Sheridan v. Crown Capital Corp.

The developer could not use an inspection clause to terminate a commercial real estate sales agreement because it did not perform an inspection to determine if development of the property was feasible.

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This is an appeal from cross-motions for summary judgment in an interpleader action brought by Christopher B. Manos, Jr. P. C., escrow agent, holding $25,000 in earnest money for the purchase of property, between Paul Sheridan, seller, and Crown Capital Corporation, purchaser, because Crown refused to go through with the purchase of 2.26 acres of commercial real estate and buildings in Carrollton, Carroll County, Georgia for $1,075,000.00. Crown, the author of the contract, contended that it had the right to a free look at the property under the agreement; had the right “to determine if the Property is satisfactory for the Purchaser’s intended use” by inspection of the property; and had the right to terminate for failure to secure an anchor tenant, making the property development unsatisfactory. Sheridan contended that the inspection provision limited the satisfactory intended use to conditions set forth in the clause for inspection and for the commercial use of the property and did not include economical feasibility for any reason. The trial court erroneously granted summary judgment to Crown and against Sheridan. We reverse.

The property was zoned commercial, containing commercial buildings on the 2.26 acres. On August 24, 1998, the agreement prepared by Crown’s representatives was executed by Crown’s president and presented to Sheridan as an offer to purchase the property as zoned. On September 4, 1998, Sheridan accepted the offer and executed the agreement. Crown deposited $25,000 as earnest money with Christopher B. Manos, Jr. as escrow agent. Crown had 120 days from the acceptance to inspect the property and to determine if it was satisfactory to its intended use under the agreement. After the 121st day, Crown had to deposit an additional $75,000 in earnest money, unless it had earlier given notice of termination after inspection if the property was not satisfactory to the purchaser’s intended use.

Sheridan v. Crown Capital Corp.

The developer could not use an inspection clause to terminate a commercial real estate sales agreement because it did not perform an inspection to determine if development of the property was feasible.

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