Land Developer Hit With Damage Award For Breach of Contract

December 30, 2007 | Erin Herbold

The defendant, a real estate developer, purchased 120 acres to develop and resell as residential lots.  The plaintiff purchased a multi-acre lot from the plaintiff for $35,000.  Based on the defendant’s representation, the plaintiff believed that the southern boundary of the lot was located along a terrace, but that later proved to be incorrect with the effect that the plaintiff actually owned about one acre less than what the plaintiff originally thought she had purchased.  That created a problem – the plaintiff would have to change her septic system laterals and relocated her house on the lot.  So, the plaintiff offered to purchase the additional acre for $2,500.  The defendant countered by offering to sell the acre for $30,000.  Ultimately, the plaintiff did not buy the acre, but instead redesigned her house, relocated it and also relocated the septic.  The plaintiff then sued for breach of contract and misrepresentation.  The trial court found that the defendant had breached its contract with the plaintiff and awarded the plaintiff $30,000 in damages.  

On appeal, the defendant claimed that the plaintiff had waived her right to contest the lot’s boundaries when she signed the survey to the lot.  But, the court noted that the copy of the survey provided to the plaintiff was illegible and that the property boundary appeared to follow the terrace.  Also, the restrictive covenants provided to the plaintiff made the plaintiff responsible for maintaining the terraces on and surrounding the lot.  Also, the court pointed out that the plaintiff’s offer was conditioned on the boundary being the terrace.  On that point, the defendant, through its representatives, continued to assure the plaintiff that the terrace was the boundary.  As a result, the court held that the plaintiff had reasonably relied on the defendant’s assertions, and had not waived her right to contest the lot’s boundary.  As for damages, the court reasoned that it was the defendant’s breach that caused the plaintiff to receive one acre less that she was entitled to receive.  Accordingly, the damage award of $30,000 was upheld insomuch as similar one-acre lots in the vicinity were selling for that price.  Strong v. Mortgage Loans of America, LLC, No. 7-698/06-2090, 2007 Iowa App. LEXIS 1234 (Iowa Ct. App. Nov. 29, 2007).