TIME OF THE ESSENCE NOTICE CANCELS APARTMENT SALE CONTRACT
Plaintiff-purchaser sought an injunction preventing the defendant from selling his Manhattan cooperative apartment and enjoining the effectiveness of the "time of the essence" clause on a June 27, 2002 default notice sent by the seller to the purchaser. The plaintiff's complaint set forth five causes of action: (1) Breach of contract and specific performance; (2/3) Injunctions pertaining to "time of the essence" clause and the potential that the seller was seeking to commence an action against the plaintiff in a landlord/tenant action; (4) Damages involving rent payments which had not been paid; and (5) Legal fees.
Plaintiff, an attorney, resided in the apartment and lived there under a rent stabilized lease. The parties executed an agreement for the sale of the apartment at the insider price of approximately $600,000. The closing of the apartment did not take place when the contract specified and the sellers issued the first of its default notices. Pursuant to the terms of the June 25, 2001 notice, the purchaser was to close on the apartment by July 21, 2001 or the contract would be terminated; however, by July 31, 2001 renovations were still incomplete, in part due to a failure of the buyer to deliver needed construction materials. The sellers informed the purchaser in May of 2002 that the remaining renovations would be completed with or without the upgraded materials that the buyer was to have provided to the contractors and the buyer was instructed to schedule a closing date, which he did not do. On June 27, 2002 the sellers issued written notice informing the plaintiff-purchaser of the new closing date and stating that they had fulfilled all obligations under the contract and were ready, willing and able to close title on the apartment. The purchaser was further advised that "time was of the essence" for the closing and the purchaser's failure to attend would result in his default under the contract at which time the sellers would cancel the contract and return the downpayment.
Under New York Law, a buyer's refusal to close is deemed unreasonable when it is based on the failure of a seller to complete minor or insignificant terms of the contract. Moreover, under these circumstances, the buyer is not entitled to specific performance on the contract. In the instant case, the sellers stated that all of the renovation work on the apartment had been completed but also contended without supporting any of its allegations with specifics, that certain upgrade items were not installed. The only specific flaws that the buyer pointed to in his papers were that the sellers failed to install a bookcase and transom; however, examination of the contract of sale and its riders did not indicate that the sellers were required to install these items.
Where a contract for the sale of real property does not include a "time of the essence", the law allows for reasonable time in which to tender performance, regardless of whether the contract designates a specific date for performance. Time may be made of the essence by either party through the use of "clear, distinct, and unequivocal notice to that affect giving the other party a reasonable time in which to act." The reasonableness of a particular time frame is dependent on the facts and circumstances of the particular case. In prior cases, the court has held that an eight-day notice of a final closing date where the closing had been scheduled and re-scheduled for lack of mortgage financing, which was not required under the contract of sale, was reasonable. Other courts have reached opposite conclusions in holding where the plaintiff was not afforded a period of time after the closing date to perform, an eighteen-day advance notice of the closing was unreasonable. In the instant case, the original closing date was June 15, 2001. On June 25, 2001 the sellers mailed the buyer's the first of two letters containing "time of the essence" language. Defendant provided plaintiffs 36 days of clear, distinct and unequivocal notice of a new closing date as well as notifying the purchaser that time was of the essence and notice that a default will result in termination of the contract and retention of plaintiff's downpayment.
Defendant's second letter containing "time of the essence" language is dated June 27, 2002. This letter, in addition to stating that defendants were ready, willing and able to close also unequivocally set a closing date of July 31, 2002, "time being of the essence". Once again, the purchaser was provided with 34 days of clear, distinct and unequivocal notice of a new closing date. Since the buyer did not show a probability of success, plaintiff's motion for a preliminary injunction enjoining the effectiveness of the time of the essence clause was denied and the seller was allowed to commence summary proceedings against the buyer to evict him from the premises.
Warner v. Reads Ventures Corp., Supreme Court, New York County
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