THE RISK TO A SELLER WHO WON'T SELL..AND A BUYER WHO WON'T WALK AWAY

As the court noted in the companion appeal, the elements of a cause of action for specific performance of a contract for the sale of real property are that the plaintiff substantially performed its contractual obligations and was [ready,] willing and able to perform its remaining obligations, that defendant was able to convey the property, and that there was no adequate remedy at law. NOTE: the contract of sale was entered into in September 2013 and the court ordered conveyance took place around October 2018. That's a long wait for a house.

Breskin v Moronto, 2019 NY Slip Op 04127, Decided on May 29, 2019, Appellate Division, Second Department:

"The basic facts of this case are related in a companion appeal (see Breskin v Moronto, _____ AD3d _____ [Appellate Division Docket No. 2016-03080; decided herewith]). In an order dated February 22, 2016, the Supreme Court granted the plaintiffs' motion for summary judgment on their first cause of action, which sought specific performance, and on their second cause of action, which sought reasonable costs and expenses, including attorneys' fees, pursuant to the terms of the parties' contract. The order directed the defendant to deliver the premises vacant, with no tenants on the first and third floors, and directed the plaintiffs to make a separate motion for an award of reasonable costs and expenses, including attorneys' fees. In an order dated March 7, 2016, the court, upon renewal and reargument, adhered to the determination in the order dated February 22, 2016, [*2]and directed that "[s]pecific performance of the contract must be completed on or before" April 6, 2016.

When the closing did not occur by April 6, 2016, the plaintiffs moved, inter alia, to hold the defendant in civil contempt and to direct the Sheriff of Kings County to convey the property to them. In a separate motion, the plaintiffs sought an award of attorneys' fees in the sum of $199,123.50, costs in the sum of $300, and disbursements and expenses in the sum of $4,805.11. In the order appealed from, the Supreme Court directed the defendant to convey the subject real property to the plaintiffs and awarded the plaintiffs attorneys' fees in the sum of $5,000, costs in the sum of $300, and disbursements and expenses in the sum of $4,805.11. The court denied that branch of the plaintiff's motion which was to hold the defendant in civil contempt, "particularly without a hearing ascertaining the intent of the defendant." The plaintiffs appeal.

While this appeal was pending, in an order dated October 26, 2018, the Supreme Court directed the Sheriff of Kings County to convey the property to the plaintiffs, and the property was so conveyed. Accordingly, the remaining issues on this appeal are whether the defendant should have been held in civil contempt and the amount of attorneys' fees awarded to the plaintiffs.

"A motion to punish a party for civil contempt is addressed to the sound discretion of the court, and the movant bears the burden of proving the contempt by clear and convincing evidence" (Matter of Hughes v Kameneva, 96 AD3d 845, 846). "In order to adjudicate a party in civil contempt, a court must find: (1) that a lawful order of the court, clearly expressing an unequivocal mandate, was in effect, (2) that the party against whom contempt is sought disobeyed the order, (3) that the party who disobeyed the order had knowledge of its terms, and (4) that the movant was prejudiced by the offending conduct. The party seeking a finding of civil contempt must prove these elements by clear and convincing evidence" and willfulness need not be established (Palmieri v Town of Babylon, 167 AD3d 637, 640 [citation omitted]).

Since a showing of willfulness is not required to establish civil contempt, no hearing was necessary with respect to the defendant's intent. We conclude that the defendant's conduct in failing to vacate the premises was in civil contempt of the orders dated February 22, 2016, and March 7, 2016. Accordingly, we remit the matter to the Supreme Court, Kings County, for a hearing and determination as to the appropriate punishment for contempt and the appropriate directive for allowing the defendant to purge herself of her contempt.

Further, it is apparent that the defendant was in violation of the terms of the parties' contract, and pursuant to the terms of that contract the plaintiffs were entitled to an award of reasonable costs and expenses, including attorneys' fees. The Supreme Court improvidently exercised its discretion when it awarded the plaintiffs the sum of only $5,000 in attorneys' fees. Accordingly, we also remit the matter to the Supreme Court, Kings County, for a hearing and a new determination of the award of attorneys' fees to which the plaintiffs are entitled pursuant to the terms of the contract (see East Ramapo Cent. Sch. Dist. v New York Schs. Ins. Reciprocal, 150 AD3d 683, 690; Altadonna v Accord Contr. & Mgt. Corp., 148 AD3d 764).

Since this action for specific performance is an action of an equitable nature, interest on the award of reasonable costs and expenses, including attorneys' fees, and the rate and date from which that interest shall be computed shall be in the court's discretion (see CPLR 5001[a]; John Hancock Life Ins. Co. of N.Y. v Hirsch, 77 AD3d 710, 711), governed by the facts, including any wrongful conduct by either party (see Danielowich v PBL Dev., 292 AD2d 414, 415). This issue should be determined after the hearing."

SUMMARY JUDGMENT DENIED FOR SPECIFIC PERFORMANCE OF REAL ESTATE CONTRACT

Finkelstein v Lynda, 2018 NY Slip Op 08116, Decided on November 28, 2018, Appellate Division, Second Department:

"The plaintiff and Benny Cohen entered into a contract dated January 30, 2012, and a "contract modification" dated May 1, 2012 (hereinafter together the contract), to purchase real property from the defendant Steuben Street Corp. (hereinafter the seller). The seller's attorney sent a letter dated December 31, 2013, to the plaintiff's attorney setting a closing date of February 1, 2014, and stating that time was "of the essence." Although the plaintiff and the seller agreed to adjourn the closing date twice, the closing did not occur. The plaintiff subsequently commenced this action, inter alia, for specific performance of the contract.

"The elements of a cause of action for specific performance of a contract [for the sale of real property] are that the plaintiff substantially performed its contractual obligations and was [ready,] willing and able to perform its remaining obligations, that defendant was able to convey the property, and that there was no adequate remedy at law" (EMF Gen. Contr. Corp. v Bisbee, 6 AD3d 45, 51; see Victory M, LLC v Frederic, 148 AD3d 1086; Spira v Acceus, 114 AD3d 663; Huang v Shih, 73 AD3d 981; Backer v Bouza Falco Co., 28 AD3d 503; Cheemanlall v Toolsee, 17 AD3d 392, 393).

In moving for summary judgment on a complaint seeking specific performance of a contract, a purchaser must submit evidence demonstrating financial ability to purchase the property in order to demonstrate that it was ready, willing, and able to purchase the property (see Grunbaum [*2]v Nicole Brittany, Ltd., 153 AD3d 1384; Kaygreen Realty Co., LLC v IG Second Generation Partners, L.P., 78 AD3d 1010, 1015).

Here, the plaintiff did not establish his prima facie entitlement to judgment as a matter of law on his cause of action for specific performance. Contrary to the defendants' contention, the contract did not contain a provision obligating the plaintiff to secure a "conventional" mortgage loan. Nevertheless, the plaintiff did not show by competent evidence that he had obtained a mortgage loan or otherwise had the means to purchase the premises as of the closing date (see Grunbaum v Nicole Brittany, Ltd., 153 AD3d 1384; New York Tile Wholesale Corp. v Thomas Fatato Realty Corp., 115 AD3d 829; Benhamo v Marinelli, 82 AD3d 922, 923; Kaygreen Realty Co., LLC v IG Second Generation Partners, L.P., 78 AD3d at 1015; Fridman v Kucher, 34 AD3d 726, 727-728). Further, any evidence of a breach or repudiation of the contract by the seller would not obviate the plaintiff's obligation to establish that he was ready, willing, and able to close as of the closing date (see Dixon v Malouf, 70 AD3d 763, 763-764; Zeitoune v Cohen, 66 AD3d 889, 891; see also Pesa v Yoma Dev. Group, Inc., 18 NY3d 527, 531).

The defendants did not demonstrate their prima facie entitlement to judgment as a matter of law dismissing the cause of action for specific performance, as they did not eliminate all issues of fact as to the plaintiff's readiness and ability to perform the contract (see Chester Green Estates, LLC v Arlington Chester, LLC, 161 AD3d 1036; 1107 Putnam LLC v Beulah Church of God in Christ Jesus of the Apostolic Faith, Inc., 152 AD3d 474, 475; Jericho Group Ltd. v Pioneer Mgt. & Realty, LLC, 48 AD3d 368).

The record also shows the existence of triable issues of fact as to whether the plaintiff and/or the seller defaulted, which precludes the grant of summary judgment to either the plaintiff or the defendants as to the cause of action for the return of the down payment (see 533 Park Ave. Realty, LLC v Park Ave. Bldg. & Roofing Supplies, LLC, 156 AD3d 744, 746-747; Pizzurro v Guarino, 147 AD3d 879; Reid v I Grant Inc., 94 AD3d 500, 501).

The plaintiff did not establish his prima facie entitlement to judgment as a matter of law dismissing the counterclaims. Specifically, the plaintiff failed to establish, prima facie, that he did not breach the contract in the manner alleged by the defendants (see Weatherguard Contrs. Corp. v Bernard, 155 AD3d 921, 922; Derago v Ko, 153 AD3d 663, 665).

The plaintiff's remaining contentions are without merit.

Accordingly, we agree with the Supreme Court's determination denying the defendants' motion for summary judgment dismissing the complaint and those branches of the plaintiff's cross motion which were for summary judgment on his causes of action for specific performance of the contract and for return of the down payment, and for summary judgment dismissing the affirmative defenses and counterclaims."

SPECIFIC PERFORMANCE ON SALE OF HOME - SELLER IS DECEASED

Caldara v Monti, 2018 NY Slip Op 07283, Decided on October 31, 2018, Appellate Division, Second Department:

"On January 14, 2015, the plaintiff commenced an action against Robert Monti (hereinafter the decedent) for specific performance of a written contract which the plaintiff alleged was entered into by the parties on August 2, 2013 (hereinafter the prior action). The plaintiff alleged that, pursuant to the written contract, the decedent agreed to sell an undeveloped parcel of land located in Hauppauge (hereinafter the subject property) to the plaintiff for the sum of $150,000. On January 15, 2015, the plaintiff, unaware that the decedent had died on May 16, 2014, filed a notice of pendency of the prior action against the subject property (hereinafter the 2015 notice of pendency). Subsequently, on October 29, 2015, the defendant Alice M. Monti, as executrix of the decedent's estate (hereinafter the executrix), sold the subject property to the defendants Sergio Lobato and Silvia Lobato (hereinafter together the Lobatos).

At some point in time, the plaintiff learned of the death of the decedent and thereafter commenced this action in January 2016 against the executrix and the Lobatos and filed another notice of pendency against the property. The Lobatos moved pursuant to CPLR 3211(a)(1) and (7) to dismiss the complaint insofar as asserted against them and to cancel the notices of pendency. The executrix separately moved pursuant to CPLR 3211(a)(1), (7), and (8) to dismiss the complaint insofar as asserted against her. The Supreme Court, inter alia, granted the Lobatos' motion and granted those branches of the executrix's motion which were to dismiss the first cause of action, [*2]seeking specific performance of the contract, and the fourth cause of action, seeking rescission of the deed conveying the subject property to the Lobatos, insofar as asserted against her. The plaintiff appeals.

We agree with the Supreme Court that, accepting the facts as alleged in the complaint as true and according the plaintiff the benefit of every possible favorable inference, the complaint failed to state a cause of action for either specific performance or rescission of the deed (see Rojas v Paine, 101 AD3d 843, 846; see also Acocella v Bank of N.Y. Mellon, 127 AD3d 891, 892-893). The prior action and the 2015 notice of pendency were legal nullities because of the decedent's death in 2014 (see Marte v Graber, 58 AD3d 1). Thus, the Lobatos were bona fide purchasers for value of the subject property since neither the prior action nor the 2015 notice of pendency provided the Lobatos with "knowledge of facts that would lead a reasonably prudent purchaser to make inquiry" (Berger v Polizzotto, 148 AD2d 651, 652, quoting Morrocoy Mar. v Altengarten, 120 AD2d 500, 500 [internal quotation marks omitted]; see Chiulli v Reiter, 173 AD2d 672, 673; Skoler v Rimberg, 20 AD2d 580, 581)."

A FIGHT OVER THE SALE OF A HOME

Brisk v Bloch, 2018 NY Slip Op 06712, Decided on October 10, 2018, Appellate Division, Second Department:

"The plaintiff and the defendant owned residential property across the street from each other in Brooklyn. In March 2012, they entered into two contracts, one for each property, in which the plaintiff agreed to pay the defendant $649,990 for the defendant's home, and the defendant agreed to pay the plaintiff $499,990 for the plaintiff's home. The transactions were contingent on the defendant obtaining a mortgage within 60 days of the execution of the contracts. If the defendant were unable to do so, she was permitted to cancel the contracts in writing within five business days after the deadline for obtaining a mortgage. The defendant's applications for a mortgage were denied and her attorney sent a letter dated July 18, 2012, to the plaintiff's attorney cancelling the contracts. Neither the plaintiff nor her attorney responded in writing. In November 2012, the defendant's attorney sent a letter to the plaintiff's attorney with a check for the reimbursement of title search expenses, which was required upon termination of the contracts. Neither the plaintiff nor her attorney objected.

Thereafter, in early 2013, both parties listed their properties for sale with the same real estate broker, and the defendant received an offer to purchase her property from a third party. In April 2013, the plaintiff sent the broker an offer to buy the defendant's house for $1,335,000. In May 2013, the plaintiff sent a letter to the defendant stating that she still had a contract on the defendant's home which was in full force and effect. In June 2013, the defendant entered into a contract of sale with the third-party buyer. The plaintiff then commenced this action seeking specific [*2]performance and damages for breach of contract, and filed a notice of pendency against the defendant's property. The defendant answered the complaint and asserted counterclaims for, inter alia, an award of attorneys' fees.

The plaintiff moved for summary judgment on her cause of action for specific performance, which the Supreme Court denied. Thereafter, following a nonjury trial, the court found that the plaintiff's conduct after receiving the defendant's letter of cancellation indicated that she accepted the defendant's termination of the contracts. The court rendered judgment in the defendant's favor and struck the notice of pendency. The court also dismissed the defendant's counterclaim for an award of attorneys' fees.

We agree with the Supreme Court's denial of the plaintiff's motion for summary judgment on her cause of action for specific performance, which is brought up for review on this appeal from the judgment (see CPLR 5501[a][1]). The plaintiff failed to meet her prima facie burden of demonstrating that "she was ready, willing, and able to perform . . . her obligations under the contract, regardless of any alleged anticipatory breach by the defendant" (Aliperti v Laurel Links, Ltd., 27 AD3d 675, 676; see Internet Homes, Inc. v Vitulli, 8 AD3d 438, 439).

" In reviewing a determination made after a nonjury trial, this Court's power is as broad as that of the trial court, and it may render the judgment it finds warranted by the facts, taking into account that in a close case the trial court had the advantage of seeing and hearing the witnesses'" (BNG Props., LLC v Sanborn, 153 AD3d 1221, 1221-1222, quoting BRK Props., Inc. v Wagner Ziv Plumbing & Heating Corp., 89 AD3d 883, 884; see Northern Westchester Professional Park Assoc. v Town of Bedford, 60 NY2d 492, 499). "Where the trial court's findings of fact rest in large measure on considerations relating to the credibility of witnesses, deference is owed to the trial court's credibility determinations" (Bennett v Atomic Prods. Corp., 132 AD3d 928, 930; see BNG Props., LLC v Sanborn, 153 AD3d at 1222; Neiss v Fried, 127 AD3d 1044, 1046).

Here, we agree with the Supreme Court's determination that the plaintiff accepted the defendant's termination of the contracts. The credible evidence adduced at trial established that neither the plaintiff nor her attorney objected to the termination, the plaintiff later placed her property on the market, and she made an offer to purchase the defendant's property for more than double the purchase price set forth in the parties' contracts. The first time the plaintiff took steps to enforce her rights under the contract was after such conduct and nearly one year after the defendant's letter of cancellation. The plaintiff's conduct evinces an intent to abandon the contracts (see Savitsky v Sukenik, 240 AD2d 557, 559; Jones v Trice, 202 AD2d 394, 395). Accordingly, the complaint was properly dismissed and judgment rendered in the defendant's favor.

We agree with the Supreme Court's determination to dismiss the defendant's counterclaim for an award of attorneys' fees. A promise to pay attorneys' fees to the prevailing party cannot be clearly implied from the language of the contracts (see Hooper Assoc. v AGS Computers, 74 NY2d 487, 492; Goldman v Citicore I, LLC, 149 AD3d 1042, 1045-1046; 214 Wall St. Assoc., LLC v Medical Arts-Huntington Realty, 99 AD3d 988, 990)."

RECORDING CONTRACTS OF SALE?

139 Lefferts, LLC v Melendez, 2017 NY Slip Op 08647, Decided on December 13, 2017, Appellate Division, Second Department:

“On August 5, 2014, the plaintiff entered into a contract to purchase a parcel of real property located at 139 Lefferts Place, Brooklyn, from the defendant Sahidan Melendez for a purchase price of $1,050,000. The plaintiff provided Melendez with a down payment. However, the plaintiff never recorded the contract of sale. Melendez subsequently entered into another contract of sale on November 11, 2014, to sell the subject property to the defendant Craig Bolender for a purchase price of $1,000,000. The deed to the subject property was delivered to Bolender on November 21, 2014, and was recorded in the Office of the City Register of New York on December 27, 2014.

The plaintiff commenced this action against Melendez seeking specific performance of the contract or, in the alternative, money damages, by filing a summons, complaint, and notice of pendency on December 11, 2014. Bolender moved for, and was granted leave to, intervene in the action "as a defendant." Thereafter, Bolender moved, in effect, for summary judgment dismissing the complaint insofar as asserted against him. The Supreme Court granted the motion.

To establish that he was a bona fide purchaser for value, Bolender had the burden of proving that he purchased the property for valuable consideration and that he did not purchase with " knowledge of facts that would lead a reasonably prudent purchaser to make inquiry'" (Berger v Polizzotto, 148 AD2d 651-652, quoting Morrocoy Mar. v Altengarten, 120 AD2d 500; see TCJS Corp. v Koff, 74 AD3d 1188, 1189). "When two or more prospective buyers contract for a certain property, pursuant to Real Property Law §§ 291 and 294, priority is given to the buyer whose conveyance or contract is first duly recorded" (Avila v Arsada Corp., 34 AD3d 609, 610; see 2386 Creston Ave. Realty, LLC v M-P-M Mgt. Corp., 58 AD3d 158, 160; Varon v Annino, 170 AD2d 445, 446; La Marche v Rosenblum, 50 AD2d 636, 637).

Here, Bolender established, prima facie, his entitlement to judgment as a matter of law dismissing the complaint insofar as asserted against him. His submissions demonstrated that he was a bona fide purchaser for value, that he purchased the subject property for valuable consideration, without prior notice of the plaintiff's alleged interest in the subject property, and without knowledge of facts that would lead a reasonably prudent purchaser to make such an inquiry. Bolender further demonstrated that the deed for the subject property was delivered to him on November 21, 2014, and recorded on December 27, 2014.

In opposition, the plaintiff failed to raise a triable issue of fact. Contrary to the plaintiff's assertion, the proof that it filed a notice of pendency on December 11, 2014, failed to raise a triable issue of fact. Although New York has a so-called "race-notice" statutory scheme (see CPLR 6501; Real Property Law § 291; Goldstein v Gold, 106 AD2d 100, 101-102, affd 66 NY2d 624), having failed to avail itself of the protection of either Real Property Law §§ 291 or 294, the plaintiff may not successfully contend that its filing of a notice of pendency serves as a substitute for the recording of a conveyance or a contract (see TCJS Corp. v Koff, 74 AD3d at 1189; 2386 Creston Ave. Realty, LLC v M-P-M Mgt. Corp., 58 AD3d at 160; Avila v Arsada Corp., 34 AD3d at 610; Finkelman v Wood, 203 AD2d 236, 238).

Accordingly, the Supreme Court properly granted Bolender's motion, in effect, for summary judgment dismissing the complaint insofar as asserted against him.”

REAL ESTATE CONTRACTS - SPECIFIC PERFORMANCE ACTION

Many times, a purchaser in a contract of sale will ask, or insist, that it be entitled to bring an action to specifically enforce the contract should the seller fail to close.

Grunbaum v Nicole Brittany, Ltd., 2017 NY Slip Op 06638, Decided on September 27, 2017, Appellate Division, Second Department:

"In a contract dated December 30, 2003, the defendant, Nicole Brittany, Ltd. (hereinafter NBL), agreed to sell real property located in Brooklyn to the plaintiff. The closing did not occur pursuant to the terms of the contract. In August 2007, the plaintiff commenced this action against NBL for specific performance of the contract of sale. Subsequently, NBL moved to dismiss the complaint, and the plaintiff cross-moved for summary judgment on the complaint in January 2015. In an order dated July 30, 2015, upon a decision dated April 17, 2015, the Supreme Court denied NBL's motions to dismiss the complaint and granted the plaintiff's cross motion for summary judgment on the complaint. NBL appeals from so much of the order as granted the plaintiff's cross motion for summary judgment on the complaint.

"To prevail on a cause of action for specific performance of a contract for the sale of real property, a plaintiff purchaser must establish that it substantially performed its contractual obligations and was ready, willing, and able to perform its remaining obligations, that the vendor was able to convey the property, and that there was no adequate remedy at law" (1107 Putnam, LLC v Beulah Church of God in Christ Jesus of the Apostolic Faith, Inc., 152 AD3d 474; see ADC Orange, Inc. v Coyote Acres, Inc., 7 NY3d 484; Cipriano v Glen Cove Lodge #1458, B.P.O.E., 1 NY3d 53; E & D Group, LLC v Vialet, 134 AD3d 981; Johnson v Phelan, 281 AD2d 394, 395). In moving for summary judgment on a complaint seeking specific performance of a contract, the plaintiff purchaser must submit evidence demonstrating financial ability to purchase the property in order to demonstrate that it was ready, willing, and able to purchase such property (see Kaygreen Realty Co., LLC v IG Second Generation Partners, L.P., 78 AD3d 1010, 1015). In the absence of such evidence, a plaintiff purchaser's motion for summary judgment in its favor on a cause of action for specific performance should be denied due to the plaintiff purchaser's failure to meet its initial burden (see id. at 1015; Ferrone v Tupper, 304 AD2d 524, 525; Goller Place Corp. v Cacase, 251 AD2d 287, 288; cf. Madison Equities, LLC v MZ Mgt. Corp., 17 AD3d 639, 640). "When a purchaser submits no documentation or other proof to substantiate that it had the funds necessary to purchase the property, it cannot prove, as a matter of law, that it was ready, willing, and able to close" (Fridman v Kucher, 34 AD3d 726, 728; see Internet Homes, Inc. v Vitulli, 8 AD3d 438, 439; Johnson v Phelan, 281 AD2d at 395).

Here, the plaintiff failed to establish, prima facie, that he was ready, willing, and able to purchase the subject property, since he did not submit any evidence demonstrating his financial ability to close the transaction (see New York Tile Wholesale Corp. v Thomas Fatato Realty Corp., 115 AD3d 829, 832; Kaygreen Realty Co., LLC v IG Second Generation Partners, L.P., 78 AD3d at 1015; Dixon v Malouf, 70 AD3d 763, 764). Contrary to the plaintiff's contention, the issue of whether he demonstrated, through the submission of financial evidence, that he was ready, willing, and able to purchase the property is properly before this Court, as the plaintiff was required to submit such proof to meet his initial burden of establishing his prima facie entitlement to summary judgment directing specific performance of the contract of sale (see Kaygreen Realty Co., LLC v IG Second Generation Partners, L.P., 78 AD3d at 1015; Fridman v Kucher, 34 AD3d at 728; see generally Zuckerman v City of New York, 49 NY2d 557, 562; Fairlane Fin. Corp. v Longspaugh, 144 AD3d 858, 859).

Accordingly, the Supreme Court should have denied the plaintiff's cross motion for summary judgment on the complaint, regardless of the sufficiency of the opposing papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853; Dixon v Malouf, 70 AD3d at 764)."