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Brown v. Habiak

A-1899-97T5 (N.J. Super. App. Div. 1999) (Unpublished)

CONTRACTS; DAMAGES—In a breach of a contract for sale of property, good sense, rather than a mechanical application of any single formula is a fundamental factor in fixing damages.

A married couple contracted to purchase a single-family home. They deposited 5% of the purchase price with the seller’s attorney. The closing never took place. At trial, the lower court found that the buyer had breached the contract and entered a monetary judgment in favor of the seller. The seller sought the amount of the deposit and the attorney’s fees as damages even though the property was eventually sold to other buyers for slightly more than it would have been sold to the buyers who had breached. The lower court awarded only an amount equal to interest on what the net proceeds would have been had the transaction been consummated, credit for inspection, and the amount of the seller’s attorney’s fees. It rejected the seller’s request for damages based on the payment of real estate taxes, hazard insurance, utilities, mortgage interest, and the time and effort to re-market the property. The Appellate Division affirmed. In doing so, it noted that the New Jersey Supreme Court has held that “automatic forfeiture of the deposit is not allowed as damages. Instead, the purchaser is entitled to a return of the deposit less actual losses suffered by the seller. In a breach of a contract for sale of property ‘good sense, rather than a mechanical application of any single formula is a fundamental factor’ in fixing damages.” Although the seller continued to pay real estate taxes, insurance, and utilities longer than it wanted to, it also continued to enjoy possession of the premises. Those charges were found to be directly related to that enjoyment.


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