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Massachusetts Court Reviews Claims Arising out of Oral Agreement for Sale and Purchase of House

Massachusetts property transfers involve legal considerations that, if not taken into account, may have unintended consequences.  A July 3, 2019 case before the Appeals Court of Massachusetts illustrates how some of these issues may arise.  The case centered around the parties’ oral agreement for the purchase and sale of a house, and the subject of their legal dispute was the defendants’ failure to assume the mortgages on the property.

In late 2010, facing possible foreclosure on his house, the plaintiff in the case reportedly entered into an oral agreement to sell his house to the defendants.  In exchange, the plaintiff would receive a cash payment, the defendants’ assumption of the mortgages on the property, and payment of all property-related expenses.  In April of 2013, over two years after the defendants took possession of the house, and despite their good faith efforts, they failed to complete the assumption of the mortgage.  The plaintiff then filed an action in Land Court seeking to rescind the transaction and cancel the deed to the defendants.

In Massachusetts, rescission is a potential remedy for breach of contract, but rescission is not an available remedy for any and all breaches.  Generally, rescission is disfavored as a remedy for a mere failure to perform a promise.  To justify the remedy, a plaintiff seeking rescission must show that the breach deprived him of the essence of the agreement.  In the absence of fraud, the conduct of the defendant must be fundamentally adverse to the purpose of contact in order to be a ground for rescission of it by the other party.

The appeals court concluded that the defendants’ failure to assume the mortgage did not go to the essence of the contract, nor did it take away the foundation of the contract.  Rather, the court determined that the fundamental essence of the agreement was that the plaintiff would recover his equity in the home, by receiving the cash payment from the defendants, as well as be relieved of the obligation to pay the mortgage and expenses on the house, which he could not afford.

Ultimately, the court found that the fundamental essence of the parties’ agreement had been met by the time of the lawsuit.  The court pointed out that the plaintiff was not harmed by the defendants’ failure to assume the mortgage as of yet.  The court also noted that the defendants were paying the mortgage and that it was current, along with the other expenses on the home, such as taxes, insurance, and maintenance.  Accordingly, the court held that the facts of the case did not justify a rescission of the contract and went on to affirm the dismissal of the plaintiff’s claims against the defendants.

At Pulgini & Norton, our Massachusetts real estate attorneys can represent individuals in residential property sales and purchases, as well as other transactions concerning their homes.  We have navigated homeowners through mortgage re-financing, building permit and variance applications, tax lien issues, foreclosure proceedings, and more.  If you have a question involving residential real estate, request a free consultation by calling Pulgini & Norton at (781) 843-2200 or submitting our contact form online.

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