Buyer Sues For Specific Performance of Ralph Avenue Contract

Did Stipulation Adjourning Closing Create a TOE Date?

In 2010,  Edmund Lashley entered into a contract of sale with BDL Real Estate Development Corp. for 1474  Ralph Avenue in Brooklyn. Lashley had been leasing one of two buildings located on the property for use as an auto body repair shop since 2007. The contract did not contain a closing date. Sometime after the parties entered into the contract, BDL commenced a landlord-tenant proceeding against Lashley, 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 [Lashley], and in consideration of [Lashley] closing title on the purchase of 1474 Ralph Avenue, Brooklyn, New York, no later than March 31, 2011, [BDL] waives the rent due for July 2010.” The closing never occurred.

In 2015, Lashley sued BDL for specific performance of the contract. BDL moved for summary judgment dismissing the amended complaint.  Supreme Court  determined that Lashley breached the contract by failing to close title by March 31, 2011, and, as a result, BDL was entitled to retain the down payment. Lashley appealed.

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 was unilaterally set and what constituted a reasonable time for performance depended upon the facts and circumstances of the particular case.

Here, assuming that the stipulation designated March 31, 2011 as the date to perform the contract, the stipulation did not inform Lashley that, if he did not perform, he would be considered in default. Since BDL failed to establish, prima facie, its entitlement to judgment as a matter of law dismissing the amended complaint,  its motion  for summary judgment dismissing the amended complaint should have been denied.

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