A Cautionary Legal Tale 

Have you ever wondered why the Agreement of Sale is so long?

One of the reasons is that the Agreement of Sale is a legal document filled with carefully crafted language to cover as many eventualities as both the Standard Forms Committee and we attorneys could think of that may arise during the sale and purchase of real estate. So when you take that document that PAR has so painstakingly drafted and amend it with any old addendum that you dreamed up, it is no surprise to see results such as the following.

In a memorandum decision issued by the Superior Court earlier this month, they upheld a finding that the contract language drafted by the buyer’s agent and added to the Agreement of Sale was patently ambiguous. The court said, “ambiguity in the contract contributed to the parties’ conduct, which caused a material breach of the contract.” Please read that again and let it sink in.  

The facts of the case involve the sale of a property that needed a lot of rehabilitation, which was going to be performed by the seller, according to a specification sheet that was attached to the agreement. The buyer’s agent had included in paragraph 32(B) a term stating, “Seller will require non-refundable deposits for any ‘extras’ that were not signed off on or agreed to in the final plans and specifications sheet.” The seller performed work on the property, advancing labor costs and the expense of some extras requested by buyer, which were not on the specification sheet. This continued for two years until the seller presented the buyer with a bill for $20,308, representing reimbursement for costs seller had already fronted as well as some that he had not, and providing buyer with 72 hours to remit payment. The buyer did not pay, and the seller terminated thereafter filing a lawsuit for breach of contract.

The trial court found the language drafted by the buyer’s agent to be faulty. There was no written description of how changes to the work were to be communicated to the seller, no process for invoicing buyer for these “extras,” and no deadlines for buyer to remit payment. Despite the lack of specific language, the court found it unbelievable “that the parties intended at the time they signed the contract for extras requests to be haphazard and informal” or that extended periods of time should pass before payment being demanded with only 72 hours to fulfill the obligation. The court found that both parties had breached their own terms, and because both parties breached the agreement, no relief was awarded to either party.

Stop. Writing. Sloppy. Language.

When you are careless with your words, the court will interpret them against your client. Even if this decision gets appealed and the Supreme Court comes to a different conclusion, the whole reason this even escalated into a multiyear lawsuit is that the agents and parties did a bad job in the first place. The above result may have been avoided with a few more details about when and how changes to the specs would be requested, when and how payments for extras would have occurred, and what happens when either party fails to comply. If you don’t want to worry about those details, please refer your client to an attorney because worrying about the details is what we do best.