FREDERICK VAUGHN DAWSON, APPELLANT,
v.
JOHN E. MALLOY AND SUSAN A. MALLOY, HIS WIFE, JOINTLY AND SEVERALLY, APPELLEES
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A buyer sought to cancel a real estate purchase agreement after the mortgagee refused to allow assumption of an existing mortgage without changing the interest rate. The court held that the buyer was entitled to exercise his cancellation option and recover his deposit, reversing the trial court's judgment in favor of the sellers.
The buyer was entitled to cancel the contract and recover his deposit. The trial court erred in ruling that the sellers could keep the deposit as damages, as the contract clause permitted cancellation upon the mortgagee's refusal to permit assumption without material changes to terms.
[1] A purchase and sale agreement clause allowing a buyer to cancel if a mortgagee does not permit assumption of an existing mortgage without material change entitles the buy…
[2] A "New Mortgages" clause marked "NA" (not applicable) in a purchase and sale agreement indicates that new financing was not contemplated by the parties.
Previewing 2 of 4 headnotes on this case. FLexlaw’s editorially structured points of law — every proposition, pinpointed — are reserved for members.
Join FLexlaw to unlock all legal intelligence“In the event mortgagee does not permit the Buyer to assume the existing mortgage without a change in the interest rate, terms of payment or other material change, the Buyer at his option may cancel the Contract and all monies paid on the purchase price shall be refunded to him and the parties shall be released from all further obligations.”
This is the central contract clause that gave the buyer the right to cancel and recover his deposit when the mortgagee refused assumption without interest rate changes.
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Join FLexlaw to unlock all legal intelligenceThe sellers had an existing 11% mortgage with Southern Federal for $149,000. The buyer deposited $36,000 and attempted to assume the existing mortgage…
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BERANEK, Judge.
This appeal concerns the interpretation of a purchase and sale agreement. One of the clauses of this agreement read: In the event mortgagee does not permit the Buyer to assume the existing mortgage without a change in the interest rate, terms of payment or other material change, the Buyer at his option may cancel the Contract and all monies paid on the purchase price shall be refunded to him and the parties shall be released from all further obligations.
The sellers had an existing 11% mortgage with Southern Federal in the amount of $149,000. The buyer deposited $36,000 with the sellers and then proceeded to contact Southern Federal which refused to permit the buyer to assume the existing mortgage without an upward change in the interest rate. At the time of closing, the sellers offered to lend the money to the buyer and to give the buyer a mortgage with the same terms and conditions as the existing Southern Federal mortgage. The buyer refused, citing the above clause, and announced his exercise of the option to cancel the contract. The sellers refused to refund the deposit and the buyer sued. The buyer made a motion for summary judgment which resulted in a summary final judgment in favor of the sellers. The trial court ruled the sellers could keep the deposit as damages for the buyer’s breach. Although we agree with the trial court that summary judgment was the proper vehicle for disposition of this matter, we hold that the court ruled in favor of the wrong party.
The purchase and sale agreement used here was a form document to which the sellers added certain special conditions favorable to them. Had they so desired, they could have amended the above quoted clause on existing mortgages. There is nothing in the contract which required the buyer to make any effort to secure financing other than from Southern Federal. The seller contends that a paragraph in the form contract entitled “New Mortgages” placed an obligation on buyer to secure new financing. This paragraph is no comfort to seller. The paragraph is couched in conditional language — “If this contract provides for Buyer to obtain a new mortgage ... . ” Further the paragraph was marked “NA” for “not applicable” and this insertion clearly does not support appellee’s contention that a new mortgage was contemplated or that the buyer assumed the obligation to secure same.
The agreement called for the buyer to assume or obtain a mortgage in the amount of $149,000 at 11% from Southern Federal. The “NA” insertion in the “New Mortgages” paragraph is a clear indication that no new financing was contemplated. We will not rewrite the contract and substitute our judgment for that of the parties. Steiner v. Physicians Protective Trust Fund, 388 So. 2d 1064 (Fla. 3d DCA 1980). The buyer was entitled to cancel the contract and to have his deposit returned as provided in the document. Accordingly, we reverse with directions to enter summary final judgment in favor of the buyer. REVERSED AND REMANDED.
DELL and WALDEN, JJ., concur.
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In re Gardinier, Inc. v. Gardinier, Inc., 831 F.2d 974 (11th Cir. 1987)…210 So. 2d 356 (La.Ct.App. 1968) (award of subcontract conditioned upon award of general contract with city). Purchase and sale agreements frequently condition the buyer’s performance on its ability to obtain a mortgage. See, e.g., Dawson v. Malloy, 428 So. 2d 297 (Dist.Ct. App.), review denied, 436 So. 2d 99 (Fla. 1983); Merritt v. Davis, 265 So. 2d 69 (Fla. Dist.Ct.App.1972). In such a case, even though the purchase and sale agreement is conditioned upon the mortgage agreement, and even though the buyer is…
Authorities Cited
- Steiner v. Physicians Protective Tr. Fund, 388 So. 2d 1064 (Fla. 3d DCA 1980)