Updated April 2026

The Statute of Frauds Explained for the Indiana Real Estate Exam

Last updated: April 2026

When preparing for your real estate license, mastering contract law is one of the most critical steps to ensuring your success. Among the foundational concepts you will encounter is the Statute of Frauds. For candidates taking the state exam, understanding how this legal doctrine applies specifically within the Hoosier State is absolutely essential. This mini-article breaks down everything you need to know about the Statute of Frauds, complete with practical examples and Indiana-specific legal frameworks.

For a broader overview of all topics covered on the state licensing exam, be sure to bookmark our Complete Indiana Exam Guide.

What is the Statute of Frauds?

Originating from English common law in 1677, the Statute of Frauds is a legal concept designed to prevent perjury, forgery, and dishonest conduct in high-stakes agreements. It dictates that certain types of contracts must be in writing and signed by the party to be charged (the person being sued or held to the agreement) to be legally enforceable in a court of law.

A common trap for test-takers is confusing the terms void and unenforceable. If two parties make an oral agreement to sell a house, the contract is not necessarily "void" (illegal or completely invalid). If both parties voluntarily fulfill the oral agreement, the sale is perfectly fine. However, the contract is unenforceable. This means if one party backs out, the other party cannot ask a judge to force the sale, because there is no written evidence of the agreement.

How the Statute of Frauds Applies in Indiana

In Indiana, the Statute of Frauds is codified under Indiana Code (IC) Title 32, Article 21. The law strictly outlines which real estate transactions must be reduced to writing. For your exam, you must memorize the following three primary real estate applications:

1. Contracts for the Sale of Land

Under IC 32-21-1-1, any contract involving the sale of land, or any interest in or concerning land, must be in writing. This includes purchase agreements, land contracts, options to purchase, and the transfer of easements. If a buyer and seller shake hands on a $250,000 property sale, neither party is legally bound until a written purchase agreement is executed.

2. Leases Exceeding One Year

The Statute of Frauds applies to any agreement that cannot be performed within one year from the date it is made. Therefore, a commercial or residential lease for a term of more than one year must be in writing. Conversely, a month-to-month lease or a strict six-month lease is legally enforceable even if it is only a verbal agreement (though oral leases are highly discouraged in practice).

3. Real Estate Broker Commissions

Indiana law has a very specific rule regarding real estate compensation. Under IC 32-21-1-10, a real estate broker cannot successfully sue a client for an unpaid commission unless the agreement to pay the commission (such as a listing agreement or buyer agency agreement) is in writing and signed by the client. An oral promise to pay a 6% commission is unenforceable in an Indiana court.

Enforceability: Must Contract Be in Writing? (100 = Yes, 0 = No)

Essential Elements of a Written Agreement

For a real estate contract to satisfy the Statute of Frauds in Indiana, it doesn't necessarily need to be a formal, typed, fifty-page document. Historically, even agreements written on napkins have been upheld, provided they contain the essential elements:

  • Identification of the Parties: The buyer and seller (or landlord and tenant) must be clearly named.
  • Description of the Property: The real estate must be identifiable (a legal description is best, though a clear property address may suffice depending on the context).
  • Essential Terms and Conditions: The purchase price, earnest money, and basic terms of the exchange must be present.
  • Signatures: It must be signed by the "party to be charged." Thanks to the Uniform Electronic Transactions Act (UETA), electronic signatures are legally binding and satisfy this requirement in Indiana.

The Exception: The Doctrine of Part Performance

The Indiana real estate exam often tests exceptions to the rule. The most notable exception to the Statute of Frauds is the Doctrine of Part Performance. Courts of equity may enforce an oral contract for the sale of land if the buyer has taken substantial steps that prove the contract exists, making it unjust to void the agreement.

In Indiana, proving part performance of an oral land contract typically requires a combination of the following actions by the buyer:

  1. Paying a substantial portion (or all) of the purchase price.
  2. Taking actual, open possession of the property.
  3. Making valuable and lasting improvements to the real estate.

Exam Scenario: John orally agrees to buy a vacant lot from Mary. John gives Mary 50% of the cash, moves his equipment onto the lot, and builds a permanent foundation for a barn. If Mary tries to cancel the oral agreement citing the Statute of Frauds, a court will likely enforce the sale under the Doctrine of Part Performance.

Integrating Contract Law into Your Exam Prep

Understanding the Statute of Frauds is just one piece of the puzzle. To ensure you stay on track with all the complex legal concepts, we highly recommend utilizing our Indiana Study Schedule Planner. Breaking down contract law, agency law, and property rights into manageable daily study sessions will prevent burnout.

Additionally, remember that written contracts must adhere to all state and federal regulations, including fair housing laws. A written contract that violates civil rights is void. Brush up on these rules with our guide to Indiana Protected Classes and Discrimination. Finally, once you have a valid, written listing agreement in place, your next step in the real world will be pricing the property correctly—a skill you can master in our Indiana Comparative Market Analysis Guide.

Frequently Asked Questions (FAQs)

1. Does an oral contract for real estate mean the agreement is completely void in Indiana?

No. An oral contract for the sale of real estate is considered valid but unenforceable. If both the buyer and seller willingly proceed to closing based on a handshake, the transaction is perfectly legal. However, neither party can use the court system to force the other to complete the transaction if someone changes their mind.

2. Can an Indiana real estate agent collect a commission on an oral listing agreement?

No. According to Indiana Code 32-21-1-10, any agreement to pay a real estate broker a commission must be in writing and signed by the principal (the seller or buyer). Without a written agreement, the broker has no legal recourse to collect an unpaid commission.

3. Are month-to-month leases subject to the Statute of Frauds?

No. The Statute of Frauds only applies to leases that exceed one year in duration. A month-to-month lease, or a fixed lease for 12 months or less, can be legally enforceable even if it is only agreed upon verbally. However, written leases are always recommended for clarity and protection.

4. What constitutes a "signature" under Indiana's Statute of Frauds?

A signature can be any mark or symbol made with the intention of authenticating the document. Under the Uniform Electronic Transactions Act (UETA) adopted by Indiana, digital and electronic signatures (such as those via DocuSign or Dotloop) carry the exact same legal weight as traditional wet-ink signatures.

5. Does the Statute of Frauds apply to the transfer of easements?

Yes. An easement is considered an interest in real estate. Therefore, the creation or transfer of an express easement must be in writing to be enforceable under the Statute of Frauds.

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