Background
Bruce and Kim Doering owned Marshall Mountain, a 156-acre parcel in Missoula County, Montana, that included structures and improvements from a retired commercial ski operation. On February 22, 2021, the Doerings and buyers Spencer and Colette Melby executed a Buy-Sell Agreement for the property at a purchase price of $2,150,000, with a closing date of June 4, 2021. The Melbys approved a preliminary title commitment that disclosed three specific easements but no licenses or easements for public access.
When the Melbys could not obtain conventional financing, the parties executed an Amendment on May 3, 2021, converting the financing arrangement to a seller-financed contract for deed with specified terms: 20% down, 6% interest amortized over 25 years, and a 7-year balloon payment. The Amendment added the phrase: “Final contract for deed to be mutually agreed upon by both parties.” All other Buy-Sell terms—including a Condition of Title provision barring any new encumbrances after the title commitment was approved—were incorporated by reference.
During negotiation of the contract-for-deed document, the Doerings unilaterally expanded the draft from eleven to twenty-one pages, adding over twenty new terms, including a Public Access provision granting an easement over any part of the 156 acres to several cycling organizations. The Melbys objected that the proposed easement violated the Condition of Title provision and fundamentally changed the nature of what they had contracted to buy. The Doerings refused the Melbys’ proposed revisions and purported to terminate the Buy-Sell Agreement. The Melbys sued for breach of contract in the Fourth Judicial District Court, Missoula County. The district court granted partial summary judgment for the Melbys, finding the Buy-Sell and Amendment together constituted an enforceable contract that the Doerings breached by failing to close. The Doerings appealed.
The Court’s Holding
The Montana Supreme Court, in an opinion by Justice Beth Baker, affirmed the district court’s grant of partial summary judgment. Applying de novo review, the Court held that the Buy-Sell Agreement and Amendment together constituted a valid and enforceable contract. The Court analyzed whether an informal agreement is independently enforceable under a three-part framework: (1) whether it satisfies the essential elements of contract formation; (2) whether it contains all agreed-to material terms; and (3) whether the parties did not clearly and unambiguously require the execution of a formal superseding agreement as a condition precedent to contract formation. All three requirements were satisfied here.
The Court rejected the Doerings’ central argument that the phrase “Final contract for deed to be mutually agreed upon by both parties” created a condition precedent to the very formation of the contract. Read in the context of the entire agreement—which on its face declared itself “a legally binding contract” and bound the parties’ heirs, successors, and assigns—that phrase was, at most, a condition precedent to closing and full performance, not to the existence of a binding agreement. The Doerings’ failure to use the Buy-Sell’s two blank contingency placeholders to expressly make contract-for-deed approval a condition to the agreement’s binding effect reinforced this conclusion.
On the question of material terms, the Court followed Perl v. Grant and Olsen v. Johnston, holding that a contract for the sale of real property is enforceable when it identifies the parties, describes the property, specifies the purchase price or criteria for determining it, and reflects mutual assent. The Buy-Sell and Amendment satisfied all of those requirements. The additional terms the Doerings sought to inject into the contract-for-deed negotiations—including the Public Access easement—were subsidiary matters going to performance, not material terms whose absence defeated contract formation. The Court distinguished Dineen v. Sullivan, relied on by the Doerings, because that case addressed a written memorandum’s failure to capture prior oral agreements, a situation not present here.
Key Takeaways
- A “final contract for deed to be mutually agreed upon” clause, embedded in an amendment to an otherwise complete buy-sell agreement, is a condition precedent to performance (closing), not a condition precedent to contract formation—and therefore does not allow a seller to escape an already-binding agreement by refusing to agree on contract-for-deed terms.
- For real property sales in Montana, the material terms necessary to form an enforceable contract are the parties, the subject matter, a reasonably certain property description, the purchase price or criteria for determining it, and an indication of mutual assent; additional financing mechanics and operational terms are subsidiary matters that go to performance.
- A seller who introduces new encumbrances during contract-for-deed negotiations—after a Condition of Title provision has already prohibited additional encumbrances—risks being found in breach of the underlying buy-sell agreement, not just at an impasse in negotiations.
- The existence of blank contingency placeholders in a form buy-sell agreement is significant: a party who fails to expressly fill those placeholders with an intended condition precedent to formation will have difficulty arguing that such a condition existed implicitly.
Why It Matters
This decision reinforces Montana’s well-established principle—rooted in Steen v. Rustad and consistently applied through Kluver, Hanson, and Hurly—that parties who sign a detailed buy-sell agreement are bound by it even when they contemplate reducing the transaction to a more formal document later. For real estate practitioners, the case is a cautionary tale about the difference between conditions to performance and conditions to formation: language requiring future agreement on financing documents will not rescue a seller who changes their mind about the deal, absent clear, unambiguous contractual language making that future agreement a prerequisite to any binding obligation.
The opinion is also notable for its treatment of seller-financed transactions. The Doerings argued that a contract-for-deed arrangement is fundamentally different from a conventional purchase and introduces novel material terms that must be fully negotiated before any contract exists. The Court rejected that framing, holding that the essential terms of the seller-financing arrangement—down payment, interest rate, amortization period, and balloon payment date—were already specified in the Amendment, and that the remaining contract-for-deed details were collateral to the core bargain. Attorneys drafting seller-financing amendments should take care to identify any additional terms that the parties genuinely regard as material and include them expressly, along with a clear condition precedent clause if the parties truly intend that no binding agreement exists until a formal contract for deed is executed.