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Cooperatives & Condominiums

By ljnstaff | Law Journal Newsletters
June 02, 2017

Vague Purchase Contract
Bohensky v. 3912 Rainspring, LLC
NYLJ 3/3/17, p. 37, col. 4
AppDiv, Second Dept.
(memorandum opinion)
In an action to foreclose a mortgage on a condominium unit, the unit's occupants appealed from Supreme Court's order striking their affirmative defense alleging that mortgagee was not a bona fide encumbrancer. The Appellate Division affirmed, holding that although occupants' possession placed mortgagee on inquiry notice, inquiry would have revealed that occupants had no claim to the subject unit.

In 2008, Kenner, a member of 3912 Rainspring, the sponsor of the condominium complex, executed a note to mortgagee, secured by a mortgage on unit A-3, located at a specified street address. Occupants had been in possession of the apartment since November 2007. When, in 2013, mortgagee brought this action to foreclose on the mortgage, occupants contended that their rights were superior to those of the mortgagee, relying on a contract they had signed with 3912 Rainspring before taking possession. Supreme Court awarded summary judgment to mortgagee, and occupants appealed.

In affirming, the Appellate Division conceded that, even though the occupants had not recorded any instrument giving them title to the unit, their possession served as notice to the world of any right the occupants were able to establish. But the court then held that occupants could establish no right to the unit They had never received a deed to the unit, and the purchase contract on which they relied did not satisfy the statute of frauds because it did not provide a street address for unit A-3, did not set forth the time or terms of payment, the required financing, the closing date, the quality of title to be conveyed, or the risk of loss during the sale period. Moreover, the court held that the partial performance exception to the statute of frauds was not applicable because the payments made by occupants were not unequivocally referable to the agreement between the parties.

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