Bob Stetson Quoted in Massachusetts Lawyers Weekly on Real Estate Deposit and Lis Pendens Decision
Bernkopf’s Bob Stetson was recently quoted in Massachusetts Lawyers Weekly discussing a Massachusetts Superior Court decision that raises a question that practitioners on both sides of real estate transactions encounter regularly: can a buyer’s failure to pay a purchase deposit constitute a material breach excusing the seller’s performance?
SRO Development LLC v. 46 Seagrass LLC: Alleged Deposit Non-Payment and Material Breach Claims
In SRO Development LLC v. 46 Seagrass LLC, the seller argued that the buyer’s alleged failure to pay a required deposit was a material breach of the purchase and sale agreement. The buyer disagreed, asserting that the seller was the party in breach for presenting a deed at closing that described less land than the parties had agreed to convey. The buyer brought claims for breach of contract, fraud, and violations of Chapter 93A, and filed a lis pendens against the property. The seller moved to dismiss and dissolve the lis pendens. The court denied the motion, finding that the disputed factual issues required resolution through discovery and trial.
Stetson noted that the decision highlights a question with legitimate arguments on both sides. Payment is generally considered a material term of any contract. But a deposit in a real estate transaction serves a specific and limited purpose—it defines the seller’s remedy if the buyer walks away, not the seller’s ability to perform.
“A seller who keeps performing through permitting, schedules a closing, and never raises the issue until litigation might have a very hard time claiming that non-payment was material enough to excuse its own obligations,” Stetson said.
The case also illustrates the practical power of the lis pendens statute. Once the lis pendens survived the motion, the property became effectively frozen for the life of the litigation. This shifted considerable leverage to the buyer regardless of how the underlying dispute ultimately resolves.
Read the full article in Massachusetts Lawyers Weekly here.
Reach out to Bob Stetson at rstetson@bernkopflegal.com or 617.790.3423.