Buyer Not Obligated to Close on Property for Which He Does Not Have Exclusive Use

A buyer entered into to a contract to purchase a penthouse co-op apartment for $27.5 million. Part of the unit being purchased included a terrace, which was to be for the buyer’s exclusive use. Between contract and closing, this exclusive use was questioned as the board intended to convert the roof to a common area and provide access to the roof through the penthouse terrace. Obviously, the buyer would not agree to that invasion of privacy necessary for roof access. The board provided conflicting authorizations and plan drawings, and had to be compelled to provide the co-op plans. The buyer informed the seller that it was canceling the contract and demanded the return of its down payment. The board then withdrew its demand for terrace access but refused to provide an unqualified statement that the roof was not common area, that no access would be provided for the terrace or that the board would not in the future raise this issue. Nonetheless, the seller refused to return the downpayment, claiming that the buyer was getting the co-op as described in the contract. The buyer disagreed and refused to close. Litigation followed over the $2.7 million downpayment. The trial court decided that the buyer’s failure to appear at the closing and see what plan was delivered was a breach, and refused to direct the return of the downpayment.

The appellate court disagreed, and found that the seller’s inability to provide an unqualified promise by the board not to convert the roof to a common area and allow the buyer private and exclusive use of the terrace supported a finding that the seller was unable to deliver the apartment as promised. The Court seemed unimpressed by the board’s qualified promise not to interfere, given the board’s prior conduct, and the buyer’s need to interact with the board on some regular basis. The appellate court was concerned that a fight would erupt in the future and the Buyer should not be compelled to buy a “problem” property. All of this, supported the buyer’s right to rescind the purchase contract.

Pastor v. DeGaetano, First Dept. 2015