Opinion
No. 00-1144
April 1, 2003
FINDINGS OF FACT, RULINGS OF LAW, AND ORDER FOR JUDGMENT INTRODUCTION
This action arises from a real estate transaction that was, unfortunately, interrupted by the sudden death of the defendant's wife. The plaintiff buyers now seek to enforce an accepted offer to purchase; the defendant seller contends that the offer expired of its own terms when no purchase and sale agreement was executed. The action was tried before me, jury waived, on March 10, 2003. Based on the evidence presented at trial and arguments of counsel, I find and rule as follows.
FINDINGS OF FACT
1. In early April of 1999, Stephen and Rose Giove, then ages 83 and 79, respectively, planned to move from their two family house at 399-401 Beale Street in Quincy to a mobile home they had arranged to purchase in a complex known as Leisurewoods in Rockland. In preparation for that move, they signed a listing agreement for their Quincy home with broker Al Styles of Success! Real Estate, with an expiration date of August 1, 1999. Styles began to market the property.
2. As between Stephen and Rose Giove, Rose played the primary role in dealing with Styles, and Styles took direction from her. I infer that Rose played that role with her husband's assent, and with his authority to act for both of them, at least with respect to relatively minor aspects of the transaction.
3. On April 8, 1999, the plaintiffs Joseph and Julie McNulty made an offer to purchase the Gioves' house, at the asking price of $219,900. Styles prepared the offer for them on a Greater Boston Real Estate Board standard form offer to purchase, in all pertinent respects identical to the one described in McCarthy v. Tobin, 429 Mass. 84, 85 (1999). The McNultys gave Styles a deposit of $500, in the form of a check to Success! Real Estate. The offer set a deadline of April 23, 1999, for execution of the purchase and sale agreement and payment of an additional deposit of $10,495, and a closing date of May 28, 1999. Styles satisfied himself as to the McNultys' financial qualifications for the transaction.
4. Styles presented the offer to the Gioves, who agreed to accept it with certain changes, particularly a change in the closing date to June 30, 1999, so as to allow themselves additional time to complete their purchase at Leisurewoods. Styles made the changes on the form, and Both the Gioves signed the form and initialed the changes. Sometime thereafter, Julie McNulty initialed the changes for herself and her husband, with his authorization.
5. The McNultys then proceeded to apply for a mortgage loan, and to arrange for an inspection of the house. They paid a mortgage company some $800, characterized as a "half-point," at the time they submitted their application. The evidence does not indicate whether that payment was refundable if the loan did not close. Under the arrangement they made with the mortgage company, they had a "rate lock" that would expire on June 10, 1999. Soon after their application, market rates began to rise.
6. The inspection occurred on April 14, 1999. Styles and the McNultys were present. At that time, Styles provided to the McNultys a copy of his draft purchase and sale agreement, prepared on a Greater Boston Real Estate Board standard form. Certain issues arose at the inspection, the most important of which was the condition of the roof. To address that issue, the McNultys arranged for a roofing contractor to visit the property on April 21, 1999, to provide an estimate for a new roof.
7. The roofing contractor visited the property on April 21, 1999, and gave an estimate of $6,200. McNulty expressed to Styles his concern about an unanticipated expense of that magnitude. After some discussion, they settled on a proposal that the sellers pay $3,000 toward the buyers' closing costs. Later that day, Styles discussed this plan with Rose Giove. She agreed, but expressed concern that the purchase and sale agreement be signed as scheduled, so that the Gioves would be ready for their planned purchase at Leisure Woods. Stephen Giove did not participate in the discussion about the $3,000 adjustment and was not consulted about it then or at any later time. At trial, he testified that he would not have agreed to it. I credit that testimony as an honest statement of his present view, in retrospect, of what he would have done at the time. Nevertheless, I infer from the course of communication between Styles and the Gioves that this matter was within the authority Mr. Giove had delegated to his wife, and that he would have executed a purchase and sale agreement with this term, based on her agreement to it.
8. Later the same day Styles telephoned the McNultys to convey Rose Giove's agreement, and to arrange for execution of the purchase and sale agreement, revised to include the new term, on Friday, April 23, 1999. He spoke with Julie McNulty, who informed him that they wanted to have an attorney review the agreement, and needed time to do that. He responded that that would require an extension, which would need to be in writing and initialed.
9. Styles then discussed the proposed extension with Rose Giove. She was unhappy, but did not refuse, in light of Styles's assurance that he would be able to find another buyer if the McNultys did not complete the transaction. I infer that Rose Giove implicitly authorized Styles to agree to the extension on her behalf and that of her husband.
10. Styles prepared a second draft of the purchase and sale agreement, which differed from the first only by the addition of a one sentence provision for the sellers' payment of $3,000 toward the buyers' closing costs. He also prepared a revision of the accepted offer form to extend the date for execution of the purchase and sale agreement to April 30, 1999. On April 22, 1999, Julie McNulty met with Styles's wife, who delivered to her the second draft of the purchase and sale agreement and presented the revised offer form for her to initial. Julie McNulty initialed the extension for herself and her husband, with his authorization. Styles intended to present the extension to the Gioves for them to initial, but did not do so; he no longer remembers why he did not, and no other evidence addresses that question. Styles did inform Rose Giove that the McNultys had initialed the extension.
11. On Monday, April 26, 1999, Styles learned that Rose Giove had had a massive heart attack and might not survive. He conveyed that information to the McNultys and indicated that he would keep them informed. On Wednesday, April 28, 1999, Rose Giove died. Styles was so informed by the Gioves' daughter, and passed the information on to the McNultys.
12. In the days immediately following Rose Giove's death, Stephen Giove decided not to proceed with the planned purchase at Leisurewoods. Styles did not have access to Stephen Giove at this time, and was unsure of his plans. Sometime between April 28th and April 30th, Styles made a statement to the McNultys to the effect that "you understand that we won't be signing the
P S. April 30th passed without either side signing the purchase and sale agreement, and without the McNultys tendering the additional deposit. I find that the McNultys did not do so at that time out of respect for Stephen Giove's bereavement, expecting to hear further about the status of the transaction after the passage of an appropriate period of time.
13. On or about May 1, 1999, the Gioves' daughter informed Styles that her father had decided not to make the purchase at Leisurewoods, and that he might still want to sell the house, but that he was unable to deal with the matter at that time. Styles called the McNultys, spoke with Julie, and informed her that he would wait several weeks and then speak with Mr. Giove. A couple of weeks later, Styles called again and said that Mr. Giove needed a month "to get his affairs in order." Julie McNulty responded that they understood the situation, still wanted the house, and would wait.
14. In Mid-May, Joseph McNulty became concerned about the June 10 expiration of the rate lock. He contacted Styles and proposed that the transaction proceed to closing by that date, with the stipulation that Mr. Giove would stay in the house as long as he chose, at a "very modest" rent. Styles presented this proposal to Mr. Giove, who declined.
15. In approximately June, Mr. Giove expressed interest in purchasing a condominium. He told Styles that he still wanted to sell his house to the McNultys if he found a place to buy. Styles showed him a number of units over the next several months. During this time, Styles had a number of conversations with the McNultys, keeping them informed of Mr. Giove's search, and encouraging their continued interest. During this period, Styles did not offer to return the McNultys' deposit, and they did not ask for its return. At some point during this period, Julie McNulty told Styles "If Mr. Giove puts the property back on the market please contact us."
16. The Gioves' listing agreement with Success! Real Estate expired on August 1, 1999, and was not renewed.
17. Sometime in August, Joseph McNulty, while riding his motorcycle, happened to pass the house and saw Mr. Giove outside. He stopped and expressed condolences on the death of Rose Giove. Mr. Giove made a statement to the effect that he would sell the house to the McNultys if he found something to buy.
18. As of February, 2000, Mr. Giove had not found a place he wanted to move to. Success! Real Estate returned the McNultys' deposit to them with a cover letter from Styles dated February 7, 2000. The letter explained that the deposit was being returned because "we feel that it is not appropriate for SUCCESS! Real Estate to continue to hold this money." It went on to say that Mr. Giove had recently indicated that "he still has hopes of moving and to check back with him this spring. He also indicated that he would call me if he decided sooner and wanted me to contact you before anyone else when he's ready."
19. Upon receiving the letter and check, Joseph McNulty telephoned Styles and expressed reluctance to cash the check. He asked whether Mr. Giove would still sell the house to the McNultys at the same price, and Styles responded to the effect that he believed Mr. Giove would if he found a place to move.
20. Mr. Giove did not find a condominium to his liking, and has remained in his house. His long-term tenant moved out sometime after the events in issue here, and he performed some renovation in the upstairs apartment, which is now occupied by his grandson.
21. The only direct evidence on the issue of whether the McNultys had the financial ability to proceed with the purchase is Joseph McNulty's testimony that they were "ready, willing and able" to do so. I infer that the McNultys had the funds necessary for the deposit, and that the mortgage application either had been approved or would have been approved upon submission of a signed purchase and sale agreement.
22. The McNultys filed this action on July 28, 2000. Their complaint seeks specific performance and damages. They obtained approval of a memorandum of lis pendens shortly after filing suit.
CONCLUSIONS OF LAW AND DISCUSSION
The plaintiffs contend that the accepted offer to purchase was a binding contract, that the defendant agreed to extend the date for the purchase and sale agreement to April 30, 1999, and that the defendant thereafter waived the requirement of the purchase and sale agreement by the communications from Styles to them in the aftermath of Rose Giove's death. The defendant contends that the April 23, 1999, deadline for the purchase and sale agreement was never effectively extended, since he never initialed the extension, so that the offer expired by its terms when the defendants failed to sign the purchase and sale agreement by that date. As a fall-back position, he argues that even if the deadline was extended to April 30, 1999, the plaintiffs' continued failure as of that date to tender a signed purchase and sale agreement and deposit terminated the offer.
Based on the facts found supra, I reject both these contentions. I conclude that the parties' statements and conduct, considered in light of the circumstances of the transaction, constituted an implicit agreement, as of early May, 1999, to replace the agreement formed by the accepted offer with a new agreement that the defendant would sell the house to the plaintiffs, on the terms previously agreed, when and if he found a satisfactory place to move within a reasonable time. The condition was not satisfied within a reasonable time, and, I conclude, the new agreement expired.
The accepted offer formed a binding contract between the parties, subject to a condition subsequent of the execution of a purchase and sale agreement by the date agreed. See McCarthy v. Tobin, 429 Mass. at 88. The parties had the power to extend the date for that condition, and also to waive the condition altogether. See id. at 88-89. Rose Giove's response to the plaintiffs' request for an extension of the deadline from April 23 to April 30, as conveyed through Styles, constituted oral agreement on behalf of both sellers. Written acknowledgment would have confirmed her agreement, but was not necessary to its effectiveness. See Rex Lumber Co. v. Acton Block Co., 29 Mass. App. Ct. 510, 515 (1990) ; see also McCarthy v. Tobin, 429 Mass. at 89 (words and conduct attributable to seller constituted waiver of time requirement for purchase and sale agreement); Church of God in Christ, Inc., v. Congregation Kehillath Jacob, 370 Mass. 828, 834 (1976) (oral extension of time for performance).
A week later, the circumstances had changed dramatically. Unsure of his client's wishes, Styles told the plaintiffs, in substance, that the purchase and sale agreement would not be signed at that time. The effect of that statement, at that time, was to request an extension of the April 30th deadline to a reasonable, but unspecified, time in the future. Although Styles had no explicit authority from Mr. Giove to make that request, any reasonable person in the plaintiffs' position would have viewed him as speaking for Mr. Giove. I conclude, therefore, that he had apparent authority to make the request. See, e.g., Rex Lumber Co. v. Acton Block Co., 29 Mass. App. Ct. at 517-518. The plaintiffs, by their conduct in failing to tender a signed agreement, acquiesced in the requested extension.
Thus, as of early May, the parties still had a binding agreement, which was still subject to the condition subsequent of the execution of a purchase and sale agreement. No precise deadline existed for the condition; a reasonable time was implied. What happened thereafter, however, changed the situation. Styles's communications to the plaintiffs over the next several weeks and months conveyed, in substance, that Mr. Giove would not proceed with the transaction as previously agreed, but that he would sell the house to them on the same terms if and when he found a place to move. The plaintiffs, as of May and perhaps even June, may well have had a right to insist on enforcing the existing agreement. To do so, however, they would have had to comply with their obligations under it; that is, they would have had to tender a signed purchase and sale agreement and deposit. They did not. Rather, they waited weeks and then months, without further action, while Mr. Giove adjusted to his new situation and then looked at condominium units.
In Metrowest v. Jeffries, Norfolk Superior Court No. 02-00806, cited by the plaintiffs, the buyer did not tender a signed agreement, but did file suit for enforcement, within some three weeks after the seller's repudiation of the agreement. That action effectively substituted for tendering the agreement by unequivocally expressing the buyer's insistence on proceeding.
The McNultys' forbearance was entirely understandable under the circumstances. Nevertheless, it had legal consequences. By failing to act to satisfy the condition and assert their rights under the existing agreement, the McNultys effectively acquiesced in its termination, and replacement with a new agreement that Mr. Giove would sell the house to them on the previous terms if and when he found a place to move. That revised agreement was essentially confirmed in the August conversation between Mr. Giove and Joseph McNulty, as well as in Julie McNulty's statement to Styles, "If Mr. Giove puts the property back on the market please contact us."
This revised agreement did not set a time limit on Mr. Giove's finding a place to move. In the absence of a time specified in the agreement, the law implies a limit of a reasonable time. See Church of God in Christ, Inc., v. Congregation Kehillath Jacob, 370 Mass. at 834. By February of 2000, as a new selling season was approaching, a reasonable time had passed. I conclude, therefore, that the agreement had terminated, and the plaintiffs retained no enforceable rights under it. Accordingly, the plaintiffs are not entitled to the relief sought in either count of the complaint.
CONCLUSION AND ORDER
For the reasons stated, it is hereby ordered that JUDGMENT enter dismissing both counts of the plaintiffs' complaint.
_______________________ Judith Fabricant Justice of the Superior Court
April 1, 2003