From Our Readers
| Publication year | 1980 |
| Pages | 1893 |
1980, September, Pg. 1893. From our Readers
1893
The recent case of DeFeyter v. Riley, decided October 25, 1979, by the Colorado Court of Appeals, reported in The Colorado Lawyer on page 2462 (December 1979) held that the commonly used form approved by the Colorado Real Estate Commission and widely printed and distributed as Form S.C. 20-10-75, Receipt and Option Contract (Residential) (currently numbered S.C. 20-12-77) was not an option at all, but a contract which was binding on the purchaser. Similar Commission-approved forms are: S.C. 22-12-77 (Commercial); S.C. 24-12-77 (Farm and Ranch); S.C. 26-12-77 (Vacant Land); S.C. 50-12-77 (Installment Land Contract). This seems to be a typical situation where "the hard case makes bad law."
Lawyers, for a great many years, have proceeded on the premise that no matter what a buyer agreed to do in a prior portion of the contract, if the only penalty upon the buyer was the forfeiture of his earnest money deposit, then the buyer had an option and was not bound to perform the contract and to complete the purchase. So widespread was this assumption that the Real Estate Commission, in promulgating approved forms for use by realtors, carefully and meticulously provided two forms: Receipt and Option Forms and Specific Performance Forms. The latter was designed to bind both seller and buyer. Each even-numbered form above (except the last one) is matched by an odd numbered one; e.g., 21-12-77, Specific Performance Contract (Residential).
The court did not actually grant specific performance in the above case, but remanded it for retrial. The court, however, said, "... [The contract] imposes an affirmative obligation on Plaintiffs [Buyer] to purchase the property."
When a buyer definitely does not want to assume an affirmative obligation to purchase, it is necessary for his attorney to modify the Commision-approved form to make clear that it is truly an option, and failure of the buyer to perform penalizes him only to the extent that he loses the amount of his earnest money deposit if he does not complete the deal.
The official publication of the Colorado Real Estate Commission, March 1980 Real Estate New, p. 3, suggests that the following be typed in the above listed forms:
It is the intent of the parties, notwithstanding the use of the words "contract,"...
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