Renovest Co. v. Hodges Development Corp.

600 A.2d 448 (N.H. 1991)

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Nature of the Case

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Facts

P entered into a purchase and sale agreement with D for a two-building apartment complex. The price was $1,476,000, and the initial deposit was $65,000. The contract specified that the deposit would serve as liquidated damages if P failed to close on or before September 3, 1986. Three conditions precedent to the buyer's obligation to perform were contained in the contract. No portion of the contract stated expressly that time was of the essence. The inspection condition called for the inspection to be completed within fourteen working days, and specified that if the inspection was unsatisfactory, the 'Buyer shall have three (3) days from the date of completion of such inspection in which to notify Seller of his disapproval, and this Agreement shall be null and void, and all deposits hereunder shall be refunded in full.' The financing condition contained a forty-five-day limit, after inspection of the seller's business records, in which the buyer was required to notify the seller of an intention to invoke the financing condition clause. Paragraph 9 of the contract required that all notices be given in writing. P first inspected the buildings on July 10, 1986, .P discovered a crack in the exterior of one building, and D agreed to extend the deadline in order to allow further inspection. D disputes the extension. An engineer in a report on August 6 stated his opinion that the building would require 'underpinning' of the foundation in order to prevent further settling of the building. P wrote to D on August 7, terminating the transaction and demanding return of the $ 65,000 deposit. D undertook its own engineering study, which commenced with borings on August 12 and culminated in an evaluation report dated August 26. This report described the cracking as cosmetic. D shared this report with P. P did undertake to secure the financing by approaching four banks. Two were favorably disposed toward the financing application, up to the time that P notified them of the results of the engineer's report about the building's structural problems. The banks indicated they would not continue to process the loan applications until the issue of the building's structural soundness was resolved. Time still remained in which to meet the financing deadline, but D never pursued the applications further. A second letter on August 12 asserted the failure to obtain financing, as well as an unsatisfactory result of the inspection of D's books and records, as additional grounds for the termination of the contract. D refused to return the deposit. At trial on its suit to obtain return of its deposit, the judge specifically concluded that P's objection to the building's structure was untimely and that P prematurely terminated its attempts to obtain financing. D's motion to dismiss was granted. P appealed.