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Electricity has returned and back to work!

SANDY!

We are in but with limited power. We can only return phone calls.
Stay safe!

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But if the Property Disclosure Statement is not delivered to the Buyer (and Buyer receives $500 credit) or if the disclosure regarding the Certificate of Occupancy is marked "Unknown", what is the next step for the Buyer?

PRO BONO FAIR AT NASSAU COUNTY BAR ASSOCIATION

The Nassau County Bar Association invite all Nassau County residents to a Free Legal Fair. Attorneys knowledgeable in many areas of law will be available to meet with residents to provide information. Attorneys do not provide legal representation but residents are invited to bring their questions. To be held at the The Nassau County Bar Association in Mineola, NY. Registration required by calling 516-747-4070. More info at www.nassaubar.org

I will be a volunteer attorney from 3-5.

MY DAY AS AN ARBITRATOR

The New York State Court System has established a Statewide Fee Dispute Resolution Program (FDRP) to resolve attorney-client disputes over legal fees through arbitration (and in some cases mediation).

Yesterday, I was honored to be appointed as an arbitrator in a fee dispute. It is also very instructive.

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Thus the Property Disclosure Statement, if delivered, would advise the Buyer as follows:

"9. Are there certificates of occupancy related to the property? If No, explain below . . . . . . . . .
            Yes             No                Unkn                  NA"

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Of course, if the Seller does not have all C of O's and furnishes a Property Disclosure Statement, the the Buyer should be advised of this issue.

RECENT ARTICLE

A mention (see 1976) in the recent alumni magazine publication "De Novo" from St. John's University School of Law:

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Now if the Seller and Buyer want to go to contract but the Seller does not have all C of O's, should the Seller first inform the Buyer?

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Note the statement from yesterday's post: "Many banks and lending institutions require an up-to-date Certificate of Occupancy before they will issue a mortgage."

However, even if no bank was involved, even if a bank was involved and did not require the C of O, every Buyer should insist upon it.

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Basically, a certificate of occupancy is a document issued by a local government agency or building department certifying a building's compliance with applicable building codes and other laws, and indicating it to be in a condition suitable for occupancy. I refer to a discussion in the website of a New York engineering firm Heimer® Engineering PC:

"When all the requirements of the building code and all other local municipal requirements have been met, a Certificate of Occupancy is issued. The Certificate of Occupancy generally means that the building complies with all codes and regulations applicable at the time of construction.

Prior to issuing the Certificate of Occupancy, a building inspector has probably checked the construction project several times during the project. Even so, the Certificate of Occupancy is not a guarantee from the building department that the building is perfect. The inspection is limited to areas that could be examined during the building inspector's inspection. The Certificate of Occupancy gives you some assurance that the building complied with applicable codes and regulations at the time of construction.

Many banks and lending institutions require an up-to-date Certificate of Occupancy before they will issue a mortgage. In some cases a Certificate of Occupancy cannot be issued because no building permit was issued prior to construction, and the building inspector was not called in during construction. In these cases, the building department may issue a Certificate of Alteration, Certificate of Compliance, or Certificate of Completion. A similar document may be issued for outside items like decks and pools, or inside items like a wood burning stove. Consult your local building department for more information if you are looking at a building that has been altered."

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Here is a problem I have discovered in two different residential sales. It is based on the following clause that is contained in the standard RESIDENTIAL CONTRACT OF SALE Jointly Prepared by the Real Property Section of the New York State Bar Association, the New York State Land Title Association, the Committee on Real Property Law of the Association of the Bar of the City of New York and the Committee on Real Property Law of the New York County Lawyers' Association. (11/00):

" 16. Conditions to Closing. This contract and Purchaser's obligation to purchase the Premises are also subject to and conditioned upon the fulfillment of the following conditions precedent:

........................

(b) The delivery by Seller to Purchaser of a valid and subsisting Certificate of Occupancy or other required certificate of compliance, or evidence that none was required, covering the building(s) and all of the other improvements located on the property authorizing their use as a family dwelling at the date of Closing."

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In Nassau County, the custom is to have the Seller's counsel draft the contract of sale. Counsel will usually send it to Buyer's counsel with the following language:

"Attached please find the proposed Contract of Sale.

If the Contract meets with your clients' approval, please forward four (4) originally executed copies to me, together with the down payment check in the sum of $XXXXXXX, payable to "YYYYYYY, as attorney". I will then review the terms with my clients and, provided the terms are acceptable, I will have them execute the Contracts and return two (2) fully executed copies to you. I will deposit the escrow check at the time I forward the fully executed copies to you at which time the Contract shall be binding."

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The two cases cited and discussed illustrate the ambiguity that may arise when contracts are "in the mail" but not yet signed.

This is a common practice in many types of agreements - rather than having a sit down contract execution, arrangements are made through the mail.

But when residential sale contracts are executed that way, an issue may then arise as to when a binding contract exits.

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The decision in Church of God v. 4TH CHURCH, 76 AD 2d 712 (App. Div. 2nd Dept. 1980):

"This is an appeal by the defendant from a judgment of the Supreme Court, Kings County, which awarded the plaintiff money damages for breach of a contract to sell real property owned by the defendant and upon which its church edifice was erected. The plaintiff cross-appeals from so much of the judgment as failed to direct specific performance of the contract.

Because of a decline in its membership the defendant, Fourth Church of Christ, Scientist, of Brooklyn, New York, decided to sell its house of worship and move to a smaller facility which it also owned. Plaintiff, Church of God of Prospect Plaza, offered to buy the real property and, after negotiations, defendant's membership voted unanimously to sell the same in accordance with plaintiff's offer. In accordance with defendant's instructions, its attorneys prepared a proposed contract and sent it to plaintiff. Plaintiff executed the contract and returned it with a deposit according to the instructions given by the attorneys for the defendant.

At about the same time, defendant received an offer from a sister church to merge their congregations and also received an all cash offer for the property from yet another prospective purchaser. Subsequent to the return of the contract signed by the plaintiff, defendant's membership voted to consolidate with the sister church and to rescind the acceptance of plaintiff's offer. The contract was never executed by the defendant.

In light of the merger, plaintiff was content to forego its rights to purchase the property, but when it subsequently developed that the merger was not permitted by defendant's mother church and defendant entered into a contract of sale with the other buyer which had made an "all cash" offer, plaintiff decided to commence this action. In fact, the merger was eventually approved, the contract between defendant and the second offeree was canceled and that offeree purchased the property of defendant's sister church. Defendant's attorneys, who had obtained court leave approving all the transactions except the contract with the plaintiff, never informed the court of the plaintiff's status.

On a prior appeal in this action, we reversed an order granting summary judgment to the defendant and remitted the action to determine whether certain signed corporate minutes of the defendant authorizing the sale constituted a sufficient memorandum of the contract of the parties to satisfy the Statute of Frauds (Church of God of Prospect Plaza v Fourth Church of Christ, Scientist, of Brooklyn, 59 AD2d 732). Pursuant to court-ordered discovery, plaintiff obtained the defendant's signed corporate minutes authorizing the sale and thereafter it sought summary judgment. Special Term held that the "corporate minutes were duly executed and constituted a sufficient signing to satisfy the Statute of Frauds and an adequate acceptance of the plaintiff's offer" and it set the action down for a determination of the fairness of the contract and as to whether there were any valid reasons for refusing plaintiff's request for performance of the agreement (see Religious Corporations Law, § 12). After an evidentiary hearing the Referee determined that the contract was fair and enforceable and offered the defendant an alternative of either specifically performing the contract or paying damages in the amount of the difference between the contract price of $150,000 and the fair market value of $225,000 at the date of the hearing, plus plaintiff's attorney's fees. The judgment appealed from was entered in accordance with the defendant's election to pay damages.

The corporate minutes of the defendant indicate that its membership unequivocally accepted the offer of the plaintiff to purchase its church property on the terms proposed by the plaintiff. Although the vote of defendant's membership constituted an acceptance, such acceptance was not effective until communicated to plaintiff (see White v Corlies, 46 N.Y. 467, 469; 1 Corbin, Contracts, § 67; Simpson, Contracts [2d ed], § 36). At defendant's direction, its attorneys sent plaintiff a written instrument for execution on its behalf which embodied the same terms as had been proposed by plaintiff and agreed upon at defendant's membership meeting. The sending of the transmittal letter and this formal written instrument for execution constituted sufficient notice of acceptance.

Defendant contends that it never intended to be bound until the written contract was executed by both parties. In determining whether the parties entered into a contract, it is necessary to examine the words and deeds of the parties which constitute the objective manifestations of their intent 715*715 (see Brown Bros. Elec. Contrs. v Beam Constr. Corp., 41 N.Y.2d 397, 399). A review of the record demonstrates that the parties had come to a meeting of minds on the terms of their contract and all that remained was the mere memorialization of their agreement in a formal document. As the Court of Appeals explained in the case of Matter of Municipal Consultants & Publishers v Town of Ramapo (47 N.Y.2d 144, 148-149): "Generally, where the parties contemplate that a signed writing is required there is no contract until one is delivered (Scheck v Francis, 26 N.Y.2d 466; Schwartz v Greenberg, 304 N.Y. 250). This rule yields, however, when the parties have agreed on all contractual terms and have only to commit them to writing. When this occurs, the contract is effective at the time the oral agreement is made, although the contract is never reduced to writing and signed. Where all the substantial terms of a contract have been agreed on, and there is nothing left for future settlement, the fact, alone, that it was the understanding that the contract should be formally drawn up and put in writing, did not leave the transaction incomplete and without binding force, in the absence of a positive agreement that it should not be binding until so reduced to writing and formally executed (Disken v Herter, 73 App Div 453, affd 175 N.Y. 480; 1 Williston, Contracts, § 28; see, also, Matter of Meister, 39 AD2d 857, affd 32 N.Y.2d 626; Belmar Contr. Co. v State of New York, 233 N.Y. 189, 194)." Neither the minutes of the defendant's corporate meeting at which plaintiff's offer was accepted nor the transmittal letter expressly or impliedly reserved the effectiveness of the agreement until the formal contract was signed. Accordingly, we find that the parties duly contracted for the sale of defendant's church edifice to plaintiff.

Defendant next contends that that contract is unenforceable by reason of the Statute of Frauds (see General Obligations Law, § 5-703, subd 2). It is our opinion, however, that the plaintiff's written offer, the signed corporate minutes of the defendant accepting the terms of that offer and the formal unsigned contract prepared by defendant's attorneys which unequivocally refers to the same transaction, when read together, constitute a sufficient memorandum of the contract to satisfy the Statute of Frauds (see Scheck v Francis, 26 N.Y.2d 466, 470-471; Crabtree v Elizabeth Arden Sales Corp., 305 N.Y. 48, 54-56; DFI Communications v Greenberg, 41 N.Y.2d 602, 606-607).

The next question is whether the Referee to hear and determine erred in granting approval of the contract between plaintiff and defendant pursuant to the provisions of certain relevant statutes. Subdivision 1 of section 12 of the Religious Corporations Law provides that in order to sell any of its real property, such a corporation must apply for and obtain leave of court pursuant to section 511 of the Not-For-Profit Corporation Law. Subdivision (d) of section 511 provides that the court may authorize the sale if it appears to the court's satisfaction that: "the consideration and the terms of the transaction are fair and reasonable to the corporation and that the purposes of the corporation or the interests of the members will be promoted [thereby]".

The law is clear that a religious corporation can enter into a valid contract for the sale of its real property without first obtaining court approval (Muck v Hitchcock, 149 App Div 323, 328-329, revd on other grounds 212 N.Y. 283; Congregation Beth Elohim v Central Presbyt. Church, 10 Abb Prac [NS] 484, 488-489; Sun Assets Corp. v English Evangelical Lutheran Church of Ascension of Borough Park, Brooklyn, 19 Misc 2d 187, 192). Although a court of equity may decree specific performance of an executory contract for the sale of the real property of a religious corporation (Muck v Hitchcock, 149 App Div 323, 328-329, supra; Sun Assets Corp. v English Evangelical Lutheran Church of Ascension of Borough Park, Brooklyn, supra, p 192; Bounding Home Corp. v Chapin Home for Aged & Infirm, 19 Misc 2d 653; Congregation Beth Elohim v Central Presbyt. Church, supra, p 490), it must first determine, in accordance with subdivision (d) of section 511 of the Not-For-Profit Corporation Law, that the terms and consideration of the transaction are fair and reasonable and that the purposes of the corporation or interests of its members will be promoted by the sale (cf. Associate Presbyt. Congregation of Hebron v Hanna, 113 App Div 12, 14). The purpose of this requirement is to protect the members of the religious corporation, the real parties in interest, from loss through unwise bargains and from perversion of the use of the property (Bowen v Trustees of Irish Presbyt. Congregation in City of N. Y., 6 Bosw 245; Muck v Hitchcock, 212 N.Y. 283, 287, supra; Congregation Beth Elohim v Central Presbyt. Church, supra, pp 488-489; Madison Ave. Baptist Church v Baptist Church in Oliver St., 1 Abb Prac [NS] 214, 224; Reformed Prot. Dutch Church in Garden-St. v Mott, 7 Paige Ch 77, 83-84).

It thus appears that the Legislature intended the test to have two prongs. First, the court must determine that the terms and consideration of the transaction were not unwise. In assessing the prudence of the bargain, it is our view that the court should look to the conditions prevailing at the time it was struck. Measured in that light, we agree with the Referee that the contract between plaintiff and defendant was fair and reasonable when made. However, the second prong of the test requires the court to determine that the sale would benefit the corporation or that the best interests of its members would be promoted thereby. We hold that in applying this second prong of the test the court may consider whether corporate purposes would have been served or the best interests of the membership promoted at the time the contract was made, but it should be guided primarily by whether those ends would be realized in light of conditions prevailing at the time the issue is presented to the court (cf. Wilson v Ebenezer Baptist Church, 17 Misc 2d 607, 608-609). Examined in this light, it clearly appears that conveyance of defendant's church edifice would now be highly detrimental to the purpose of the corporation and the interests of its members. Sale is now unanimously opposed by defendant's membership because the congregation has merged with another congregation that sold its church as part of the consolidation. Specific performance of this contract would leave the combined congregation of two churches without a house of worship.

It has been said that in making the determination required by section 12 of the Religious Corporations Law and section 511 of the Not-For-Profit Corporation Law the court must either "ratify or veto" the contract of the parties (Matter of Minister, Elders & Deacons of Ref. Dutch Church in Saugerties, 16 Barb 237, 241-242). In the case of Congregation Beth Elohim v Central Presbyt. Church (10 Abb Prac [NS] 484, 492-493, supra), the court clearly explained that although a contract made by a religious corporation for the sale of its property is valid, it is "liable * * * to be defeated" where the court finds it not to be in the best interests of the membership and that where consent to the alienation of the property has been withheld by the court, the contract of sale is "inoperative". It thus appears that contracts for the sale of the real property of a religious corporation are valid, subject to being defeated by the veto of the court, i.e., they are voidable by the court where the two-pronged test of subdivision (d) of section 511 of the Not-For-Profit Corporation Law 718*718 has not been met. For the reasons stated above, we cannot approve the sale of defendant's property under the present conditions and therefore the contract of sale between it and plaintiff is vetoed and rendered inoperative.

By this determination we do not wish to be understood as holding that a religious society may, at its whim, change its mind as to the sale of its real property after it has entered into a contract of sale but before the requisite court approval has been obtained. Where the seller refuses to perform and the buyer sues for specific performance, the trial court must satisfy itself that the test prescribed in subdivision (d) of section 511 of the Not-For-Profit Corporation Law has been met before awarding relief to the plaintiff. Such a determination must be made on a case-by-case basis because it entails the assessment of differing and often complex facts. Suffice it to say that where the terms and price are reasonable and the sale is only opposed by the membership because of a slightly better offer from some other party, a court of equity should not hesitate to approve the contract and decree specific performance. But where, as here, the sale is opposed by the membership because of merger with another church and the combined congregations now use the edifice, the contract is not in the present best interests of the membership and must be disapproved.

The final issue raised by defendant concerns the question of the money damages awarded by the Referee. Since the contract has been voided, that issue has become academic.

Accordingly, the judgment appealed from should be reversed and plaintiff's complaint dismissed.

Judgment of the Supreme Court, Kings County, entered July 5, 1979, reversed, on the law and the facts, without costs or disbursements, and plaintiff's complaint is dismissed."

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Another interesting case as to when a contract exists is Church of God v. 4TH CHURCH, 76 AD 2d 712, (App. Div., 2nd Dept. 1980).

COLUMBUS DAY

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The conclusion in "184 JORALEMON LLC, Plaintiff, v. BROOKLYN LAW SCHOOL, Defendant. 31 Misc 3d 1201(A) Supreme Court, Kings County. Decided March 28, 2011": "

Defendant's motion to dismiss pursuant to CPLR 3211 (a) (1), (5) and (7) is granted in its entirety. Provided that no timely appeal is taken, defendant's motion to cancel the notice of pendency pursuant to CPLR 6514 (a) is granted and the Kings County Clerk is directed to cancel the notice of pendency thirty days from the date a copy of this order is served upon plaintiff. Defendant's motions pursuant to CPLR 6514 (c) and Rule 130-1.1 of the Chief Administrator are denied. This constitutes the decision, order, and judgment of the court."

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The legal discussion in "184 JORALEMON LLC, Plaintiff, v. BROOKLYN LAW SCHOOL, Defendant. 31 Misc 3d 1201(A) Supreme Court, Kings County. Decided March 28, 2011":
"Defendant moves to dismiss the complaint pursuant to CPLR 3211 (a) (1), based upon documentary evidence, CPLR 3211 (a) (5), as precluded by the statute of frauds, and CPLR 3211 (a) (7), for failure to state a cause of action.
On a motion to dismiss pursuant to CPLR 3211, the pleading is to be afforded a liberal construction (see, CPLR 3026). We accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory. Under CPLR 3211 (a) (1), a dismissal is warranted only if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law. (Leon v Martinez, 84 NY2d 83, 87-88 [1994]) (internal quotations and citations omitted).
In support of its motion to dismiss pursuant to CPLR 3211 (a) (1), defendant submits the Agreement, which defendant claims conclusively establishes that the Agreement, by its terms, was not intended to be valid and enforceable until executed by both parties. Defendant also claims the email communications between the parties, wherein defendant's counsel informed plaintiff's counsel that he would forward the Agreement to Wexler for approval, and Wexler, knowing that plaintiff had executed the Agreement and wired the funds into an escrow account, clearly stated that she wished to review the Agreement once more before executing it, evidence a lack of finality in the negotiation of terms and that the Agreement remained subject to review by defendant.
"[I]f the parties to an agreement do not intend it to be binding upon them until it is reduced to writing and signed by both of them, they are not bound and may not be held liable until it has been written out and signed. Moreover, when the parties' intent to be bound by a contractual obligation is determinable by written agreements, the question is one of law. A question of fact arises as to the parties' intent to enter into an enforceable obligation only where the intent must be determined by disputed evidence or inferences outside the written words of the instrument"(ADCO Elec. Corp. v HRH Const., LLC, 63 AD3d 653, 654 [2d Dept 2009] [internal quotations and citations omitted]; see Scheck v Francis, 26 NY2d 466, 470 [1970]; Peter F. Gaito Architecture, LLC v Simone Dev. Corp., 46 AD3d 530 [2d Dept 2007]; Feldman v Miller, 168 AD2d 597, 598 [2d Dept 1990]; Yenom Corp. v 155 Wooster St. Inc., 23 AD3d 259, 259-260 [1st Dept 2005]).
Here, there is no disputed question of fact. Section 28 of the Agreement evinces the parties' clear intent not to be bound until the execution of the Agreement by both parties and disproves plaintiffs' central claim that an enforceable obligation had arisen. It is undisputed that defendant did not execute the Agreement. It is also undisputed that plaintiff did execute the Agreement, thereby accepting the explicit language in section 28 barring enforcement of the Agreement until duly executed by both parties. Moreover, the emails of both defendant's president and its counsel unambiguously state their intent to review the Agreement further prior to executing it. As the Agreement was ultimately not executed by defendant, and the clear terms of the Agreement itself established that only execution by both parties would render the contract binding and enforceable, and the defendant's president had explicitly stated that execution remained contingent upon further review, Wexler's vague, general statements that "I am confident all will be fine" and "We'll be good," are insufficient to raise a question of fact as to whether a meeting of the minds took place.
In opposition to defendant's motion, plaintiff argues that the statute of frauds does not require dismissal of the complaint, citing a number of inapposite cases (see generally Denton v Clove Valley Rod & Gun Club, Inc., 95 AD2d 844 [2d Dept 1983]; St. Paul Indus. Park, Inc. v New York State Urban Dev. Corp., 63 AD2d 822 [4th Dept 1978], Korin Group v Emar Bldg. Corp., 291 AD2d 270 [1st Dept 2002]; Municipal Consultants & Publishers, Inc. v Town of Ramapo, 47 NY2d 144 [1979]; Church of God of Prospect Plaza v Fourth Church of Christ, Scientist, of Brooklyn, 76 AD2d 712 [2d Dept 1980]). Denton merely recognized that, in some circumstances, an unsigned contract combined with other writings, can constitute a written memorandum capable of satisfying the statute of frauds. However, there is no indication that the unsigned contract in Denton contained the language present here of the condition precedent to enforceability that both parties have executed the agreement. In both St. Paul Indus. Park, Inc. and Korin Group, summary judgment was denied upon a finding of factual disputes relating to a claim of equitable estoppel. Again, there is no mention of the unequivocal contractual provision present here. None of these cited cases are contrary to the fundamental rule that, when parties unambiguously express their intent to only be bound by a duly executed, written contract, no binding contract will arise or can be inferred until the contract is executed by both parties. In both Municipal Consultants & Publishers, Inc. and Church of God of Prospect Plaza, the courts expressly acknowledge this well-settled principle. Apropos of the instant suit, in Municipal Consultants & Publishers, Inc., the court stated: "[w]here all the substantial terms of a contract have been agreed on, and there is nothing left for future settlement, the fact, alone, that it was the understanding that the contract should be formally drawn up and put in writing, did not leave the transaction incomplete and without binding force, in the absence of a positive agreement that it should not be binding until so reduced to writing and formally executed" (47 NY2d at 149 (emphasis added); see also Church of God of Prospect Plaza, 76 AD2d at 716). Here, section 28 of the Agreement contained the same explicit, positive language contemplated in the above cases: that the Agreement was not to have binding effect until it was executed by both parties.
"If documentary proof disproves an essential allegation of the complaint, dismissal pursuant to CPLR 3211 (a) (7) is warranted even if the allegations, standing alone, could withstand a motion to dismiss for failure to state a cause of action" (Peter F. Gaito Architecture, LLC, 46 AD3d at 530). Moreover, it has been held that where, as here, the written communications indicate that "the parties expressly contemplated the subsequent execution of a more complete and formal contract of sale," and no contract was executed, a meeting of the minds has not taken place and the exchange of correspondence will not satisfy the statute of frauds (Nesbitt v Penalver, 40 AD3d 596, 598 [2d Dept 2007]). Accordingly, defendant's motion pursuant to CPLR 3211 (a) (1), (5) and (7) is granted.
Defendant also moves, pursuant to CPLR 6514, to cancel the notice of pendency. CPLR 6501 provides that a notice of pendency may be filed where "the judgment demanded would affect the title to, or the possession, use or enjoyment of, real property, except in a summary proceeding brought to recover the possession of real property." The instant action seeks specific performance of an alleged agreement to transfer title to real property. Thus, filing a notice of pendency was appropriate under the circumstances. Under CPLR 6514 (a), the court must direct the cancellation of a notice of pendency "if service of a summons has not been completed within the time limited by section 6512; or if the action has been settled, discontinued or abated; or if the time to appeal from a final judgment against the plaintiff has expired; or if enforcement of a final judgment against the plaintiff has not been stayed pursuant to section 5519." As this court has granted defendant's motion to dismiss the complaint, the notice of pendency must be cancelled pursuant to CPLR 6514 (a) upon the expiration of thirty days from service of a copy of this Order unless an appeal is taken and cancellation is stayed pursuant to CPLR 5519 (see Greven v Muir,128 AD2d 753 [2d Dept 1987]; Yenom Corp., 23 AD3d at 260; Zafarani v Gluck, 10 Misc 3d 1073(A), 2006 WL 140716 at *4 [Sup Ct, Kings 2006], aff'd 40 AD3d 1082 [2d Dept 2007]).
Defendant contends that immediate cancellation of the notice of pendency is appropriate, irrespective of the time to appeal, under CPLR 6514 (b), which permits the court, in its discretion, to cancel a notice of pendency, "if the plaintiff has not commenced or prosecuted the action in good faith." However, although this court has found that the documentary evidence established that no contract was formed, in light of the fact that defendant continued to hold plaintiff's deposit at the time the action was commenced, it cannot be said that the action was brought in bad faith. At the time plaintiff filed the complaint, defendant had not refunded from the escrow account the deposit of $1,840,000 made by plaintiff in its attempt to purchase the Property. Thus, plaintiff maintained a legitimate hope that the contract might yet be performed and the filing of the lis pendens was not inappropriate. At the least, plaintiff had a right to seek recovery of its deposit. Accordingly, defendant's motion pursuant to CPLR 6514 (b) must be denied.
Defendant's request for costs pursuant to CPLR 6514 (c) is similarly denied as it has not been demonstrated that the notice of pendency was wrongly filed in this action (Shkolnik v Krutoy, 65 AD3d 1214, 1216 [2d Dept 2009]; No.1 Funding Ctr, Inc. v H & G Operating Corp., 48 AD3d 908, 911 [3d Dept 2008] ("The purpose of CPLR 6514(c) is to reimburse a party for costs and expenses incurred as a result of a wrongful filing of a notice of pendency"); cf. Josefsson v Keller, 141 AD2d 700 [2d Dept 1988]).
Defendant's motion seeking the award of sanctions in the form of attorneys' fees, costs and disbursements, pursuant to 22 NYCRR 130-1.1, upon plaintiff's allegedly frivolous conduct in commencing and refusing to discontinue this action is also denied. "Conduct during litigation is frivolous and subject to sanction and/or the award of costs under 22 NYCRR 130-1.1 if it is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law or . . . it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another'" (Miller v Cruise Fantasies, Ltd., 74 AD3d 919, 920-921 [2d Dept 2010], quoting Astrada v Archer, 71 AD3d 803, 807 [2d Dept 2010]). Although plaintiff's complaint has been dismissed, the circumstances here do not support a finding that the plaintiff's conduct in initiating suit was frivolous or that it brought the action solely to harass the defendant. Defendant's request for sanctions is denied."

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The factual background of "184 JORALEMON LLC, Plaintiff, v. BROOKLYN LAW SCHOOL, Defendant. 31 Misc 3d 1201(A) Supreme Court, Kings County. Decided March 28, 2011":

"This action arises out of plaintiff's attempted purchase of property owned by defendant located at 184 Joralemon Street, Brooklyn, New York (the "Property") and the disputed enforceability of a Proposed Agreement of Sale (the "Agreement"), executed on December 16, 2010 by plaintiff's member, Albert Laboz, but not by defendant, by which defendant purportedly agreed to sell plaintiff the Property for $9,200,000. Defendant claims that it did not execute the Agreement because it received a subsequent higher bid for the Property and had a fiduciary obligation to accept that bid.
Section 28 of the Agreement states: "BINDING EFFECT. The submission of this Agreement to Purchaser shall not be construed as an offer, nor shall Purchaser, or any other person, corporation, or other entity have any rights with respect thereto, unless and until both Seller and Purchaser shall have executed this Agreement, and a fully executed copy is delivered to Purchaser or his attorney" (Ex. C to Motion). Section 29 of the Agreement states: "It is understood and agreed that all understandings and agreements heretofore had between the parties hereto are merged into this Agreement . . ." (id.).

On Thursday, December 16, 2010, Edward Duffy, counsel for plaintiff, sent an email to Dennis Konner, counsel for defendant, at 1:39 PM stating, "I am attaching clean and marked versions of the revised purchase agreement. Please note that in the interest of speed I am sending it to my client simultaneously and it remains subject to his review and comment" (Ex. D to Motion).

That same day, at 2:01 PM, Konner responded, "Ed, Other than attaching the form of the student Housing License which should be removed, your changes are acceptable to us. Please add the Seller's FEIN-23-7227990 to the Escrow Agreement and add the Purchaser's FEIN if it is available. You should also date the Agreement and Escrow Agreement. Please send a clean and redlined version against the prior version so we can forward same to the Seller for approval." At 3:11 PM, Duffy replied, "Dennis, Per your voice mail, the attached shows all changes made today" (id.).

At 5:35 PM, Duffy then wrote, "Dennis, I am attaching the Agreement of Sale, executed by the buyer. The escrow agreement attached to the Agreement of Sale is also signed. I revised the Agreement to include counterpart languages, as we discussed; clean and marked versions are attached as well. Rather than increase the deposit under the contract to $2,000,000, we want to have refunded the $160,000 overpaid in the $2,000,000 wire sent to your firm's escrow account earlier today. Please wire the $160,000 in accordance with the wire instructions below and retain the remaining $1,840,000 in accordance with the terms of the Agreement of Sale and Escrow Agreement . . . . I will messenger three signed copies of the Agreement of Sale to your attention tomorrow. Thanks. We look forward to receiving the seller's signature pages" (id.). According to the complaint, on December 17, 2010, defendant's counsel, acting as Escrow Agent, refunded plaintiff the $160,000, retaining the remaining balance in accordance with the terms of the Agreement.
 
At 5:57 PM on December 16, 2010, Laboz sent an email to Frederick Cohen, another of defendant's counsel from Duane Morris LLP, and Joan Wexler, the president of Brooklyn Law School, containing only the subject heading, "Are we done?" At 8:50 PM, Wexler replied, "I just got home. I've been at meetings and then holiday parties tonight. Please forgive me. I haven't had a chance to review the latest contract. Tomorrow, again I will be out of the office, but Monday, I'll be back full strength and I will look it over. I am confident all will be fine." At 8:54 PM, Laboz responded, "My money was wired today. Don't be such a lawyer, you're more than adequately represented" to which Wexler replied, "Keep calm. We'll be good." At 9:01 PM, Laboz wrote, "I'll defer to you. We're ready when you are" (id.).

At a meeting on December 20, 2010, Wexler advised Laboz that defendant was declining to sign the contract and accepting a higher offer. At the time, defendant had not yet returned the $1,840,000 deposit.

Plaintiff filed a notice of pendency and commenced this action on December 30, 2010 by filing a summons and complaint, seeking specific performance of the Agreement and damages incurred from an alleged breach of contract. Defendant subsequently brought the instant motion, by order to show cause, and appeared for oral argument on March 9, 2011.

Plaintiff claims that, although unsigned by the defendant, the Agreement is valid and enforceable as it had been agreed to in principle and merely required execution, as evidenced by email correspondence between the parties. Defendant claims that, to be valid and enforceable, the Agreement must satisfy the statute of frauds and must have been executed by all parties, as required by the express language in the Agreement itself."

SELLING A HOME IN TODAY'S MARKET

Many buyers and/or sellers will raise the question as to when is there a valid contract of sale - do I have a deal or what?

Usually the pattern is that between long delays in negotiation, execution of contracts, deposit of down payment in escrow, etc., it can be confusing.

Here is one case. 184 JORALEMON LLC, Plaintiff, v. BROOKLYN LAW SCHOOL, Defendant. 31 Misc 3d 1201(A) Supreme Court, Kings County. Decided March 28, 2011 which starts out as follows:
  "Defendant Brooklyn Law School ("BLS") moves, by Order to Show Cause, for an order dismissing the complaint, pursuant to CPLR 3211 (a) (1), (5) and (7); directing the Clerk of Kings County to cancel the notice of pendency filed by plaintiff 184 Joralemon LLC, pursuant to CPLR 6514; and, pursuant to CPLR 6514 (c), awarding costs and expenses, including reasonable attorneys' fees, incurred as a result of the allegedly improper filing of the notice of pendency; and awarding sanctions in the form of attorneys' fees, costs and disbursements against plaintiff and its attorneys, pursuant to Rule 130-1.1 of the Chief Administrator, due to their allegedly frivolous conduct in commencing and refusing to discontinue this action."

MORTGAGE FORECLOSURE CLINIC IN NASSAU COUNTY

I will be there as a volunteer lawyer from 4 -6:

"Nassau residents caught in the growing mortgage foreclosure crisis can have their questions answered by attorneys at a free clinic sponsored by the Nassau County Bar Association at the NCBA headquarters, 15th and West Streets, Mineola, NY. Attorneys have volunteered to provide one-on-one guidance, advice and direction to any Nassau County homeowner who is concerned about foreclosure matters or is already in the foreclosure process involving property in Nassau County.

Attorneys have volunteered to review individual foreclosure issues with Nassau homeowners, help them sort things out, and give advice or refer them to agencies and programs, right in the same room, that may be able to help. This is not legal representation. The attorneys will help the homeowner find out if indeed, they need a credit counselor or a lawyer, and get them in touch with available resources.

In addition to meeting one-on-one with a volunteer attorney, housing counselors, bankruptcy attorneys and representatives from Nassau/Suffolk Law Services -- which provides free legal services for those who meet certain income guidelines -- are on hand to provide assistance.

→ Reservations are required by calling the Bar Association at 516-747-4070. Please bring your mortgage documents. Attorneys fluent in other languages are available upon request when reserving.

All clinics are 3-6 p.m. and are held at the Nassau County Bar Association in Mineola."