Real Estate 101: The Statute of Frauds is a really old law that originated in England in 1677. It requires that certain transactions must be in writing, signed by the party to be charged, basically the person being sued. Real estate purchases are one of the transactions covered by the statute of frauds. In real estate transactions, the SOF further requires that the writing contain a description of the property, a description of the parties, the price, and any agreed to conditions of price or payment.
There are a few exceptions to this rule. Part Performance is when someone has paid all or part of the purchase price, taken possession, and / or made substantial improvements to the land. For example, if Bob made an oral contract with Sue to buy property, paid her a down payment of 25% of the agreed purchase price, and built a house on the land, then even though the SOF would invalidate the oral contract, Sue could argue that Bob's partial performance proves the existence of the contract.
In addition to Part Performance, Equitable estoppel and Promissory estoppel may be used to prove an oral contract for the sale of land. Equitable estoppel is based upon an act or a representation. Promissory estoppel is based upon a promise.
Once a contract has been signed, a purchaser becomes an equitable owner of title at the time of the execution of a binding contract. Under the common law, the risk of loss is on the buyer after signing the contract for sale. In other words, if the house burns down between the signing of the contract and the closing, the risk is on the buyer. The buyer will still have to close the deal.
There are some states that have a different rule. States that have enacted the Uniform Vendor and Purchase Risk Act hold that the risk of loss is placed on the seller unless legal title or possession of the property has passed. There are a minority of states have passed this statute. So, in a majority of states, the risk of loss is on the buyer.
Surprisingly, its quite common for people to make oral contracts to sell parts of their property, not realizing it must be in writing. Later, when the buyer fails to pay, the seller is at a loss at how to proceed. An attorney familiar with the nuances of real estate law can help with this.