March 27, 2008

Contractual provisions allow real estate agents to sue for breach of contract when buyer does not make good faith attempts to meet conditions


Listing real estate agent and buyer's agent filed suit against prospective buyer to recover their commissions due under a contract for the sale of real estate. The trial court found that prospective buyer breached the contract and awarded commissions to both agents. On appeal, prospective buyer challenges the trial court's finding that he breached the contract as well as the determination that he was liable to the listing agent for a real estate commission. We affirm.

Opinion may be found at the TBA website:

"Mr. Tinsley got mad and decided he didn’t want to go through with the contract, so he didn’t follow through what needed ... to be done to make the closing dates. So technically, in the contract, he is in default, and the contract provides if the buyer is in default, that the agents have the right to sue for damages or specific performance." Id(quoting the trial court).

"Mr. Tinsley emphasizes the fact that the contract contained two conditions: [the buyer's] ability to obtain financing from a lender of his choice and an appraisal at the sale price or above. Because these conditions were not met, Mr. Tinsley argues that he was excused from performing under the contract. However, Tennessee law implies in every contract a duty of good faith: 'Parties to a contract owe each other a duty of good faith and fair dealing as it pertains to the performance of a contract. [] Thus, each party to a contract promises to perform its part of the contract in good faith.' (citations omitted). The contract states that time was of the essence. ... Thus, there is ample evidence to support the trial court’s finding that Mr. Tinsley had the ability to obtain financing but simply decided he did not want to go forward because of a conflict with Mr. Boykin." Id.