Virginia Lawyers Weekly VA Lawyers Weekly
Where would-be property purchasers did not close on the contractual date, the have no claim for specific performance after the property owner terminated the sales agreement.
Overview
Newton owns property that the Carlsons wanted to purchase. The purchase agreement provided for a Jan. 12, 2022 closing date. “However, the Agreement also provides that the Closing Date could be extended by ten days to complete financing requirements or to cure title defects.”
The Carlson’s inspector found defects in the floor joists. The parties executed an addendum to the sales contract that provided Newton was to have a licensed and insured contractor make repairs, which had to be completed “prior to walk through.”
Newton hired Hug-A-Bug Pest Control to perform moisture and termite inspections and to repair the deficient joists. When this was done, the Carlsons had the house reinspected that the floor joists were still deficient.
Turner, the Carlson’s real estate agent, contacted the lender to “‘learn what information the lender required in order to approve the repairs to the floor joists of the Property.’ …The lender stated that it required a re-inspection to confirm that the repairs were done and that there were no structural issues. …
“Plaintiffs subsequently hired US Inspect to determine whether Hug-A-Bug repaired the defective items. … On January 20, 2022, US Inspect issued a report stating that the ‘beam and joist replacement in crawl space are sound,’ and Turner forwarded the report to the lender.
On Jan. 21, the day before closing, “the lender stated that the underwriting department requested that a licensed engineer inspect and certify the repair work. … On that same date, Turner located two engineers who were willing to visit the Property on January 24, 2022. …
“Turner sent to Newton a proposed addendum to the Agreement (the ‘Proposed Addendum’) to adjust the Closing Date to January 31, 2022, and increase the earnest money deposit by $5,000. …
“On January 23, 2022, Newton delivered to the Carlsons a signed termination notice and release. … On January 24, 2022, Newton ‘expressly forbade any entrance onto the Property by any contractor or engineer’ after Turner repeated the proposal.”
The Carlsons sued for specific performance of the sales contract. Newton’s demurrer is before the court.
Discussion
“Even accepting all of the Carlsons’ allegations as true, the Court finds that the Carlsons have failed to state any viable claims.”
Newton was free to terminate the sales agreement if closing failed to occur on the closing date unless the failure was Newton’s fault.
“The Court finds that the Inspection Addendum explicitly provides that the Carlsons may procure an inspector at their expense. Accordingly, Newton was not obligated to procure a licensed engineer to inspect the repairs.
“Moreover, the Complaint alleges that the Carlsons were informed, the day before the Closing Date, that the lender required a licensed engineer to inspect the Property. The Complaint does not allege that Newton refused to permit a structural engineer on the Property on or before the Closing Date.
“Instead, the Complaint alleges that Newton refused to permit a structural engineer on the Property after the Closing Date.
“The Court finds that the Carlsons have failed to allege that Newton breached the terms of the Inspection Addendum because the Agreement did not require Newton to permit a structural engineer on the Property after the Closing Date and because Newton was not required to procure a licensed engineer to inspect the repairs.”
Further, Newton is not at fault for the failure to close. “The Court finds that the Complaint fails to allege sufficient facts demonstrating that Newton was at fault. To the contrary, the Complaint alleges that Newton hired a contractor to repair the floor joists. It also alleges that the contractor was at the Property performing repairs only seven days after the Inspection Addendum was executed.
“Assuming, arguendo, that the contractor’s conduct is attributable to Newton, the facts alleged in the Complaint fail to demonstrate that the contractors unreasonably delayed performance of repairs.”
There was no anticipatory repudiation of the sales agreement. “[T]he Complaint alleges that Newton improperly declined on January 21, 2022, to execute an addendum postponing the Closing Date.
“The Supreme Court of Virginia has held that ‘a party’s abandonment of his or her contractual duties under a continuous performance contract, after performance has commenced, constitutes an anticipatory repudiation.’ …
“Here, however, the express terms of the Agreement did not require Newton to execute an addendum postponing closing if closing failed to occur by the Closing Date. To the contrary, the Agreement explicitly provides Newton the right to terminate the Agreement if, through no fault of his own, closing failed to occur by the Closing Date.
“As previously discussed, Plaintiffs fail to allege any facts demonstrating that Newton was at fault for closing not occurring as anticipated. Rather, the allegations in the Complaint describe how Newton properly issued a termination notice, pursuant to the express terms of the Agreement, after closing failed to occur on or before the Closing Date through no fault of Newton.”
Newton’s demurrer is sustained without prejudice.
Carlson, et al. v. Newton, Case No. CL22-1156, June 24, 2022, City of Norfolk Circuit Court (Lannetti). Ronald D. Slaven Jr., Richard B. Campbell for the parties. VLW 022-8-034, 9 pp.
