Levenson v. L.M.I. Realty Corp., 89-P-471

• Decision Date: 26 July 1991
• Docket Number: No. 89-P-471,89-P-471
• Citation: 575 N.E.2d 370,31 Mass.App.Ct. 127
• Parties: Norman A. LEVENSON v. L.M.I. REALTY CORPORATION.
• Court: Appeals Court of Massachusetts

Page 370

575 N.E.2d 370

31 Mass.App.Ct. 127

Norman A. LEVENSON v. L.M.I. REALTY CORPORATION.

No. 89-P-471.

Appeals Court of Massachusetts,

Suffolk.

Argued Nov. 15, 1990.

Decided July 26, 1991.

Robert E. McLaughlin (Donna E. Cohen with him), Boston, for plaintiff.

Karen M. Thursby, Boston, for defendant.

Before ARMSTRONG, BROWN and JACOBS, JJ.

ARMSTRONG, Justice.

The plaintiff (Levenson) seeks specific performance of an alleged contract to purchase real estate, consisting of an apartment building on Queensbury Street in Boston. The question, which is close on the facts, is whether the negotiations between Levenson and the defendant culminated in a contract.

The principal of the defendant is Louis M. Insoft. Both he and Levenson have substantial real estate holdings and are thoroughly experienced in the purchase and sale of real estate. Insoft engaged one Stein, a real estate broker, to find a buyer for the Queensbury Street building. After producing an offer that Insoft rejected, Stein interested Levenson in the property. Levenson gave Stein a verbal offer that Insoft rejected, then a written offer that Insoft also rejected. Over the course of a year Insoft raised his asking price several times until it reached $400,000. Levenson doubted that the rents justified the price. In the fall of 1981 the defendant was allowed rent increases, and Stein attempted to persuade Levenson to make a new offer. Levenson, exasperated by Insoft's record of rejections, told Stein he would not make any further offers unless Insoft reduced to writing the terms upon which he would sell.

Stein, learning Insoft's terms from the latter's accountant, prepared a typewritten letter for Insoft's signature, which read as follows:

"October 7, 1981

Dear Mr. Stein;

The following are the terms and conditions under which I will sell my property at 25-29 Queensbury St. Boston, to Mr. Norman Levenson.

1. Price--$400,000 net to me

2. 1st Mortgage--$175,000 (to be placed by the buyer)

3. 2nd Mortgage--$225,000 (to be taken back by the seller)

4. Terms of the 2nd Mortgage.--5 year note bearing interest only at 12% for the first year and 15% for the balance of the term.

I personally guarantee that if this offer is made to me within the next 14 days, we will enter into a purchase and sale agreement forthwith.

Very truly yours

Louis M. Insoft

LMI Realty"

Stein gave the letter to the accountant, who altered the text by writing in, after the words "we will enter into a purchase and sale agreement forthwith," the words "satisfactory to both parties." (The judge found that the accountant added these words because Insoft did not wish to be bound by any purchase and sale agreement until he had the opportunity to speak to Mr. Gerber, his attorney, who was then on vacation.) Insoft then signed the letter in his capacity as president of L.M.I. Realty Corp.

On October 19, 1981, within the two-week period specified by Insoft's letter, Levenson returned to Insoft (through Stein, who prepared the document) an offer to purchase conforming in every respect to the terms set out in the Insoft letter. The offer was typed on the standard offer form of the Greater Boston Real Estate Board (1978 revision). The only terms specified in addition to those recited by the Insoft letter were a provision that the offer should remain open until 5:00 P.M. on November 6, 1981, and that the parties should execute by November 15, 1981, the Greater Boston Real Estate Board standard purchase and sale agreement "or any form substantially similar thereto, which, when executed, shall be the agreement...."

The Greater Boston Real Estate Board standard offer form has a line for the seller to subscribe his acceptance of the offer before its expiry date. Compare the forms in Goren v. Royal Invs., Inc., 25 Mass.App.Ct. 137, 138, 516 N.E.2d 173 (1987), and Blomendale v. Imbrescia, 25 Mass.App.Ct. 144, 145, 516 N.E.2d 177 (1987). Insoft declined to sign his acceptance, saying he wanted Mr. Gerber to review it first. Mr. Gerber, after a delay, proposed new terms altogether, and any agreement quickly fell apart.

On these facts the judge was justified in concluding that the negotiations stopped short of a contract. Insoft's guarantee was less than an unqualified promise to sell the Queensbury Street property. Contrast Coan v. Holbrook, 327 Mass. 221, 221-222, 97 N.E.2d 649 (1951). Rather, it was a promise that, on receipt of an offer containing specific terms, "we will enter into a purchase and sale agreement forthwith satisfactory to both parties." Contrast, again, Coan v. Holbrook, supra at 222, 97 N.E.2d 649 ("[we] will, on acceptance, sign your usual purchase and sale agreement ..."). Contrast also Goren v. Royal Invs., Inc., supra, where the buyer's detailed offer was "accepted" in writing by the seller in circumstances that caused the court to conclude that a contract had been reached despite the contemplation of a later purchase and sale agreement.

The norm in real estate transactions has been that, where the parties sign a writing contemplating the later execution of a purchase and sale agreement, they do not intend to be bound until that time. Doten v. Chase, 237 Mass. 218, 220, 129 N.E. 363 (1921). Rosenfield v. United States Trust Co., 290 Mass. 210, 216, 195 N.E. 323 (1935). Goren v. Royal Invs., Inc., 25 Mass.App.Ct. at 142 n. 5, 516 N.E.2d 173, citing Currier v. Kosinski, 24 Mass.App.Ct....