## Facts

- Pannone (plaintiff) negotiated to purchase a home owned by Grandmaison (defendant).
- The parties entered into a purchase agreement that required Pannone to make an $18,000 deposit.
- The agreement made Pannone’s offer contingent on the “Purchaser’s approval” of the results of three inspections: a general home inspection, a termite inspection, and a radon gas inspection.
- Pannone had a heightened concern about radon because of prior exposure to radiation while serving in the United States Air Force during the Korean War.
- The radon gas inspection showed radon was present in the home, but not at an abnormal level for homes in Connecticut.
- Despite the radon levels being typical for the area, Pannone found any radon presence unacceptable and notified Grandmaison that he was canceling the sale under the inspection contingency.
- Grandmaison refused to return the $18,000 deposit after Pannone canceled.
- Pannone sued in Connecticut Superior Court seeking return of the deposit plus interest.

## Issues

1. Whether a real estate contract contingency requiring the “Purchaser’s approval” of inspection results permits the purchaser to cancel the agreement when the purchaser, acting honestly, finds the results unacceptable.
2. Whether the purchaser acts in good faith when rejecting inspection results based on a personal health-related concern (radon sensitivity), even though the radon level is not abnormal for the region.
3. Whether, under the contract’s inspection-approval language, the seller may retain the buyer’s deposit after the buyer disapproves the inspection results and cancels the transaction.

## Decision

- The court held that the inspection contingency conditioned on the “Purchaser’s approval” required the purchaser to exercise that approval decision in good faith.
- The court found that Pannone’s rejection of the radon results was based on his genuine concern about radon due to his prior radiation exposure, and was not shown to be dishonest or merely a pretext to exit the deal for unrelated reasons.
- Because Pannone exercised the approval contingency in good faith, he was entitled to cancel the purchase agreement under its terms.
- The court ordered that Pannone was entitled to the return of the $18,000 deposit (and sought interest) rather than allowing Grandmaison to keep it.

## Legal Principles

- A contract provision conditioning performance on one party’s “approval” or “satisfaction” does not allow arbitrary conduct; the decision must be made honestly and in good faith.
- When an agreement makes a buyer’s duty to close contingent on the buyer’s approval of inspection results, the buyer may cancel if the buyer in fact (and honestly) disapproves of the results within the scope of the contingency.
- A buyer’s health or safety concerns can be a legitimate basis for disapproval under an inspection-approval clause, even when the inspected condition is within typical regional levels, so long as the buyer’s stated concern is sincere.
- A seller generally may not retain a buyer’s deposit where the buyer properly exercises a contractual contingency in good faith and cancels the transaction under that contingency.

## Conclusion

In *Pannone v. Grandmaison*, the court treated the contract’s “Purchaser’s approval” inspection contingency as a good-faith satisfaction condition and concluded that the buyer honestly found the presence of radon unacceptable given his personal sensitivity; accordingly, the buyer could cancel the sale under the contingency and recover the $18,000 deposit rather than forfeiting it to the seller.


Pannone v. Grandmaison, 1990 WL 265273 (1990)