Opinion
No. CV11-6021389 S
October 17, 2011
MEMORANDUM OF DECISION
The Defendants, David Purcell and Ann Marie Purcell, are the owners of property known as 25 Abbey Road, Easton. In the spring of 2011, they listed the property for sale with a real estate agency. The asking price was $1,149.500.
The Plaintiffs, Vito Lombardo and Laura Lombardo, acting through their Realtor, Margot Ciolino, made an offer to purchase the property (Ex. B). The offer recited a sale price of $1,100,000., including $11,000 which was paid at the time of the signing of the binder, and $990,000. "cash on signing of superseding contract (if any)." The balance, $990,000 was to be due at the time of the closing of title.
The offer (Ex. B Ex. 12) contained no mortgage contingency clause, and specifically provided that it was not contingent upon the Plaintiffs' ability to obtain financing for the purchase.
Exhibit B was signed by the Plaintiffs on July 2, 2011, and was accepted by the Defendants on July 4, 2011 (Ex. C).
In the document signed by both parties, Exhibit C, a closing date of August 6, 2011 "or sooner" was established. Inspections were to be completed on or before July 15, 2011, and superseding contracts were to be executed on or before July 29, 2011. The signed writing provided: "offer contingent on results of professional appraisal at or above agreed upon purchase price."
The signing of the "Binder of Sale Form" (Ex. B, C 12), was the culmination of negotiations between the parties (Ex. 1 through 11). An initial cash offer of $880,000. (Ex. 4) was met with a counter offer of $1,175,000. (Ex. 5). A proof of funds letter was also supplied (Ex. 9).
The appraisal referred to in the binder of sale was performed. It revealed a fair market value of $1,050,000., a figure below that of the purchase price, $1,100,000.
The document signed by all parties (Ex. C), states, in bold capital letters at the top of the page, "BINDER OF SALE FORM."
In the body of the document, the following appears:
"This agreement to remain in force and effect and constitute a VALID CONTRACT between the parties hereto unless, or until, superseded by further contract between parties, incorporating detailed description of property and providing for adjustment of taxes, rent, interest, insurance premiums, etc. The SELLER and the BUYER further agree that the above stipulations are to apply to and bind the heirs, executors, administrators and assigns of respective parties."
On July 23, (Ex. 18) the Defendants raised the listing price of the property to $1,199,000.
Upon learning of the action, the Plaintiffs' realtor, Margot Ciolino, wrote the other broker, protesting the action. The increase in the listing came, while inspection issues were being discussed.
On July 25, 2001 (Ex. J), Margot Ciolino wrote the real estate agent Marilyn Klemisch. She stated: "we need to get you or attorney to provide letter of release for the 1% deposit that the Lombardos made for the purchase of 25 Abbey Road. We need to get this ASAP so they can move on."
The Plaintiffs later signed a document titled "BAR ASSOCIATION STANDARD FORM RESIDENTIAL REAL ESTATE AGREEMENT" (Ex. E).
The document was prepared by Attorney Robert Walker, who was representing David and Ann Marie Purcell. It was sent (Ex. 24) to Attorney Bruce Matzkin, the Plaintiffs' attorney.
On August 3, 2011, the Plaintiffs signed the document, and returned it to Attorney Walker with a check in the amount of $99,000. made payable to "Robert G. Walker, Esq., Trustee" (Ex. F).
The document signed by the Plaintiffs contained minor changes, from that forwarded to their attorney by Attorney Walker. In addition to those changes, the following language was added as a separate paragraph on page 9:
"41. Seller must accept buyer's offer by returning signed contract no later than Friday August 4, 2011 at 12 noon and can be conveyed by email scan of signed contract."
David and Ann Marie Purcell never signed Exhibit E. On August 5, Attorney Walker sent an email to Attorney Matzkin (Ex. G). The communication stated: ". . . my clients will not accept the latest offer and sign the contracts, so this matter is terminated . . ."
The email also authorized the release of the binder deposit to the Plaintiffs.
In this action, Vito and Laura Lombardo seek an order in the nature of specific performance, ordering the Defendants to convey title to 25 Abbey Road, Easton to them, for the consideration of $1,100,000.
They maintain that Exhibit C, which was signed by all parties, constitutes a binding and enforceable contract to sell real estate, and that the parties are bound by the agreement.
SPECIFIC PERFORMANCE BASED ON EQUITABLE PRINCIPLES
An action for specific performance of a contract to sell real estate is an equitable action and is to be determined by equitable principles. Webster Trust v. Roly, 261 Conn. 278, 284 (2002). The granting of specific performance of a contract to sell land is a remedy which rests in the broad discretion of the trial court. Batalino v. VanPatten, 100 Conn App. 155, 160 (2007). It will not be granted unless the contract is made according to the requirements of law, and is fair, equitable, reasonable, certain, mutual, on good consideration, consistent with policy and free from fraud, surprise or mistake. State v. Lex Associates, 248 Conn. 612, 617-21 (1999).
Whether to award specific performance, assuming a breach of contract situation, is fact specific. Hill v. Raffone, 103 Conn.App. 737, 743 (2007). If, under the circumstances, specific performance would be inequitable, the equities of the case should be examined, when weighing the merits of a claim. Schneidau v. Manley, 131 Conn. 285, 289 (1944).
BINDER OF SALE FORM IS NOT A BINDING CONTRACT FOR SALE OF REAL ESTATE CT Page 21737
In order for the Plaintiffs to be entitled to the remedy of specific performance, they must first demonstrate that Exhibit C, the document signed by all of the parties, is a binding contract for the sale of real estate.
An examination of Exhibit C reveals that it identifies the parties to the agreement, and the total purchase price. Although a metes and bounds description of the property is not included, the identification of the parcel as 25 Abbey Road, Easton is sufficient to satisfy the requirement that the property be described with reasonable certainty. Foster v. Civale, 134 Conn. 469, 472 (1948).
Any contract for the sale of real estate must be in writing, in order to satisfy the Statute of Frauds, § 52-550 of the General Statutes, which reads in relevant part:
"(a) No civil action may be maintained in the following cases unless the agreement, or a memorandum of the agreement, is made in writing and signed by the party or the agent of the party to be charged . . . (4) upon any agreement for the sale of real property or any interest in or concerning real property . . ."
Exhibit F, the proposed contract of sale which was initially drafted by the Defendants' attorney, and was signed by the Plaintiffs, cannot satisfy the Statute of Frauds. David Purcell and Ann Marie Purcell did not sign Exhibit F, after the document was returned by the Plaintiffs.
The Plaintiffs argue that the executed Binder of Sale meets all of the requirements of a binding contract, while the Defendants insist that the Binder of Sale is merely an agreement to negotiate a contract.
The court agrees with the Defendants.
In Fowler v. Weiss, 15 Conn.App. 690 (1988), the Appellate Court reversed a trial court finding that specific performance was appropriate, based upon a binder of sale agreement. The court determined that the signing of a formal written agreement was a condition precedent to the formation of a contract, in that the binder provided that a contract of sale was to be signed on or before a date certain. Fowler v. Weiss, supra, 693-94.
In Fowler, the Appellate Court adopted a three-fold test, to be employed when determining whether a formal contract had been negotiated: 1) the language used in the document, 2) the circumstances surrounding the transaction, and 3) the purpose which the parties sought to accomplish. Fowler v. Weiss, supra, 693 (See also Wellington Systems, Inc. v. Redding Group, LLC, 49 Conn.App. 152, 161, n. 5 (1998)).
The question posed is largely a question of intent. A binder is unenforceable, if the intent of the parties was that they would not be bound, absent the execution of a formal contract. Srager v. Koenig, 1997 WL 422564; 1997 Ct.Sup. 7865, 7870 [ 20 Conn. L. Rptr. 85] (Stevens, J.).
In Srager, the binder contained the following language, in bold print:
"THIS AGREEMENT IS TO REMAIN IN FORCE AND EFFECT AND CONSTITUTE A CONTRACT BETWEEN THE PARTIES HERETO UNLESS OR UNTIL SUPERSEDED BY FURTHER
CONTRACT BETWEEN THE PARTIES INCORPORATING DETAILED DESCRIPTION AS HEREIN ABOVE PROVIDED."
Based upon the quoted language, and the surrounding circumstances, Judge Stevens, applying the Fowler test, determined that the binder required the parties to consummate the sale of the real property only on the basis of a superseding contract. Srager v. Koenig, supra, 7874.
Applying the Fowler test to the facts of this case, it is found that the parties to the binder agreement, Exhibit C, did not intend to bind themselves, prior to the execution of a formal contract of sale.
Although the language contained in Exhibit C is not identical to that construed by the court in Srager, the surrounding circumstances indicate that formal contracts were deemed a necessary condition precedent to the formation of a contract.
Under the heading "IMPORTANT DATES" the date for the signing of a superseding contract is referenced. As in Srager, a significant deposit was required at the time the contract was to be signed.
The Plaintiffs' real estate agent, Margo Ciolino, treated the contemplated transaction as "dead," when the listing price was increased by the Defendants. The fact that the Defendants believed they could increase the listing price, is some evidence that they did not feel that a binding agreement had been consummated.
The Plaintiffs, when they signed the formal contracts of sale, added additional language to the contract, and stated, in the document, "Seller must accept buyer's offer," by a date certain.
At no time did the Plaintiffs, or their attorney, claim that Exhibit C constituted a binding agreement, until after the Defendants' attorney communicated his client's refusal to sign the proposed contracts, on August 5 (Ex. G).
It is therefore found that the Plaintiffs have not met their burden of proving that Exhibit C constitutes a binding contract for the sale of real property, entitling them to an order in the nature of specific performance.
The case-by-case analysis mandated by the Fowler test provides a legal tool, to be employed in resolving what Judge Stevens accurately described as the "recurring issue concerning the legal effect of a binder for the sale of real estate which is prepared by a realtor . . ." Srager v. Koenig, supra, 7870.
This reliance upon hindsight, however is not helpful to prospective home buyers. Faced with entering into the most significant financial investment most consumers will ever undertake, home buyers should be aware of their rights and obligations at every stage in the process.
Although courts are properly loathe to interfere with the freedom to contract, there must be a preference for formal contracts, signed following legal advice obtained from a trained professional charged with explaining all material terms and conditions to the consumer.
Members of the real estate bar, along with trained and knowledgeable real estate agents and brokers, would benefit from clear and unambiguous forms, rather than relying upon the vagaries of litigation to resolve ambiguities.
The Plaintiffs' request for relief, in the nature of specific performance, is DENIED.