Understanding the parol evidence rule

When real estate is exchanged, an agreement is usually formalized in a written contract. Without written contracts, it would not be possible to enforce the agreement in court if a party doesn’t fulfill its obligations.

Although this may seem simple on the surface – the parties agree to terms orally, then translate those terms into a written agreement – the contract process rarely goes this smoothly.

Contract disputes arise during real estate transactions frequently, and some of the most common sources of tension are so-called informal contract modifications – parties add or change terms without modifying the actual written agreement.

Courts employ a nifty rule to determine whether evidence of a modification is admissible – the parol evidence rule.

According to the parole evidence rule, evidence of modification is inadmissible, unless:

  • The evidence, such as discussions, written correspondence, etc., occurred after the agreement was finalized.
  • The evidence fills in a missing term in the contract.
  • It resolves an ambiguity in the contract.
  • The evidence pertains to a collateral contract that is relevant to the dispute.
  • Trust an experienced real estate lawyer

Real estate transactions, even for mundane property, are complex and trigger byzantine legal doctrines, such as the parol evidence rule. Navigating the process is challenging, and even a small mistake can have serious ramifications down the road.

For these reasons, having an experienced real estate lawyer by your side is critical if you are buying or selling residential or commercial property.

Nashville, Tennessee, residents shouldn’t hesitate to reach out. If cost is a concern, many lawyers offer a free initial consultation at no out-of-pocket cost to the client.