Court Opinion

ID: 9604741
Source: CourtListenerOpinion
Date Created: 2023-08-22 02:26:08.403631+00
Date Added: 2024-06-11T12:05:40.220557
License: Public Domain

On Motion for Rehearing.
Appellees cite several cases1 which have held that a contract lacks mutuality, is unenforceable, and void where the financing provision is too indefinite. These cases for the most part are factually different from this case in that they involved efforts by the purchasers to obtain a refund of their earnest money. Nevertheless the basis for the decisions in these cases (i. e., that a contract containing a vague, ancillary financing clause lacks mutuality and is not a valid contract) is implicitly overruled by our decision in this case.2 We have held here that this financing clause does not vitiate the entire contract for sale3 and that the seller cannot, rightfully rescind his bargained-for agreement under these facts. This is especially true in view of the fact that the financing condition is inserted for the purchasers’ protection, and that so long as the purchasers’ comply with their primary obligation to pay the purchase price at closing, the precise manner in which the funds are obtained is irrelevant to the vendors. Whitley, supra, and Edwards, supra.
*822Appellees also argue that this opinion’s change in the application of the mutuality concept in Georgia will result in purchasers losing their earnest money whenever they are unable to obtain financing and to fulfill their contract obligations. It must be stressed that this opinion does not hold that a purchaser who makes a good faith effort to obtain financing, yet is unable to obtain a loan, will lose his earnest money. Although the mutuality concept may no longer be used by a court to say that a contract never existed, it is still true that the purchaser may be entitled to a refund of his earnest money because the condition precedent of obtaining the loan was not fulfilled after the purchaser’s good faith efforts to do so. See 3A Corbin on Contracts, § 629A. Of course, the terms of the contract and the intentions of the parties in a particular case will be determinative of the disposition of the earnest money. As a general rule, however, if a purchaser fails to make a good faith effort to obtain financing after agreeing to the contract, he would forfeit his earnest money. See 78 ALR3d 880.
Nor does the opinion decide precisely how to categorize this financing contingency. The general view appears to be that a financing contingency clause creates “a condition precedent to the performance of the primary contractual obligations to buy and sell the property.” 77 AmJur2d 251, Vendor and Purchaser, § 66. See generally 6 EGL 117, Contracts, § 82. See Smith v. Vernon, 286 NE2d 99 (1972). Corbin categorizes it as a condition precedent and states: “To this treatise, it appears that there was a valid contract of purchase and sale, one term of which provided for the obtaining of the loan ... [I]t is reasonable to hold that the obtaining of the loan was a condition precedent to the duty of both parties to render their promised performances (and not a condition precedent to the existence of a valid contract.)” 3A Corbin on Contracts, § 629A, fn. 22.15, p. 13 (1971 Supp.).

Motion for rehearing denied.

 Barton v. E. D. Martin Co., 142 Ga. App. 586 (236 SE2d 555) (1977); Bell v. Babb, 139 Ga. App. 695 (229 SE2d 511) (1976); Kenimer v. Thompson, 128 Ga. App. 253 (196 SE2d 363) (1973); Brady v. Poulos, 121 Ga. App. 35 (172 SE2d 437) (1970); Cole v. Cutler, 96 Ga. App. 891 (102 SE2d 82) (1958); Lightfoot v. King, 25 Ga. App. 80 (102 SE 468) (1925).

 While overruled by this case, the cases cited in footnote 1, supra, lack legal vitality at least as applied to ancillary conditions in a contract. For example, in Clairmont Development Co. v. Highlands Forest, Inc., 232 Ga. 541 (207 SE2d 505) (1974), a unanimous court held two special stipulations to a real estate sales contract that (1) “[t]he terms of the note evidencing said loan and the security deed securing same will be no more burdensome to the mortgagor than the forms of same now being used by Lawyer’s Title Insurance Corporation...” and (2) “ [sjubject to confirmation in writing from proper authorities regard to utilities, zoning and taxes” did not render the contract unenforceable. “In the context of the entire contract we hold... that these two items do not make the contract unenforceable.” Id. at 542. The contract had been challenged as being “vague, indefinite, uncertain, and lacking in mutuality.” See also Warren v. Camp, supra, and Barto v. Hicks, 124 Ga. App. 472 (184 SE2d 188) (1971). Barto held that a provision to obtain a loan at the “current prevailing rate” did not render a contract void for uncertainty. See footnote 3 infra.

See Buckner v. Mallett, 245 Ga. 245 (264 SE2d 182) (1980) where we held that *822vague release provisions in a contract for sale are not material and do not “vitiate the entire contract.” We have previously held that the precise manner in which funds are obtained by the purchaser is irrelevant to the vendor. See Edwards v. McTyre, 246 Ga. 302 (271 SE2d 205) (1980) where it is stated: “Even if the terms of the loan to be obtained are vague and uncertain, if the buyer actually has the purchase price in cash to pay to the seller as required by the contract, it should not make any difference to the seller how the cash is obtained.”