## Facts

- Thomas K. Barber planned to relocate with his family from Toronto, Canada, to Connecticut.
- On April 19, 1994, Barber and his wife viewed residential property in Greenwich, Connecticut owned by Robert D. Jacobs and Linda S. Jacobs.
- On May 25, 1994, Barber offered to buy the property and requested a wetlands inspection.
- The parties executed a written purchase-and-sale contract with a closing date of August 8, 1994.
- The contract included a mortgage contingency clause making the sale conditional on Barber obtaining specified mortgage financing.
- Barber paid a 10% deposit of $327,000, which was held in escrow by Irwin K. Liu, the sellers’ attorney.
- Barber applied for a mortgage at Putnam Trust Company of Greenwich; the bank initially approved the loan in principle but did not issue a formal written mortgage commitment.
- Attorney Robert Hartch, who represented both Barber and the bank, reviewed the inland wetlands file and found that a prior owner had filled wetlands on the property in violation of agency regulations.
- Hartch informed Barber and the bank that the wetlands issue would be a serious obstacle to financing.
- After learning of the wetlands problem, the bank reversed course and denied the mortgage application.
- Hartch requested that the sellers authorize release of the escrowed deposit back to Barber; the Jacobses refused.
- Barber filed an interpleader action seeking a court determination of the parties’ rights to the escrowed deposit.
- After a court trial, the trial court found that Barber made reasonable efforts to obtain the mortgage required by the contingency clause and entered judgment awarding Barber the deposit.
- The Jacobses appealed to the Appellate Court of Connecticut.

## Issues

1. Whether a mortgage contingency clause requiring the buyer to use reasonable efforts to obtain financing requires the buyer to apply to multiple lenders when evidence shows further applications would likely be futile.
2. Whether the trial court clearly erred in finding that Barber satisfied the contract’s reasonable-efforts requirement and was entitled to return of the escrow deposit after the mortgage was denied due to property-related wetlands violations.

## Decision

- The Appellate Court of Connecticut affirmed the trial court’s judgment for Barber.
- The court held that the trial court did not clearly err in finding Barber used reasonable efforts to obtain the required mortgage financing.
- The court rejected the sellers’ argument that Barber automatically failed the contingency because he applied to only one bank.
- Given the evidence that the loan denial resulted from the property’s wetlands regulatory problem and testimony indicating other institutional lenders would likely respond the same way, the court agreed that additional mortgage applications were not required.
- Because the mortgage contingency failed despite Barber’s reasonable efforts, Barber was entitled to the return of the $327,000 deposit held in escrow.

## Legal Principles

- A mortgage contingency clause generally imposes on the buyer a duty of good-faith, reasonable diligence in seeking the specified financing.
- Whether a buyer’s conduct satisfies a “reasonable efforts” requirement is a question of fact for the trial court.
- Contract law does not require a party to perform useless acts; a buyer is not required to make additional loan applications when credible evidence shows doing so would likely be unsuccessful for the same reason.
- On appeal, factual findings supporting a trial court’s conclusion on reasonable efforts are reviewed under the clearly erroneous standard, and the appellate court will not reweigh credibility determinations made at trial.

## Conclusion

The Connecticut Appellate Court affirmed a judgment awarding Barber the return of his $327,000 escrow deposit because the mortgage contingency failed after a lender denied financing due to wetlands violations affecting the property, and Barber’s single mortgage application satisfied the contract’s reasonable-efforts requirement where further applications would likely have been futile.


Barber v. Jacobs, 753 A.2d 430 (2000)