Cancellation of Contract of Sale Due to Mold Not an Anticipatory Breach

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In a contract for the sale of real property in Southampton, the sellers’ represented that “the Premises is free and clear of any mold or evidence of any existing mold remediation”. The purchasers’ obligation to close depended on the accuracy “as of the date of closing” of the sellers’ representations and warranties, but the sellers were given an opportunity to cure any defects.

 Prior to the date of the closing, the purchasers canceled the contract and requested a return of their contract deposit, claiming that an inspection had revealed extensive evidence of mold. The sellers answered that the mold condition was not a material breach and the purchasers’ cancelation constituted an anticipatory breach, for which the seller was entitled to retain the down payment as liquidated damages as provided in the contract on the purchasers’ default. The sellers commended an Action alleging they were entitled to retain the down payment. The Supreme Court, Suffolk County, granted the Defendants’ cross-motion for summary judgment, dismissed the complaint, and directed the Plaintiffs to return the down payment. The Appellate Division, Second Department, affirmed the lower court’s ruling.

According to the Appellate Division, the sellers’ representation was that “’the premises is free and clear of mold or evidence of any existing mold remediation’ (emphasis added). Therefore, the condition is incurable inasmuch as any attempt to eradicate the existing mold will constitute evidence of existing mold remediation on the date of closing”. Mineroff v. Lonergan, 2017 NY Slip Op 05430, decided July 5, 2017, is posted at http://www.nycourts.gov/reporter/3dseries/2017/2017_05430.htm.

 

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Mike Berey
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