Despite Ambiguous Terms in Purchase Agreement, Court Orders Farm Sale

With unclear terms and intentions, two parties attempted to negotiate the sale of a farm property. After both vacillated between moving forward and rescinding the agreement, the seller and the buyer petitioned the court for specific performance of the sale. On March 8, 2023, the Iowa Court of Appeals affirmed the district court’s order of specific performance finding that the seller did not abandon his specific-performance claim. The court also affirmed the denial of the buyer’s breach of contract claim because there was insufficient evidence that the buyer was ready to perform his obligations under the agreement.

Background

An individual approached a farmland owner offering to buy a 180-acre property which included a house. Although initially hesitant, the farmland owner eventually agreed to sell the property for $2 million. The parties executed a purchase agreement which stated in part:

The buyer tendered a $200,000 check as required by the purchase agreement that same day. After providing the farm tenant with proper termination notice on August 31, the landowner informed the buyer that he wished to close the sale on December 1, 2018. The landowner also ordered an abstract for the property.

In response, the buyer sent a note stating that he did not agree to the December 1 date. In the note, the buyer claimed that there was no agreement because the landowner had added a new term requiring acceptance of the property “as is.” Uncertain if the sale would move forward, the landowner did not seek a title opinion and did not prepare closing documents, such as the deed. The sale did not occur on December 1. The landowner rejected the buyer’s proposal for a reduced price and cashed the down payment check on January 29, 2019.

The buyer wanted to close on March 1, 2019, but key items remained unresolved.  On March 15, the buyer demanded the return of his $200,000 downpayment. The landowner refused claiming that the buyer was “in breach of the Purchase Agreement and [] therefore forfeited the down payment.”

On May 2, 2019, the buyer initiated this lawsuit alleging breach of contract for failure to close on the property and conversion for failure to return the down payment. The landowner counterclaimed for breach of contract and breach of implied covenant of good faith and fair dealing. He sought specific performance of the purchase agreement. The buyer amended his petition requesting specific performance and moved for summary judgment.

Finding that genuine issues of material fact prevented summary judgment, the district court held a bench trial on July 9, 2021. In a January 2022, written ruling, the district court found that the lack of a closing date did not make the contract invalid. Additionally, while there were times that the contract could have been rejected, neither party clearly rejected it. The court found specific performance was an appropriate remedy and ordered the parties to close the sale. The court denied all other claims and did not award monetary damages. The landowner appealed the order of specific performance and the buyer cross appealed.

Specific Performance

On appeal, the landowner contested the court’s order of specific performance claiming that he had abandoned his request for this remedy. At trial, the landowner testified that he did not believe a contract existed after the parties failed to close the sale on December 1. Additionally, the landowner never argued in favor of specific performance at trial.

Yet, the landowner never informed the court of his intention to dismiss his specific performance claim. What’s more, in one of the landowner’s interrogatory answers he stated, “The seller stands ready to preform [sic] and is not in bre[a]ch. The buyer has no reason not to perform.” The Court of Appeals affirmed the order for specific performance, finding that where both parties requested specific performance, it could not find the trial court’s order of specific performance adverse to either party. A party cannot challenge the relief he himself requested.

Breach of Contract

The court next considered whether the district court should have awarded the buyer breach-of-contract damages. The buyer claims he suffered monetary damage from home rental payments, lost farming profits, and lost farm program payments from the government.

To succeed on a breach of contract claim, the proponent must show, among other things, that he “has performed all the terms and conditions required under the contract.” Iowa Arboretum, Inc. v. Iowa 4-H Found., 886 N.W.2d 695, 706 (Iowa 2016). Here, sufficient evidence existed that neither party was ready to perform. The buyer specifically “never tendered full payment or provided final closing documents or proof he was prepared to close by March 1.” Thus, the court affirmed the denial of the buyer’s breach of contract claim.