North Dakota Rental Agreements: The Truth About Verbal Leases
Understanding the Statute of Frauds and its impact on oral rental agreements in the Peace Garden State
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In North Dakota, the enforceability of a verbal lease agreement depends largely on its duration. While verbal agreements can indeed be legally binding, the "Statute of Frauds" dictates that certain contracts, including leases, must be in writing to be enforceable. Understanding these nuances is crucial for both landlords and tenants in the state.
The General Rule: Verbal Leases Are Enforceable (Usually)
North Dakota law generally recognizes oral contracts as valid and enforceable, provided they meet the basic requirements of a contract: offer, acceptance, and consideration (something of value exchanged). This principle extends to rental agreements. Therefore, a verbal lease agreement where a landlord offers to rent a property, a tenant accepts, and both agree on a monthly rent amount, can constitute a legally binding agreement.
The Statute of Frauds: A Key Exception
However, a significant exception to this general rule is the Statute of Frauds, codified in North Dakota Century Code § 9-06-04. This statute mandates that certain types of contracts must be in writing to be enforceable. For leases, the critical provision is:
Leases for a period longer than one year: Any agreement for the leasing of real property for a period exceeding one year is invalid unless it is in writing and signed by the party to be charged (the person against whom the agreement is being enforced) or their authorized agent.
This means that if a verbal lease agreement is for a term of one year or less (e.g., a month-to-month tenancy or a fixed term of six months), it is generally enforceable in North Dakota. However, if the verbal agreement is for a term of, say, two years, it would typically be unenforceable under the Statute of Frauds.
Practical Implications and Exceptions
Even for leases of less than a year, relying solely on a verbal agreement carries inherent risks. Proving the specific terms of a verbal agreement can be challenging in a dispute. Without a written record, it becomes a "he said, she said" scenario, making enforcement difficult.
While the Statute of Frauds generally requires written leases for terms over a year, some equitable doctrines or actions might still make an oral agreement enforceable in specific, limited circumstances. For example, if one party has partially performed the agreement (e.g., the tenant has moved in and paid rent) and their actions clearly indicate the existence of a lease, a court might consider enforcing the verbal agreement to prevent an injustice. However, these are exceptions and not the norm.
Best Practices
For both landlords and tenants in North Dakota, the strong recommendation is to always have a written lease agreement, regardless of the term. A written lease clearly outlines all terms and conditions, including:
Rent amount and due date
Lease term (start and end dates)
Responsibilities for repairs and utilities
Security deposit amount and conditions for its return
Notice requirements for termination
Rules regarding pets, guests, or property use
A written lease serves as a tangible record that can be referred to in case of a dispute, providing clarity and protection for both parties and minimizing the risk of misunderstandings or legal challenges.
Information published to or by The Industry Leader will never constitute legal, financial or business advice of any kind, nor should it ever be misconstrued or relied on as such. For individualized support for yourself or your business, we strongly encourage you to seek appropriate counsel.
