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Dacey v. Pitney Farms Associates, L.P.

A-4735-96T2 (N.J. Super. App. Div. 1998) (Unpublished)

CONTRACTS; TIME PERIODS—Mortgage contingency time limitations are of the essence unless otherwise qualified.

A husband and wife entered into a contract to purchase a home, subject to a 45 day mortgage contingency. If they could not secure a mortgage commitment within that time, they had 5 additional days within which to notify the seller of the failure to obtain a commitment or the contingency would be deemed waived. If the buyers timely notified the seller that they could not obtain a mortgage commitment, the seller then had 60 days to try to secure financing on their behalf. The buyers did not comply with these time requirements, but they, in fact, were able to obtain a mortgage commitment 60 days after they signed the contract, contingent on the sale of their current residence. After not receiving the contractually required notice from the buyers, the seller attempted to secure a commitment for the buyers and was able to obtain a commitment from a different bank, also contingent on the sale of the buyers’ existing house. Unable to sell their house, the buyers claimed that mortgage commitments contingent on the sale of their home were not firm commitments because this was a condition beyond the buyers’ control, and therefore, they could cancel the contract pursuant to the mortgage contingency provision. The seller claimed that the buyer failed to timely notify it of the failure to obtain mortgage financing. Both parties moved for summary judgment and the lower court granted it in favor of the seller after concluding that the buyers breached the mortgage contingency provision.

The Appellate Division began by finding that the time period provision of the mortgage contingency was not satisfied by the buyers, and that notification was a condition precedent to the buyer’s ability to terminate the contract. The buyers argued that the notification period was not of the essence, making their reasonably prompt notice satisfactory enough to defeat a summary judgment motion. The Court disagreed, finding that the intent of the parties was to make time of the essence. The Court concluded that “time was of the essence” as a matter of law despite the absence of that explicit phrase, language and that the parties specifically agreed that failure of buyers to notify the seller was a waiver of the mortgage contingency clause.


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