Billman v. Hensel
Court of Appeals of Indiana, Third District
391 N.E.2d 671 (1979)
The Hensels (plaintiffs) agreed to sell their home to the Billmans (defendant) for $54,000, subject to a clause conditioning the sale on the Billmans securing a mortgage of at least $35,000 within 30 days, backed by a $1,000 earnest-money deposit. The Billmans contacted only one bank, learned they needed more financing than expected, made no formal loan application, never told the Hensels they actually needed $5,000 from Mr. Billman's parents, and rejected the Hensels' offer to cut the price by $5,000 anyway. The Billmans then stopped payment on their earnest-money check. The Hensels sued for the deposit, and the trial court ruled the Billmans were not excused from performing and awarded the Hensels $1,000. The Billmans appealed.
Whether a subject-to-financing clause in a real estate contract imposes an implied obligation on the buyer to make a reasonable, good-faith effort to obtain the required financing.