Presale Construction Contracts Must Specify the Scope, Quality, and Price of the Finished Residence

Introduction

SCHUSTER v. MILBRATH concerns the enforceability of presale agreements for two condominium units that had not yet been completed. Ryan and Aaryn Schuster sought specific performance requiring developer Benjamin Milbrath to construct and convey Units 17 and 18 of the Harrison Heights development for $849,000 each.

The parties used the Idaho Association of Realtors’ Form RE-22 for presold new construction. Although the agreements referred to a “Model 185-D,” they also stated that the residences were custom-built units based on detailed “Plans and Specifications” attached to and incorporated into the agreements. No such Plans and Specifications were created or attached.

The central issue was whether the agreements were enforceable despite failing to identify the grade and type of finishes, heating system, windows, flooring, cabinetry, countertops, plumbing, appliances, and other substantial features of the finished condominiums.

Summary of the Opinion

The Idaho Supreme Court unanimously affirmed the district court. It held that the Plans and Specifications—and the finish materials they were supposed to describe—were material terms because they defined the scope, quality, and cost of Milbrath’s construction obligations.

Because those documents did not exist and the agreements supplied no alternative objective standard for determining the omitted terms, the parties did not reach a meeting of the minds on all material terms. The agreements were therefore too indefinite to constitute enforceable contracts.

The Court also held that:

• Paragraph 9’s selection procedure could not cure the defect because it depended on the missing Plans and Specifications.
• The parties’ later conduct did not establish the required mutual assent at the time of formation.
• The defect was indefiniteness, not an ambiguity that could be resolved through contract interpretation.
• Schuster’s challenge to the additional supersedeas bond was moot after affirmance of the judgment.
• Milbrath remained entitled to attorney fees below and on appeal under Idaho Code section 12-120(3).

Analysis

The Governing Rule of Contract Formation

A valid contract requires an objectively manifested meeting of the minds on every material term. An offer and acceptance are not enough if the parties have left an essential part of their bargain for future negotiation.

The Court distinguished an ordinary sale of existing real property from a presale construction agreement. A conventional land-sale agreement ordinarily must identify the parties, property, price, and other essential terms. A construction agreement must additionally define the scope of the work with reasonable certainty.

Here, the missing terms affected three major aspects of the transaction:

1. Scope: what Milbrath was required to build;
2. Quality: the grade and type of materials to be installed; and
3. Price: which finishes were included in the $849,000 purchase price and which required additional payment.

Why the Plans and Specifications Were Material

Paragraphs 7 through 9 made the Plans and Specifications central to the parties’ bargain. Paragraph 8B expressly represented that the buyer had reviewed and approved detailed Plans and Specifications and that they were attached. Paragraph 9 assumed those documents would identify either the grade and type of finish materials or a monetary allowance for them.

The omitted choices were substantial rather than cosmetic. They included the heating system, windows, cabinetry, flooring, countertops, plumbing, appliances, trim, doors, ceilings, and deck materials. Milbrath’s later pricing showed that potential upgrades could total more than $200,000, including $90,000 for hydronic heating.

The Model 185-D computer-aided design rendering did not fill the gap. It depicted the condominium’s general layout but did not describe the finish materials or quality level. Likewise, option sheets addressing such matters as fireplace location, kitchen configuration, sinks, a linen closet, and a hot-tub junction box did not describe the complete finished product.

Paragraph 9 Did Not Supply an Objective Standard

Schuster argued that Paragraph 9 allowed the buyers to choose materials after execution and permitted Milbrath to make selections if the buyers failed to respond. The Court rejected that argument because Paragraph 9 operated only within the framework of the missing Plans and Specifications.

Without those documents, Paragraph 9 did not establish:

• the baseline materials included in the purchase price;
• a monetary allowance against which selections could be measured;
• the quality range from which the buyer could select; or
• a standard governing the seller’s selections.

The provision therefore could not reduce the missing terms to certainty.

Later Conduct Could Not Cure the Formation Defect

Contract formation is judged objectively. Milbrath’s construction activity and subjective belief that the agreements covered a “base unit” could not establish a mutual understanding that had never been communicated to Schuster.

The parties’ later positions instead confirmed their disagreement. Milbrath believed the contract price covered a base unit, while Schuster maintained that upgraded finishes were already included. Milbrath’s February 2022 proposal to identify a base model and amend the agreements to include upgrades demonstrated that the disputed terms remained unsettled.

Milbrath’s closings on other units also did not establish assent concerning Units 17 and 18. The district court found that those closings occurred during litigation to generate funds needed to complete construction and did not demonstrate a common understanding when the agreements were signed.

Indefiniteness Versus Ambiguity

Schuster characterized the conflict between Paragraph 7’s reference to Model 185-D and Paragraph 8B’s description of a custom residence as an ambiguity. The Court found that resolving this textual tension would not answer the decisive question: what grade and type of materials were included?

Ambiguity exists when contractual language supports two reasonable interpretations or is nonsensical. Indefiniteness is different: it arises when the parties never supplied the content needed to identify their obligations. Courts may interpret ambiguous language, but they may not create material terms the parties omitted.

Specific Performance

Specific performance requires a sufficiently definite contract so that a court can identify and compel the promised performance. Because the agreements did not establish what Milbrath had to construct, the court could not order him to build and convey the units according to nonexistent specifications.

Mootness of the Bond Challenge

The district court conditioned a stay preventing the sale of Units 17 and 18 on an additional $195,000 bond. Schuster did not post that bond. Once the Supreme Court affirmed that the agreements were unenforceable, Schuster no longer had a contractual basis to prevent the sales. Any ruling on the bond calculation would have no practical effect and was therefore moot.

Attorney Fees

The Court affirmed the award of $150,687.35 in net attorney fees and costs to Milbrath under Idaho Code section 12-120(3). Schuster did not challenge the amount, Milbrath’s prevailing-party status, or the statute’s applicability apart from arguing that the contracts should be enforced.

Milbrath also received attorney fees and costs on appeal. A party who alleges a commercial contract triggers section 12-120(3), even if the court ultimately determines that no enforceable contract existed.

Precedents Cited

Contract Formation and Material Terms

Inland Title Co. v. Comstock

Established that contract formation requires a meeting of the minds manifested through mutual intent, ordinarily by offer and acceptance. It also placed on the party asserting the contract the burden of proving a distinct and common understanding.

Barry v. Pac. W. Constr., Inc.

Supplied two central rules: the parties must agree on all material terms, and the scope of work is a material term of a construction contract. This principle was decisive because the missing specifications defined Milbrath’s construction obligations.

Tricore Invs., LLC v. Est. of Warren ex rel. Warren

Confirmed that mutual assent is evaluated objectively rather than through the parties’ undisclosed subjective beliefs. The Court used this rule to reject reliance on Milbrath’s personal belief that the price covered a base unit.

BrunoBuilt, Inc. v. Strata, Inc.

Cited through Tricore Invs., LLC v. Est. of Warren ex rel. Warren for the objective nature of the meeting-of-the-minds inquiry.

P.O. Ventures, Inc. v. Loucks Fam. Irrevocable Tr.

Identified the minimum terms generally required for a land-sale contract and required contracts to be complete, definite, and certain or capable of being reduced to certainty. Unlike the agreement in that case, the Schuster agreements also imposed substantial construction duties that remained undefined.

Gomez v. Hurtado

Reinforced that leaving a material term for future negotiation creates only an unenforceable agreement to agree.

Treasure Valley Home Sols., LLC v. Chason

Provided the agreement-to-agree principle quoted in Gomez v. Hurtado.

Silicon Int'l Ore, LLC v. Monsanto Co.

Explained that when an agreement is too vague, indefinite, or uncertain as to essential terms, no meeting of the minds exists and courts leave the parties as they found them.

Griffith v. Clear Lakes Trout Co.

Supported the distinction between an agreement that is merely ambiguous and one that is too indefinite to constitute a contract.

Porcello v. Est. of Porcello

Established that whether an agreement is complete is a legal question subject to de novo review.

Terms Made Material by the Parties’ Agreement

Lawrence v. Jones

Held that although a real-estate agreement need not contain a security provision when none is contemplated, such a provision becomes essential once the parties choose to address it. The Court analogized that reasoning to the express incorporation of Plans and Specifications here.

Chapin v. Linden

Held that no contract arose where the parties failed to agree on a security-related provision they had placed at issue. It demonstrated that a term becomes material when the parties’ agreement treats it as significant.

Reasonable Certainty and Judicial Gap-Filling

Barnes v. Huck

Recognized that absolute certainty is unnecessary and that courts may imply performance within a reasonable time. The Court distinguished it because the omitted payment timing in Barnes v. Huck could be supplied by law, while a court cannot choose between hydronic and forced-air heating or determine the proper grade of windows and trim.

Watson v. Watson

Supported the conclusion that no contract exists when the parties fail to agree on what property or performance is to be conveyed.

Contract Interpretation

Potlatch Educ. Ass'n v. Potlatch Sch. Dist. No. 285

Defined ambiguity as language admitting two reasonable interpretations or being nonsensical.

J.R. Simplot Co. v. Bosen

Explained that interpretation of a formed contract seeks the parties’ intent from the document as a whole. That process could not be used to invent specifications absent from the agreements.

Standards of Review

Wilson v. Mocabee and Mortensen v. Berian

Required deference to factual findings after a bench trial unless clearly erroneous.

Walker v. Meyer and Pocatello Hosp., LLC v. Quail Ridge Med. Inv., LLC

Established free review of legal conclusions and whether the facts support those conclusions.

Alsco, Inc. v. Fatty's Bar, LLC and Lunneborg v. My Fun Life

Supplied the abuse-of-discretion framework governing the attorney-fee award.

Mootness and Attorney Fees

Blaskiewicz v. Spine Inst. of Idaho, P.A. and State v. Barclay

Established that an issue is moot when judicial relief would have no effect on the parties and would merely create precedent.

Brown v. Greenheart

Recognized that a real-property conveyance may be a commercial transaction when the property has a commercial element.

Bronco Elite Arts & Athletics, LLC v. 106 Garden City, LLC and Sun Valley Potato Growers, Inc. v. Tex. Refinery Corp.

Confirmed that attorney-fee decisions are generally reviewed for abuse of discretion.

Garner v. Povey and Magic Lantern Prods., Inc. v. Dolsot

Established that alleging a commercial contract triggers Idaho Code section 12-120(3), allowing the prevailing party to recover fees even when contractual liability is not established.

Great Plains Equip., Inc. v. Nw. Pipeline Corp.

Was noted as having abrogated Magic Lantern Prods., Inc. v. Dolsot on grounds unrelated to the fee principle applied here.

Complex Concepts Simplified

Meeting of the minds

The parties must objectively agree on the same essential bargain. Secret or subjective understandings do not count.

Material term

A term important enough to affect the transaction’s subject matter, price, quality, quantity, duration, or required work.

Indefiniteness

Essential terms are missing, so a court cannot identify what the parties promised.

Ambiguity

Contract language exists but supports more than one reasonable meaning. Courts may interpret ambiguity but cannot invent missing material terms.

Agreement to agree

An understanding that the parties will negotiate an essential term later. It ordinarily is not an enforceable final contract.

Specific performance

A court order requiring a party to perform the contract rather than merely pay damages. The contract must be sufficiently definite for the court to know what performance to compel.

Supersedeas bond

Security posted to protect the prevailing party from losses caused by delaying enforcement of a judgment during an appeal.

Mootness

A dispute is moot when a court’s ruling can no longer provide practical relief to either party.

Potential Impact

The decision is particularly important for presale construction, custom-home, and condominium transactions. It does not require every technical detail to be finalized before execution. It does require the agreement to state all material terms with reasonable certainty or provide an objective method for determining them.

Builders, buyers, brokers, and attorneys using Form RE-22 should attach the addendum contemplated by Paragraph 8A or the Plans and Specifications required by Paragraph 8B. At a minimum, the documents should establish baseline materials, quality levels, allowances, upgrade pricing procedures, and the scope of the seller’s discretion.

The decision also warns that later construction, negotiations, or closings will not necessarily cure an initial failure of mutual assent. Finally, parties who litigate alleged commercial contracts face potential fee liability under Idaho Code section 12-120(3), even if the asserted contract is ultimately held unenforceable.

Conclusion

SCHUSTER v. MILBRATH establishes that a presale construction agreement is unenforceable when documents expressly incorporated to define the finished residence are missing and the remaining agreement supplies no objective method for determining the omitted terms. Where those omissions affect scope, quality, and price, courts may not convert an incomplete bargain into a contract by selecting the terms themselves.

The judgment declaring the agreements unenforceable was affirmed, the bond challenge was dismissed as moot, and Milbrath received attorney fees and costs both below and on appeal.