## Facts

- Robert C. Sechrest (seller) and George E. Safiol (buyer) signed a purchase-and-sale agreement on September 20, 1977 for a vacant lot in Wellesley, Massachusetts, on which Safiol planned to build a single-family home.
- Safiol paid Sechrest a $3,800 deposit (held by the broker and later paid into court).
- The agreement included a contingency clause (paragraph 31) making Safiol’s duty to buy conditional on his obtaining from the proper public authorities all permits and other approvals reasonably necessary for construction of a single-family residence on the lot by a stated deadline; if not obtained by that date, the buyer could terminate and receive a refund of payments.
- The original closing date was October 21, 1977, but at Safiol’s request the parties extended the performance date three times, ultimately to December 9, 1977, with the understanding that no further extensions would be granted.
- Safiol worked with an architect and paid for preliminary drawings, and he spoke with a builder and later with other potential builders after the first builder became unavailable.
- Safiol never finalized building plans, never selected a builder, and never submitted building plans to the Town of Wellesley.
- Safiol never applied for a building permit and did not seek any other municipal permits or approvals needed to build the contemplated single-family residence.
- On December 9, 1977, Safiol (through counsel) notified Sechrest that he was terminating under paragraph 31 because the required permits and approvals had not been obtained, and he demanded return of the $3,800 deposit.
- Sechrest refused to return the deposit and sued to retain it.
- The District Court found for Safiol, concluding that he had acted in good faith and made reasonable efforts, and ordered the deposit returned; the Appellate Division dismissed Sechrest’s report.
- The Supreme Judicial Court of Massachusetts granted review.

## Issues

1. Whether a buyer who benefits from a permit-and-approval contingency has an implied duty to use good-faith, reasonable efforts to obtain the permits and approvals.
2. Whether the evidence supported the trial court’s finding that Safiol made reasonable efforts where he never applied to any public authority for permits or approvals.
3. Whether Safiol could terminate under the contingency clause and recover his deposit based on the nonoccurrence of permits that he did not reasonably attempt to obtain.

## Decision

- The Supreme Judicial Court held that a permit-and-approval contingency is read with an implied obligation on the buyer to make reasonable efforts, in good faith, to obtain the required governmental permits and approvals.
- The court concluded there was insufficient evidence to support the trial court’s finding that Safiol made reasonable efforts, because he never submitted plans, never applied for a building permit, and never sought any other necessary town approvals.
- Preparatory steps such as consulting an architect, obtaining preliminary drawings, and speaking with builders were not enough to satisfy the buyer’s obligation where there was no attempt to secure action from the permitting authorities.
- The trial judge therefore erred in ruling that Safiol was entitled to terminate the agreement and recover the deposit under paragraph 31.
- The judgment for Safiol was reversed, and Sechrest was entitled to retain the $3,800 deposit.

## Legal Principles

- When a contract condition benefiting one party depends on an event that party can help bring about, the law implies a duty on that party to act in good faith and use reasonable efforts to cause the condition to occur.
- A party may not treat a condition precedent as a free exit when the party’s own lack of reasonable efforts caused the condition to fail.
- Language giving the buyer an option to cancel if permits are not obtained does not permit cancellation without meaningful attempts to obtain the permits; the option is limited by the implied duty of reasonable efforts.
- For a permit contingency tied to “proper public authorities,” reasonable efforts normally require timely applications or submissions to the relevant governmental bodies, not only private planning and conversations.

## Conclusion

Sechrest v. Safiol holds that a buyer may not cancel a real-estate purchase agreement under a permit-and-approval contingency and reclaim a deposit unless the buyer first makes good-faith, reasonable efforts to obtain the necessary governmental permits; because Safiol never applied for any permits or approvals, he could not invoke the contingency to recover his $3,800 deposit.


Sechrest v. Safiol, 419 N.E.2d 1384 (1981)