Condominium Purchase Agreement Is Enforceable Although It Does Not Provide A Specific Closing Date
A recent appellate court decision holds that a contract for the purchase and sale of a condominium unit is enforceable even if it does not provide for a specific closing date. In Clements v. 201 Water Street LLC, 2018 N.Y. App. Div. LEXIS 498, 2018 N.Y. Slip Op. 471 (1st Dep’t Jan. 25, 2018), the purchaser sought a court order cancelling the contract and requiring the seller to refund the down payment. The purchaser argued that the contract gave the seller, which was the sponsor of the condominium, absolute discretion to set the closing date, rendering the contract “illusory” and invalid.
Reviewing the terms of the agreement, however, the court found that the sponsor was required to set the closing date within a specified time after issuance of a certificate of occupancy for the condominium unit, which was still under construction when the contract was signed. Moreover, the sponsor was required to use its best efforts to procure the certificate of occupancy within two years after issuance of the first TCO. At the time the purchaser commenced the lawsuit, the certificate of occupancy had not been issued and the purchaser did not allege any unreasonable delay in the condominium’s construction. In any event, where a purchase agreement does not specify a closing date, “the law provides for a reasonable time to close. Accordingly, the agreement is not illusory or unenforceable.”