Buyer and seller entered into a written contract for the purchase and sale of 25 acres of land. The contract called for final settlement to be completed on or before October 15, 1975, but settlement did not take place within the prescribed time period because the buyer needed additional time to complete the property survey and title examination.
The seller subsequently refused to convey title, arguing (in part) that the buyer had failed to close within the time specified in the contract; however, the Court of Appeals rejected the seller's argument, pointing out that nothing in the nature of the contract or its terms made time of the essence insofar as the settlement date was concerned.
NOTE: If your standard forms do not meet the needs of the parties to a particular transaction, consult an attorney for assistance.
N. H. (375 A. 2d 600)
In this case the New Hampshire Supreme Court held that the purchasers forfeited their earnest money deposit where (1) The purchase and sale contract was subject to buyers obtaining bank financing, (2) a bank agreed to finance the purchase, and (3) the bank subsequently withdrew its offer to finance when it learned the buyers (husband and wife) had decided to file for divorce.
The court reasoned that a provision in a sales contract making the sale subject to the buyer's ability to obtain financing does not protect the buyer when financing is denied due to some voluntary action on his part, such as filing for divorce.
LA. (331 SO. 2d 550)
In Louisiana the first Circuit Court of Appeals was faced with the following situation: A seller signed a standard ninety-cloy exclusive listing contract with a brokerage firm giving this firm the right to sell certain property and also providing as follows:
"I/we further agree to pay commission as above stipulated in event of sale of said property by me/us within six months after the expiration of this agreement, provided purchaser has become interested in said property as a result of the efforts of advertising of said agent during the active term of this listing, and I/we also agree to refer all prospects to the listing Realtor."
During the initial ninety-day period, a Mr. Kuetemeyer made two offers to purchase the property, but both offers were rejected. Immediately following the expiration of the listing agreement, however, the seller listed the property with another realty firm and the Kuetemeyers then presented a higher offer through this firm. The seller accepted the offer, and the house was sold. The agency which had originally listed the property then sued the seller for a commission citing the above "six-month" clause.
Despite two dissents, a majority of the Louisiana appellate court held that, as a matter of law, the first agency was not entitled to a commission even though the house was sold to the Kuetemeyers within the six-month period. According to the court, the purpose of the "six-months" clause is to prevent an owner from contacting a prospective purchaser after expiration of a listing in order to deprive the agent of his commission. Thus, the clause pertains only to a sale by owners and does not apply where a real estate agent, operating under a listing agreement, sells property to a purchaser who has initially become interested as a result of efforts of the first listing agent.