Devine v. Notter, Appeal No. 2007AP812: The question raised in a recent unpublished Wisconsin Court of Appeals case - does the inclusion of an attorney approval clause in an Offer to Purchase render the Offer illusory and unenforceable? The pertinent language in the Offer to Purchase stated:
Devine v. Notter, Appeal No. 2007AP812: The question raised in a recent unpublished Wisconsin Court of Appeals case - does the inclusion of an attorney approval clause in an Offer to Purchase render the Offer illusory and unenforceable? The pertinent language in the Offer to Purchase stated:
This Offer to Purchase is contingent upon buyer(s)/seller(s) attorney’s approval of the terms and conditions, other than price, within 5 days of the acceptance of this offer. If buyer/seller does not submit notice of attorney’s disapproval within 5 days of the acceptance of this offer, it shall be deemed that there are no conditions to which the buyer(s)/seller(s) attorney disapproves. If written disapproval is timely submitted and an agreement to the terms in writing cannot be reached by the buyers and sellers within 5 days of submittal, this offer shall be null and void and all earnest money will be returned to buyer.
The buyers notified the seller 10 days before closing that they would not complete the sale. The seller then sued the buyers for specific performance (the legal term meaning too bad so sad, you must buy this property). Buyers’ defense - by including the attorney-approval clause the OTP was illusory and not really a contract at all - thus the buyers could walk away from the deal.
The Court of Appeals, in a case of first impression, held that the OTP language required the party wishing to cancel the deal to consult with an attorney and provide notice within five days of any disapproval and that this language was sufficient to save the deal from being illusory. In its holding the court was very specific that the attorney-approval clause in the subject OTP did not render the contract illusory and the seller was entitled to specific performance; however, this does not mean that all attorney-approval clauses will pass muster.
So what does this mean for real estate people - if you represent a seller and want the deal to stick, include an attorney-approval clause similar to the above language. If you represent a buyer and want some wiggle room - then the vaguer the better, the door may be open.