Zaman v. Felton

Facts

Felton (the defendant) was an experienced buyer and seller of real estate. She took out a construction mortgage to finance the building of a residence on one of the properties she had purchased but later defaulted on it in the amount of $105,000. To prevent foreclosure, the plaintiff met with Zaman (the plaintiff) to discuss selling the property. The plaintiff and defendant agreed that the plaintiff would purchase the property for $200,000, the defendant would remain on the property as a tenant, and the defendant would receive an option to buy back the property. The parties reduced their agreement to a writing using a standard form the plaintiff used in his real estate office. The form identified the plaintiff as “buyer” and the defendant as “seller,” had a signed witness, contained the location of the property, and established the sale price as $200,000; however, the agreement did not contain the buy-back option or reference to the defendant’s lease. The parties first signed a separate writing containing the lease which stated that rent was to be $1,000/month. On a later date, they signed the deed, the affidavit of title, and the buy-back option, which stated that the defendant would have the option to buy back the property within 3 months for $237,000. The plaintiff then paid the defendant $85,960, the amount remaining of the $200,000 purchase price after the plaintiff paid off the existing mortgage and other outstanding obligations on the property. After closing, the plaintiff paid off the construction mortgage, and the defendant attempted to rescind the agreement by sending a check to the plaintiff for $85,983.65 (which he refused to cash), did not pay rent, and did not exercise her option to buy the property.