Agreement to Purchase Four-Family Brooklyn Brownstone for $300,000

This was originally published on the SGR Blog.

Was Contract Enforceable/Barred Under the Statute of Frauds?

On January 23, 2006, Yaron Cohen, as purchaser, and Vivian Holder, as seller, executed a document purporting to be a contract for the sale of a four-family brownstone located in Brooklyn, for the purchase price of $300,000. But the document, which was provided by Cohen, did not indicate the date or place of the closing.

About 17 months later, Cohen sent a letter to Holder setting a time of the essence closing date of May 22, 2007. The closing did not occur on that date and Cohen commenced an action seeking specific performance. Holder interposed an answer and asserted counterclaims seeking damages for fraud and for rescission of the purported contract. In 2015, Holder transferred the property to 143 Hancock St., LLC. Cohen then filed a separate action against 143 Hancock. Holder and Corey Holder, as executor of Vivian’s estate, was substituted as the defendant in the action commenced against Holder. The two actions were consolidated.

Cohen moved for summary judgment on the complaint. Holder then cross-moved for summary judgment dismissing the complaint and on the counterclaims. The Supreme Court denied the motion and cross motion. Both sides appealed.

Contrary to the Cohen’s contention, the Court found that the statute of frauds defense was not waived since Cohen had a full and fair opportunity to argue the merits of the defense in opposing Holder’s summary judgment motion.

Under the statute of frauds, a contract for the sale of real property must be evidenced by a writing. 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. The writing must set forth the entire contract with reasonable certainty so that the substance 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.

Here, Holder demonstrated prima facie entitlement to judgment as a matter of law dismissing the complaint on the ground that the document did not satisfy the statute of frauds. 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, Cohen 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 Cohen 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 made the purported real estate contract unenforceable. In opposition, Cohen failed to raise a triable issue of fact.

The Supreme Court should have granted that branch of Holder’s cross motion for summary judgment dismissing the complaint and properly denied that branch of Cohen’s motion for summary judgment on the complaint.

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