Manouchehr Galdjie submitted his purchase offer to buy an apartment building that was available for sale. The seller, Barbara Darwish, made a counteroffer, which the buyer accepted.

The sales contract said that within 10 days of acceptance the buyer was to provide evidence from a lender that he can obtain the necessary financing. The sale was to close by April 9.

Purchase Bob Bruss reports online.

But the buyer had difficulty obtaining a mortgage. While faxing some property information to the buyer, the seller included a note that said the contract would not be extended beyond April 9–”the date everything should be wrapped up.”

However, it took the buyer until May 12 to obtain a mortgage commitment letter. Also on May 12, the seller signed instructions canceling the apartment building sale.

The buyer then sued the seller for specific performance of the sales contract. He admitted not meeting the April 9 deadline, but stated the seller encouraged him to continue trying to obtain a mortgage so the deadline was waived by the seller.

The seller answered the complaint by stating the contract said “time is of the essence,” so she should not be required to deliver the title because the buyer was more than a month late in obtaining mortgage financing.

If you were the judge would you order specific performance of the sales contract and require the seller to deliver the apartment building deed to the buyer?

The judge said yes!

Specific performance of a real estate sales contract is not usually granted by the court if the buyer is in breach of contract, the judge began. However, in this situation the seller encouraged the buyer to continue trying to obtain a mortgage, he noted.

Although the sales contract stated “time is of the essence,” the judge continued, that provision can be waived by the seller, as it was when the seller failed to timely enforce the April 9 deadline by canceling the sale at that time.

Because the seller waived the time of performance provision in the contract by continuing to encourage the buyer to arrange a mortgage after the April 9 deadline, specific performance of the contract is approved and the seller is ordered to deliver the apartment building deed as agreed in the sales contract, the judge ruled.

Based on the 2003 California Court of Appeal decision in Galdjie v. Darwish, 7 Cal.Rptr.3d 178.

(For more information on Bob Bruss publications, visit his
Real Estate Center
).

***

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