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Leeper v. Weintraub

Decided: May 23, 1994.

DAVID LEEPER, PLAINTIFF-RESPONDENT,
v.
ARTHUR WEINTRAUB, DEFENDANT-APPELLANT.



On appeal from Superior Court of New Jersey, Law Division, Morris County.

Before Judges Brody, Stern and Keefe.

Brody

The opinion of the court was delivered by BRODY, P.J.A.D.

Defendant (seller) appeals from a judgment in the amount of $1,384 entered against him in the Special Civil Part of the Law Division. The sum represents damages, mostly attorney's fees, that plaintiff (buyer)*fn1 incurred in attempting to purchase a house from the seller. The seller canceled the contract of sale because the buyer did not receive a written mortgage commitment by the deadline set in the contract. The trial Judge held that an oral commitment satisfied the contract's mortgage contingency clause. In reversing, we hold that a mortgage lender is not bound by an oral commitment and therefore an oral commitment does not satisfy a mortgage contingency clause that is silent as to whether the commitment must be in writing.

The contingency clause here appears in the contract as follows:

IF THE BUYER FAILS TO OBTAIN SUCH MORTGAGE COMMITMENT OR FAILS TO WAIVE THIS CONTINGENCY BEFORE NOVEMBER 20, 1992, THE BUYER OR SELLER MAY VOID THIS CONTRACT BY NOTIFYING THE OTHER PARTY WITHIN TEN (10) CALENDAR DAYS OF THE EXPIRATION OF THE AFOREMENTIONED DATE. The method of notifying the other party shall be in accordance with Section 27 of this Agreement. IF THE BUYER OR THE SELLER DOES NOT SO NOTIFY THE OTHER PARTY

WITHIN THIS SPECIFIED TIME PERIOD, THE BUYER AND SELLER WAIVE THEIR RIGHTS UNDER THIS SECTION TO VOID THE CONTRACT.

During the attorney review period, the seller's attorney initiated the following amendment to the contract: "There shall be no waiver by silence of the mortgage contingency clause."

In a "P.S." to a letter dated November 19, 1992, the buyer's attorney advised the seller's attorney, "I just received word from the lender that the Leepers were verbally approved." That letter apparently was not received before the seller's attorney sent the buyer's attorney a letter dated November 20, the buyer's deadline for obtaining a mortgage commitment, that declared the following:

I have been given unequivocal instructions by my client. There will be no extension of any contingencies. Therefore, since your client has not waived the mortgage contingency clause my client has instructed me that pursuant to the contract, he is invoking the mortgage contingency clause and the contract is hereby declared null and void. I am by copy of this letter advising the realtor to return all deposit monies to your client.

I would also mention that we never resolved the significant home inspection issues.

Thereafter, the seller's attorney responded to the buyer's attorney's November 19 letter by letter dated November ...


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