Schrader v. Benton

635 P.2d 562 (1981)

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Nature of the Case

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Facts

D entered into a Deposit Receipt, Offer and Acceptance (DROA) contract with Schrader (P). The subject of the sale was Apartment 313, Honokowai East Condominium, Maui, Hawaii. The total price was $44,500.00, payable via $7,000.00 in cash and a $37,500.00 three-year agreement of sale at 9 percent interest per annum with payments of not less than $ 325.00 per month. P was entitled to pay 'in full' at any time during the three years without prepayment penalty. The apartment was being sold free and clear of an existing $31,800.00 first mortgage in favor of Amfac Financial. The first mortgage contains a 'due-on-sale' provision which requires D to obtain Amfac Financial's consent to the agreement of sale or to suffer Amfac Financial's immediate acceleration of the due date of the entire mortgage debt. D was going to get a wrap-around financing deal with D paying 7% on the lower balance due to Amfac and P paying 9% on the $37,500 balance. Amfac Financial refused to permit an agreement of sale over its mortgage, but it was willing to consent to an assumption. D refused to agree to such a change in the structure of the transaction. P sued for specific performance. Both sides moved for summary judgment. The lower court granted summary judgment to P and ordered D to convey to P when P (1) pays the purchase price in cash or (2) assumes the first mortgage, arrange for D to be completely released from the liability of the first mortgage by May 20, 1981, and pay the balance of the purchase price, together with interest at 9 percent per annum, in equal monthly payments amortized from actual closing to May 20, 1981, and (3) adjust 'all income and ordinary expenses of the property since May 20, 1978, excluding interest paid on the first mortgage' so that the Buyers would enjoy all profits or suffer all losses since May 20, 1978. D appealed.