Parties to Real Estate Transaction Argue Over Attorney Fees

December 28, 2009 | Erin Herbold

 

Here, the parties entered into a real estate agreement to purchase 3.7 acres of land. The real estate contract provided that the land purchase was subject to “any easements of record for public utilities, roads and highways.” The contract also provided that the sellers were responsible for obtaining an updated abstract of title, showing “merchantable title.” After closing was to occur, the buyer’s attorney prepared a title opinion noting that the property was subject to a perpetual easement and right of way for sewer in favor of the U.S. government. The buyer claimed that this made the title unmerchantable and required that the seller maintain a release from the easement holder before the purchase. The sellers were unable to obtain that release. The buyer sued the seller and the U.S. government, maintaining the easement made the title unmerchatable, that they were owed an abatement on the purchase price, and they were entitled to a decree quieting title to the property against the U.S. government. 

The sellers countersued, seeking performance of the contract and damages for breach of contract and attorneys fees. The sellers also attempted to proceed with the closing, but the buyers would not close until the “title defects” were taken care of and an abatement of the purchase price was agreed upon. 

At trial, the sellers prevailed and were awarded attorney’s fees. The contract specifically stated that, “in any action or proceeding relating to this contract the successful party shall be entitled to receive reasonable attorney’s fees and costs.” The seller’s request for specific performance of the contract was granted. 

The buyer appealed to the Iowa Court of Appeals, which heard the case on just the attorney’s fees issue. The appellate court reiterated that the “successful party” was entitled to attorney’s fees at the trial court and appellate court level in this case. Woods v. Sonneman, No. 9-608/09-0267, 2009 Iowa App. LEXIS 1653 (Iowa Ct. App., Dec. 17, 2009).