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06/18/87 Raj P. Thakral Et Al., v. Raymond Mattran Et Al.

June 18, 1987





509 N.E.2d 772, 156 Ill. App. 3d 849, 109 Ill. Dec. 111 1987.IL.846

Appeal from the Circuit Court of Du Page County; the Hon. Fredrick Henzi, Judge, presiding.


JUSTICE DUNN delivered the opinion of the court. INGLIS and NASH, JJ., concur.


This appeal arises from a dispute over earnest money deposited pursuant to a real estate sales contract that failed to be consummated. After a bench trial, the court ruled that the sellers, defendants Raymond and Julia Mattran, were entitled to the earnest money. We affirm.

On August 13, 1985, plaintiffs, Raj and Sudha Thakral, entered into a contract with defendants to purchase a two-flat building in Lombard for $131,000. Plaintiffs deposited $5,000 in earnest money with the listing broker. The financing condition clause of the contract provided in pertinent part as follows:

"This contract is subject to the condition that on or before Sept. 30, 1985, the Buyer shall secure, or there shall be made available to the Buyer, a written commitment for a loan to be secured by a mortgage or trust deed on the property in the amount of $119,000, or such lesser sum as Buyer accepts, with initial interest not to exceed 11.5% per annum, said loan to be amortized over a period of 30 years with a loan service charge not to exceed 4%, . . .. (If the loan is to be other than a variable-rate mortgage, fill in the blank space immediately following, stating the type of loan to be acquired: F.H.A. 203 K Fixed Rate) If after the Buyer has submitted a true loan application and otherwise made every reasonable effort to procure a loan commitment from any source made available to him and has been unable to do so, and after serving written notice thereof upon the Seller or his agent within the time specified herein for securing such commitment, then this Contract shall become null and void, and all monies paid by the Buyer hereunder shall be refunded; . . .. IN THE EVENT THE BUYER DOES NOT SERVE NOTICE OF FAILURE TO PROCURE SAID LOAN COMMITMENT UPON SELLER AS HEREIN PROVIDED, THEN THIS CONTRACT SHALL CONTINUE IN FULL FORCE AND EFFECT WITHOUT ANY LOAN CONTINGENCIES."

On November 1, 1985, plaintiffs filed a complaint alleging that defendants had breached the contract by refusing to return the earnest money after being notified that plaintiffs were unable to secure financing. Defendants responded that plaintiffs were not entitled to the earnest money because plaintiffs had failed to make every reasonable effort to obtain a mortgage and, alternatively, had failed to provide timely written notice of their inability to obtain a loan commitment. The parties agreed to file a written stipulation of facts and proceed to a hearing thereon after which judgment would be entered. On April 30, 1986, the parties presented a written "Stipulation of Facts" to the court. The following provisions are pertinent to the Disposition of this appeal:

"4. On September 4, 1985, MATTRANS learned that THAKRALS had not yet made a mortgage application. MATTRANS' Attorney mailed to THAKRALS' Attorney a letter (advising plaintiffs that defendants intended to enforce the terms of the contract if plaintiffs failed to make a loan application as provided in the contract).

5. On or about September 7, 1985, THAKRALS applied for a conventional 12% loan with Hinsdale Federal Savings and Loan Association.

6. By September 30, 1985, THAKRALS' financing had not been approved, and THAKRALS caused to be delivered to MATTRANS a signed request for extension of the time to obtain loan commitment. MATTRANS agreed to said request by signing the extension on September 30, 1985, extending the time for obtaining a loan commitment to October 7, 1985.

7. On October 7, 1985, THAKRALS' Attorney telephoned MATTRANS' Attorney and advised him that a loan commitment had been issued by Hinsdale Federal, but that said commitment did not meet the terms of the Contract because it required THAKRALS to verify the sale of their present home. MATTRANS' Attorney stated that he was not sure whether such a commitment would entitle THAKRALS to terminate the Contract, but that, in any event, October 7 was the day by which written notice must be given to MATTRANS.

8. On October 7, 1985, THAKRALS' Attorney prepared and mailed a (confirming) letter dated October 7, 1985, (which) was received by ...

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