Facts:
Issue: Are P’s entitled to recover their deposit upon a piece of real estate, where the
obligations under the purchase and sale agreement were made subject to the buyers’
obtaining of bank financing and such financing was first granted but then subseqeuently
revoked due to P’s decision to file for divorse?
Holding: Reversed. The intent of the financing clause is to protect the buyer from
involuntary breach. Where, however, the condition precedent of financing is first
satisfied, but then fails because of some action voluntarily undertaken by the buyer, the
risk of the failure of the transaction is properly imposed upon the party who so acts, and
not upon the innocent seller.
Rationale:
– The purpose of the provision of bank financing precedent is merely to protect the
prospective purchasers form committing a technical breach of contract due to
their inability, base don the facts and circumstances present at the time of the
signing of the purchase and sale agreement, or due to some fortuitous intervening
event, to secure the funds necessary to complete the purchase.
– D herein contracted a married couple, the conditional provision was inserted
under the understanding that the mortgage would be sought by two wage earners.
The intent of the clause was not to place upon the seller the hazard that P’s would
alter their circumstances, and therefore, their borrowing potential through
voluntary acts.