Appellant purchasers challenged the judgment of the Superior Court of Alameda County (California), which quieted respondent seller’s title to a parcel of real property after appellants defaulted in their payments on the real property.
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Overview
Respondent seller declared a forfeiture of the parties’ agreement to purchase real property when appellant purchasers defaulted on two of the required monthly payments because their checks were dishonored. The lower court granted respondent judgment quieting title to the real property and the court reversed. It found that appellants could be relieved from the forfeiture by making full compensation to respondent unless their actions were grossly negligent, willful, or a fraudulent breach of duty, and that relief would be granted whether or not time had been made of the essence. In addition, the default was not serious and appellants were willing and able to continue with performance of the contract. The court found that, at most, the overdrafts were an error in computation coupled with delays in making the usual deposits due to illness. Appellants’ good faith belief they had sufficient funds to cover the checks prevented their breach from being wilful. Further, their failure to investigate the implications of their bank statement that would have reflected the first check had been dishonored at most amounted to simple negligence.
Outcome
The court reversed the judgment in favor of respondent seller that quieted title in the subject real property. Appellant purchasers were entitled to relief from forfeiture as their default was not serious, they were willing and able to continue with the performance of the contract, and they made substantial improvements to the property in reliance on the contract.
