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Almeida v. Ward

A-2332-05T2 (N.J. Super. App. Div. 2006) (Unpublished)

CONTRACTS; TIME OF THE ESSENCE — Where a seller prevents a buyer from securing a mortgage commitment and then sends a time of the essence notice, the date set in the time of the essence notice must give the buyer a reasonable time within which to obtain its mortgage commitment.

A buyer executed a contract to purchase a house. The terms of the contract included a requirement that the seller deliver the house vacant. Additionally, the buyer was to secure financing and the parties were to set a closing date. After the parties agreed on a closing date, the seller extended the closing date twice claiming that he had been unable to get his brother to vacate the property. The buyer consented to both of seller’s extension requests. During this time, the buyer obtained financing, a survey, and a mortgage commitment letter which he transmitted to the seller. When the seller finally succeeded in getting his brother to vacate the house, the seller told the buyer that he was ready to close on the property. The buyer attempted to set a closing date, but its mortgage company said that new appraisals were required due to the length of time that had elapsed. When the appraiser arrived at the house, he could not perform the appraisal because the seller had shut off all the utilities. The mortgage company refused to approve the buyer’s mortgage without a new appraisal. The seller refused to restore the utility service to the house despite knowing that the buyer could not obtain a new mortgage commitment without a new appraisal. Subsequently, the seller sent the buyer a time of the essence notice. The buyer could not meet the demanded closing date because he was unable to secure financing. The seller then told the buyer that the contract was null and void because the buyer failed to obtain a mortgage commitment and failed to close pursuant to the time of essence notice.

The buyer filed a complaint seeking specific performance and to compel the seller to convey title to the property according to the contract of sale. The seller answered the complaint and filed a motion for summary judgment. The lower court granted the buyer’s request for specific performance and denied the seller’s motion. It held that the seller did not provide the buyer with a reasonable closing date in its time of the essence notice. Additionally, the lower court found that the seller prevented the buyer from securing a mortgage commitment when the seller refused to turn on the utilities. It noted that the reason that the buyer needed to obtain new financing resulted from the buyer accommodating the seller’s requests for extending the closing date. The Appellate Division affirmed the lower court’s decision.


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