Ebbeler v. Andrews
| Decision Date | 28 February 2022 |
| Docket Number | 82225-0-I |
| Parties | JONATHAN WESLEY EBBELER AND ELIZABETH ASHLEY EBBELER, husband and wife, Appellants, v. SIDNEY S. ANDREWS, Personal Representative of the Estate of Alison S. Andrews; and ESTATE OF ALISON S. ANDREWS, Respondents. |
| Court | Washington Court of Appeals |
UNPUBLISHED OPINION
Jonathan and Elizabeth Ebbeler, prospective purchasers of a home under a real estate purchase and sale agreement, appeal the trial court's finding that they forfeited their earnest money deposit by failing to tender the purchase price on or before closing, as required by the agreement. Because the trial court's findings are supported by substantial evidence we affirm.
In February 2018, Alison Andrews passed away, leaving a large home in the Highlands neighborhood of Shoreline, Washington. Her son, Sidney Andrews, [1] acting as her estate's personal representative (the Estate), listed the home for sale.
All property sales in the Highlands must be approved by the Highlands Homeowner's Association (HHA). HHA contracts with the Highland Sewer District (the District) to provide a sanitary sewer and storm water drainage system for the community. Under the Highlands bylaws, all buildings must be connected to the general sewer system. The Highlands Sewer District Sanitary Sewer & Storm Water Lateral Compliance Plan makes all property owners financially responsible for repairs to or replacements of sanitary sewer and storm water lateral pipelines. Under this plan, the District is responsible for inspecting sewer lines and issuing certificates of compliance. In 2005, the District implemented a policy requiring an inspection of all sewer connections when a residence is proposed to be sold and to require "immediate arrangements to correct all deficiencies found by such inspections." The District requires any seller to obtain a "Letter of Compliance" as a condition of any sale.
In April 2018, Andrews began working with the District to bring the home into compliance by separating the home's storm water from the District's sewer lines. In mid-March 2019 the District and Andrews discovered that the home had never been connected to the District's sewer system. The District issued a noncompliance report indicating that before any sale, the District had to connect the home to its sanitary sewer system.
On March 28, 2019, the Ebbelers offered to purchase the property for $2 million, using the Northwest Multiple Listing Service (NWMLS) real estate purchase and sale agreement form (REPSA). On March 30, Andrews extended a counteroffer for $2, 625 million, offered a personal representative's deed in lieu of a statutory warranty deed, and required that any and all contingencies, both financing and inspections, be waived within 30 days of mutual acceptance. Andrews also disclosed the defects with the sewer system and represented that the Estate was selling the house without connecting to the District's sewer system.
On March 31, 2019, the parties settled on a purchase price of $2.3 million.
The REPSA contained the Estate's proposed 30-day contingency period clause:
The parties agreed on a closing date of "on or before" May 29, 2019. They also agreed to use WFG National Title (WFG) as the closing agent. Once they agreed to these final terms, the Ebbelers deposited $65, 000 in earnest money with WFG.
During the 30-day contingency period, the Ebbelers sought assurances that the District would complete sewer repairs before closing and asked Andrews to reduce the purchase price and extend the closing date until the repairs were complete. The Ebbelers initially thought the District would not allow the sale to close without the sewer connection work being completed. Andrews confirmed with the HHA and the District that because the District could not complete the work by the closing date, it would allow the transaction to close if the Estate agreed to set aside a portion of the sale proceeds to cover the costs of the repairs in a "holdback" agreement.
Discussions between the parties regarding the sewer issue became contentious with the Ebbelers continuing to seek a price reduction to reflect the lack of a connection. On May 1, 2019, the Estate's attorney, Lisa Peterson, told the Ebbelers that the Estate would not negotiate the issue further and that they could walk away from the deal if they were not happy with the sewer situation. She offered to extend the feasibility period to May 3, 2019, to give the Ebbelers additional time to decide if they wanted to proceed.
The Ebbelers allowed the contingency period to lapse and all contingencies were, at that point, waived. On May 24, 2019, the District agreed to a holdback amount at $150, 000, two times the anticipated cost to finish the sewer repairs. Andrews agreed that this sum would be withheld from the proceeds to be paid to the Estate at closing.[2]
The Ebbelers, residents of Maryland, worked with a mortgage broker to obtain a $1.6 million loan from Washington Federal (WaFed) to purchase the property. WaFed prepared loan documents and forwarded them to WFG for the Ebbelers to execute. WFG arranged for a traveling notary to meet the Ebbelers to execute the loan and closing papers on Saturday, May 25, 2019, four days before the scheduled closing date.
WFG mistakenly provided the Ebbelers with a draft statutory warranty deed, rather than a personal representative's deed, to approve. The Ebbelers approved the deed form, signed what they believed to be all remaining documents, and returned them via overnight mail to WFG.
WFG received the Ebbelers' signed closing documents on the morning of May 28 and forwarded them to WaFed to review. The same day, the Ebbelers wired a $690, 000 down payment to WFG.
Just before 6 p.m. that evening, Dani Leggett, the closing agent, emailed Andrews and asked him to arrive at WFG's Seattle offices at 11 a.m. the next day to sign closing documents so she could "send documents to the lender prior to their funding cutoff." Leggett informed Andrews that "[t]he buyer's lender requires reviewing a portion of the seller signed documents prior to funding their loan and releasing us to record." The following morning, Andrews told Leggett that he would come in to execute the closing documents but that she did not have the authority to distribute any documents to the Ebbelers' lender until he provided written authorization for her to close.
At approximately 11 a.m. on May 29, WaFed notified WFG that it had discovered at least 13 errors in the Ebbelers' signed loan documents that needed to be corrected before it would wire funds for closing.
At 1 p.m., Peterson notified Leggett that the Estate would not authorize her to send copies of signed documents to anyone unless and until all funds had been deposited. Leggett responded that the only documents she wanted to send were the signed escrow instructions, the "closing disclosure," and the statutory warranty deed. When Peterson received this email, she told Leggett that the proper deed form should be a personal representative's deed, not a statutory warranty deed, and that she would not authorize WFG to distribute a signed deed before funds were on hand to close. She also informed Leggett that Andrews would be there by 2:30 p.m. to sign the closing documents.
Leggett then sent an email notifying everyone involved in the transaction that once Andrews arrived to sign the documents and she had the "green light" to move forward with the closing, she would let everyone know. She further stated that it was her belief that the lender's cutoff to fund the loan was 2 p.m. and suggested that the parties would need to extend the REPSA. At 1:40 p.m., the Ebbelers' mortgage broker, Phil Mazzaferro, sent an email to the parties indicating that WaFed wanted more changes to the loan documents. Barbara Otero, WaFed's loan manager, testified that the bank could not and would not fund the loan until these items were corrected.
Nothing in the record indicates if or when the errors in the Ebbelers' loan documents were corrected. Neither WaFed nor the Ebbelers ever deposited the balance of the purchase price with WFG.
Andrews arrived at WFG's offices at 2:17 p.m. and learned that WFG had prepared, and the Ebbelers had approved, the incorrect deed form. He immediately notified his attorney of the error and she sent WFG a personal representative's deed for WFG to finalize. WFG asked its lawyer to approve the revised deed. Andrews signed all the closing documents, except the deed, by 2:48 p.m. He signed the correct deed form at 3:51 p.m. Because the King County Recorder's Office closes at 3:30 p.m., WFG would have been unable to record the deed that day.
When the Ebbelers realized the transaction would not close, they asked Andrews to extend the closing date. Andrews refused because the Ebbelers had failed to tender the purchase proceeds.
The...
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