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69 Franklin JC, L.L.C. v. Catalano

A-0488-08T2 (N.J. Super. App. Div. 2009) (Unpublished)

CONTRACTS; INTERPRETATION — Where a contract allows either party to cancel if the seller is “still unable to deliver a deed” it means that the seller has to communicate its readiness to deliver the deed and not simply, and silently, merely “be able to deliver a deed” or “to be in a position to deliver a deed.”

A buyer entered into a contract to purchase a condominium unit. The parties agreed that if the seller were unable, for reasons beyond its control, to deliver the deed on the anticipated closing date, it could postpone the closing for up to sixty days. The agreement also indicated that if, after that period expired, the seller was “still unable to deliver a deed” for reasons beyond its control, either party could terminate the contract. After the sixty day extension period expired, the buyer’s attorney sent a letter to the seller terminating the contract. The seller later sold the property to another purchaser for a reduced purchase price. The seller then sued the original buyer and sought the difference between the purchase price the original buyer agreed to pay, and the sales price of the property, plus carrying costs from the date of the breach up to and including the date of sale, plus interest, costs, and attorneys’ fees.

The lower court dismissed the suit, with prejudice. In doing so, it rejected the seller’s argument that it had no obligation to notify the buyer of a closing date, or actually close within the sixty-day time frame. It also found that the seller did not, by its words or actions, manifest an intent to deliver a deed to the buyer, as required by the contract. The lower court also held that although the seller was in a position to close before the expiration of the sixty day period, it never communicated that position to the buyer or his attorney.

The Appellate Division affirmed. It determined that the lower court had correctly applied to its findings a reasonable construction of the contract consistent with the probable intent of the parties. The Court found that the contract required the seller to communicate its readiness to buyer to assure the buyer that closing would be held during the required time frame. It was not sufficient that the seller simply “had ‘to be able’ to or ‘to be in a position to’ deliver a deed upon the expiration of the sixty-day period.” Since it did not do so, it concluded that the buyer was entitled to terminate the contract without cost.

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