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Macalalad v. Castle Ridge at Newton, Inc.

A-3861-99T5 (N.J. Super. App. Div. 2001) (Unpublished)

CONTRACTS; CONTINGENCIES—Where performance of a contract is contingent upon a buyer’s ability to obtain financing, without greater elaboration, the buyer may terminate the contract if its mortgage commitment requires proof of the sale of an existing residence and no sale takes place.

A contract to purchase a house contained a clause reading, “In the event that the buyers are unable to obtain financing, all deposit monies must be immediately returned to the buyers without interest.” The buyers were unable to sell their existing property and therefore, they were unable to satisfy their mortgage commitment which was specifically conditioned upon their obtaining a HUD statement evidencing the sale of their premises. Under the Court’s analysis, “[t]hat specific condition failed to occur and hence, the mortgage commitment failed and the purchase contract was automatically canceled thereby entitling [the buyers] to the refund of their deposit.”

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