Real estate purchase and sales agreements in Rhode Island are generally drafted and reviewed by several real estate law experts to ensure that each party’s rights and obligations are clear and unambiguous so that the contract can be easily enforced in the event of a breach or default. When contract terms are unclear or have more than one reasonable interpretation, this can lead to contract disputes that may ultimately cost more to the parties in legal fees than the disputed amount. The Rhode Island Supreme Court recently addressed cross-motions filed by parties to a real estate contract, which disputed the amount that the plaintiff would be allowed to subtract from the purchase price of the property based on agreed-upon renovations to the dock which the plaintiff demanded as a condition of the sale.
According to a judicial opinion released by the court hearing the dispute, the plaintiff agreed to purchase a dock from the defendant in 2017 for use in their petroleum distribution business. Because the dock at issue was not allowed to service boats over 90 ft, and the plaintiff’s use of the dock would require permission for boats up to 105 ft, the parties agreed in the real estate contract that the cost of repairs would be deducted from the purchase price. The parties included a provision that would adjust this division of responsibility in the event that the actual renovation cost either exceeded or fell short of an estimated amount.
After the project was completed, each party demanded payment from the other based on the purchase contract. The parties disputed which figure should be used for the “estimated amount” of renovation costs. The plaintiff and defendant each proposed a different estimated cost of renovation, with vastly different outcomes for each figure being used. Using the plaintiff’s numbers, they would be entitled to an overpayment of over $400,000, while using the defendant’s numbers would require the plaintiff to pay nearly $15,000 for underpayment. The plaintiff sued the defendant in the Superior court seeking $400,000, and the defendant countersued for the underpaid amount.
The court addressed the parties’ arguments on a summary judgment motion, which is only applicable in contract cases when the terms of the contract are clear and unambiguous. Because the 2017 contract contained figures that could reasonably be used to support either party’s arguments, the court could not grant either motion at the time of the ruling. As a result of the ruling, the finder of fact (a judge or jury at an official trial) will need to determine which set of numbers to use, based on evidence and credibility determinations developed at trial. The case will proceed toward a trial.
A poorly drafted or ambiguous real estate contract can result in large, complicated problems later on. Retaining a qualified Rhode Island real estate attorney early on in the purchase process can ensure that the final contract unambiguously states what you want it to, and will be enforceable by the courts. The experienced Rhode Island real estate attorneys with Bilodeau Capalbo, LLP have helped hundreds of Rhode Island clients draft favorable contracts for their transactions. If an ambiguous contract has already been entered into and the cracks of a dispute are starting to form, now is the time to retain qualified counsel to improve your chances of a desired result. We’re here to help. Call us at 401-300-4055 for a free consultation.