## Facts

- NW, LLC (NW) owned property in Tacoma, Washington, and sought to subdivide it into 23 residential lots for sale and development.
- NW applied to the City of Tacoma for approval of a subdivision plat; at the time of contracting, final plat approval had not yet been obtained.
- O’Connor & Associates, LLC (O’Connor) entered into a purchase agreement with NW to buy the property/lots while the plat process was still pending.
- Addenda to the purchase agreement stated that the sale was “subject to” NW securing final plat approval from the City and included language indicating the plat would be approved before closing.
- The parties set closing dates for sales of various lots, but final plat approval was not obtained by those dates, so the scheduled closings did not occur.
- O’Connor assigned its interest in two lots to United Builders of Washington, Inc. (United).
- NW continued pursuing plat approval but ran out of funds needed to complete the platting process.
- NW offered to sell the property to O’Connor “as is,” with O’Connor to complete the plat approval process; O’Connor declined.
- NW then sold the property to Tacoma Northpark, LLC (Tacoma Northpark), which purchased without knowledge of the prior NW–O’Connor agreement.
- Tacoma Northpark filed a quiet title action against O’Connor, United, NW, and other parties with claimed interests (including lenders and a title insurer).
- O’Connor and United counterclaimed against Tacoma Northpark and sued NW for breach of contract, alleging NW’s failure to obtain final plat approval (and the later sale to Tacoma Northpark) violated the purchase agreement.
- The trial court found NW had pursued plat approval in good faith and concluded NW did not breach the purchase agreement; O’Connor appealed.

## Issues

1. Whether contract language making the sale “subject to” NW obtaining final plat approval created an enforceable promise by NW to obtain approval, or instead created a condition precedent to NW’s duty to convey.
2. If final plat approval was a condition precedent, whether NW’s good-faith efforts to obtain approval excused the failure of the condition so that NW’s nonperformance was not a breach.

## Decision

- The Washington Court of Appeals, Division Two, affirmed the trial court (Aug. 24, 2004).
- The court held that final plat approval was a condition precedent to NW’s duty to perform under the purchase agreement.
- The court upheld the trial court’s finding that NW acted in good faith in attempting to obtain final plat approval.
- Because the condition precedent did not occur despite NW’s good-faith efforts, NW was excused from performance and did not breach the purchase agreement.
- As a result, O’Connor’s and United’s breach-of-contract theory failed, supporting Tacoma Northpark’s quiet title position.

## Legal Principles

- Contract terms stating a transaction is “subject to” governmental approval are generally read as creating a condition precedent to a party’s duty to perform, rather than an unconditional promise that approval will be obtained.
- A condition precedent is an event that must occur before a contractual duty becomes due; if the condition does not occur, the duty does not arise unless the nonoccurrence is attributable to the party seeking to avoid performance.
- When performance depends on third-party or governmental action, the law may require the party responsible for pursuing that action to use good-faith (or reasonable) efforts to try to bring about the condition.
- If the condition fails despite good-faith efforts, nonperformance due to the nonoccurrence of the condition is excused and does not, by itself, establish breach.

## Conclusion

Tacoma Northpark, LLC v. NW, LLC holds that a land-sale agreement stating the sale is “subject to” final plat approval makes that approval a condition precedent to the seller’s duty to convey. Because NW pursued final plat approval in good faith but could not complete the process after running out of funds, the condition did not occur and NW’s performance was excused; therefore, NW did not breach its agreement with O’Connor, and Tacoma Northpark’s title was not defeated by the earlier unclosed contract.


Tacoma Northpark, LLC v. NW, LLC, 96 P.3d 454 (2004)