Articles Posted in Real Estate Litigation

Plaintiff entered into a contract to buy a mixed-use building for slightly more than $2 million. Plaintiff’s downpayment was $200,000. The transaction was to be all cash, as-is, and to close six months after the date of the contract. Before that closing date, plaintiff asked permission to show the property to a bank to obtain financing, which was granted. The closing was not held on the scheduled date and defendant-seller gave time of the essence notice for a date about three weeks later. Plaintiff did not appear on that date. Defendant held plaintiff in contempt and declared that it was retaining the downpayment. Plaintiff sued for specific performance. Defendant answered and cross-claimed for a declaration that it was entitled to keep the downpayment. Defendant thereafter moved for summary judgment. The lower court granted summary judgment dismissing the complaint but also denied the counterclaim. Both parties appealed.

Finding that plaintiff could not demonstrate its financial ability to close “on the closing date,” and did not appear to close, hence its breach. As a result, the Second Department affirmed the dismissal but reversed as to the defendant, granting its counterclaim on the downpayment.

Ashkenazi v. Miller

Plaintiff claims that shortly after they built their house, they placed sod, and a tree and bushes on a strip of land at the edge of defendant’s property, and then linked the area to their in-ground sprinkler system. Defendant purchased its adjoining property after this had been done. After defendant tore up the strip, plaintiff filed suit, claiming adverse possession. Pending the decision of defendant’s motion to dismiss, the court granted a preliminary injunction against defendant’s further interference with this strip of land.

The first issue before the court was whether the pre-2008 law or post-2008 law applied. The laws of adverse possession were amended in 2008 to require, among other things, that the adverse possessor make substantial and more obvious improvements to the disputed property so that the conduct was more objectively adverse. Acts that are seen as de minimis, such as fences, hedges, shrubs, and even non-structural building, were not acts upon which adverse possession could be claimed post-2008. Lawn maintenance, too, a basis often used to argue adverse possession, is not a sufficiently adverse to support that claim. Under the pre-2008 law, however, this type of conduct could support a claim, depending on the land and its usage. Because these claims accrued before 2008, the court applied the old law.

Turning next to the adverse use, the court dismissed the case, finding that even under the old law planting and mowing grass would not suffice. Even “[a]dding a bush or a young tree does not tip the balance” to find adverse possession. The same for running a hose and “a few sprinkler heads.” These items do not amount to a showing, by clear and convincing evidence, of exclusive, hostile or use under a claim of right.

Plaintiff agreed to buy and defendant to sell, three contiguous parcels of property. The parties had set a time of the essence closing date, at which closing, plaintiff did not appear. However, a week before that closing, plaintiff’s attorney informed defendant’s that the lender’s appraisal was pending, and asked to adjourn the closing. Defendant’s counsel did not reply. The day before the closing, the attorneys communicated, but about issues unrelated to the actual closing or the request for an adjournment. On the closing date, seller appeared but buyer did not. Seller declared buyer’s breach and retained the downpayment.

Plaintiff-buyer sued, arguing that based on the parties’ prior practices of adjourning the closing, and defendant’s counsel’s failure to respond, led the buyer to a good faith belief that the time of the essence closing date had been adjourned. Plaintiff also pointed out that title revealed more than $11 million in outstanding mortgages, far exceeding the almost $4 million purchase prices, and that the seller had made no effort address those mortgages prior to the closing date.

The lower court dismissed plaintiff’s case, finding that it was not able to close and had failed to object to the title defects prior to the closing date. With plaintiff-buyer’s default defendant-seller was relieved from performance.

In their effort to combat a derelict and abandoned property, a group of local residents founded a community garden in 1985.  The garden covered three lots, 16, 18 and 19. Defendants (different owners throughout the relevant time periods) claimed to be the record owner of Lot 19 as it was used as part of the garden. In a long decision which we will highlight here, the First Department found that the garden’s use was open, adverse, and continuous, sufficient to withstand the dismissal of its adverse possession claim.

Starting in 1985, community residents cleared garbage, pulled weeds, and put up a fence to enclose the premises (consisting of the three lots). They planted assorted vegetation, including trees, installed playground equipment, and built a performance and exhibit stage. To improve the space, pathways and a fish pond were installed. The area was not public and was locked at night or when no community member was available to monitor its use. Over the years, many school and camp programs events were held there, and it was used generally as a community space, including for music and poetry gatherings. The members guarded the space, specifically against defendants. For example, in 1999, defendants cut the gate, entered the premises, and allegedly damaged the trees and equipment, and re-gated Lot 19 for their own use. The garden members tore down defendants’ gate, restored the garden, and reinstalled the gate so that all three lots were again combined into one parcel.

In 2013, a group with power tools and private security guards attempted to enter the garden. After a stand of, the police directed that the group be allowed into the garden. Lot 19 was then cleared and a new gate was installed segregating that Lot 19 from the others. Thereafter, New York City took steps to preserve to maintain the remaining lots as the garden.

Earlier this year, we wrote about the First Department’s decision addressing the question, as framed by the Court of Appeals, of “whether the mere commencement of an action seeking ‘rescission and/or reformation’ of a contract constitutes an anticipatory breach of such agreement.” The First Department found that it did. The Court of Appeals recently disagreed and reversed.

The facts of this case are found in our prior post. Briefly, a buyer entered into a contract to buy two parcels of land with the closing set for after the seller obtained certain regulatory approvals, but not later than 18 months from the contract date. If the approvals could not be obtained either party could, among other things, terminate the contract. After the approvals were delayed, the seller opted to terminate the contract and return the downpayment unless the buyer agreed to modify the contract. The contract was modified to extend the deadline to close and other contract terms. The parties also agreed that the buyer would not sue the seller if the approvals could not be timely delivered. Believing that the approvals were forthcoming, the parties again extended the closing deadline. Before that newly extended closing deadline, the buyer sued the seller seeking to cancel, or rescind, the contract. The seller counterclaimed claiming that the buyer’s lawsuit, by which it announced that it would not close and sought to cancel the contract before the time to close, was itself a default entitling the seller to keep the buyer’s substantial downpayment. After the buyer’s lawsuit for rescission was dismissed, the seller pursued its counterclaim for the downpayment. The First Department deemed the buyer’s lawsuit to be a breach of the parties’ contract and allowed the seller to keep the downpayment.

The Court of Appeals zeroed in on the First Department’s core finding that “the Appellate Division affirmed . . . because a rescission action unequivocally evinces the plaintiff’s intent to disavow its contractual obligations, the commencement of such an action before the date of performance constitutes an anticipatory breach’ (Princes Point LLC v. Muss Dev. L.L.C., 138 AD3d 112, 114 [1st Dept 2016] ). The Appellate Division also concluded ‘that the seller . . . was not required to show that it was ready, willing, and able to complete the sale [as a condition of receiving damages] because the buyer’s anticipatory breach relieved [the seller] of further contractual obligations’ (id.).”