DIRT Development for Thursday, January 5, 2009
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Husch Blackwell Sanders
Kansas City, Missouri
VENDOR AND PURCHASER. Vendor’s removal of lockers from recreational facility during pre closing period permits termination under a contract clause that stated purchaser had the option to rescind contract if “any buildings or other improvements are damaged or destroyed” before closing even if Vendor restores the lockers prior to closing and even though, because of restoration, the removal was not a “material breach.”
Marion Family YMCA v. Hensel, 897 N.E.2d 184, (Ohio App. 3 Dist. 2008).
Buyer Hensel entered into contract with YMCA for purchase of an old YMCA building. After contract was signed, buyer toured building and noticed a wall of lockers had been removed. Buyer considered this to be a breach of the contract and told YMCA the contract was terminated.
YMCA restored lockers before the scheduled closing and informed buyer of their restoration. YMCA proceeded with the sale by retaining an attorney to complete the closing. Attorney wrote buyer twice, requesting that closing be scheduled immediately or the property would be listed for sale again. After no further action was taken to resolve the matter, YMCA sold the building to a third party and filed a complaint to recover the price difference from buyer. At trial, a jury returned a verdict in favor of YMCA for $125,000.
Buyer appealed on two grounds. First, buyer claimed that YMCA materially breached the contract by removing the lockers. Generally, a material breach of contract will entitle a party to stop performance; a “material breach of contract” is a failure to do something that is so fundamental to a contract that the failure to perform defeats the essential purpose of the contract or makes it impossible for the other party to perform. Until the time of closing, YMCA still had time to perform the contract and remedy any nonmaterial breach, which it did. Therefore, the jury did not err in finding that the removal of the lockers was not a material breach of the contract.
Buyer also claimed that the contract permitted him to terminate the agreement because the lockers were improvements that were damaged or destroyed prior to the delivery of the deed. The contract stated “if any buildings or improvements are damaged or destroyed” before closing, the buyer has the option to rescind the contract. Even if the lockers were not fixtures, they were improvements to the building and were covered by the plain language of the contract. Therefore, their removal altered the property with the same effect as if they were destroyed. The contract did not require the buyer to give the seller time to cure. Thus, buyer had the right to terminate the contract as a matter of law. His termination was not a breach of the contract, and the trial court erred in holding otherwise.
Editor’s Comment: Oh, pooh. Certainly the terms “damaged or destroyed” must have contemplated injury to the building that raises a legitimate concern that the building would be in the same condition at closing that it was at contract signing. Otherwise, vandals throwing a rock through a window or the breaking of a door hinge while sellers are removing their furniture could satisfy the condition. Here, as the seller apparently responded promptly and restored the premises to its original condition, the buyer’s backing out on the basis of the lockers was nothing more than a pretext that the court should not honor.
Items reported here and in the ABA publications
are for general information purposes only and
should not be relied upon in the course of
representation or in the forming of decisions in
legal matters. The same is true of all
commentary provided by contributors to the DIRT
list. Accuracy of data and opinions expressed
are the sole responsibility of the DIRT editor
and are in no sense the publication of the ABA.
Parties posting messages to DIRT are posting to a
source that is readily accessible by members of
the general public, and should take that fact
into account in evaluating confidentiality
DIRT is an internet discussion group for serious
real estate professionals. Message volume varies,
but commonly runs 5 to 15 messages per work day.
Daily Developments are posted every work day. To
subscribe, send the message
subscribe Dirt [your name]
To cancel your subscription, send the message
signoff DIRT to the address:
for information on other commands, send the message
Help to the listserv address.
DIRT has an alternate, more extensive coverage that includes not only
commercial and general real estate matters but also focuses specifically upon
residential real estate matters. Because real estate brokers generally find
this service more valuable, it is named “BrokerDIRT.” But residential
specialist attorneys, title insurers, lenders and others interested in the
residential market will want to subscribe to this alternative list. If you
subscribe to BrokerDIRT, it is not necessary also to subscribe to DIRT, as
BrokerDIRT carries all DIRT traffic in addition to the residential discussions.
To subscribe to BrokerDIRT, send the message
subscribe BrokerDIRT [your name]
To cancel your subscription to BrokerDIRT, send the message
signoff BrokerDIRT to the address:
DIRT is a service of the American Bar Association
Section on Real Property, Probate & Trust Law and
the University of Missouri, Kansas City, School
of Law. Daily Developments are copyrighted by
Patrick A. Randolph, Jr., Professor of Law, UMKC
School of Law, but Professor Randolph grants
permission for copying or distribution of Daily
Developments for educational purposes, including
professional continuing education, provided that
no charge is imposed for such distribution and
that appropriate credit is given to Professor
Randolph, any substitute reporters, DIRT, and its sponsors.
DIRT has a WebPage at: