not apply.
“The test for determining whether an agreement is within section 1 of the statute is not whether it was performed within one year but rather whether when the agreement was made, it could have been performed within a year; and if so, it does not come within the statute.” In re Marriage of Strand, 408 NE 2d 415 – Ill: Appellate Court, 1st Dist. 1980
Statute Of Frauds As A Defense For Agreements Made In Court
Under the stern gaze of the judge, parties frequently make oral agreements in court. These oral in-court agreements are binding despite not yet being written and signed.
“Where the parties to a divorce proceeding contract in respect to alimony and property rights arising out of the marriage relationship, and the provisions agreed to are incorporated in the decree, the contract becomes merged in the decree. The rights of the parties are thereafter based upon the decree, not the agreement; and the requirement of the Statute of Frauds that contracts concerning real estate be in writing has no application.” Guyton v. Guyton, 161 NE 2d 832 – Ill: Supreme Court 1959
Statute Of Frauds For Fraudulent Conveyance
When one spouse transfers a property to a third party so that the property is no longer in the marital estate and thus is no longer divisible. The spouse that transferred the party is likely to claim that the other spouse has no claim on the transferred real estate because of the Statute of Frauds.
The spouse disputing the transfer is NOT barred by the Statute of Frauds from alleging a fraudulent conveyance.
A fraudulent conveyance is “[a] transfer of an interest in property for little or no consideration, made for the purpose of hindering or delaying a creditor by putting the property beyond the creditor’s reach.” Black’s Law Dictionary (11th ed. 2019)
The holder of the transferred property will be made a third party to the divorce.
“The court may join additional parties necessary and proper for the exercise of its authority under this Act.” 750 ILCS 5/403(d)
The third party who received the property should always have known better if he or she got the property for a bargain (usually they get it for nothing because they’re in on the fraud).
“The general rule is that a transferee is chargeable with acquiescence in a fraudulently intended transfer where he is in possession of facts and circumstances which are not reconcilable with ordinary business integrity or would otherwise put a prudent person on inquiry.” Hofmann v. Hofmann, 446 NE 2d 499 – Ill: Supreme Court 1983
The Statute Of Frauds Should Not Be Abused
It is common for a divorce litigant to be clever by half. Invoking a trust, a statute of frauds or other legal “magic words” does not render the concept of justice moot in the face of the invocation. Illinois courts can shrug off the statute of frauds defense in the name of equity.
“This court has long recognized the inequity of allowing one to utilize the Statute of Frauds to work an injustice or fraud, and has refused in such cases to permit its assertion as a defense. The courts of equity will not permit the Statute of Frauds, the only purpose of which is to prevent fraud, to be used where the effect will be to accomplish a fraud, and if the facts are such that it would be a virtual fraud to permit the defendant to interpose the statute, a court of equity will not listen to that defense.” Loeb v. Gendel, 179 NE 2d 7 – Ill: Supreme Court 1961
The statute of frauds was originally a law from 1671 that prevented the confusion of oral agreements for the few items of real value at that time (real estate and long-term contracts). Do not expect an ancient law to have powerful affects in your modern divorce unless it meets the extremely narrow requirements as listed above.
To learn more about laws ancient and modern and how they can affect your Illinois divorce, contact my Chicago, Illinois family law firm to speak with an experienced Illinois divorce lawyer.
