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Appeals Court Agrees That Purchaser Could Terminate Contract After Seller Failed to Pursue Rezoning as Agreed

A contract purchaser of real property sought to terminate the purchase contract and recover its down payments, because the seller failed to pursue a rezoning application as required.  A lower court ruled in the purchaser’s favor and the Appellate Division affirmed.  ZL Elmhurst, LLC v. Sunshine Elmhurst Real Estate LLC, 2022 N.Y. App. Div. LEXIS 1582, 2022 N.Y. Slip Op. 1671 (1st Dep’t Mar. 15, 2022).

The purchase contract required that as a condition of the purchaser’s obligation to close, the seller had to successfully apply to have the premises rezoned as “residential with a commercial overlay.”  Under this zoning classification, a structure’s upper floors are reserved for residential use, but commercial use (such as retail stores) is permitted on the ground floor and basement.  The seller submitted a rezoning application, but subsequently withdraw the application for the commercial overlay.

The appeals court held that “[t]he terms of the parties’ purchase agreement unambiguously provided that a condition precedent to closing was issuance of a rezoning of the property, defined to mean ‘residential with a commercial overlay,’ and that in the event that such rezoning was not issued in a specified time, plaintiff was entitled to terminate the agreement and be refunded the down payment.”  Because the rezoning could not take place because the Seller had withdrawn the application, the purchaser was entitled to terminate the contract and recover its full down payments.   Ganfer Shore Leeds & Zauderer LLP represented the successful contract purchaser in this case.