Opinion ID: 2516194
Heading Depth: 2
Heading Rank: 1

Heading: The Inspection Provision

Text: In reviewing a breach of contract case, we defer to the trial court's findings of fact if the record supports them, and we review its conclusions of law de novo. See Ad Two, Inc. v. City & County of Denver, 9 P.3d 373, 376 (Colo.2000); Mesa County Valley Sch. Dist. No. 51 v. Kelsey, 8 P.3d 1200, 1204 (Colo.2000); I.M.A., Inc., v. Rocky Mountain Airways, Inc., 713 P.2d 882, 887 (Colo.1986). A court's primary obligation is to effectuate the intent of the contracting parties according to the plain language and meaning of the contract. See Ad Two, 9 P.3d at 376. A trial court takes evidence regarding the intent and meaning of a contract only in the event of a material term's ambiguity, whereas [w]ritten contracts that are complete and free from ambiguity will be found to express the intention of the parties and will be enforced according to their plain language. Id. Here, the Seller and Buyers entered into a residential real estate contract on a Commission-promulgated form. The General Assembly gave the Commission the authority to promulgate rules, consider licensing and examination matters, provide educational materials, review complaints, and take disciplinary action against licensees. [6] See, e.g., §§ 12-61-104(1), -108 to -110.5, -113 to -114, -406, -706 to -710, -803(4), 4 C.R.S. (2000); Colo. Real Estate Comm'n, Real Estate Manual 1-2 to 1-4 (2000). Protection of the public is a primary Commission purpose. See § 12-61-102, 4 C.R.S. (2000); Colo. Real Estate Comm'n, Real Estate Manual 1-3 (2000). To further this purpose, agents must use the Commission's standardized forms. [7] These forms set forth the basic contractual rights and remedies for Buyers and Sellers of real property in Colorado. See § 12-61-803(4); Colo. Real Estate Comm'n, Real Estate Manual 25-1 (2000). In 1989, the Commission added an Inspection Provision to the standard residential real estate form to replace agents' prior practice of inserting their own choice of inspection language. This provision, which the Commission has adjusted from time to time, allows Buyers to inspect, object to, and obtain resolution of their objections concerning the physical condition of the contracted property and inclusions, and in the absence of such resolution, trigger termination of the Contract. See Kent Jay Levine et al., Guidebook to Colorado Real Estate Contracts & Disclosures 72 (2d ed.1995). Pursuant to the Contract, the Seller supplies Buyer with a copy of Seller's Property Disclosure form. Buyer then has the right to inspect the property and the inclusions. The Objection Deadline is the time by which Buyer must supply written objections to Seller listing the physical conditions of the property or inclusions that are unsatisfactory to Buyer. In the event of no timely written objection, Buyer accepts the physical condition of the property and inclusions. In the event of timely written objection, the parties then have until the Resolution Deadline to reach a written agreement satisfying Buyer's concerns. If the parties reach agreement, they sign an addendum that describes that agreement. If they cannot reach agreement, the Contract terminates three calendar days after the Resolution Deadline, unless Buyer waives the objection. If Buyer withdraws the objection, Seller remains under an obligation to sell to Buyer under the contract terms. A commentator observes that the Inspection Provision allows Buyer to exercise his or her own discretion in determining whether the physical condition of the property and inclusions is unsatisfactory, thereby triggering termination in absence of reaching agreement: Unlike prior approved forms, the current [Commission] Forms contain an inspection provision whereunder the buyer can terminate the contract if the buyer identifies any unsatisfactory physical condition, and the buyer and seller do not reach written agreement in settlement of the condition. 2 Cathy Stricklin Krendl, Colorado Methods of Practice 92 (4th ed.1998). [8] Upon review of the Contract, we read the Inspection Provision as providing that: (1) if Seller did not agree to the Buyers' timely inspection objection proposal made before the Objection Deadline; and (2) the parties did not reach an alternate accommodation by the Resolution Deadline; then (3) the Contract terminated three days after the Resolution Deadline unless (4) the Buyers withdrew their objections. Additionally, an implied duty of good faith and fair dealing applied to the Seller's and Buyers' actions under the Contract. See Bayou Land Co. v. Talley, 924 P.2d 136, 154 (Colo.1996). Accordingly, we proceed with our review of the record to determine who is entitled to the $4000.00 earnest money deposit.