Cooperatives & Condominiums

Purchasers' Attempt to Retract Repudiation of Sale Contract Ineffective

Beinstein v. Navani

NYLJ 8/6/15, p. 22, col. 1

AppDiv, First Dept.

(4-1 decision; memorandum opinion; dissenting memorandum by Saxe, J.)

In an action by condominium sellers for a declaration that they are entitled to retain the $365,000 down payment, purchasers appealed from Supreme Court's order authorizing release of the down payment to sellers. The Appellate Division affirmed, holding that purchasers had repudiated the contract and had not retracted the repudiation.

On June 18, 2012, purchasers contracted to buy the subject apartment for $3,650,000. On July 27, purchasers learned that the building's board had determined that firestopping throughout the building was inadequate. Two weeks later, on Aug. 12, purchasers notified sellers that they did not intend to go through with the purchase. The parties continued to have discussions until Oct. 12, when sellers' lawyer wrote to purchasers' lawyer that it was now clear that purchasers did not intend to close, and said that if purchasers did intend to close, purchasers' lawyer should “contact me immediately.”

On Oct. 26, purchasers' lawyer responded by confirming that purchasers were ready to close as soon as they received information from the condo board's managing agent, conducted a reinspection, and completed an updated title search. Sellers' lawyer responded the same day that seller would not close on the June 18 contract because purchasers had already breached that contract. Sellers' lawyer left open the possibility on a new sale contract. Sellers' lawyer then demanded that the escrow deposit be released. When purchasers' lawyer objected, sellers brought this action, and purchasers counterclaimed, seeking specific performance and contending that the inadequate firestopping (which had by now been remedied) constituted breach of the contract. Purchasers invoked a provision of the sale contract providing that it “is a condition of Purchaser's obligation to close” that “any written notice to Seller from the Condominium ' that the Unit is in violation” of condominium rules “shall have been cured.”

Purchasers contended that the condominium's rules required compliance with valid laws, and that the inadequate firestopping, which the condominium board had brought to the attention of all unit owners, constituted a violation of the law that had to be cured. Supreme Court rejected purchasers' argument and declared that sellers were entitled to the deposit.

In affirming, the Appellate Division majority emphasized that purchasers had not established that the condominium had delivered a written notice to sellers that they were in violation of the condominium's governing documents. The court also noted that no provision in the contract justified purchasers' initial reason for cancelling ' that the absence of firestopping threatened the safety of their children. In addition, the court's majority pointed to language in the sale contract discussing a 2011 notice from the board discussing the firestopping issue. The majority then held that the purchasers' retraction of their repudiation was ineffective because it imposed conditions on the purchasers' willingness to close.

Justice Saxe, dissenting, concluded that purchasers' Oct. 26 letter constituted an effective retraction of their repudiation. He concluded first that the conditions imposed in that letter were not material and did not make the retraction ineffective. He also noted that sellers had not adduced any evidence to establish that they had changed their position between the time of their Oct. 12 letter and the time of the retraction.

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Co-op Corporation Entitled to Warrant of Eviction

111-35 75th Ave Owners Corp. v. Hendrix

NYLJ 9/3/15, p. 21, col. 1

AppTerm, 2nd, 11th and 13th Districts

(memorandum opinion)

In co-op corporation's summary holdover proceeding predicated on an illegal sublet, unit owner appealed from Civil Court's issuance of a warrant of eviction. The Appellate Term affirmed, holding that even if tenant was entitled to extension of a 10-day cure period, tenant had not corrected the breach.

In April 2012, the co-op corporation, as landlord, obtained a final judgment of possession based on unit owner's illegal sublet. Civil Court stayed the warrant of eviction for 10 days to permit unit owner to cure by commencing a proceeding to remove the illegal occupants. The co-op corporation then moved for issuance of a warrant of eviction based on unit owner's failure to cure. Civil Court denied that motion on Aug. 10, 2012, noting that unit owner had submitted evidence that she had served a 30-day notice of termination, but acknowledging that she had not cured the breach by obtaining consent from the owners of at least 65% of the co-op's shares, as required by a provision in the proprietary lease. The co-op corporation again moved for a warrant of eviction, but on Dec. 21, 2012, Civil Court again denied the motion pending a compliance hearing. On April 10, 2013, Civil Court granted the co-op corporation's motion, concluding that unit owner had failed to establish cure by providing evidence that she had obtained consent of owners of 65% of the shares.

In affirming, the Appellate Term concluded that unit owner's default in this case was not readily curable within 10 days, because bringing a proceeding to remove the occupant would not itself be enough to cure the default. The court then noted that in any event, Civil Court lacked authority to extend the 10-day period. The court then held that even if the co-op corporation acquiesced in the extension of the cure period, unit owner did not cure within the extended cure period, either by removing the occupants or by obtaining consent from other shareholders. As a result, landlord was entitled to issuance of a warrant of eviction.

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Purchasers' Attempt to Retract Repudiation of Sale Contract Ineffective

Beinstein v. Navani

NYLJ 8/6/15, p. 22, col. 1

AppDiv, First Dept.

(4-1 decision; memorandum opinion; dissenting memorandum by Saxe, J.)

In an action by condominium sellers for a declaration that they are entitled to retain the $365,000 down payment, purchasers appealed from Supreme Court's order authorizing release of the down payment to sellers. The Appellate Division affirmed, holding that purchasers had repudiated the contract and had not retracted the repudiation.

On June 18, 2012, purchasers contracted to buy the subject apartment for $3,650,000. On July 27, purchasers learned that the building's board had determined that firestopping throughout the building was inadequate. Two weeks later, on Aug. 12, purchasers notified sellers that they did not intend to go through with the purchase. The parties continued to have discussions until Oct. 12, when sellers' lawyer wrote to purchasers' lawyer that it was now clear that purchasers did not intend to close, and said that if purchasers did intend to close, purchasers' lawyer should “contact me immediately.”

On Oct. 26, purchasers' lawyer responded by confirming that purchasers were ready to close as soon as they received information from the condo board's managing agent, conducted a reinspection, and completed an updated title search. Sellers' lawyer responded the same day that seller would not close on the June 18 contract because purchasers had already breached that contract. Sellers' lawyer left open the possibility on a new sale contract. Sellers' lawyer then demanded that the escrow deposit be released. When purchasers' lawyer objected, sellers brought this action, and purchasers counterclaimed, seeking specific performance and contending that the inadequate firestopping (which had by now been remedied) constituted breach of the contract. Purchasers invoked a provision of the sale contract providing that it “is a condition of Purchaser's obligation to close” that “any written notice to Seller from the Condominium ' that the Unit is in violation” of condominium rules “shall have been cured.”

Purchasers contended that the condominium's rules required compliance with valid laws, and that the inadequate firestopping, which the condominium board had brought to the attention of all unit owners, constituted a violation of the law that had to be cured. Supreme Court rejected purchasers' argument and declared that sellers were entitled to the deposit.

In affirming, the Appellate Division majority emphasized that purchasers had not established that the condominium had delivered a written notice to sellers that they were in violation of the condominium's governing documents. The court also noted that no provision in the contract justified purchasers' initial reason for cancelling ' that the absence of firestopping threatened the safety of their children. In addition, the court's majority pointed to language in the sale contract discussing a 2011 notice from the board discussing the firestopping issue. The majority then held that the purchasers' retraction of their repudiation was ineffective because it imposed conditions on the purchasers' willingness to close.

Justice Saxe, dissenting, concluded that purchasers' Oct. 26 letter constituted an effective retraction of their repudiation. He concluded first that the conditions imposed in that letter were not material and did not make the retraction ineffective. He also noted that sellers had not adduced any evidence to establish that they had changed their position between the time of their Oct. 12 letter and the time of the retraction.

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Co-op Corporation Entitled to Warrant of Eviction

111-35 75th Ave Owners Corp. v. Hendrix

NYLJ 9/3/15, p. 21, col. 1

AppTerm, 2nd, 11th and 13th Districts

(memorandum opinion)

In co-op corporation's summary holdover proceeding predicated on an illegal sublet, unit owner appealed from Civil Court's issuance of a warrant of eviction. The Appellate Term affirmed, holding that even if tenant was entitled to extension of a 10-day cure period, tenant had not corrected the breach.

In April 2012, the co-op corporation, as landlord, obtained a final judgment of possession based on unit owner's illegal sublet. Civil Court stayed the warrant of eviction for 10 days to permit unit owner to cure by commencing a proceeding to remove the illegal occupants. The co-op corporation then moved for issuance of a warrant of eviction based on unit owner's failure to cure. Civil Court denied that motion on Aug. 10, 2012, noting that unit owner had submitted evidence that she had served a 30-day notice of termination, but acknowledging that she had not cured the breach by obtaining consent from the owners of at least 65% of the co-op's shares, as required by a provision in the proprietary lease. The co-op corporation again moved for a warrant of eviction, but on Dec. 21, 2012, Civil Court again denied the motion pending a compliance hearing. On April 10, 2013, Civil Court granted the co-op corporation's motion, concluding that unit owner had failed to establish cure by providing evidence that she had obtained consent of owners of 65% of the shares.

In affirming, the Appellate Term concluded that unit owner's default in this case was not readily curable within 10 days, because bringing a proceeding to remove the occupant would not itself be enough to cure the default. The court then noted that in any event, Civil Court lacked authority to extend the 10-day period. The court then held that even if the co-op corporation acquiesced in the extension of the cure period, unit owner did not cure within the extended cure period, either by removing the occupants or by obtaining consent from other shareholders. As a result, landlord was entitled to issuance of a warrant of eviction.

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