Law School Case Brief
Billman v. Hensel - 181 Ind. App. 272, 391 N.E.2d 671 (1979)
A subject to financing clause imposes upon the buyers of real estate an implied obligation to make a reasonable and good faith effort to satisfy the condition.
The Hensels, as sellers, entered into a contract to sell their home to the Billmans (the buyers) for $ 54,000 cash. A condition of the contract was the ability of the buyers to secure a conventional mortgage on the property for not less than $ 35,000 within 30 days. When the buyers did not complete the purchase, the sellers commenced this specific performance suit to secure a $ 1,000 earnest money/liquidated damage deposit required by the contract. The buyers defended upon the basis that they were relieved from performing. The case was tried by the court, and judgment was entered in favor of the sellers. The buyers appealed.
In house sellers' action for specific performance of a contract to sell a house to the buyers, did the court properly determined that the buyers were not excused from performance?
The Court of Appeals affirmed the trial court's judgment in favor of appellee sellers holding that appellant buyers were not excused from performance. Here, the condition imposed was that the buyers be able to secure a conventional mortgage of not less than $ 35,000. The "subject to financing" clause imposed upon the buyers an implied obligation to make a reasonable and good faith effort to satisfy the condition. The evidence supported the trial court's conclusion that the sellers carried their burden of proof by establishing that the buyers had not made a reasonable and good faith effort to secure the necessary financing and, therefore, could not rely upon the condition to relieve their duty to perform. .
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