Category Archives: Vendor/Purchaser Disputes

Did De Minimus Plantings Lead to Adverse Possession?

This was originally posted to the SGR Blog.

“Mox Nix” If Old or New Law Controlled.

Both owners of contiguous real property have the right to landscape their side of the boundary. But, as a recent case illustrates, a Court may have to decide if, as and when such plantings and maintenance on or across the line rose to the level of adverse possession.

E. 12th St. Holding LLC sued Mousa Lati, the owner of an adjoining property, for adverse possession, trespass, and damages.

Holding’s predecessors (Bettina and Nathan Avidan) bought the property in 1995 as husband and wife; built a new house which was completed in 1998; and transferred title to an LLC in 2015 of which the Avidans are the managing members.

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Was Offer to Sell Mortgaged Residence at Auction Timely Revoked?

This was originally posted on the SGR Blog.

What Was Remedy If Mortgage Balances Exceeded Winning Bid?

It is not unusual in a hot suburban residential real estate market for an offering to morph into a “bidding war”- a de facto auction. And, on occasion, an auction is the sales method of choice from the start. But, as a recent case illustrates, a real estate auction sale may raise some unique factual disputes and concomitant legal issues.

Theodore Brois and Helene Brois authorized Concierge Auction, LLC, to conduct an auction of their property located at 3 Tallwoods Road in Armonk, New York, by an agreement dated May 21, 2018. The Auction Marketing Agreement provided that the auction “shall be conducted without reserve” and that the Brois, as sellers, “shall be obligated to sell the [property] to the highest bidder.” That agreement included a provision giving the Brois the right to cancel the auction, by written notice of cancellation and certain payments, which right expired at 12:00 p.m. on the day of the auction. The Broises pre-executed a contract of sale for the property on June 26, 2018. They also signed a document entitled an Auction Sale Acknowledgment on June 26, 2018, acknowledging that the highest opening bid was $1,500,000.

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Town Voided Certificate of Occupancy Before Closing: Was Non-Disclosure Excused by “Caveat Emptor”?

This was originally posted on the SGR Blog.

Caveat emptor”—or “buyer beware”—historically was rule number one of real property purchase and sales. But did the rule still control as to the duty to discover or disclose that a certificate of occupancy had been voided?

David Chapman sought damages for, fraud arising from his purchase of a home from Adam and Jennifer Jacobs. Chapman alleged that the Jacobs represented that there was a certificate of occupancy for a pole barn situated on the property when, in fact, the Town of Farmington voided the certificate of occupancy when it discovered that the barn encroached on the adjoining property.

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Gov’t Approval Meets Condition Precedent in Rockland County: Did Seller Have Right to Cancel Real Estate Contract of Sale?

This was originally posted on the SGR Blog.

Real property purchase and sale contracts often have so-called “conditions precedent” to closing– events that must occur before a party is obligated to close. But, as a recent case illustrates, disputes often arise about which party is the beneficiary of the condition and the concomitant right to cancel.

B & A Realty Management, LLC and John Gloria entered into a purchase and sale agreement. Gloria agreed to sell an undeveloped parcel of property in Suffern to B & A Realty for $1 million. The agreement was contingent upon B & A Realty, as the purchaser, obtaining all governmental approvals for the development of the parcel within 24 months from the end of a 90-day due diligence period. The date by which B & A Realty was to obtain the approvals was referred to as the approval date. And the agreement contained a provision allowing B & A Realty to extend the approval date by three months on two occasions. The closing was to occur 30 days after the approval date.

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Was There Asbestos in A/C Ducts of Resi Condo? Court Adjudicates Buyer’s Right to Intrusive Testing

This was originally posted on the SGR Blog.

Contracts for the sale of residential property often contain both generic and specific provisions with respect to the purchaser’s right to inspect the premises between the time the contract is signed and the actual closing and transfer of title. But, as a recent case illustrates, the scope of that inspection right may nevertheless be the basis of a dispute.

Oren Mor and Hadar Laor (for convenience, the “Mors”) owned a residential condominium unit 3C at 15 Hubert Street in Manhattan. Jessica Fisher signed a contract to buy the unit for $3,875,000, with a $387,500 deposit. She contemplated making extensive alterations to meet her specific requirements. Fisher suffered from various medical ailments, including allergy-induced asthma, which required her to investigate an apartment’s HVAC units and soundproofing. And alleged that she was promised unfettered access to the apartment prior to the closing so that she could perform various inspections. Despite purported oral representations about her access to the apartment, Fisher claimed that her request for an asbestos inspection was denied. She claimed that this was a routine inspection and required in order to submit any alteration plans.

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Trust But Verify: Failure to Memorialize Anticipated Extension of Time of the Essence Closing Date Leads to Loss of $937,500 Downpayment

This was originally posted on the SGR Blog.

Wishful thinking and expectations are not a legally cognizable and enforceable plan. The failure to document the adjournment of a time of the essence closing date recently cost the would be purchasers to lose a substantial million down payment.

Suncore Group SA, LLC sought to purchase real property in New York County from 1660 1st LLC. The purchase did not close on the date specified in the purchase agreement. 1660 took the position that the failure to close constituted a default by Suncore, thereby terminating the contract and entitling 1660 to retain Suncore’s down payment.

Suncore sought a declaratory judgment that 1660 was estopped from enforcing the default provision. And that Suncore was entitled to additional time in which to close on the purchase. 1660 counterclaimed, and sought a declaratory judgment that 1660 properly terminated the agreement, and that it was entitled to retain the downpayment (along with attorney fees and costs). 1660 moved for summary judgment on its counterclaims.

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DOWN & DIRTY: FIGHTS OVER REAL ESTATE CONTRACT OF SALE “DOWN PAYMENTS”

The skyrocketing prices for commercial and residential real estate have led to a concomitant increase in enormous – sometimes multi-million dollar-down payments – the right to which often ends in litigation when the transaction ends and the “finger pointing” begins.  Disputes following failures or refusals to close have led to several decisions in the Appellate Division since the year 2016 began, as well as many decisions in the Supreme Court.

Princes Point LLC v. Muss Dev. L.L.C., 2016 NY Slip Op 00783 (1st Dept. February 4, 2016) Continue reading

Four Recent Lessons in Vendor/Purchaser Disputes – Waivers, Architects, Reliance, and Porcupines

By Victor Metsch

DUE DILIGENCE WAIVERS SURRENDER EVEN THE NOMINAL DEFENSES

In Diplomat Properties L.P. v. Komar Five Associates LLC, 899 N.Y.S.2d 237 (1st Dept. April 29, 2010), the First Department considered the sale of the $620 million Diplomat Hotel and Convention Center and related facilities in Hollywood and Hallandale Beach, Fla.

The defendant purchaser, in connection with an extension of the closing date from Aug. 1, 2007, executed an amendment to the lease acknowledging that its due diligence period had ended on June 4, 2007.

The defendant then failed to close.  It argued that the plaintiff had violated numerous contract provisions, the most notable of which was a failure to disclose an alleged agreement with the city of Hallandale that future development of the property be phased in over a 10-year period.

But the city of Hallandale twice confirmed that, notwithstanding discussions of any restrictions, there was no agreement between it and the seller to limit development on the building in any way.1

Given this position by the city, Komar’s claim that its obligations under the contract never came due because of the plaintiff seller’s nonperformance was little more than a nominal defense, thrown up in the slim hope of recovering $30 million in contract deposits.

But by agreeing, in connection with the extension of the closing date, to waive due diligence objections, Komar effectively offered its nominal defense to the court in one hand while offering $30 million to the plaintiff with the other.

The lesson here?  Before waiving due diligence objections, consider the whole deal and, if the client might want to back out, keep in mind that the waiver will surrender many nominal defenses.

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