You are here: / Real Estate
, ,

THE STIPULATION SETTING A DATE FOR THE CLOSING ON DEFENDANT’S PURCHASE OF THE PROPERTY DID NOT INFORM DEFENDANT HE WOULD BE CONSIDERED TO BE IN DEFAULT IF THE CLOSING DID NOT TAKE PLACE BY THAT DATE; THEREFORE THERE WAS NO “TIME OF THE ESSENCE” AGREEMENT AND PLAINTIFF WAS NOT ENTITLED TO THE DOWN PAYMENT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the stipulation waiving defendant’s payment of rent as long as the closing on defendant’s purchase of the property occurred by a designated date did not inform defendant “time was of the essence” such that plaintiff could keep the down payment:

Sometime after the parties entered into the contract, the defendant commenced a landlord-tenant proceeding against the plaintiff, which the parties settled in a stipulation dated February 16, 2011. Paragraph 2 of the stipulation provided that “[i]n settlement and satisfaction of all claims by [the plaintiff], and in consideration of [the plaintiff] closing title on the purchase of 1474 Ralph Avenue, Brooklyn, New York, no later than March 31, 2011, [the defendant] waives the rent due for July 2010.” The closing never occurred. * * *

Where, as here, “time was not made of the essence in the original contract” … , “one party may make time of the essence by giving proper notice to the other party” … and avail himself [or herself] of forfeiture on default” … . “The notice setting a new date for the closing must (1) give clear, distinct, and unequivocal notice that time is of the essence, (2) give the other party a reasonable time in which to act, and (3) inform the other party that if he [or she] does not perform by the designated date, he [or she] will be considered in default” … . “A party need not state specifically that time is of the essence, as long as the notice specifies a time on which to close and warns that failure to close on that date will result in default” … . It does not matter that the date is unilaterally set … , and “[w]hat constitutes a reasonable time for performance depends upon the facts and circumstances of the particular case” … .

… [T]he stipulation did not inform the plaintiff that if he did not perform, he would be considered in default … . Lashley v BDL Real Estate Dev. Corp., 2023 NY Slip Op 00314, Second Dept 1-25-23

Practice Point: To trigger “time is of the essence” the defendant must be informed that failure to close the real estate purchase by the designated date will place the defendant in default.

 

/0 Comments/by
,

CONTRARY TO SUPREME COURT’S RULING, THE REAL ESTATE PURCHASE AGREEMENT, BY ITS TERMS, DECLARED THE CONTRACT CANCELLED IF THE INSPECTION REVEALED PROBLEMS AND THE PARTIES DID NOT AGREE ON HOW TO ADDRESS THOSE PROBLEMS WITHIN TEN DAYS; THE INSPECTION IN FACT REVEALED PROBLEMS AND NO AGREEMENT ON RESOLUTION WAS MADE WITHIN THE ALOTTED TEN DAYS (THIRD DEPT). ​

The Third Department, reversing Supreme Court, determined that the real estate purchase agreement was canceled in accordance with its own terms:

… [P]laintiff’s transmission of the form contract and rider constituted an offer, and the sellers counteroffered by signing and returning to plaintiff only the form contract without the rider. Plaintiff then accepted the counteroffer by proceeding with the inspections, as “a counteroffer may be accepted by conduct” … . We also agree with the court that plaintiff’s counsel’s May 18, 2020 letter did not constitute attorney disapproval of the contract under the attorney approval contingency. This letter merely acknowledged receipt of the signed contract and inquired as to the rider and other documents; in no way did it signal disapproval.

… Plaintiff’s attorney, in his letter of June 17, 2020, notified the sellers’ attorney that the property had failed multiple inspections, and provided a copy of the relevant inspection report. This conduct, in accordance with the language set forth in the inspection contingency, rendered the contract “cancelled, null and void” unless plaintiff chose to defer cancellation for 10 days. Given that the letter from plaintiff’s attorney also set forth potential ways in which the inspection issues could be resolved, we are satisfied that the 10-day option was exercised. That said, the parties did not reach a written agreement on these issues within 10 days as was expressly required pursuant to the inspection contingency … . Savignano v Play, 2022 NY Slip Op 06307, Third Dept 11-10-22

Practice Point: In reversing Supreme Court, the Third Department simply read the real estate purchase agreement and enforced the term deeming the contract cancelled if the parties did not agree on the resolution of problems revealed by inspection within ten days. No such agreement was reached.

 

/by
,

THE BROKER WAS THE PROCURING CAUSE OF THE SALE OF THE REAL PROPERTY AND THEREFORE WAS ENTITLED TO THE AGREED 4% COMMISSION (SECOND DEPT).

The Second Department, reversing Supreme Court, over an extensive dissent, determined the broker in this sale of real property was the procuring cause of the sale and was therefore entitled to the agreed 4% commission:

“To prevail on a cause of action to recover a commission, the broker must establish (1) that it is duly licensed, (2) that it had a contract, express or implied, with the party to be charged with paying the commission, and (3) that it was the procuring cause of the sale” … . Here, the issue disputed by the parties was whether the plaintiff was the procuring cause of the sale. “To establish that a broker was the procuring cause of a transaction, the broker must establish that there was ‘a direct and proximate link, as distinguished from one that is indirect and remote'” between the bare introduction of the parties to the transaction and the consummation of the sale … . “[I]n order to qualify for a commission, a broker need not have been involved in the ensuing negotiations or in the completion of the sale,” if such a direct and proximate causal link exists … . …

It was Minetree’s [the broker’s] introduction of the subject properties to, and work with, TNC [the nature conservancy] which brought the County and the defendants together on a bargain sale transaction. Saunders Ventures, Inc. v Catcove Group, Inc., 2022 NY Slip Op 05879, Second Dept 10-19-22

Practice Point: If a broker is the “procuring cause” of the sale of real property, the broker is entitled to the commission agreed to in the broker’s contract.

 

/by
,

ALTHOUGH THE HOME-INSPECTION CONTRACT WAS NOT SIGNED, PLAINTIFF TESTIFIED SHE WAS AWARE OF THE TERMS OF THE CONTRACT AND AGREED TO THEM; THEREFORE THE UNSIGNED CONTRACT WAS ENFORCEABLE AND PLAINTIFF’S FAILURE TO COMPLY WITH THE NOTIFICATION PROVISION ENTITLED DEFENDANT TO SUMMARY JUDGMENT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant home-inspection company was entitled to enforcement of a provision in an unsigned contract. The home inspection contract provided that defendant would not be liable if plaintiff failed to timely notify defendant of any alleged defects in the property. Defendant moved for summary judgment based on plaintiff’s failure to notify. The fact that the contract was not signed did not raise a question of fact because plaintiff testified she was aware of the terms of the contract and agreed to them:

“[A]n unsigned contract may be enforceable, provided there is objective evidence establishing that the parties intended to be bound” … . Here, the plaintiff testified at her deposition that she was “certain” that she looked at the contract “at the time of the inspections,” that she understood the contents of the contract, and that “after reading the agreement before the July 2016 inspection” she “accepted these terms” and paid ARPI its fee. This testimony is bolstered by the fact that the plaintiff signed an identical contract four months earlier for a home inspection performed by the defendants. Accordingly, the defendants demonstrated, prima facie, that the July 2016 contract was valid and enforceable … . Cotich v Town of Newburgh, 2022 NY Slip Op 05075, Second Dept 8-31-22

Practice Point: Although the home inspection contract was not signed, plaintiff testified she was aware of the terms and agreed to them. The contract was therefore enforceable and plaintiff’s failure to comply with the notification provision entitled defendant to summary judgment.

 

/by
, ,

PLAINTIFFS ALLEGED THE CONTRACT FOR THE PURCHASE OF LAND INCLUDED A PARCEL OF LAND NOT INCLUDED IN THE DEED AND SOUGHT A CORRECTED DEED; PURSUANT TO THE MERGER DOCTRINE, THE CONTRACT AND THE DEED MERGED AT THE CLOSING AND THE PROPERTY DESCRIPTION IN THE DEED IS DEEMED TO REFLECT THE FINAL AGREEMENT OF THE PARTIES (ABSENT FRAUD OR AMBIGUITY IN THE DEED); PLAINTIFFS’ COMPLAINT SHOULD HAVE BEEN DISMISSED (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined, pursuant to the merger doctrine, the contract for the sale of land merged with the deed when the deal was closed. The deed therefore represents the final agreement of the parties. The plaintiff alleged the deed description did not match the description in the contract and demanded that the deed be “corrected” to include an additional parcel of land:

… [W]e agree with defendants that the court erred in denying the motion with respect to the breach of contract and quiet title causes of action. Those causes of action are barred by the merger doctrine. “It is settled law that, where a contract for the sale of land has been executed by a conveyance, the terms of the contract concerning the nature and extent of property conveyed merge into the deed and any inconsistencies between the contract and the deed are to be explained and governed solely by the deed, which is presumed to contain the final agreement of the parties” … . Exceptions to the merger doctrine include “where the parties have expressed their intention that [a] provision shall survive delivery of the deed” … , where the deed is ambiguous with respect to the land conveyed …, and where there exists a valid fraud cause of action … . Pickard v Campbell, 2022 NY Slip Op 04442, Fourth Dept 7-8-22

Practice Point: Any discrepancy between the property as described in a real estate contract and as described in the deed is resolved by the merger doctrine. Absent fraud or ambiguity in the deed, the deed description controls.

 

/by
, , ,

PURSUANT TO THE SPECIAL FACTS DOCTRINE, THE PURCHASE AND SALE AGREEMENT FOR THIS “AS IS” SALE OF A BUILDING RELEASED THE SELLER FROM LIABILIITY FOR NEGLIGENCE AND NEGLIGENT MISREPRESENTATION, BUT NOT FOR FRAUD (FIRST DEPT). ​

The First Department, reversing (modifying) Supreme Court, determined Supreme Court properly found that the Purchase and Sale Agreement (PSA). pursuant to the special facts doctrine, did not release the seller of the building from a claim based on fraud (building was sold “as is”). But the PSA did release the seller from liability for negligence or negligent misrepresentation:

Plaintiff’s negligence and negligent misrepresentation claims against the seller are barred by the Purchase and Sale Agreement (PSA). In section 6.02 of the PSA, plaintiff agreed that it had not relied on any representations as to the condition of the building, and agreed to purchase the building “as is.” Although Supreme Court correctly found that under the special facts doctrine, section 6.02 does not serve to bar the causes of action based on fraud, the provision does, in fact, bar the causes of action based on negligence (compare TIAA Global Invs., LLC v One Astoria Sq., 127 AD3d 75, 87-88 [1st Dept 2015] [under special facts doctrine, which provides that a contractual disclaimer cannot preclude a fraud claim when the underlying facts are peculiarly within the defendant’s knowledge, “as is” and “no reliance” provisions in a real estate sales contract did not require dismissal of fraud claim under CPLR 3211]). Similarly, while the release in PSA section 19.15 exempts fraud claims from the scope of the release, plaintiff released the seller for claims relating to any defects in the building “whether the result of negligence or otherwise.” 470 4th Ave. Fee Owner, LLC v Adam Am. LLC, 2022 NY Slip Op 03204 First Dept 5-17-22

Practice Point: Here the building was sold “as is.” A provision in the Purchase and Sale Agreement (PSA) released the seller from liability for negligence or negligent misrepresentation. But, pursuant to the special facts doctrine, the PSA did not release the seller from a claim alleging fraud.

 

/by
,

THE REAL ESTATE PURCHASE CONTRACT DID NOT INCLUDE THE CLOSING DATE OR THE MORTGAGE TERMS; THE CONTRACT WAS THEREFORE UNENFORCEABLE PURSUANT TO THE STATUTE OF FRAUDS (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the seller was entitled to summary judgment dismissing the action for specific performance of the real estate purchase contract, because the contract did not meet the requirements of the statute of frauds:

Under the statute of frauds, a contract for the sale of real property must be evidenced by a writing (see General Obligations Law § 5-703[1]). The writing must “identify the parties, describe the subject matter, be signed by the party to be charged, and state all of the essential terms of an agreement” … . “In a real estate transaction, the essential terms of a contract typically include the purchase price, the time and terms of payment, the required financing, the closing date, the quality of title to be conveyed, the risk of loss during the sale period, and adjustments for taxes and utilities” … . “‘[T]he writing must set forth the entire contract with reasonable certainty so that the substance thereof appears from the writing alone . . . If the contract is incomplete and it is necessary to resort to parol evidence to ascertain what was agreed to, the remedy of specific performance is not available'” … . …

In addition to the document not specifying the closing date, the evidence established that the parties never agreed with respect to the mortgage terms. At his deposition, the plaintiff testified that he was purchasing the property “subject” to the existing mortgage and that he had the “option” of obtaining a purchase money mortgage. The document, however, did not state whether the plaintiff was purchasing the property subject to the existing mortgage, obtaining a purchase money mortgage, or obtaining his own mortgage. The failure to include such terms makes the purported real estate contract unenforceable … . Cohen v Holder, 2022 NY Slip Op 02778, Second Dept 4-27-22​

Practice Point: A real estate purchase contract which does not include all the material terms is not enforceable pursuant to the Statute of Frauds. Here the contract did not include the closing date or the mortgage terms. It was deemed unenforceable and the action for specific performance was dismissed.

 

/by
, , , ,

THE COMPLAINT SUFFICIENTLY STATED FACTS AMOUNTING TO A BREACH-OF-FIDUCIARY-DUTY CAUSE OF ACTION AGAINST DEFENDANT REAL ESTATE BROKER, DESPITE PLAINTIFF-SELLER’S CONSENT TO THE BROKER’S “DUAL AGENCY;” IT WAS ALLEGED THE BROKER WAS AWARE THE PROPERTY WAS TO BE SUBDIVIDED AND SOLD BY THE BUYERS FOR THREE TIMES THE PRICE AND SHE WOULD BE THE BUYERS’ BROKER FOR THE SUBSEQUENT SALES (FIRST DEPT). ​

The First Department, reversing Supreme Court, determined the complaint sufficiently stated a cause of action for breach of fiduciary duty by the defendant real estate broker, despite the plaintiff’s consent to the broker’s “dual agency:”

Although the complaint does not explicitly articulate a cause of action for breach of fiduciary duty, such a cause of action is manifest in its factual allegations, and the documentary evidence fails to utterly refute those allegations … . In connection with his sale of certain real property, plaintiff signed a disclosure form pursuant to Real Property Law § 443, giving his informed consent to a “dual agency with designated sales agent” relationship with defendants. The form states that a dual agent cannot give the seller or buyer “undivided loyalty.” Nevertheless, it does not relieve defendants from all fiduciary duty. The form states that defendant Nikki Carchedi, of defendant Stone House Properties, “is appointed to represent the seller in this transaction.” The complaint establishes a cause of action for breach of a fiduciary duty beyond the acknowledged “divided” duty by alleging that [defendant] Carchedi failed to disclose that she had a personal stake in the sale to the buyers, who planned to subdivide the property immediately after purchase and retain her as the broker for the sale of the subdivided parcels, and that they did so, listing the subdivided parcels for almost three times the price plaintiff received in his sale … . We also note plaintiff’s assertion that the agent representing the buyer was the son of Carchedi’s longtime client about whom plaintiff had expressed concern. Hahn v Stone House Props. LLC, 2022 NY Slip Op 01416, First Dept 3-8-22

​Practice Point: Even though breach-of-fiduciary-duty was not explicitly pled, the facts alleged stated a cause of action against defendant real estate broker.

Practice Point: Even though the seller signed a form consenting to the broker’s “dual agency,” the broker was not relieved of her fiduciary duty to the seller. Allegedly, the broker was aware the buyers were going to subdivide the property, sell it at three times the price, and that she would be the broker for the subsequent sales.

 

/by
,

PLAINTIFF REAL ESTATE BROKER DID NOT ESTABLISH IT WAS ENTITLED TO A BROKERAGE FEE; THE BROKERAGE AGREEMENT EXPIRED BY ITS OWN TERMS BEFORE THE LEASE TOOK EFFECT (SECOND DEPT).

The Second Department, reversing Supreme Court after a bench trial, determined plaintiff real estate broker was not entitled to a brokerage commission:

“In order to recover a real estate brokerage commission, [a] broker must establish: (1) that [it] is duly licensed, (2) that [it] had a contract, express or implied, with the party to be charged with paying the commission, and (3) that [it] was the procuring cause of the [transaction]” … . …

Although the agreement entitled the plaintiff to collect a commission “[i]f within 60 days after the expiration . . . of th[e] . . . agreement, a lease is signed or negotiations continue and ultimately lead to a signed lease of the Property to a person or entity” on a list of potential tenants to be provided by the plaintiff within 10 days of expiration of the brokerage agreement, the lease was not signed within 60 days of the expiration of the brokerage agreement, and the plaintiff did not present any evidence that it supplied a list of potential tenants to the defendant. Thus, the brokerage agreement, by its terms, expired months before the defendant entered into a binding lease … . Cpex Real Estate, LLC v Tomtro Realty Corp., 2022 NY Slip Op 00999, Second Dept 2-16-22

 

/by
, , , ,

PURSUANT TO THE DOCTRINE OF TAX ESTOPPEL, TAX FORMS SIGNED BY DECEDENT INDICATING PROPERTY WAS TRANSFERRED WITHOUT CONSIDERATION PRECLUDED THE CONSTRUCTIVE TRUST CAUSE OF ACTION BASED UPON AN ALLEGED PROMISE TO PAY PETITIONERS PROCEEDS FROM THE SALE (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court, determined the constructive trust cause of action should have been dismissed under the doctrine of tax estoppel. The claim that decedent, Joseph Scott, Jr. promised to pay petitioners the proceeds from the sale of property was belied by the tax forms signed by Scott which indicated the property was transferred without consideration:

The tax forms utterly refute petitioners’ factual allegations that, in consideration for his interest in the Amagansett property, Joseph Scott, Jr. paid respondents more than $410,000 in his lifetime as an advance on the sale of his Woodbine property … . Since petitioners are precluded from arguing that there was an oral agreement that Joseph Scott, Jr. would pay respondents’ decedents consideration for the Amagansett property, they cannot allege that a constructive trust should be imposed on the property … . The application of the tax estoppel doctrine prevents, as a matter of law, petitioners from establishing an essential element of a claim for a constructive trust: a promise by respondents’ decedents to Joseph Scott, Jr. regarding the Amagansett property. Matter of Chimsanthia, 2021 NY Slip Op 06796, First Dept 12-7-21

 

/by

Categories

Sign Up for the Mailing List to Be Notified When the Site Is Updated.

Copyright © 2023 New York Appellate Digest, LLC
Site by CurlyHost | Privacy Policy