How does a bank defend against a claim that it failed to comply with an oral agreement to make a loan? Lenders in Florida are protected against such “he said, she said” claims by Florida’s Banking Statute of Frauds – Fla. Stat. § 687.0304.

Florida’s Banking Statute of Frauds prohibits a debtor from maintaining an action on a credit agreement unless the agreement:

  • is in writing,
  • expresses consideration,
  • sets forth the relevant terms and conditions, and
  • is signed by the creditor and the debtor.

A “credit agreement” is “an agreement to lend or forebear repayment of money, goods, or things, to otherwise extend credit, or to make any other financial accommodation.”

The Banking Statute of Frauds has consistently been held to bar not only contract claims, Puff ‘N Stuff of Winter Park, Inc. v. Bell, 683 So.2d 1176 (Fla. 5th DCA 1996), but also tort claims based upon oral agreements or promises to lend money. Dixon v. Countrywide Home Loans, Inc., 710 F. Supp. 2d 1325 (S.D. Fla. 2010) (negligent misrepresentation); Mark Andrew of Palm Beaches, Ltd. v. GMAC Commercial Mortgage Corp., 265 F. Supp. 2d 366 (S.D.N.Y. 2003) (promissory estoppel and negligent misrepresentation); University Creek Associates II, Ltd. v. Boston American Financial Group, Inc., 100 F. Supp. 2d 1345 (S.D. Fla. 2000) (promissory estoppel).

In Professional Vending Services, Inc. v. Firestone Financial Corp., U.S.D.C. S.D. Fla. Case No. 15-61852-CIV-ZLOCH (Apr. 29, 2016), the U.S. District Court for the Southern District of Florida recently confirmed that Florida’s Banking Statute of Frauds absolutely bars claims that are based on an alleged oral agreement to lend money. In that case, the claimant alleged that a lender promised to loan a specific amount of money, but the loan closing documents reflected a much lower loan amount. The Court found that the oral agreement to lend money was a “credit agreement” and that the claims were barred, even though they were styled as claims for negligent misrepresentation and promissory estoppel, because they flowed from the unenforceable oral credit agreement.

When seeking a loan, a borrower needs to remember to tell the lender:

So just sign – (You, you, you’d better sign it)

Right here on this dotted line – (You, you, you’d better sign it)

Where it says you’ll be mine, all mine – (You, you, you’d better sign it)

Until the end of time – (Sign it) (Sign it) (Sign it) (Sign it)

And when a lender is sued for not complying with an oral promise to make a loan, don’t forget about Florida’s Banking Statute of Frauds.