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A North Carolina appellate court has considered whether a buyer was entitled to receive specific performance of a purchase contract that also included the seller’s personal property.
Robert M. Barefoot (“Owner”) was the beneficial owner of a lake house. The Owner entered into a contract to sell the lake house along with all of the home’s furnishings and boats to Thomas and Josephine Curran (“Buyers”), except for the Owner’s clothes and a few other personal items which were specifically excluded by the Owner. The parties set a closing date of December 31, 2003. On December 23d, the Owner’s attorney sent a letter to the Buyers’ real estate representative stating that the purchase agreement was terminated.
The Buyers filed a lawsuit seeking specific performance of the purchase contract. The trial court entered judgment in favor of the Buyers and ordered specific performance. The Seller appealed.
The North Carolina Court of Appeals affirmed the trial court. The first issue raised on appeal was whether the Buyers were “ready, willing, and able” to complete the transaction by the scheduled closing date. In order to obtain specific performance, a party must show the existence of a valid contract, its terms, and either the party’s full performance of the contract or that the part was ready, willing, and able to perform the terms of the contract. The Seller argued that there was no evidence to demonstrate that the Buyers were ever “ready, willing, and able” to complete the purchase because the Buyers never demonstrated that they were ready to proceed with the transaction, as they never had an actual loan commitment to complete the purchase.
The court disagreed with the Seller’s interpretation of the evidence. First, the Buyers had arranged for both an inspection and an appraisal of the lake house. Second, the Buyers had worked with their mortgage broker to arrange financing for the transaction, and the mortgage broker testified that the loan would have been in place by the first week of 2004. Since the contract did not contain a “time is of the essence” clause, the one week delay in financing approval did not inhibit the Buyers ability to close the transaction within a reasonable time after the scheduled closing date. The evidence also showed that the Seller had never requested the loan commitment letter from the Buyers, as he could have under the purchase agreement. Based on this evidence, the court rejected these arguments.
The Seller also argued that the purchase price as never clearly established. The Buyers had initially offered $525,000, and the Seller had made a counteroffer of $550,000. The Seller memorialized his counteroffer by crossing out $525,000 and replacing it with $550,000 in the purchase agreement, initialing the change. The Seller had also said in his deposition that he understood that the final price was $550,000. Therefore, the court denied this challenge.
Finally, the Seller argued that specific performance was not an appropriate remedy for contracts involving personal property. The personal property that was part of the contract included everything in the house except for clothes and personal items, including watercraft and all accessories. While the usual remedy for breach of a contract for personal property is monetary damages, the court can still determine specific performance is an appropriate remedy if monetary damages are an insufficient remedy. Because the Seller had agreed to provide the Buyers with a furnished lake house, the court determined that specific performance was an appropriate remedy for this transaction and so affirmed the trial court.
Curran v. Barefoot, 645 S.E.2d 187 (N.C. Ct. App. 2007).
Editor’s Note: Thanks to Will Martin, General Counsel to the North Carolina Association of REALTORS and of Martin & Gifford, PLLC, for alerting NAR Legal Affairs to this decision.