Statute of Frauds Bars Enforcement of Land Contract Where Lot Selection Depended on Third Party's Unfettered Discretion
Read the Court's Opinion (PDF)
Judge Brian Stagner
In Riverside Homebuilders v. FG Aledo Development, the Business Court's Eighth Division granted summary judgment on statute-of-frauds grounds, holding that a contract purporting to convey 181 residential lots failed because the specific lots could not be identified at signing—the buyer's selection right depended on a third-party builder first dividing the subdivision into two pools using wholly discretionary criteria. The Court concluded that where the universe from which a buyer may choose does not exist at contract formation, the property description is fatally deficient under Texas law.
Court Staff Summary
A contract for the sale of land that cannot identify the land to be conveyed, on the day it is signed, fails the statute of frauds. When the contract at issue was signed, the lots to be conveyed did not exist as an identifiable set. The contract is therefore unenforceable. Future-selection contracts satisfy the statute of frauds so long as they grant the buyer an absolute, unqualified selection right. But the contract at issue did not give the buyer an unqualified right to pick lots from an established pool that existed at the time of signing. Moreover, rather than representing that the contract contained an adequate property description, the parties openly acknowledged its insufficiency and agreed to supply the missing description later through a plat that did not yet exist.
Background: A Two-Builder Subdivision and Competing Claims
FG Aledo Development, LLC owned and was developing residential lots in the Morningstar Section 1-1 subdivision in Parker County. Kim Gill served as president of KTFW Investments, Inc., which was FG Aledo's sole manager. Riverside Homebuilders, Ltd. claimed it had secured the right to purchase 181 lots through the "Morningstar Contract." FG Aledo had already contracted to sell approximately half the subdivision to D.R. Horton under a separate agreement. The dispute centered on whether the Morningstar Contract created an enforceable obligation to convey the lots to Riverside.
The Statute-of-Frauds Problem: No Identifiable Property at Signing
The Morningstar Contract did not identify the 181 lots by lot and block, metes and bounds, or recorded plat. Instead, the contract established a deferred selection mechanism: before Riverside could choose any lots, D.R. Horton (the "Other Builder") had to first divide all lots in Morningstar 1-1 into two distinct pools. Only after that division would Riverside be able to pick one group. Critically, the contract provided no objective criteria for making this initial division—D.R. Horton was free to split the subdivision however it wished. As the Court explained,
Until D.R. Horton exercised that discretion, there were no defined groups from which Riverside could choose—and no way for Riverside, FG Aledo, or a court to determine which lots Riverside was entitled to buy.
The Court's Reasoning: Missing Terms Cannot Be Supplied Later
The Court emphasized that the deficiency was not merely a matter of incomplete drafting but a fundamental failure to identify the property at the moment of contract formation. The contract promised Riverside 181 lots somewhere within Morningstar 1-1, but never identified which 181 lots. The Court held:
The missing terms were not merely left unwritten; they did not exist. And a contract that cannot identify the land to be conveyed, on the day it is signed, fails the statute of frauds.Because the statute of frauds resolved the case, the Court did not reach FG Aledo's remaining arguments, including whether Kim Gill had authorized the contract or whether the parties had mutually assented to its terms. The Court assumed without deciding that Riverside could prove the Morningstar Contract was validly executed, but concluded that even with that assumption, the contract failed because it could not identify the property to be conveyed at signing.