The contracted-for sale of a building failed to close because of a title defect concerning the seller’s ownership of part of the building. Thereafter, the contract purchaser sued for the return of its down payment.  The seller counterclaimed for specific performance of the contract of sale.

 

On motion by the purchaser, the court dismissed the counterclaim for specific performance.  The contract authorized specific performance as a remedy for breach only in the case of a “willful refusal to perform” under the contract, which had not been shown.  Moreover, the contract of sale expressly provided that in the event a title defect arose before closing, the purchaser would have the options of either going ahead with the closing “as is” or terminating the contract and recovering the down payment.  The contract did not give the purchaser a third option of adjourning the closing and demanding that the seller cure the defect before scheduling a new closing date.

 

Moreover, specific performance could not be granted because given the title defect, the parties were not ready, willing, and able to close as of the “time of the essence” closing date provided for in the contract.  As of that date, the seller was unable to convey good title to the premises as required by the contract, and the purchaser was unwilling to accept the premises with title conveyed “as is.”

 

Because the court dismissed the contract purchaser’s claim for specific performance, it also cancelled a notice of pendency filed by the purchaser.  Although issues as to damages remained, a claim for damages does not affect title to or use of the premises as is required for a notice of pendency to be maintained.  However, the court denied the purchaser’s motion for the immediate return of its down payment, finding that issues of fact existed as to whether the purchaser had itself defaulted under the contract by seeking an extra-contractual remedy for the title defect.  The case is Highbridge House Ogden LLC v Highbridge Entities LLC, 2015 N.Y. Misc. LEXIS 1857,  2015 N.Y. Slip Op 25169 (Sup. Ct. N.Y. Co. May 26, 2015).