The First Department, in a full-fledged opinion by Justice Acosta, determined plaintiff-buyer’s action to rescind a real estate purchase contract before the final closing date constituted an anticipatory breach which relieved defendants-sellers of any further obligations called for by the purchase contract, including the acquisition of development approvals. The case raised two questions of first impression: (1) whether a rescission action by a buyer constitutes an anticipatory breach or repudiation of a purchase contract; and (2) whether such a breach relieves the seller of having to demonstrate it was ready, willing and able to close on the closing date. Both questions were answered in the affirmative and the sellers were entitled to retain the deposit and certain additional fees called for by the contract:
We … agree with the motion court that, by “commencing this lawsuit [before the Final Closing Date] and seeking the particular relief of rescission of the Amendment and abatement of the purchase price, [plaintiff] unequivocally notified the … defendants of its intention to renounce its contractual duties” … . Plaintiff did not simply seek to define its rights under the parties’ agreement; it sought to nullify the agreement entirely. * * *
The contract required defendants to obtain the development approvals as a condition precedent to closing, but defendants were absolved of that obligation upon plaintiff’s anticipatory breach. Whether defendants were in fact “on track” to obtain the approvals by the closing date is of no moment; the record demonstrates that they had been engaged in significant efforts to obtain the approvals until plaintiff’s repudiation, and it was possible, however unlikely, that they could have obtained the approvals before the Final Outside Closing Date (which the parties had been extending on a monthly basis). They were not required to continue to pursue the approvals after plaintiff repudiated the contract by commencing the instant action seeking rescission … . Once plaintiff commenced the instant action, it would have been futile and wasteful for defendants to continue to seek the approvals in preparation for a closing that plaintiff was tirelessly seeking to avoid. Princes Point LLC v Muss Dev. L.L.C., 2016 NY Slip Op 00783, 1st Dept 2-4-16
CONTRACT LAW (RESCISSION ACTION IS AN ANTICIPATORY BREACH)/REAL ESTATE (BUYER’S ACTION TO RESCIND A PURCHASE AGREEMENT IS AN ANTICIPATORY BREACH WHICH RELIEVES SELLER OF ANY FUTHER CONTRACTUAL OBLIGATIIONS)/RESCISSION (ACTION TO RESCIND A REAL ESTATE PURCHASE AGREEMENT IS AN ANTICIPATORY BREACH)/ANTICIPATORY BREACH (ACTION TO RESCIND A REAL ESTATE PURCHASE AGREEMENT IS AN ANTICIPATORY BREACH)/PURCHASE AGREEMENT, REAL ESTATE (ACTION TO RESCIND PURCHASE AGREEMENT IS AN ANTICIPATORY BREACH)