Time of the Essence
This week we wanted to bring your attention to an Appellate Court decision out of the 2nd Department which reversed a lower Court’s Order and ultimately denied Defendant-Seller’s claim for Summary Judgment to terminate a Contract and retain the Plaintiff-Purchaser’s Downpayment for failure to close title under the terms of a Time Being of the Essence (“TOE”) Letter.
The decision turned on the fact that the principals of each party apparently had a verbal conversation, after the Seller’s TOE Letter was properly delivered, wherein the Seller allegedly assured Purchaser that no default would be enforced even if the Purchaser failed to close on the TOE Closing Date. The alleged verbal conversation was deemed to raise a triable issue of fact which negated the Seller’s right to Summary Judgment.
The relevant facts of, as well as a link to, the case are set forth below.
The seller’s attorney scheduled the closing of title for May 15, 2019, “time being of the essence” to close. According to the purchaser, after receiving notice of the closing date, its managing member had a telephone call with the seller’s President in which the managing member was assured that the purchaser would not be held in default if the purchaser did not appear at the closing on May 15. On May 15, the seller’s attorney, in a letter to the purchaser’s attorney, advised that the closing had taken place, that the purchaser had defaulted, that the contract was terminated, and that the contract deposit was being retained by the Seller as liquidated damages. The purchaser commenced an action for specific performance, to recover damages, and to foreclose a vendee’s lien. The Supreme Court, Kings County, granted the Defendant-seller’s motion for summary judgment on the cause of action for a declaration, among other things, that the buyer was in breach. The Appellate Division, Second Department, reversed the lower court’s Order. According to the Appellate Division, 4
“…‘[i]t is well settled, in New York, that an oral waiver of the time for the sale of real property will be given effect’ [citations omitted]…[The assertion], made under the penalties of perjury, that [the managing member] was assured by the defendant’s president that the plaintiff would not be held in default in the event that it failed to close the transaction on May 15, 2019, was sufficient to raise a triable issue of fact as to whether the defendant’s president made a statement…that operated as a waiver of the defendant’s right to enforce the May 15, 2019 deadline for the closing.” LG723, LLC v. Royal Development, Inc., 2023 NY Slip Op 02653, decided May 17, 2023, is posted at
https://www.nycourts.gov/reporter/3dseries/2023/2023_02653.htm
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