Sep 28, 2022
A Superior Court judge recently found that a purchase and sale agreement for the sale of a condominium unit was enforceable against the estate of a condominium unit owner who died before the closing. Liberty Hill, LLC v. Seth Fernald, as Personal Representative of the Estate of William H. Rowe, Middlesex Superior Court (Civil Action No. 2281 CV 00480). Although the unit owner’s personal representative argued that he was obligated by statute to obtain the highest possible price for the condominium unit – and that he therefore shouldn’t be obligated to close on the sale – the Court determined that the law actually permits the court to enforce specific performance of the P&S.
Judge Mulligan found that the statutes referenced by Mr. Fernald – which concern the sale of property that is part of a decedent’s estate – were applicable in situations where the heirs cannot agree on what to do with the property.
In November of 2021, the buyer made an offer to purchase a condominium unit – located at 72-3 Newbern Avenue in Medford – from William Rowe for the amount of $216,000. It is an 824 square foot unit with two bedrooms and one bathroom. The condominium unit is presently estimated to be worth far more than $216,000 (or even the ultimate $260,000 purchase price). However, in August of 2021, a serious fire had occurred in the building in which the unit is located. Mr. Rowe’s unit was extensively damaged and eventually condemned. This likely accounts for the relatively low offers that Mr. Rowe received from the buyer in the Fall of 2021. Apparently, Mr. Rowe was not in good health at that time and was residing at a nursing home when the buyer’s principal convinced him to sell his unit.
Mr. Rowe accepted the offer, with the acceptance requiring that a purchase and sale agreement be executed within two weeks and a closing to occur within 45 days after the signing of the P&S. Thereafter, Mr. Rowe apparently did not return the buyer’s phone calls for access to the property for inspection. A month later, the buyer learned that Mr. Rowe was negotiating with other interested parties for the purchase of the condominium unit. The buyer then filed suit – seeking specific performance of the terms outlined in the P&S.
Shortly after the Complaint was filed, the parties apparently entered into a settlement agreement, whereby the buyer agreed to purchase the condominium unit for $260,000. The parties entered into another purchase and sales agreement that reflected the higher price. Before the closing could take place, however, Mr. Rowe died.
Mr. Rowe died intestate and his nephew, Seth Fernald, was appointed as the personal representative of his estate. Following Mr. Rowe’s passing, the buyer learned that Mr. Fernald listed the condominium unit with a broker. Mr. Fernald received at least one offer – in the amount of $320,000 – from prospective purchasers.
Upon learning of Mr. Fernald’s activities, the buyer filed suit and obtained a temporary restraining order, which prevented the sale of the condominium unit.
Mr. Fernald argued that he was statutorily obligated – under G.L. c. 202, § 38 – to obtain the highest possible price for the condominium unit and that he was not obligated to honor the P&S between the buyer and Mr. Rowe. Furthermore, he argued that the property could not be sold until a license to sell same was issued by the Probate Court. The buyer countered that specific performance of the P&S should be enforced in accordance with the provisions of G.L. c. 204, § 1., which provides as follows:
If a person who has entered into a written agreement for the conveyance of real estate or holds real estate which by operation of law is subject to be conveyed to others, dies…without having made such conveyance, the probate court shall have jurisdiction in equity concurrent with the supreme judicial and superior courts to enforce specific performance of such agreement or obligation to convey; and, upon a petition therefor by any person interested in the conveyance, [the court] shall, after notice, if upon hearing it appears that the deceased, were he living…would be required to make the conveyance, order the executor or administrator…to make the same, which conveyance shall have like force and effect as if made by the person who agreed or was liable to convey.
The Court agreed with the buyer. Judge Mulligan reasoned that Mr. Rowe’s passing did nothing to change the enforceability of the second P&S between the parties. She agreed that the above-referenced statute specifically authorized a superior court judge to order specific performance of a purchase and sale agreement entered into by a person before his death.
Judge Mulligan found that the statutes referenced by Mr. Fernald – which concern the sale of property that is part of a decedent’s estate – were applicable in situations where the heirs cannot agree on what to do with the property. In this case, Mr. Rowe’s intentions were clear – he signed the P&S. Were he alive, Judge Mulligan reasoned, the agreement could be enforced against him by the buyer. She concluded that the same right of enforcement extended to Mr. Fernald, as the personal representative of Mr. Rowe’s estate.
Judge Mulligan allowed the buyer’s motion for a preliminary injunction and ordered that the purchase and sale agreement is enforceable and that the sale had to occur within thirty days.
While the ultimate outcome in the Liberty Hill case seems eminently reasonable – it took a significant amount of litigation by the buyer to get to that point. Furthermore, the Superior Court is not obligated to enforce specific performance of a P&S signed by a decedent. As such, parties would be well advised to include provisions in a purchase and sale agreement that address the death of a party.