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'Approval of Land Contract' clause in purchase agreement is condition precedent to purchaser's obligation to perform

Concluding that the acceptance clause in the purchase agreement created a condition precedent, the court held that pursuant to the precise wording of the clause, the sellers' "approval or disapproval of the land contract had to be related to the examination and review of the proposed land contract." The trial court erred in its interpretation of the clause and thus, erred in granting the defendants summary disposition of all of plaintiffs' claims, except as to the breach of contract and specific performance counts against the real estate agency and the realtor (those claims did not pertain to them). The case arose from the execution of a real property purchase agreement, which contemplated the use of a land contract at closing. Plaintiffs were the prospective purchasers and the prospective vendor was the defendant-trust. The closing did not come to fruition, and plaintiffs sued, alleging several claims, including breach of contract, and seeking, in part, specific performance. The court concluded that a conditional contract was formed when defendant-Stewart, or the realtor as her agent, "stated in the purchase agreement, 'Offer accepted. Sellers to review and approve land contract prior to closing.' The condition or event that had to occur before a duty to perform arose was the review and approval of the land contract. The land contract was reviewed, but no approval was forthcoming." The court concluded that while Stewart or the trust "had the right to cause the failure of the condition precedent on the basis that there was unacceptable language in the land contract upon review, outside the terms incorporated from the purchase agreement, there was no right to cause the failure of the condition precedent for whatever whimsical reason unrelated to reviewing the terms of the land contract." Stewart and the trust "did not seek to avoid the purchase agreement on the basis that the land contract contained unacceptable terms aside from those already addressed and agreed to in the purchase agreement." The documentary evidence showed "without dispute that the demands voiced by Stewart and her husband to the realtor as to what the land contract had to include regarding such matters as taxes and insurance were satisfied by the language in the proposed land contract." The court noted that it was not granting the plaintiffs summary disposition on any of their claims, as there were other defenses and arguments that needed to be addressed and resolved. Reversed and remanded for further proceedings.


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