This was originally published on the SGR blog.
On January 4, 2013, Thelma Sosa and Aron Froimovits signed a handwritten, one-page agreement in which Sosa agreed to sell to Froimovits or his assignee two separate properties in Brooklyn, one located on Menahan Street and the other on Central Avenue. The agreement contained a single purchase price, $1,375,000, for both properties. Froimovits was to give Sosa a deposit of $1,000 “plus $99,000 upon demand of [Sosa] to be held in escrow with [Sosa’s] attorney or a title company.” Froimovits gave Sosa a check for $1,000. No demand was ever made for the additional $99,000.
The Menahan property was to be delivered at closing with at least four apartments vacant. And the Central Avenue property was to be delivered with at least three vacant apartments. The closing was to be held “30 days after notice to buyer that the properties are vacant.”
Froimovits assigned his rights under the agreement to Jefferson Holdings. By letter dated April 30, 2014, an attorney for Jefferson Holdings gave notice to Sosa that his client was ready, willing, and able to close on May 12, 2014, and that time was of the essence. The closing never occurred.
Jefferson Holdings sued Sosa for specific performance of the agreement as it pertained only to the sale of the Menahan property and to recover damages for breach of contract. Both parties move for summjudgment. Supreme Court denied Jefferson Holdings’ motion for specific performance and granted Sosa’s cross motion to dismiss the complaint.
To be enforceable, a contract for the sale of real property must be evidenced bwritingsufficienttsatisfythe statute of frauds. To satisfy the statute of frauds, a memorandum evidencing a contract and subscribed by the party to be charged must designate the parties, identify and describe the subject matter, and state all of the essential terms of a complete 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. And where a contract’s material terms are not reasonably definite, the contract is unenforceable.
Here, Sosa demonstrated her prima facie entitlement to judgment as a matter of law dismissing the complaint on the basis that the agreement did not satisfy the statute of frauds. The agreement did not state all of the essential terms, including allocation of the price between the two properties, whether one property could be sold without the other, the terms of payment, and the risk of loss during the sale period, and did not mention the adjustments for taxes and utilities which would customarily be included in a transaction of this nature.
Accordingly, the appellate court agreed with Supreme Court’s determination to grant Sosa’s cross motion for summary judgment dismissing the complaint and to deny Jefferson Holding’s motion for summary judgment on the complaint.
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On January 16, 2018, Jerry Makris and James Boylan entered into a “Purchase Agreement” for property located in Goshen. The agreement set a total price of $1,480,000, with a $74,000 down payment due “upon the signing of a formal contract of sale,” and provided that the sale was not subject to a mortgage contingency. The agreement also provided that certain household items were included in the sale, set a closing date of April 15, 2018 “or ASAP,” stated that it was “contingent upon Purchaser and Seller obtaining approval of this Agreement by their respective attorneys,” and was subject to a 45-day due diligence period.
Counsel for Boylan sent a letter dated January 22, 2018 to counsel for Makris stating that, after consulting with his office, Boylan elected not to proceed with the real estate transaction. Makris’ attorney claimed that the letter was sent on January 25, 2018, nine days after the contract was signed, while Boylan’s counsel claimed that the letter was sent on January 23, 2018, seven days after the contract was signed.
Makris sued for specific performance on the contract, and filed a notice of pendency against the property. Boylan moved to dismiss the complaint and to discharge the notice of pendency.
Boylan argued that the agreement was not a valid and enforceable contract because it did not satisfy the statute of frauds and the required attorney approval by their’ attorney was not given. Makris opposed the motion and cross-moved to disqualify the Boylan’s attorney.
Supreme Court granted Boylan’s motion to dismiss the complaint and denied, as academic, Makris’ motion to amend the notice of pendency and cross motion to disqualify Boylan’s attorney. Makris appealed.
On a motion to dismiss a complaint based on the statute of frauds, a court must take the allegations as true and resolve all reasonable inferences in favor of the pleader. Pursuant to the General Obligations Law, a contract for the sale of real property is void unless the contract or some note or memorandum thereof, expressing the consideration, is in writing, subscribed by the party to be charged, or by his lawful agent authorized by writing.
A writing satisfies the statute of frauds if it identifies the parties to the transaction, describes the properties to be sold with sufficient particularity, states the purchase price and the down payment required, and is subscribed by the party to be charged. Here, the purchase agreement identified the parties to the transaction, described the property to be sold with reasonable particularity, stated the purchase price and down payment required, set a closing date, and stated that the transaction was not subject to mortgage financing. The additional fact that the agreement stated that a more formal contract was to be signed did not render the purchase agreement unenforceable. Accordingly, the purchase agreement satisfied the statute of frauds.
However, Boylan was entitled to dismissal of the complaint. On a motion to dismiss a complaint for failure to state a cause of action, the court must afford the pleading a liberal construction, accept all facts as alleged in the pleading to be true, accord the plaintiff the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory. Moreover, where evidentiary material is submitted and considered on a motion to dismiss a complaint, and the motion is not converted into one for summary judgment, the motion should not be granted unless it is shown that a material fact as claimed by the plaintiff to be one is not a fact at all and unless it can be said that no significant dispute exists regarding it.
The evidentiary material submitted by Boylan demonstrated that Makris had no cause of action. Contrary to Makris’contention, the evidence conclusively established that the purchase agreement was unenforceable because it was subject to attorney approval, which was not given by Boylan’s’ attorney. As the purchase agreement contained no time limit within which approval was required, a reasonable time for cancellation was implied. Whether, as acknowledged by Boylan, it was seven days after the parties entered into the purchase agreement that his attorney disapproved it, or as alleged by Makris, it was nine days after the parties entered into the purchase agreement that Boylan’s attorney disapproved it, the time between the parties entering into the agreement and the disapproval was minimal, during which no prejudice inured to Makris and was a reasonable time period as a matter of law.
Accordingly, the appellate court agreed with Supreme Court’s determination to grant Boylan’s motion to dismiss the complaint and to discharge the notice of pendency.