The legal case put forth over the Balfour Lane property located at 22 Balfour Lane, Mashpee, MA does contain a number of interesting legal questions with regard to intent of sale and intent of payment to close sale. The agreed sale price of $300,000.00 is found to be below the market value of the house which is estimated on the sale of a nearby house of $375,000.00 which gives reason for the seller Mr. Smoot, to non-negotiate the contract under possible breach conditions. Mr. Smoot did not seek legal counsel to represent his interests in the contract whereas the buyer, the Johnsons, did have legal counsel to represent their interests to buy the property.
However, legal representation may not make much of a difference given the language of the case as legal and binding with interpretation likely going to the individual in the city and jurisdiction where the case is being judged. Specifically, the contract stipulated that contract would be rendered ‘null and void’ if any section of the contract was not completed in full. An example of the stipulation, “time is of essence”, is indicative of a highly sensitive issue related to the expeditious nature of the sale. The seller likely thought that by rushing the time of sale once interest is had in the property that the finalization of the sale will be more likely and the price agreed upon would be sticky.
The seller apparently believed the set upon price of $300,000.00 was initially an advantageous asking price relative to the value of houses in the area. The subsequent sale of a neighboring property for $375,000.00 provides incentive for the seller to seek a new contract and possibly with a new buyer that will seek to pay the higher $375,000.00 or more price tag. Aside from the inherent bias of the contract, the buyer with legal representation signed the contract and agreed to its stipulation to time. The legal counsel also agreed to represent their client based on the contingencies within the contract that required an established set of behaviors in order to release the property to the buyer.
The inherent bias of the contract is such that a ‘basis for remedy’ is not provided in that the buyer must pay the deposit amounts of $5,000 and $25,000 within a timely manner in order to remain in consideration for the property. In essence, the terms and conditions of the contract were invalid for the Johnson sale as there were no other buyers for the property at the time of signing the contract. The type of contract conditions offered by Mr. Smoot are normal when there are multiple buyers with multiple bid offers on the property and interest is high to buy the property. However when there is only one buyer for the property, the time constraints to the buyer are essentially ‘restrictive covenants’ that the attorneys for the buyer should have recognized and objected to.
The lack of a buyers remedy for the buyer does limit any legal ruling given that any positive ruling at the local court level will be taken to a higher appellate court and given a retrial. The retrial will likely see the contract for what it is, an agreement where ‘time is of essence’ and the lawyers as having failed to properly represent the interests of the buyer, will be seen as another and separate legal issue that does not directly pertain to the underlying breach of contract. Suffice to say the higher court will undoubtedly see the technicality that voids the contract as ‘unreasonable and non-binding’, the lack of a formal buyers remedy to indicate any recourse or restitution for a situation that arises where time is out of the control of the buyer with regard to the fulfillment of the contract is a hindrance.
The computer systems crashing at the bank is also an unforeseeable problem that should have forced the Johnson’s to remove the cash before the holiday to have cash on hand as per the contract given the ‘time is of essence’ stipulation and the risk of something going wrong and nullifying the contract. In fact, the contract stipulates that deposit monies paid before the closing date are escrowed toward the balance, to which any payments on or after the date are not technically escrowed although monies as paid are understood to be escrowed. Therefore, the Johnson’s should already have had the $25,000.00 on hand to pay for the additional deposit knowing the $5,000.00 had already been paid and is at risk given the time stipulation of the contract.
The real indemnity should be paid by the bank to the Johnson’s because the bank is responsible for forcing the breach of contract as is written into the contract. In essence, the attorneys for the Johnson’s would have to sue the bank for the $30,000.00 lost in the deal subject to the lawsuit the Johnsons would raise either on their attorneys or on the bank or perhaps both. The Johnson’s do have legal recourse with their attorneys and with the bank given the lack of fiduciary representation with respect to the Johnson’s interests to purchase a real asset in the form of real property given a time constraint.
Essentially, Mr. Smoot the seller revoked the contract based on the ill-timeliness of the contract fulfillment. Although there are no additional buyers for the property and the property will remain on the market after the contract termination, Mr. Smoot will not reconsider taking the $25,000.00 to continue on with the contract. The time as in the delay to close the deal did see the price in the market value of the property rise to $75,000.00 which caused a panic for the seller and raised questions to the time of sale to the attorneys representing the buyer. The sale of the other property redefined the sale price of properties in the area and therefore established a motive to not waver from the contract given the sellers incentive.
The buyer’s market changed to a seller’s market once that property sold for $375,000.00 and that caused the ‘restrictive covenant’ which was not stated in the contract nor readily interpreted to not be a factor. The case will be held in the Balfour jurisdiction of Maspee in Massachusetts. Almost two months had passed by the time the second deposit was to be paid on the house. As time is of essence, the timeliness of the contract proceedings appear to be in breach of contract. Again, the lack of a buyers remedy given the lack of coordination between the buyer and the buyer’s attorneys is neglect with respect to the seller’s interest as well as to the buyer’s interest.
The ethical principle of caveat emptor or buyer beware is one of a number of principles that are distinguishable from this case. Although one can indeed argue that ethical considerations when contracts are in question are essentially irrelevant, the considerations of undue duress or restrictive covenants do address situations that arise where ostensible breaches of contract are in fact undue and circumstantial ‘no fault’ actions that are in favor of the Plaintiffs that seek remedy for the deposit.