When Does the Statute of Fraud Not Apply?
The short answer to the question is when a Chicago real estate developer tries to milk an elderly couple under the guise of saving them from a foreclosure.
In the case of Leontios v. PWS Lake Geneva Development Company, Inc., et al., a Chicago developer developed a portion of Helen and Gus Leontios’ 150 acre farm and homestead. The purpose of developing was to prevent a foreclosure for the elderly couple and allow Mr. Swanson, through his development company, PWS Lake Geneva Development Company, Inc., to make some money in the development. Most people would think that in a real estate deal, the statute of frauds would apply. The property was conveyed by a deed, and there was no option to purchase the property back. It was clearly an oral agreement that the remaining property, after the development of a 46 acre wooded parcel into a 7-lot subdivision, the remainder of 113 acres of the farm would be deeded back to the elderly couple. Mr. Leontios died during this transition and his widow, Helen, was the remaining party in the transaction.
The Court found that the overall transaction created a Constructive Trust for the struggling farm couple. The Trial Court found that the oral agreement was not reduced to writing due to the confidential relationship between Swanson and the Leontioses, and that the abuse of this confidential relationship resulted in Swanson’s unjust enrichment, thereby warranting equitable relief.
Lesson learned: if a developer tries to milk an elderly couple and goes back on their word, Wisconsin Courts will not allow that to happen.