Even when you think a contract's terms are pretty clear, when deals go awry, it sometimes takes an appellate court to make things right.
In Manzi Homes, Inc. v. Mooney, Manzi Homes contracted to buy an undeveloped parcel of property located in Mattituck, New York, from Diedre Mooney. The agreement, dated July 11, 2001, was subject to certain contingencies, among them:
1) approval from the local Department of Heath for the installation of a sanitary system for a single-family residence;The contract also provided that in the event these applications were not approved, or potability not found, either party could cancel the sale.
2) a letter of public-water availability from the local water authority or the installation of a test well and water test indicating the availability of potable water on the property; and
3) a building permit for a single-family residence.
Over a year later, on September 17, 2002, an analysis revealed that the property's water was not potable. And, by January 2, 2003, Manzi failed to obtain a variance for a septic system or other permits. Mooney thereafter canceled the contract and returned the deposit. In response, Manzi demanded that a closing be scheduled and, after that request was ignored, commenced a lawsuit in Suffolk County Supreme Court for "specific performance"--compelling the seller to convey the property.
When the Suffolk County Supreme Court refused to grant Mooney's request to dismiss the case, she appealed to the Appellate Division, Second Department, which reviewed the contract's terms and concluded that she could not be forced to sell the property to Manzi. In its decision, the appellate court noted as follows:
Contract language which is clear and unambiguous must be enforced according to its terms...Moreover, where no time is expressed in a real estate contract for the performance of conditions, there is an implied duty to perform within a reasonable time...It is undisputed that the water on the property was found to be not potable, [Manzi] did not receive a sanitary system permit and it was unable to obtain a letter of public water availability within a reasonable period of time. The defendant [Mooney], therefore, properly invoked the contract's cancellation clause....How potable is that?
For a copy of the Appellate Division's decision in Manzi Homes, Inc. v. Mooney, please click on the following link: http://www.nycourts.gov/reporter/3dseries/2006/2006_03855.htm