A man can keep the $25,000 deposit paid to him after a real estate sale did not through, the Indiana Court of Appeals ruled Wednesday. The contract the parties entered into was enforceable and did not specify financing as part of the sale.
Larry Jernas on behalf of R&R Horse Haven entered into an agreement with Kevin Gumz to buy real estate in North Judson. He paid $25,000 in earnest money to Gumz, but the agreement did not go through and Gumz did not return the $25,000. Jernas filed suit wanting his deposit back, but Gumz said Jernas broke the terms of the contract when he did not purchase the property. Jernas claimed Gumz changed the purchase price of the property from $500,000 to $800,000 and that’s why he couldn’t get financing to complete the purchase.
There is also debate as to whether the agreement was an enforceable contract for many reasons, including that some of it was written and some not; whether the representative from R&R was authorized to sign the contract; whether the contract was definitive; whether it was properly executed.
The COA found the two did enter into an enforceable contract. It met all of the definitions for a contract, including a meeting of the minds and exchange of terms. The representative was authorized to sign and it didn’t matter that some of it was written.
The COA also said the statute of frauds allowed Gumz to enforce the contract. Gumz brought his counterclaim against R&R and the agreement was a valid one, signed by a valid R&R representative.
The COA also ruled Gumz can keep his earnest money deposit. R&R claimed it was due its money back because it could not get financing from the bank for the money, but a representative from R&R told the court it did not need financing, and in the contract the amount of the financing is listed as zero. Because of that, the contract was not contingent on financing, and Gumz can keep the deposit.
The case is Larry J. Jernas and R&R Horse Haven v. Kevin J. Gumz, 75A03-1511-CC-1903