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Hopka v. Bergen

A-2920-06T5 and A-3937-06T5 (N.J. Super. App. Div. 2007) (Unpublished)

CONTRACTS; SPECIFIC PERFORMANCE; MUTUAL MISTAKE — Where a buyer, at the time of contracting, is aware of a question regarding title to property, and the cost to the seller to clear title would eviscerate the bargain reached between the seller and the buyer, then enforcing the sales agreement could be unjust.

A married couple tendered an unsolicited offer to purchase land owned by an elderly woman. The owner’s daughter showed the couple the premises and mentioned that the property extended to the water. During negotiations over the price, the couple’s attorney contacted the owner’s attorney and requested a representation that the landowner had riparian, or waterfront, rights along the shore line. In response, the owner’s attorney informed the couple’s attorney that his client would not make any representations as to riparian rights. When the couple found out that the state asserted a tidelands claim to a section of land behind the shore land, they demanded that the owner clear title to the waterfront land so that they would have clear title to the waterfront land. An expert hired by the owner stated that it could have cost hundreds of thousands of dollars for her to obtain clear title to the property. Subsequently the owner attempted to return the couple’s deposit but the couple refused to accept it. The couple sued the owner for specific performance, demanding that the owner convey the land to them and clear title for the land along the water. The lower court denied the couple’s request, instead finding that the doctrine of mutual mistake applied because the cost to the owner to clear title would have eviscerated the bargain reached by the owner and the couple, and that enforcing the agreement would have been unjust.

On appeal, the Appellate Division rejected all of the couple’s arguments, and said that it would not disturb the lower court’s findings in equity unless an abuse of discretion was found to have occurred. It found that no such abuse. It noted the owner had given notice to the couple that she was not claiming title to any area outside the leased area and was not making any representations as to riparian water rights. The Court also found that the lower court properly applied the doctrine of mutual mistake since the couple was already aware that there was a question regarding the title of the waterfront land. According to the Court, if the couple was certain that the owner had a valid claim to the waterfront land, they could have purchased the property and then attempted to assert their perceived rights themselves. For those reasons, the lower court’s ruling was affirmed.

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