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Winters v. Calco Corp.

A-1153-00T3 (N.J. Super. App. Div. 2002) (Unpublished)

CONTRACTS; WAIVER; SPECIFIC PERFORMANCE — For a buyer to be entitled to specific performance of a real estate contract, it is required to show that the seller waived all contract provisions that would otherwise have made the contract null and void.

On April 15, a buyer and seller contracted for the sale of real property. The closing was to take place on April 30. There were two conditions precedent in the contract. One required that the buyer would sell one of its other pieces of property prior to April 27. The provision stated “that if the sale is not accomplished by the noted date ‘this agreement shall become null and void.’” The other condition was that the parties “prepare and execute an inventory and assessment of the personal property by April 25.” Again, this paragraph simply provided “[t]he failure of the parties to execute said inventory will render this agreement null and void.” It also stated that if the agreement were rendered null and void by failure to render an inventory, the deposit monies would be returned to the buyer. The inventory was not taken and the buyer did not close on the sale of its old property until April 29. The seller than told the real estate brokers that it considered the contract null and void, but his real estate brokers did not convey this information to the buyer. The buyer appeared at closing and deposited the purchase price with the title insurance company. About a month later, the seller sought a declaratory judgment to the effect that the contract was null and void by its terms. The buyer counterclaimed for specific performance. The lower court granted specific performance saying, “it appears to me that it could be characterized as both parties being in a breach relative to the same provision, and I don’t see how that could justify any termination or declaration of this contract as being null and void.” The lower court found that the buyer was ready, willing, and able to settle and that under such circumstances, the seller had suffered no damages. The decision was made without “addressing any of the issues relative to waiver or estoppel.” The seller sought reconsideration, which was handled by another judge. That judge held that when the seller allowed the 25th to pass, it was hard for the lower court to give any significance to the contingency date of the27th. Also, the second judge found that the earlier judge had determined the two paragraphs to be “unreasonable,” a decision he found “not to be obviously incorrect or irrational.” The Appellate Division had a problem with each of the lower court’s views because, “in essence” each had written a different agreement for the parties “by removing both unambiguous paragraphs” from the written contract. “It is generally well settled that a court has no right to redraft a contract or rewrite a contract as a substitute for the one drafted by the parties.” The Appellate Division, however, recognized that contracting parties can waive enforcement of various provisions. Here, the Court felt that because the duty to take the inventory fell on both parties, and because neither party went forward to take the inventory, that provision had been waived. On the other hand, it looked very carefully at the agreement and saw that there were two ways in which the “other sale” contingency could be waived. First, the buyer could waive it in writing by April 27, but that did not happen. Second, the seller could find another offer, which would require the buyer to waive the “sale” contingency within 48 hours after being presented with the offer. That did not happen either. Under the circumstances, for the buyer “to be entitled to specific performance [it was required to] show that [the seller] or someone on her behalf waived the particular contractual provisions that rendered the contract null and void.” The seller would also be required to show that “she did not waive her enforcement rights regarding the two paragraphs at issue.” For example, if the seller intended to waive the prior sale condition precedent, the seller could insist that the buyer provide evidence that it was financially able to purchase the subject premises without the prior sale taking place. In sum, the Court felt that the “prior sale” contingency was “not a provision that solely protected [the buyer].” It was tied to the financial ability of the buyer to close and, therefore, it protected the seller as well. The Appellate Division believed that there was sufficient demonstration of a factual dispute regarding whether the seller “intended to comply with the contract despite [its buyer’s] failure to complete” the prior sale before April 27. Consequently, the matter was remanded to investigate the factual circumstances concerning the “prior sale” contingency.


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