Rhode Island Supreme Court Denies Plaintiff’s Request for Specific Performance in Real Estate Dispute

Agreements and plans to develop real property into commercial or residential real estate are often reliant on several conditions being met before the agreement can be fully executed and construction begins. Developers must often obtain financing, zoning rights, and natural resources clearance before constructing a development. When unexpected or unforeseen obstacles to any of these conditions arise, a real estate deal can begin to fall through. The Rhode Island Supreme Court recently affirmed a lower court ruling that denied a developer’s request to force the owners of land to sell the land to the developers after conditions for the sale were not being met.

The plaintiff in the recently decided case is a real estate development company who entered into a purchase agreement with the defendants to buy several parcels of land with the intention of constructing a residential subdivision. As part of the purchase agreement, the plaintiff was supposed to secure financing for construction, as well as approval and permits from the town. The defendants agreed to be flexible with deadlines for the financing and approval, where appropriate. According to the facts discussed in the appellate opinion, the plaintiff faced unexpected obstacles in obtaining approval for the construction. Because neither the approval nor the financing had been obtained, the defendants stopped cooperating with the plaintiff in extending deadlines.

The plaintiff sued the defendants in state court, asking the court to force the plaintiff to follow through on the purchase contract. The defendants requested that the contract be voided because the plaintiff did not obtain financing in accordance with the terms of the purchase agreement. The court sided with the defendants, finding that the plaintiff cannot demand specific performance of a contract under Rhode Island state law if they are not ready, willing and able to perform the contract at that time. Because the plaintiff did not secure financing as agreed to in the purchase agreement, the defendants were not required to uphold their end of the contract.

The plaintiff appealed the trial court ruling to the Rhode Island Supreme Court, which ultimately upheld the ruling. The Court found that the plaintiff’s attempt to negotiate a financing agreement with a bank and the defendants did not amount to them meeting their financing obligations under the purchase contract. The agreement required specific terms, which the plaintiff was unable to comply with. As a result, the contract was unenforceable and the district court was justified in voiding the agreement in its entirety.

Legal Advice for Real Estate Development Issues

If you are looking to buy or sell land for development purposes, reaching and executing an agreement can be a complicated task. Both the buyer and seller need to be sure that deadlines, as well as financing and permit obligations, can be met. Contracts should be drafted in a way that makes it clear which party is responsible for what, and who will bear the consequences for unexpected delays or expenses. A qualified Rhode Island real estate attorney from Bilodeau Capalbo can help both developers and property owners to understand and protect their rights when entering into and performing an agreement. Our knowledgeable real estate development lawyers can assist and represent you to be sure that your interests are protected throughout a transaction. Call us at 401-300-4055 to discuss your case and schedule a free consultation with a qualified Rhode Island real estate attorney today.