We enter into contracts all the time without even realizing it. However, when you enter a contract for the sale of commercial property, you know it — long documents, lots of formalities, and possibly substantial monetary consequences are involved. You had better be sure you want to sell that property. As a recent case illustrates, even if a party to a contract for the sale of commercial property changes their mind, a court can still enforce the contract and order that party to perform. In other words, a court can order a seller to abide by the terms of the contract and complete the sale of commercial property to the purchaser.
Ratcliff Development, LLC v. Ollie Lee Corporation arose from a petition for specific performance against the Ollie Lee Corporation (“Ollie Lee”), seeking to enforce the terms of a Commercial/Land Agreement to Purchase/Sell. Under the agreement, Ollie Lee agreed to sell property to Ratcliff Development LLC (“Ratcliff”). The property was adjacent to Ratcliff’s business operation on Lee Street in Alexandria, Louisiana.
In 2006, Ollie Lee obtained a tax sale certificate to the Alexandria property. A tax sale certificate is issued when someone buys property that is sold when the original owner failed to pay taxes on it. After a certain amount of time and after certain statutory procedures giving the original owner a chance to reclaim the property have been followed, the holder of the tax sale certificate may obtain title and full ownership of the property. In the first few months of 2012, Ollie Lee began taking those requisite steps toward finalizing its full ownership over the property. See Louisiana Revised Statutes 13:4941, 13:4942 and 13:4944.
By the time representatives from defendant-seller Ollie Lee and plaintiff-purchasers Ratcliff Development, LLC, (“Ratcliff”) signed the purchase agreement on July 26, 2012, Ollie Lee did not yet finish taking the requisite steps to have clear title to the property; all that was left to do was to get a clerk’s certificate stating that the statutory requirements had been followed and to get a judgment “confirming and homologating” the completed sale of the property to Ollie Lee. However, Ollie Lee did not take these actions until late November despite having ample opportunity to easily do so earlier.
Under the purchase agreement, Ratcliff had thirty days from signing to conduct due diligence on the property and to notify Ollie Lee if there were any title defects. The contract further provided that, upon such notice, Ollie Lee had ninety days to fix any title defects. If Ollie Lee failed to address a title defect within that timeframe, Ratcliff would then have the option to  waive the title defect and accept the property and title in the defective condition; or  void the contract. The contract also provided that if Ollie Lee failed to comply with the agreement for any reason other than a “reasonable inability to deliver merchantable title within the time specified,” Ratcliff had the right to demand specific performance,
Evidence at trial supported the trial court’s finding that, contrary to Ollie Lee’s argument otherwise, Ratcliff did indeed give sufficient notice to Ollie Lee on August 14, 2012, allowing the seller until November 11, 2012, to cure the title defect. Since Ollie Lee did not cure the defect until a few weeks after November 11, despite having ample opportunity in the permitted timeframe, the trial court determined that Ollie Lee’s failure to comply with the contract does not reflect a “reasonable inability to deliver merchantable title.” Pursuant to the agreement, Ratcliff opted to waive the title defect and accept the property and title in the defective condition rather than void (that is, nullify or cancel) the contract. Thus, the trial court held that Ratcliff was entitled to demand specific performance from Ollie Lee.
On the defendant’s appeal, the appellate court affirmed the trial court’s decision in favor of the plaintiff, Ratcliff.
Additional Sources: RATCLIFF DEVELOPMENT, L.L.C. VERSUS OLLIE LEE CORPORATION
Written by Berniard Law Firm Blog Writer: Ira Perez
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