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Hogan v. Condinho

A-5858-04T3 (N.J. Super. App. Div. 2006) (Unpublished)

TENANCY-IN-COMMON — Where only one tenant-in-common signs a purchase contract, and the buyers are not aware that there are other tenants-in-common, the buyer cannot be required to purchase only the interest of the tenant-in-common who signed the contract as the seller.

Two couples each owned a condominium unit in a converted single family home. Unit A was owned by one couple as tenants in common, while Unit B was owned by the other couple as tenants by the entirety. The relationship between the unit owners deteriorated, and the Unit B owners offered to purchase Unit A from the other owners. An oral agreement was reached for a certain price, and the lawyer for the Unit B owners sent a letter memorializing the terms as well as a contract of sale. One of the tenant-in-common owners of Unit A then told the Unit B owners that he would not sell for that price and negotiations started over the increase of the purchase price and the inclusion of furnishings as part of the deal. When the deal fell through, the Unit B owners sued for breach of contract and specific performance.

At the trial that followed, the lower court found that one of the tenant-in-common owners of Unit A (the wife of the other owner) never agreed to sell the property. However, it also concluded that her husband had agreed to sell his undivided one-half interest in the condominium unit. Therefore, the lower court found that there was an enforceable oral contract as to the husband’s undivided one-half interest and ordered the husband to sell his interest to the Unit B owners for one-half of the combined purchase price. The Unit A owners appealed.

In the appeal, the Unit B owners argued that the wife—a part owner of Unit—A had no standing to appeal because the lower court did not find an enforceable contract against her interest. The Appellate Division disagreed. It found that she had standing to appeal since she occupied Unit A, from time to time, without being required to pay one-half of the fair market rent to her husband. However, with the lower court’s ruling that her husband had to sell his one-half tenant-in-common interest, the wife would now be forced to enter into a partnership arrangement with people with whom she had an acrimonious relationship. In addition, she would be required to pay one-half of the fair market rental value for Unit A whenever she occupied it.

The Court then turned to the issue of the enforceability of the oral contract. It noted that under the revised Statute of Frauds, an oral contract is enforceable if it can be demonstrated that the parties intended to have a binding contract and agreed upon the essential terms. In this case, the Court found that no oral agreement existed because the wife never agreed to sell her one-half tenant-in-common interest. It disagreed with the lower court’s reasoning that since the husband agreed to sell, he should be obligated to sell his tenant-in-common interest. The Court found that the lower court was, in effect, rewriting the contract for the parties to achieve that result. The Unit B owners never intended to purchase a one-half interest. They intended to purchase one-hundred percent of the tenant-in-common interests of Unit A. If the wife, a part-owner of Unit A, never agreed to sell her interest, then there was no meeting of the minds and no enforceable oral contract as to any ownership interests in Unit A.

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