Important Case Analysis: Time of the Essence and Breach of Contract in Property Sale

This week we wanted to draw your attention to an interesting case litigated in front of Justice Ruschelsman in the Supreme Court, Kings County. Justice Ruchelsman’s decision, in part, denied Plaintiff’s motion for Summary Judgment for causes of action for Specific Performance and Breach of Contract arising out of a Real Estate transaction where the Seller properly established a Time of the Essence (“TOE”) Closing due to Purchaser’s failure to timely close title. Among other claims, the Plaintiff-Purchaser, unsuccessfully attempted to argue that a contractual provision granting Purchaser a 10-day right to cure certain defaults also served to automatically extend any Time of the Essence Closing Date set forth in the Seller’s TOE Notice.

The mortgage contingency clause in a contract of sale afforded the Plaintiff-purchaser 60 days from the contract date to obtain a mortgage commitment. If the purchaser was unable to obtain a mortgage commitment before the 60-day period expired, he could cancel the contract and request a return of the contract deposit. The purchaser did not obtain a mortgage commitment, did not request a return of his down payment, and did not close on the contract’s closing date. The Defendant-seller sent a time of the essence letter setting a closing date. The Plaintiff’s request for a 10-day extension to close was denied, and no closing took place. The Plaintiff sued for specific performance and breach of contract. The Supreme Court, Kings County, denied the Plaintiff’s motion for summary judgment and granted the Defendant’s motion to dismiss.

The Plaintiff contended that the time of the essence letter was defective because “‘it was made with actual knowledge that [the Plaintiff] would need another few days to be ready to close.’” However, according to the Court, “there is no requirement that a time of the essence letter must consider the purchaser’s ability to close by that date.” Further, although the contract afforded the purchaser, on failing to close. ten days after notice from the seller to cure the purchaser’s default, that “clause only applies after a scheduled closing has not occurred due to the purchaser’s default…[W]here a time of the essence letter has been duly served and purchaser fails to abide by those terms the purchaser is not afforded another ten days in addition to the time provided by the time of the essence letter.” Fink v. 218 Hamilton LLC, 2023 NY Slip Op 30092, decided January 4, 2023, is posted at nycourts.gov