Trial Court Must Determine What Part of the Insurance Proceeds Plaintiff was Entitled to Receive

Post 5435

Specific Performance is an Equitable Remedy

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In Landon Cole v. Coty Link, No. 2024AP1372, Court of Appeals of Wisconsin, District III (August 18, 2026) Cole and Link entered into a purchase agreement for real property at 102 Knapp Street in Chetek, Wisconsin, for $105,000. The property consisted of a small lot with a building, and Cole accepted the property in its current as-is condition after receiving disclosures identifying structural defects. The agreement also included a maintenance clause and a property-damage clause governing damage occurring between acceptance and closing.

FACTUAL BACKGROUND

Before closing, the building’s roof collapsed after heavy snowfall. Cole elected to proceed with the transaction despite the damage and claimed entitlement to insurance proceeds under the property-damage provision. Link refused to close after the building was razed, and Cole sued for specific performance.

After a non-evidentiary hearing, the circuit court issued a written decision and order denying Cole’s summary judgment motion because the purchase agreement, when read as a whole, was ambiguous and “material issues of fact” existed.

The court interpreted the maintenance and property damage provisions together with the provision that Cole accepted the Property “as-is” to conclude that the purchase agreement was ambiguous and, therefore, unenforceable

LAW

Specific performance is an equitable remedy, reviewed under a two-tiered standard: legal questions are reviewed newly while the ultimate discretionary decision is reviewed for erroneous exercise of discretion.

Contract interpretation seeks to give effect to the parties’ intent. If contract language is clear and unambiguous, courts enforce its plain terms; if ambiguous, extrinsic evidence may be considered.

Impossibility and frustration of purpose generally do not excuse performance when the parties anticipated and allocated the relevant risk in the contract.

ANALYSIS

The Court of Appeals concluded that the purchase agreement was not ambiguous. The agreement plainly covered the sale of the entire property — the lot and building — not merely the building. It also expressly addressed the possibility of pre-closing property damage exceeding five percent of the purchase price, giving Cole the right either to terminate the agreement or to proceed and receive related insurance proceeds and any deductible credit.

Because the roof collapse was the type of pre-closing damage contemplated by the property-damage clause, Link could not rely on impossibility or frustration of purpose to avoid performance. Those defenses were unavailable as a matter of law because the parties had contracted with reference to the risk that later occurred. Link’s refusal to close therefore constituted a default under the agreement.

Before a court orders specific performance, it must be satisfied that the claim is fair, just, reasonable, and not the product of an unconscionable or oppressive bargain. A court faced with a request for specific performance must find that there are revealed factual or legal considerations which would make specific performance of the contract unfair, unreasonable or impossible.

The Court of Appeals concluded that the purchase agreement was not ambiguous because it was clear from the agreement’s language that the parties agreed to the sale and purchase of the Property and that they contemplated that the Property could be damaged between acceptance of the agreement and closing.

Link had agreed to sell the Property and Cole agreed to pay $105,000 for that Property. Both parties knew that the building on the Property had structural defects, and their acknowledgment of those defects is shown by the purchase agreement’s terms regarding Cole’s receipt of the disclosure report and his acceptance of the Property in its current as-is condition.

DISCUSSION

The decision emphasized that courts will enforce negotiated risk-allocation provisions in real estate contracts according to their plain language. The maintenance and as-is provisions did not override or limit the property-damage clause; rather, the provisions operated together to show that Cole accepted the known condition of the property while the parties separately allocated the risk of later damage before closing.

Although the Court of Appeals held that Cole was entitled to specific performance and conveyance of the property, it acknowledged equitable concerns about the amount of insurance proceeds Cole should receive.

Since specific performance is equitable, the court remanded the case to the trial court for it to determine the proper extent of Cole’s entitlement to insurance proceeds based on evidence and relevant factors, including the property’s value before and after the collapse, the building’s value, razing costs, actual insurance payments, and other relevant considerations.

CONCLUSION

The Court of Appeals reversed the judgment dismissing Cole’s action and remanded with directions to the trial court. The circuit court was ordered to enforce the purchase agreement by requiring conveyance of the property to Cole and to determine, in equity and based on the record, the extent to which Cole was entitled to insurance proceeds under the property-damage provision.

ZALMA OPINION

When parties agree that if the property being purchased that the buyer will take insurance proceeds if the property is damaged before the sale is closed the buyer can recover specific performance of the insurance provisions of the purchase agreement. Since Cole had an insurable interest in the property he could have purchased his own insurance and avoided the need to sue for the equitable remedy of Specific Performance.

(c) 2026 Barry Zalma & ClaimSchool, Inc.

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