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The purchase agreement between the Plaintiffs and the Defendant-Sponsor required the Defendant to set a closing date concurrently with or after certificates of occupancy were obtained for the building or the condominium unit intended to be acquired by the Purchaser. The agreement obligated the Defendant to use its best efforts to procure the certificates of occupancy within two years of the issuance of a temporary certificate of occupancy. When the agreement was entered into, the building was under construction. The Plaintiffs sought a return of their down-payment, alleging that the purchase agreement was void, illusory or unenforceable.

The Supreme Court, New York County, granted the Defendant’s motion to dismiss the complaint and awarded the Defendant attorneys’ fees and costs. The Appellate Division agreed that the Defendant was entitled to attorneys’ fees and cost because they were provided for in the purchase agreement but it held that the case should not be dismissed. The Appellate Division also vacated the lower court’s ruling that the Plaintiffs were not entitled to the return of their down payment. According to the Appellate Division, the return of the down payment was premature, “since [the Plaintiffs] may still close on their unit”. Further,

“[a]t the time plaintiffs commenced the instant action, the requisite certificates of occupancy were not yet obtained, and the complaint makes no allegation of unreasonable delays on defendant’s part in the progress of the condominium’s construction. While the agreement does not specify a closing date, the law provides for a reasonable time to close...Accordingly, the agreement is not illusory or unenforceable... [Citations omitted]”

Clements v. 201 Water Street LLC, 2018 NY Slip Op 00471, dated January 25, 2018 is posted at

http://www.nycourts.gov/reporter/3dseries/2018/2018_00471.htm.

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