## Facts

- William R. Kelley, Jr. entered a standard Utah Earnest Money Sales Agreement to buy residential property in Park City, Utah, and paid $10,000 earnest money.
- The agreement required the seller to provide good, marketable title evidenced by a current title insurance policy, subject to specified exceptions.
- The agreement also stated that if title insurance was unobtainable due to title defects, the buyer could either waive defects or terminate and recover the earnest money; it included a “time is of the essence” clause.
- A handwritten term stated the property was sold “as is, without warranty.”
- After contracting, a boundary dispute with adjacent owners emerged, and the seller could not provide insurable, undisputed title by the scheduled closing date.
- Kelley repeatedly agreed to extend closing while the seller attempted to resolve the dispute and took steps to marshal funds to complete the purchase.
- Kelley ultimately tendered the full purchase price, but the seller refused to close and instead offered to return the earnest money.
- Kelley sued seeking declaratory relief and specific performance (and initially damages and price abatement, later resolved), and the trial court ordered conveyance.
- On appeal, Leucadia Financial Corporation was substituted for the original seller and challenged the specific-performance decree; the intermediate appellate court reversed.

## Issues

1. Whether the standard Utah Earnest Money Sales Agreement limits the buyer’s remedies to termination and refund when the seller cannot provide marketable, insurable title, thereby barring specific performance.
2. Whether the “as is, without warranty” clause affects the seller’s obligation to convey marketable, insurable title.
3. Whether the buyer’s tender and readiness to perform were sufficient to support specific performance, including whether formal tender was excused by the seller’s refusal to close.

## Decision

- The Utah Supreme Court reversed the court of appeals and reinstated the trial court’s order granting specific performance to the buyer.
- The court held the standard form’s termination/refund language did not clearly make those remedies exclusive and did not bar specific performance for the seller’s breach.
- The court concluded the “as is” clause addressed property condition and did not negate the contractual duty to deliver marketable title supported by title insurance.
- The court determined the buyer adequately tendered or was excused from further formal tender because the seller’s refusal made additional tender futile.

## Legal Principles

- Contract provisions limiting remedies must be clear and unequivocal to displace otherwise available legal and equitable remedies.
- Permissive language granting a right to terminate and receive a refund in the event of title defects does not, without exclusivity language, eliminate the remedy of specific performance for a seller’s breach.
- Specific performance is generally available for real estate contracts because land is treated as unique and damages may be inadequate.
- An “as is” clause concerning the condition of property does not, absent clear language, waive or reduce the seller’s separate obligation to convey marketable title.
- A buyer seeking specific performance must be ready, willing, and able to perform; formal tender may be excused when the seller’s repudiation or refusal to close would make tender futile.

## Conclusion

The Utah Supreme Court held that the standard Utah earnest money sales agreement did not restrict the buyer to rescission and refund when the seller failed to deliver marketable, insurable title, and it affirmed the availability of specific performance where the buyer was prepared to perform and the seller refused to convey.


Kelley v. Leucadia Fin. Corp., 846 P.2d 1238 (Utah 1992)