The seller represented in a contract of sale that a commercial lease at the property to be conveyed did not contain a right of first refusal to purchase (“ROFR”).  The sale closed; the purchaser obtained loans from Signature Bank secured by two mortgages.

The tenant, whose lease did include a ROFR, brought an Action to invalidate the sale and to obtain specific performance. The Supreme Court, Kings County, denied motions by the Defendant-purchaser and by Signature Bank for summary judgment. However, on re-argument, the Court granted Signature Bank’s summary judgment motion. The Court found that the Bank was a bona fide purchaser for value whose interest was protected under the Recording Act (Real Property Law, Section 291, “Recording of conveyances”). According to the Court, “Plaintiff’s failure to record her lease, Signature’s initiation of a title search and [the purchaser’s] assurances that the Plaintiff did not have a right of first refusal are facts which demonstrate that Signature was unaware that Plaintiff had any rights in the premises”.

The Court, on re-argument, again denied the purchaser’s motion for summary judgment. It concluded there were issues of fact as to whether the purchaser was deemed to have notice of the ROFR by reason of the Plaintiff’s possession and because an estoppel certificate from the tenant, required by the contract, was not produced, whether the Plaintiff attempted to exercise the ROFR in a timely manner, and whether the Plaintiff was ready, willing and able to purchase the premises. Dahari v. Villafana, 2016 NY Slip Op 31859, decided October 3, 2016, is posted at
http://nycourts.gov/reporter/pdfs/2016/2016_31859.pdf.