## Facts

- The Louisiana Real Estate Commission (LREC) held a $12,500 deposit connected to a residential real estate transaction and, to bring all claimants before one court, filed a concursus proceeding under Louisiana law.
- Dr. Brett Butler and his wife (the Butlers) prepared a written contract to purchase Dr. Edward Crocker’s home (the Crockers).
- The contract stated that the sale was contingent on the Butlers obtaining a loan in a sum “to be determined” at an interest rate of 8.5%.
- The contract also recorded the Butlers’ representation that they had sufficient funds to complete the purchase, including funds needed for the transaction.
- The Crockers accepted the Butlers’ offer, and the Butlers paid $12,500 toward the purchase price as a deposit/down payment.
- After acceptance, the Butlers applied to a bank for a loan equal to 90% of the property’s value, to be secured by a mortgage on the property.
- The bank denied the loan application.
- The Butlers then withdrew their offer and sought return of the $12,500, contending that the purchase agreement was void because the parties allegedly misunderstood (or never agreed on) the amount the Butlers would finance.
- The Crockers refused to refund the deposit and claimed they were entitled to keep it due to the Butlers’ withdrawal.
- The trial court ruled for the Crockers, awarding them the $12,500 deposit. The Butlers appealed.

## Issues

1. Whether the purchase contract was void for lack of consent or mutual misunderstanding because the financing amount was stated as “to be determined.”
2. Whether the Butlers proved the financing contingency failed so as to excuse performance and require return of the deposit.
3. In the LREC concursus proceeding, whether the Crockers or the Butlers were entitled to the $12,500 being held.

## Decision

- The Louisiana court of appeal affirmed the trial court’s judgment awarding the $12,500 deposit to the Crockers.
- The court rejected the Butlers’ attempt to invalidate the contract based on the financing term’s unspecified loan amount, concluding the agreement was not void on that basis.
- The court treated the financing clause as written—requiring financing at the stated interest rate—and placed the burden on the Butlers, as the party invoking the condition, to show the suspensive condition did not occur.
- The Butlers’ single loan denial on a 90% financing request did not establish that they could not obtain financing consistent with the contract’s terms.
- Because the Butlers did not carry their burden to show the contingency failed as defined by the contract they drafted, the Crockers were entitled to retain the deposit.

## Legal Principles

- A concursus proceeding allows a stakeholder holding disputed funds to join all claimants in a single action so the court can determine entitlement to the funds.
- A real estate financing contingency is enforced according to its text; it does not incorporate unstated assumptions about the amount or structure of financing.
- The party relying on the failure of a suspensive condition bears the burden of proving the condition did not occur under the contract’s terms.
- Courts do not rewrite contracts to add terms the parties did not include; an asserted “misunderstanding” will not void an accepted agreement when the written terms supply the operative condition.
- Ambiguities in a contract prepared by one party are construed against that drafting party when the drafter later seeks to use the ambiguity to escape performance.

## Conclusion

Louisiana Real Estate Commission v. Butler held that the Butlers could not avoid their accepted purchase contract by claiming a mutual misunderstanding about the loan amount where the contract they drafted made financing contingent on a loan “to be determined” at 8.5% interest. Because the Butlers did not prove the contingency failed as written—especially in light of only one denial for a 90% loan—the court affirmed the award of the $12,500 deposit to the Crockers in the concursus proceeding.


Louisiana Real Estate Commission v. Butler, 899 So.2d 151 (2005)