Option-to-Purchase Contracts: No Implied Right to Delay Closing to Challenge a Contractually-Required MAI Appraisal; Appraisal-Critique Experts Must Satisfy V.R.E. 702

Introduction

Jamaica Cottage Shop, Inc. v. Londonderry Industrial Park, Inc. (Vt. Sept. 4, 2026) arises from a commercial lease containing an option to purchase real property in South Londonderry, Vermont. The option set the purchase price as the average of two MAI-certified appraisals—one obtained by each party—and required closing within thirty days after receipt of the appraisal(s).

After the buyer (Jamaica Cottage Shop, Inc.) exercised the option and both sides obtained MAI appraisals, the seller (Londonderry Industrial Park, Inc.) refused to close, citing concerns with the buyer’s appraisal and seeking time for further appraisal-related inquiry. The buyer sued for breach and specific performance, plus damages for rent and insurance it continued to pay and attorney’s fees.

The central legal issues were: (1) whether the seller could delay or refuse closing based on alleged defects or disparity in the buyer’s appraisal despite the contract’s pricing/closing mechanism; (2) whether the seller could support good-faith/unclean-hands defenses without admissible evidence of appraisal defects; (3) whether the seller’s appraiser could offer expert testimony criticizing the buyer’s appraisal under Vermont Rules of Evidence; and (4) whether certain damages/offset arguments were waived.

Important limitation: The decision is an Entry Order by a three-justice panel and, as the Opinion itself notes, such decisions “are not to be considered as precedent before any tribunal.” The analysis below therefore treats the ruling as instructive rather than binding.

Summary of the Opinion

The Vermont Supreme Court affirmed the trial court’s partial summary judgment for the buyer, holding that:

  • The seller breached the contract by refusing to close under a purchase option that set price as the average of two MAI appraisals and required closing within thirty days of receipt.
  • The seller failed to produce admissible evidence supporting its affirmative defense that the buyer breached the implied covenant of good faith and fair dealing (and the Court declined to reach unclean hands because it was not properly raised in the opening brief).
  • The trial court did not abuse its discretion in excluding the seller’s appraiser’s expert testimony as irrelevant (fair market value not at issue) and unreliable under V.R.E. 702 (no reliable methodology offered to critique the other appraiser’s report, especially given conceded noncompliance with USPAP review standards).
  • The buyer properly received specific performance, damages for rent/insurance paid during the period it should have owned the property, and contractual attorney’s fees; the seller’s offset theory was waived as untimely.

Analysis

Precedents Cited

1) Burdens on summary judgment and affirmative defenses

  • Fritsche v. Deer Valley Ridge at Silver Lake Ass'n of Unit Owners: Cited for the proposition that a party asserting an affirmative defense bears the burden of proof on that defense. Here, it supported the conclusion that the seller had to come forward with competent evidence to substantiate good-faith/unclean-hands theories.
  • Ross v. Times Mirror, Inc.: Used to explain burden-shifting on summary judgment when the moving party does not bear the burden of persuasion at trial. The buyer could prevail by showing an absence of evidence supporting the seller’s affirmative defenses; the burden then shifted to the seller to show a triable fact. The seller’s inability to present admissible evidence of appraisal “defects” was fatal.

2) Relevance and evidentiary discretion

  • State v. Hooper: Cited for the trial court’s broad discretion on relevance determinations and the high threshold for reversal (“clearly untenable reason”). This bolstered affirmance of the ruling that the property’s fair market value was irrelevant because the contract fixed the price via a mechanical averaging of two MAI appraisals.

3) Expert testimony and gatekeeping under V.R.E. 702

  • State v. Menize: Quoted for the abuse-of-discretion standard governing admission/exclusion of expert testimony. It framed the Supreme Court’s deference to the trial judge’s Rule 702 gatekeeping assessment.
  • USGen New Eng., Inc. v. Town of Rockingham: Reinforced that, absent a clear showing of judicial error, the Court will affirm the admission/exclusion of expert testimony. This further insulated the trial court’s decision excluding the appraiser’s critique.

4) The implied covenant of good faith and fair dealing

  • Langlois v. Town of Proctor: Provided Vermont’s core articulation of the covenant: parties must not undermine the other’s contractual benefit and must act consistently with justified expectations. The Court used this framework to hold that the seller had no “justified expectation” of a right to delay closing for extra appraisal-related investigation when the contract did not provide that right.

5) Preservation, waiver, and appellate briefing

  • In re S.B.L.: Cited for the principle that appellants bear the burden of showing error; the Court will not comb the record for them. This supported rejecting the seller’s undeveloped claim that it preserved an insurance-offset argument.
  • Lane v. Town of Grafton: Applied to hold that failing to raise a reason to deny summary judgment in the trial court generally precludes raising it on appeal. This directly supported the waiver finding on offsets/carrying-cost theories raised late.
  • State v. Ben-Mont Corp.: Reinforced that preservation requires presenting issues with specificity and clarity to give the trial court a fair opportunity to rule—again supporting waiver.
  • Robertson v. Mylan Labs., Inc. and Gallipo v. City of Rutland: Used to decline consideration of arguments raised for the first time in a reply brief (here, the unclean-hands issue).

Legal Reasoning

1) Contract text controlled: appraisal-averaging and a firm closing deadline

The Court treated the option clause as a self-executing pricing and timing mechanism: price equals the average of two MAI appraisals, and closing must occur within thirty days of receiving the appraisal(s). On that text, the seller’s attempt to interpose an additional “review-and-revision” stage conflicted with the contract’s design—especially where the clause required the parties to “cooperate to execute all appropriate documents and take all appropriate action to accomplish the sale.”

The Court’s covenant analysis tracked this same logic: because the written agreement did not confer a right to demand more appraisal support or delay closing to challenge the other side’s appraisal, the seller could not transform its preference for further inquiry into a “justified expectation” protected by good faith.

2) The seller’s defenses failed because they lacked admissible proof

The seller’s theory depended on showing that the buyer’s appraisal was materially defective and that the buyer’s reliance on it was bad faith (or inequitable). But the seller’s proof problem was evidentiary: absent admissible expert testimony (or other competent evidence) establishing major defects, the seller was left with assertions and lay impressions insufficient to create a triable issue on an affirmative defense.

3) Expert exclusion: irrelevance and Rule 702 reliability

The Court affirmed two independent rationales for excluding the seller appraiser’s testimony:

  • Relevance: Because the contract fixed price by averaging two MAI appraisals, the litigation did not present a typical “battle of experts” over fair market value. The “fact of consequence” was whether the contractual appraisal process was followed, not whether one appraisal better captured market value. Therefore, testimony offered to “confirm” alleged omissions in the buyer’s appraisal via fair-market-value opinions was properly treated as irrelevant.
  • Rule 702 reliability: The seller sought to use its appraiser to imply that the buyer’s appraisal failed to meet professional standards. Yet the appraiser conceded he did not conduct a USPAP Standard 3 appraisal review and was constrained by professional standards from opining on the other appraisal without that methodology. With no alternative reliable standard proposed, the court could not find reliable principles/methods were applied to the facts, as V.R.E. 702 requires.

4) Damages and attorney’s fees: consequence of breach plus waiver principles

Once breach and specific performance were established, the buyer’s rent and insurance payments during the period it should have owned the property were treated as compensable. The seller’s late-breaking “offset” theory—claiming the buyer would have incurred other carrying costs if closing had occurred—was deemed waived because it was not timely pleaded or argued in opposition to summary judgment.

Contractual attorney’s fees followed from the agreement’s fee provision and the buyer’s success on the contract claim.

Impact

  • Option drafting and deal practice: The ruling underscores that appraisal-based purchase options operate as written. If parties want a dispute-resolution mechanism (e.g., appraisal review, third appraiser, reconciliation procedures, or tolling of closing deadlines), they must draft it explicitly.
  • Litigation strategy in appraisal disputes: A party resisting a contractually-defined appraisal mechanism must be prepared with admissible expert proof, not generalized dissatisfaction or disparity arguments.
  • Expert gatekeeping in technical “review” testimony: Courts may treat critiques of another professional’s report as specialized “review” opinions requiring adherence to established professional methodologies (here, USPAP), or some other demonstrated reliable method, to satisfy Rule 702.
  • Preservation discipline: The decision highlights that damages theories (like offsets) must be timely raised and supported; reply-brief arguments risk forfeiture.

Complex Concepts Simplified

  • Specific performance: A court order requiring a party to carry out the contract (here, to complete the sale), commonly used in real-estate disputes because land is considered unique.
  • Implied covenant of good faith and fair dealing: A background rule in every contract requiring parties not to sabotage the contract’s benefits or act inconsistently with the deal’s shared purpose. It cannot be used to add new rights or procedures that the contract did not bargain for.
  • Summary judgment: A pretrial ruling when there is no genuine dispute of material fact and one party is entitled to judgment as a matter of law. When a defendant relies on an affirmative defense, it must show evidence supporting that defense to avoid summary judgment.
  • Motion in limine: A request to admit or exclude evidence before trial; here, it was used to prevent expert testimony that would suggest the buyer’s appraisal was “defective.”
  • V.R.E. 401 (relevance): Evidence must relate to a fact that matters to the legal decision. If the contract fixes price by averaging appraisals, “true market value” may not matter.
  • V.R.E. 702 (expert reliability): Expert opinions must be based on sufficient data and reliable methods reliably applied. If an appraisal professional concedes they did not use the profession’s review standard (USPAP Standard 3) to critique another appraisal, the court may find the critique unreliable.
  • USPAP (Uniform Standards of Professional Appraisal Practice): Industry standards governing appraisals and appraisal reviews. A “review” opinion typically requires specific procedures and reporting standards distinct from performing one’s own appraisal.
  • Waiver/preservation: Arguments generally must be raised at the trial level with clarity and on time. New theories raised late (or only in a reply brief) may not be considered.

Conclusion

This Entry Order reinforces a contract-centered approach to appraisal-based purchase options: when parties agree to price by averaging MAI appraisals and impose a firm closing timetable, one party cannot invoke “good faith” to insert an extra-contractual appraisal-challenge process or delay closing absent admissible evidence of contractual noncompliance. The decision also illustrates rigorous Rule 702 gatekeeping for appraisal-critique testimony—especially where professional standards require a defined review methodology—and serves as a cautionary reminder that damages and defense theories must be timely raised and properly preserved.