IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
CHICAGO TITLE COMPANY OF WASHINGTON, a Washington No. 84868-2-I Insurance Corporation, DIVISION ONE
Plaintiff/Interpleader, UNPUBLISHED OPINION
v.
BILLY J. SPINKS, as his separate estate,
Appellant,
and
MOLLY JONES,
Respondent.
MANN, J. — Billy Spinks entered into a residential purchase and sale agreement
(PSA) to sell a Bellingham home to Molly Jones. The PSA required Jones deposit
$15,000 in earnest money. The PSA also included a financing addendum making the
sale contingent on Jones obtaining a loan, and provided that Jones could terminate the
PSA before closing if, after a good-faith effort, financing was unavailable. After Jones No. 84868-2-I/2
failed to obtain financing before the closing date due to unresolved potential mold
issues in the home, Jones terminated the PSA.
Spinks appeals the trial court’s decision on summary judgment requiring the
remaining earnest money be returned to Jones. Because Jones made a good-faith
effort to obtain financing, and substantially complied with the PSA, we affirm. 1
I
Spinks and Jones executed a PSA on November 16, 2021, for a home located in
Bellingham, Washington (property). The PSA set the selling price as $640,000 and set
the closing date as December 22, 2021. The PSA required Jones to deposit a $15,000
earnest money payment with Chicago Title Company. The PSA provided that if Jones
failed, without legal excuse, to complete the purchase of the property, then the earnest
money “shall be forfeited to the Seller as the sole and exclusive remedy available to
Seller.”
The PSA included a financing addendum which provided for a refund of the
earnest money if financing was unavailable.
If Buyer has not waived the Financing Contingency, and is unable to obtain financing by Closing after a good faith effort then, on Buyer’s notice, this Agreement shall terminate. The Earnest Money shall be refunded to Buyer after lender confirms in writing (a) the date Buyer’s loan application for the Property was made, including a copy of the loan estimate that was provided to Buyer; (b) that Buyer possessed sufficient funds to close (e.g. down payment, closing costs, etc.); and (c) the reasons Buyer was unable to obtain financing by Closing.
1 This matter originated as a complaint for interpleader filed by Chicago Title Company of
Washington (Chicago Title) after Spinks and Jones disputed who had the right to the earnest money deposited under the PSA. Chicago Title is not a party to this appeal. Spinks and Jones appear before us pro se.
-2- No. 84868-2-I/3
Prior to executing the PSA, Jones obtained preapproval for a loan from Peoples
Bank. The preapproval letter stated that any subsequent loan commitment would be
subject to underwriter approval and contingent on several requirements including the
“satisfactory completion of all underwriting requirements and conditions.”
The PSA also included an inspection addendum. On November 22, 2021, Jones
hired BNB Home Inspections to inspect the property. The inspection revealed potential
mold in several areas of the interior of the home. The inspection did not include
detecting the actual presence of mold and specified that if a qualified opinion was
desired the appropriate services should be used.
Consistent with the inspection addendum, on November 24, 2021, Jones
submitted an Inspection Response for Form 35R (Form 35R) to Spinks. Jones asked
Spinks to have the rodent feces removed and have the “microbial growth and mold in
[the] basement treated and cleaned by a professional.” Jones also requested a
reduction in the purchase price to $630,000. Spinks rejected Jones’s request for
repairs, but offered to reduce the purchase price to $634,000. Jones agreed. Jones
then hired a professional cleaning service to clean the property.
In response to the Form 35R, on December 9, 2021, Peoples Bank notified
Jones that if the underwriter deemed the property to have health or safety issues, there
may be more required to approve the loan. That same day, Jones received a mortgage
loan commitment from Peoples Bank. The loan commitment was contingent upon the
lender receiving a letter from the home inspector stating that the items for repair,
including the potential mold, had been repaired. That same day Jones had BNB Home
Inspectors revisit the property. The inspector noted that the potential mold he had
-3- No. 84868-2-I/4
originally observed was still present. Two days later, on December 11, 2021, the lender
responded that the home inspector’s report did not satisfy their health and safety
concerns.
In response, on December 14, 2021, Jones hired a property restoration company
to inspect the property and prepare an estimate for repairs. The estimate came back at
nearly $15,000 for all repairs, about $9,000 of which was estimated for extensive
hazardous material remediation and water extraction and remediation. That same day,
Jones sent Spinks a notice of termination of the PSA and an authorization to disburse
earnest money.
Because Jones and Spinks each claimed they were entitled to the earnest
money, Chicago Title deposited the earnest money with the court and filed a complaint
for interpleader on February 2, 2022. On September 9, 2022, the trial court discharged
Chicago Title from its obligations and awarded its attorney fees and costs to be paid
from the earnest money deposit. Then, after cross motions for summary judgment, the
trial court ordered the remaining earnest money be returned to Jones. After
unsuccessfully seeking reconsideration, Spinks appeals.
II
Spinks contends the trial court erred in refunding the remaining earnest money to
Jones because Jones breached the PSA by failing, without “a legal reason,” to complete
the purchase. We disagree.
We review an order granting summary judgment de novo. Ebel v. Fairwood Park
II Homeowners’ Ass'n, 136 Wn. App. 787, 792, 150 P.3d 1163 (2007). Summary
judgment is proper only when there are no genuine issues of material fact and the
-4- No. 84868-2-I/5
moving party is entitled to judgment as a matter of law. Ebel, 136 Wn. App. at 792
(citing Tri-City Constr. Council, Inc. v. Westfall, 127 Wn. App. 669, 674, 112 P.3d 558
(2005)). We view all facts and reasonable inferences in the light most favorable to the
nonmoving party. Elcon Constr., Inc. v. E. Wash. Univ., 174 Wn.2d 157, 164, 273 P.3d
965 (2012).
A
Jones and Spinks agreed in the PSA financing addendum that the sale was
contingent on Jones obtaining a loan. The financing addendum provided:
If Buyer has not waived the Financing Contingency, and is unable to obtain financing by Closing after a good faith effort then, on Buyer’s notice, this Agreement shall terminate.
(Emphasis added). This provision allowed Jones to terminate the PSA before the
closing date.
The financing contingency is a condition precedent to Jones’s duty to perform
under the PSA. “A buyer has a duty to act in good faith to attempt to obtain third-party
financing when that is a condition of [their] duty to close.” Salvo v. Thatcher, 128 Wn.
App.
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IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
CHICAGO TITLE COMPANY OF WASHINGTON, a Washington No. 84868-2-I Insurance Corporation, DIVISION ONE
Plaintiff/Interpleader, UNPUBLISHED OPINION
v.
BILLY J. SPINKS, as his separate estate,
Appellant,
and
MOLLY JONES,
Respondent.
MANN, J. — Billy Spinks entered into a residential purchase and sale agreement
(PSA) to sell a Bellingham home to Molly Jones. The PSA required Jones deposit
$15,000 in earnest money. The PSA also included a financing addendum making the
sale contingent on Jones obtaining a loan, and provided that Jones could terminate the
PSA before closing if, after a good-faith effort, financing was unavailable. After Jones No. 84868-2-I/2
failed to obtain financing before the closing date due to unresolved potential mold
issues in the home, Jones terminated the PSA.
Spinks appeals the trial court’s decision on summary judgment requiring the
remaining earnest money be returned to Jones. Because Jones made a good-faith
effort to obtain financing, and substantially complied with the PSA, we affirm. 1
I
Spinks and Jones executed a PSA on November 16, 2021, for a home located in
Bellingham, Washington (property). The PSA set the selling price as $640,000 and set
the closing date as December 22, 2021. The PSA required Jones to deposit a $15,000
earnest money payment with Chicago Title Company. The PSA provided that if Jones
failed, without legal excuse, to complete the purchase of the property, then the earnest
money “shall be forfeited to the Seller as the sole and exclusive remedy available to
Seller.”
The PSA included a financing addendum which provided for a refund of the
earnest money if financing was unavailable.
If Buyer has not waived the Financing Contingency, and is unable to obtain financing by Closing after a good faith effort then, on Buyer’s notice, this Agreement shall terminate. The Earnest Money shall be refunded to Buyer after lender confirms in writing (a) the date Buyer’s loan application for the Property was made, including a copy of the loan estimate that was provided to Buyer; (b) that Buyer possessed sufficient funds to close (e.g. down payment, closing costs, etc.); and (c) the reasons Buyer was unable to obtain financing by Closing.
1 This matter originated as a complaint for interpleader filed by Chicago Title Company of
Washington (Chicago Title) after Spinks and Jones disputed who had the right to the earnest money deposited under the PSA. Chicago Title is not a party to this appeal. Spinks and Jones appear before us pro se.
-2- No. 84868-2-I/3
Prior to executing the PSA, Jones obtained preapproval for a loan from Peoples
Bank. The preapproval letter stated that any subsequent loan commitment would be
subject to underwriter approval and contingent on several requirements including the
“satisfactory completion of all underwriting requirements and conditions.”
The PSA also included an inspection addendum. On November 22, 2021, Jones
hired BNB Home Inspections to inspect the property. The inspection revealed potential
mold in several areas of the interior of the home. The inspection did not include
detecting the actual presence of mold and specified that if a qualified opinion was
desired the appropriate services should be used.
Consistent with the inspection addendum, on November 24, 2021, Jones
submitted an Inspection Response for Form 35R (Form 35R) to Spinks. Jones asked
Spinks to have the rodent feces removed and have the “microbial growth and mold in
[the] basement treated and cleaned by a professional.” Jones also requested a
reduction in the purchase price to $630,000. Spinks rejected Jones’s request for
repairs, but offered to reduce the purchase price to $634,000. Jones agreed. Jones
then hired a professional cleaning service to clean the property.
In response to the Form 35R, on December 9, 2021, Peoples Bank notified
Jones that if the underwriter deemed the property to have health or safety issues, there
may be more required to approve the loan. That same day, Jones received a mortgage
loan commitment from Peoples Bank. The loan commitment was contingent upon the
lender receiving a letter from the home inspector stating that the items for repair,
including the potential mold, had been repaired. That same day Jones had BNB Home
Inspectors revisit the property. The inspector noted that the potential mold he had
-3- No. 84868-2-I/4
originally observed was still present. Two days later, on December 11, 2021, the lender
responded that the home inspector’s report did not satisfy their health and safety
concerns.
In response, on December 14, 2021, Jones hired a property restoration company
to inspect the property and prepare an estimate for repairs. The estimate came back at
nearly $15,000 for all repairs, about $9,000 of which was estimated for extensive
hazardous material remediation and water extraction and remediation. That same day,
Jones sent Spinks a notice of termination of the PSA and an authorization to disburse
earnest money.
Because Jones and Spinks each claimed they were entitled to the earnest
money, Chicago Title deposited the earnest money with the court and filed a complaint
for interpleader on February 2, 2022. On September 9, 2022, the trial court discharged
Chicago Title from its obligations and awarded its attorney fees and costs to be paid
from the earnest money deposit. Then, after cross motions for summary judgment, the
trial court ordered the remaining earnest money be returned to Jones. After
unsuccessfully seeking reconsideration, Spinks appeals.
II
Spinks contends the trial court erred in refunding the remaining earnest money to
Jones because Jones breached the PSA by failing, without “a legal reason,” to complete
the purchase. We disagree.
We review an order granting summary judgment de novo. Ebel v. Fairwood Park
II Homeowners’ Ass'n, 136 Wn. App. 787, 792, 150 P.3d 1163 (2007). Summary
judgment is proper only when there are no genuine issues of material fact and the
-4- No. 84868-2-I/5
moving party is entitled to judgment as a matter of law. Ebel, 136 Wn. App. at 792
(citing Tri-City Constr. Council, Inc. v. Westfall, 127 Wn. App. 669, 674, 112 P.3d 558
(2005)). We view all facts and reasonable inferences in the light most favorable to the
nonmoving party. Elcon Constr., Inc. v. E. Wash. Univ., 174 Wn.2d 157, 164, 273 P.3d
965 (2012).
A
Jones and Spinks agreed in the PSA financing addendum that the sale was
contingent on Jones obtaining a loan. The financing addendum provided:
If Buyer has not waived the Financing Contingency, and is unable to obtain financing by Closing after a good faith effort then, on Buyer’s notice, this Agreement shall terminate.
(Emphasis added). This provision allowed Jones to terminate the PSA before the
closing date.
The financing contingency is a condition precedent to Jones’s duty to perform
under the PSA. “A buyer has a duty to act in good faith to attempt to obtain third-party
financing when that is a condition of [their] duty to close.” Salvo v. Thatcher, 128 Wn.
App. 579, 585, 116 P.3d 1019 (2005). In Salvo, the buyer acted in good faith to obtain
financing by timely applying for a loan and continuing to pursue loan approval but was
unable to do so by the closing date; thus, the condition precedent of his duty to close
was unfulfilled. 128 Wn. App. at 586. The court concluded that because Salvo
attempted to obtain financing in good faith, his failure to close was excused. Salvo, 128
Wn. App. at 586.
Here, it is undisputed that Jones did not waive the financing contingency. Jones
obtained loan preapproval before the PSA was signed. After signing the PSA, Jones
-5- No. 84868-2-I/6
received a mortgage loan estimate from the lender. Following the inspection and
discovery of potential mold, the loan was conditionally approved requiring a letter from
the inspector stating that the potential mold was treated by the appropriate
professionals. Jones continued to pursue financing by hiring professional cleaners and
seeking an estimate for mold remediation work. There is no evidence in the record to
suggest that Jones breached the duty of good faith. Further, Spinks cites no authority
suggesting that the duty to pursue financing in good faith obligated Jones to spend
almost $15,000 to make repairs to Spinks’s property before she could obtain a loan.
There is thus no genuine issue of material fact as to whether Jones acted in good faith
to obtain financing and the condition precedent to her duty to close was unfulfilled.
B
Spinks argues that Jones cannot rely on the financing addendum because the
lender did not send a letter denying the loan and explaining why. 2 The financing
addendum states:
The Earnest Money shall be refunded to Buyer after lender confirms in writing (a) the date Buyer’s loan application for the Property was made, including a copy of the loan estimate that was provided to Buyer; (b) that Buyer possessed sufficient funds to close (e.g. down payment, closing costs, etc.); and (c) the reasons Buyer was unable to obtain financing by Closing. If Seller terminates this Agreement, the Earnest Money shall be refunded without need for such confirmation.
2 Spinks also argues that under the Fair Credit Reporting Act, 15 U.S.C. § 1681m, it was
mandatory that the lender provide a specific writing, a loan denial letter. When a creditor takes “adverse action” against a consumer such as denying a credit application, there are certain notice and disclosure requirements such as providing the consumer with the reason for denial. 15 U.S.C. §§ 1681a(k), 1681m, 1691(d)(6). Here, the lender did not commence an adverse action against Jones. Instead, the underwriter put a condition on the loan approval based on health and safety issues related to the state of the property—obtaining a letter from the inspector stating items from Form 35R were properly completed.
-6- No. 84868-2-I/7
The provision required the lender to confirm certain facts in writing before the earnest
money is refunded to Jones. “The general rule with respect to compliance with the
terms of a bilateral contract is not strict compliance, but substantial compliance.” DC
Farms, LLC v. Conagra Foods Lamb Weston, Inc., 179 Wn. App. 205, 220, 317 P.3d
543 (2014) (citing 15 RICHARD A. LORD & SAMUEL W ILLISTON, A TREATISE ON THE LAW OF
CONTRACTS § 44:52, at 217 (4th ed.2000)).
Here, the lender confirmed Jones’s preapproval and loan estimate in writing.
The lender also confirmed in writing the mortgage loan commitment which conditioned
approval upon receipt of an inspector’s letter that the potential mold was treated by a
professional. It is undisputed that the potential mold was not treated or remediated by
Spinks. It is also undisputed that there is no letter from the inspector confirming the
items in Form 35R were acceptably completed. While the lender did not send a formal
letter of denial, there is no genuine issue of material fact that the lender notified Jones,
in writing, that the loan would not be approved before the scheduled closing date
without the required remediation.
Jones made a good-faith effort to obtain financing as required by the financing
agreement and substantially complied with the requirements for establishing financing
was unavailable. The trial court did not err in ordering the remaining earnest money be
returned to Jones. 3
We affirm.
3 Spinks requests costs incurred on appeal. Because Spinks is not the substantially prevailing party, he is not entitled to recover costs on appeal. RAP 14.2.
-7- No. 84868-2-I/8
WE CONCUR:
-8-