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Perspectives

Pandemic Did Not Excuse Purchaser’s Failure to Close: Sellers Retain Down Payment, But Are Not Awarded Interest

The parties contracted for the purchase and sale of a condominium apartment.  The purchase agreement contained the customary provision that if the purchasers defaulted, the sellers would retain the purchaser’s down payment as their exclusive remedy.  The seller set a “time of the essence” closing date and the purchasers failed to appear or close.  The sellers brought a lawsuit seeking a court determination that purchasers had defaulted and sellers were entitled to retain the down payment, plus prejudgment interest at the statutory rate.

Purchasers argued that their performance should be excused because they were allegedly unable to gain access to the apartment beginning on March 16, 2020 due to restrictions imposed by the condominium during the pandemic.  However, the purchasers did not submit documentary evidence supporting this defense or details as to when and how often they requested access and were denied.  In any event, the access restrictions were largely removed by June 21, 2020, which was two and one-half weeks prior to the closing date.  The court concluded that “frustration of performance and impossibility of performance are not occasioned by temporary restrictions on the parties’ ability to perform.”

Thus, sellers were entitled to the down payment.  However, the court rejected sellers’ claim for interest, because the contract provided that sellers’ “sole remedy” was to retain the down payment.  The court also denied sellers’ claim for attorneys’ fees, because the contract did not contain any attorneys’ fees provision.  Lee v. Hootnick, Index No. 652973/2020, 2022 N.Y.L.J. LEXIS 1305 (Sup. Ct. N.Y. Co. Sept. 1, 2022).