It seems like lately I have been getting a lot more inquiries about suing to force someone to sell (or buy) their house. Perhaps it’s the market, or perhaps its just the odd ebb and flow of different types of cases that come across my desk. I really enjoy these cases, because they are often very factually dependent, and the side that knows the unique nuances of the law in this area usually has a strong advantage - especially if they come to me early enough to help them set things up to win! Since I’m licensed in a few states, I should note that in this post I am looking at the issue through the lens of Ohio law.
A common scenario is where a stated closing date has passed and the sellers no longer want to sell. These are tough cases. Generally, where the contract makes “time of the essence,” the closing date becomes an “expiration” date, and the contract expires if not closed by the closing date. But again, these are very fact-dependent situations, and that may not get the seller off the hook for money damages, particularly if the buyer was ready, willing, and able to perform at the closing date and tried to do so.
Cases where the contract does not make “time of the essence” are more likely to result in a favorable outcome for the buyer. In such case, a closing date generally isn’t treated as an expiration date. Instead, the buyer must perform within a reasonable time (Hall v. United States Bank Nat'l Ass'n, 2006-Ohio-303, 1st Dist. 2006). That Hall case seems to be floating around a lot lately in letters between opposing attorneys representing parties in these sorts of situations. Each case is its own animal, of course, but the strongest buyer cases are the ones where time was NOT made of the essence and the buyer had the money, was ready to go, and tried to close.
The impetus for this post was a very recent decision that I just read from the First District, which is the court of appeals that governs the Cincinnati / Hamilton County area (http://www.supremecourt.ohio.gov/rod/docs/pdf/1/2018/2018-Ohio-3787.pdf). In the case, the parties owned adjacent lots in Mt. Adams, which from a little Google-fu appear to have an incredible view of the city, as many lots in Mt. Adams do. The short version (taken from the facts as listed in the decision) is that the parties seemed to have formed a contract by email, even stating “I accept,” but they also discussed drafting and signing an actual written contract, which created some problems for them.
You may at this point wonder if a contract by email is valid, and the answer is that yes, it can be. You need to have the essential terms (basically who are the parties, what is the subject matter of the contract, and how much is being paid / given of value), and an “electronic” signature (typing your name at the bottom of the email, for example).
The issue here was that in the emails, the parties also discussed signing a written contract, but they never actually did. I’m reminded of my law school Contracts professor drilling into our heads class after class, “contract like you mean it!” Her advice was excellent. Contract like you mean it, indeed! In this case, the parties seemed to have a valid email contract, and that was the buyers’ argument. However, the additional discussion about signing a written contract called into question whether the parties intended to be bound by the email agreement. The appellate court decided that whether the intent was formed remained an open question, and it sent the case back down to the trial court to resolve the issue. So neither party won at that point, but it sure seems like it would have been a different case had the buyers NOT discussed signing a written contract (or had they actually signed a written contract).
So the lesson here is, like my professor told us over and over, “contract like you mean it.” When you put a closing date in your contract, if you don’t want the contract to expire on that closing date, say so! If your seller has to complete probate, negotiate a short sale, or do anything that will take an amount of time that you can’t determine with certainty, then make the closing date so many days after whatever that thing is that has to be done is actually done.
Can you still win without all of that? Maybe. But do you want to end up paying your attorneys to litigate the case or even take it up to the court of appeals? How many properties are worth that much? Remember, the U.S. has a “pay to play” system where you generally can’t win attorney’s fees, so don’t expect the opposing party to have to cover your costs if you win. It’s much easier to contract like you mean it. Then you’re in a lot stronger position, and I have to tell you – when you’re in a strong position and the other side knows it, you’re probably not going to trial. You’re probably not even going to file…those are the cases that tend to settle favorably. So contract like you mean it.
Please remember that these posts are for informational purposes only and should not be considered or relied on as legal advice. If you are ever in doubt about your rights under the law, you should consult an attorney familiar with the law in your area.
Ben Bauer is a Cincinnati-based attorney who writes about things in law and life that he finds interesting.