A buyer in Havre, Montana is purchasing a rural property and the purchase agreement includes a clause stating that the seller will convey the property via a warranty deed 'free and clear of all encumbrances.' At closing, the title search reveals an outstanding deed of trust from the seller's existing lender. The seller insists this is the lender's problem to resolve and refuses to pay off the loan before closing. Under Montana law, what is the buyer's most appropriate remedy?
Correct Answer
B) The buyer may refuse to close and sue the seller for specific performance or damages based on the seller's breach of the purchase agreement
The seller's failure to deliver title free and clear of encumbrances as promised in the purchase agreement constitutes a material breach of contract. Under Montana law, the buyer is entitled to refuse to close and pursue remedies including specific performance (compelling the seller to pay off the deed of trust and deliver clear title) or damages. The seller cannot unilaterally change the terms of the purchase agreement by refusing to satisfy the existing deed of trust as required by the contract.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An assignment of contract transfers one party's rights and obligations under a contract to a third party called the assignee. The original party, known as the assignor, transfers their contractual position to someone who was not originally part of the agreement.
A bilateral contract is an agreement in which both parties exchange promises and are both obligated to perform, while a unilateral contract is one in which only one party makes a promise and the other party is not obligated to act.
A breach of contract occurs when one party fails to perform their obligations under the contract without a legal excuse. The non-breaching party is entitled to legal remedies including damages, specific performance, or contract rescission.
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