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Steliga v. Ostrum

2010 WL 1029265 (N.J. Super. App. Div. 2010) (Unpublished)

CONTRACTS; SPECIFIC PERFORMANCE — One of the consequences of the equitable nature of specific performance is that the party seeking the remedy must have acted in a fair, just, and an equitable manner in order to be awarded specific performance.

A developer and sellers entered into a contract for the sale of undeveloped real property. The contract made closing contingent upon the developer’s receipt of “final unappealable approval” for a subdivision and provided the closing would take place forty-six days after the municipality published the approval notice in the local newspaper. The land use approval contained several conditions to be satisfied. The approval notice was published and the approval became unappealable forty-five days later. The sellers asked the developer to set a closing date, but the developer refused, demanding that all of the conditions of the approval be satisfied before closing. The sellers terminated the contract and the developer sued for specific performance.

The lower court found that the developer breached the contract by failing to settle on the closing date. It also implied a “time of essence” clause in the contract and allowed the sellers to retain the deposit as liquidated damages. On appeal, the Appellate Division reversed and remanded, finding that the lower court failed to consider that the sellers never sent the developer a “time of essence” letter after the closing date had passed and that the record did not demonstrate that the parties deemed the intended closing date to be essential. On remand, the lower court found that “time of essence” could not be implied from the contract language and that the developer did not breach the contract. The lower court also found that the developer was not entitled to specific performance. It found that the developer’s insistence on satisfying every approval condition before closing was not “commercially appropriate” and because the developer behaved inequitably, it was not entitled to specific performance. The developer appealed again and the Appellate Division affirmed.

The Court noted that one of the consequences of the equitable nature of specific performance is that the party seeking the remedy must have acted in a fair, just, and equitable manner in order to be awarded specific performance. In this case, the Court found that many of the approval conditions were ministerial in nature and did not justify delaying the closing. Thus, the Court held it inequitable to allow the developer to keep the seller waiting indefinitely to close while they satisfied each and every approval condition before closing.


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