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Morales v. Sivon

A-6012-95T2 (N.J. Super. App. Div. 1997) (Unpublished)

CONTRACTS; DAMAGES—There is a virtual presumption that specific performance is the appropriate remedy when a seller breaches a contract to sell real property.

Plaintiff and defendant entered into a contract for the sale of a house owned and occupied by the seller. Neither party had counsel and the written contract was a two-page form purchased at a stationery store. The parties left blank the line fixing the date of closing but the contract did provide that either party may, upon reasonable notice, fix a date and declare that time is of the essence. Both parties later obtained counsel in anticipation of closing. When the buyer tried to schedule a closing date, seller responded that the contract had serious “deficiencies and ambiguities” and that these flaws voided the contract. He also rescinded his offer to sell the property. The buyer then sent a time-of-the-essence notice to the seller in an attempt to fix a closing date. The seller repeated his claims and added that the lack of a closing date in the contract provided further grounds for his position. When the seller refused to close, the buyer demanded specific performance. Prior to trial, seller’s attorney argued that the elderly seller was incompetent to participate in a trial. The trial was postponed by the seller’s hospitalization. At trial, the buyer restated his willingness and ability to purchase the property. The seller argued that: (1) the sale of the property was conditioned on an oral agreement which allowed seller to remain there for a reasonable period while he found another place to live, (2) the contract was void and unenforceable because the closing date was missing, (3) the buyer failed to pay the deposit as required under the contract, and (4) he had since rescinded his offer.

The judge found no oral arrangement that allowed the seller to occupy the premises for any additional time, and even if such an agreement existed, it was unenforceable because it violated the statute of frauds. The judge also found that the failure to include a closing date did not void the contract and that buyer either did pay the deposit or seller waived his right to receive it. The judge concluded that the contract was enforceable and the seller had breached it. However, the judge ultimately ruled in favor of the seller by denying specific performance, holding that the property was not so unique as to preclude an adequate remedy at law. He further held that specific performance would be inequitable, unfair and unjust to the seller since he was in poor health, had no place to go and appeared impecunious. Buyer appealed, claiming that the trial judge’s determination of poverty was based on superficial, personal observations, not on evidence presented at trial.

On appeal, the Superior Court remanded for reconsideration of the denial of specific performance. The Court found that the trial record did not support the judge’s conclusion that seller was penniless or otherwise unable to comply with the contract. The Court also found no suggestion of inadequate price or unfair dealing between the parties. The Superior Court held that since real estate is unique, specific performance is the preferred remedy and monetary damages are inadequate. The Court even went as far as stating there is a “virtual presumption” that specific performance is the appropriate remedy in a dispute over the sale of land.


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