Kutzin v. Pirnie

124 N.J. 500, 591 A.2d 932 (1991)

 

RULE:

A buyer, or seller, who has not received notice within the stated period can rely upon a binding arrangement.

FACTS:

This is an action on a contract for the sale of residential property. The plaintiff sellers' real-estate agent prepared the contract, after which defendants, the prospective buyers, signed it, and paid a deposit of nearly ten percent of the purchase price. The contract also contains a three-day attorney-review provision, which provides that if the buyer or seller reviews and disapproves the contract, the attorney must notify the realtors and the other party named in the contract within the three-day period. The realtors must be notified by certified mail, telegram, or personal delivery. Seller's counsel telephoned the buyer's agent on September 2nd to communicate his approval of the contract with one exception: he wanted to hold the deposit in his trust account pending closing. The lawyer followed up that conversation by mailing a letter to the agent the following day, with a copy to the lawyers of the buyers. When the buyers decided not to go through with the purchase, plaintiff filed suit. The trial court found in favor of plaintiffs and awarded them the deposit paid on the property sale contract but denied them any interest or credit due to increased capital gains taxes paid.  The appellate court ruled that plaintiffs were entitled to keep the entire deposit. On review, the court affirmed the judgment of the appellate court, but modified the amount awarded to plaintiff sellers to the amount awarded by the trial court for the actual damages suffered. 

ISSUE:

Did either party's counsel send a notice of disapproval thus rescinding the contract?

ANSWER:

No.

CONCLUSION:

The court affirmed the decision in favor of plaintiffs, finding that defendants had breached the contract. To rescind the contract, either party's attorney would have had to send notice of disapproval during the three-day period to both agent and counsel "by certified mail, by telegram, or by delivering it personally." The record reveals that the only correspondence between the attorneys and the realtors during the three-day period in question was the letter to seller's agent. That letter did not disapprove of the contract. Moreover, the letter was not sent by certified mail, nor did he send a copy to the opposing counsel.

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