Appeal from Superior Court of Snohomish County. Docket No: 94-2-03309-1. Date filed: 08/12/94. Judge signing: Hon. James H. Allendoerfer.
Petition for Review Denied May 7, 1997,
Authored by Ann L. Ellington. Concurring: H. Joseph Coleman, Visiting Judge.
The opinion of the court was delivered by: Ellington
ELLINGTON, J. -- Keun Su and Jung Su Park signed an agreement to purchase a house from Ray and Becky Head. When the Heads' lender would not approve the deal, the parties agreed to a lease with an option to purchase. The Parks attempted to exercise their option, although they failed to give written notice of their intent, as required by the option contract. We hold that the trial court properly exercised its equitable powers when it granted the Parks specific performance of the option to purchase because (1) the Heads had notice the Parks intended to purchase the property, and the Heads' actions indicated they had waived strict compliance; (2) the Parks substantially complied with the option contract; (3) the Parks' consideration for the option was substantial; and (4) the Heads were not prejudiced by the delayed closing.
We also conclude that the trial court's order requiring funds to be withheld from escrow for the Parks' attorney fees did not amount to an improper prejudgment writ of attachment. Nor did the trial court abuse its discretion when it awarded the Heads an offset for rent based upon the amount the Heads paid their lender, rather than on the rental value in the lease. The trial court also did not abuse its discretion when it awarded all the Parks' attorney fees and costs, but denied the Parks damages for the amount they had to pay in increased mortgage costs as a result of the Heads' refusal to close the sale. We therefore affirm.
In July 1992, Ray and Becky Head agreed to sell their home to Keun Su and Jung Su Park for $315,000. The Parks agreed to pay $63,000 down, $2,027.67 per month, and the insurance and taxes on the property. The Heads agreed to finance the sale, which was to be secured by a deed of trust that was to be subordinate to another deed of trust held by Washington Mutual. But Washington Mutual refused to approve the sale, so the deal was restructured as a lease with an option to purchase, which allowed the Parks to move into the house quickly, while giving them time to secure conventional financing.
The figures from the purchase and sale agreement became the figures for the lease/option contract. The Parks were to pay $2,027.67 per month in rent, and the insurance and taxes on the property, but they had the option to purchase the property at the original sale price of $315,000 at any time before the lease expired. The rent, however, was not to be applied to the purchase price, and the $63,000 down payment became a non-refundable option fee:
In consideration for the option, lessee shall pay the amount of Sixty Three Thousand Dollars U.S. ($63,000.00) which shall be nonrefundable in the event lessee does not exercise this option to purchase within twenty months of the date of exectuion [sic]
of this lease, or by April 24, 1994, whichever date is later.
This option may be exercised only by written notice from Lessee to Lessor given not less than 45 days prior to the Closing Date specified in such notice, provided the Closing Date is prior to April 24, 1994 and within the Lease Term. The option fee shall be paid in full upon the execution of this lease.
The Heads insisted the lease term end on April 24, 1994, rather than August 25, 1994, as originally drafted, to avoid any last minute problems that might cause them to lose their capital gains tax exemption, which expired on August 25, 1994.
The Parks are natives of Korea and neither is fluent in English, so they relied upon others to communicate for them. In September 1992, the Parks' real estate agent, Wendy Jo, sent a letter to the Heads. Jo's letter expressed the Parks' intent to exercise the option:
Mr. and Mrs. park have asked me to inform you about the purchasing the house before they leave to Korea last week. They are planing to be back by middle of November and will purchase the house right after they return. According to your lease, Mr. & Mrs. Park have 40 days prior notice to purchase the house.
If you have any question concerning this matter, feel free to contact me at (206) 363-2218 at any time. Thank You.
(Errors in original.) Because Mr. Park was in Korea for much of late 1992 and early 1993, the Parks did not proceed with the purchase until 1994.
On February 9, 1994, Danette Johnson, who is an escrow processor, wrote the Heads to introduce herself as the person handling the escrow for their transaction with the Parks. In her letter, Johnson asked the Heads to complete and return a "Seller's Information Form" as soon as possible so the transaction could be completed before the scheduled closing date. The letter did not mention the closing date, but it instructed the Heads to contact Johnson if they had any questions. Otherwise, she informed them she would contact them a few days before closing to arrange for them to sign the documents.
When Johnson had not received the seller's information form from the Heads within two weeks of sending her letter, she contacted the Parks' mortgage broker, David Park, *fn2 and asked him to contact the Heads. She received the seller's information form signed by the Heads shortly thereafter.
Johnson prepared the closing documents with the understanding that the date of closing was to be April 25, 1994. David Park, the mortgage broker, submitted the Parks' loan ...