Blogs

Commercial Division Blog

Current Developments in the Commercial Divisions of the
New York State Courts
Posted: December 6, 2016

Strict Compliance With Notice Provision Not Required In Real Estate Case

On November 28, 2016, Justice Ritholtz of the Queens County Commercial Division issued a decision in 11-01 36 Ave. LLC v. Quamar, 2016 NY Slip Op. 26388, denying a motion for summary judgment seeking to have a time-is-of-the-essence letter declared a nullity.

In the underlying dispute, the parties had entered into a contract for the sale of real estate, but could not agree on who was responsible for paying off various “judgments and violations against the property.” Presumably in order to bring the issue to a head, the plaintiff sent the defendants a time-is-of-the-essence letter, and when the defendants did not close, declared a default and brought the lawsuit.

The defendants then moved for summary judgment declaring that the letter was ineffective, arguing that it was not properly served, that it did not place the venue for the closing in the proper location, and that it did not provide defendants a reasonable time to perform.

On the first issue, the contract of sale called for all notices to be sent to the parties’ lawyers, and also to each party, and the defendants argued that, by only serving their lawyer, the plaintiff failed to comply with the contract. The court was confronted by contradictory Second Department precedents, some holding that strict compliance with notice provisions was required, and others holding that it was not required, so long as actual notice was given, and no prejudice resulted. The court decided to follow the most recent Second Department decision and ruled that strict compliance could be excused because the defendants had actual notice and did not claim prejudice.

The court similarly rejected defendants’ second argument that the letter placed the venue of the closing at plaintiff’s lawyer’s office and not at defendant’s lawyer’s office as required by the contract, holding that “the minor deviation from the contract was neither material nor prejudicial.”

Defendant’s third argument, that the letter did not give them “a reasonable time in which to act,” raised “at best for the defendant sellers . . . an issue of fact,” because they had not shown that reasonableness could be decided as a matter of law. The motion for summary judgment nullifying the letter was accordingly denied.

This case is not so much of interest for the specific points of law raised as for the fact that the trial court—unusually—acknowledged a conflict between decisions of a particular appellate division, rather than pretending that one set of cases or the other could be distinguished. The decision also illustrates both that (a) a party relying on technical notice arguments is not in the strongest position if actual notice was provided, but also that (b) parties should take care to strictly comply with notice requirements; after all, if the Second Department’s most recent decision had gone the other way, the plaintiff’s time-is-of-the essence letter might well have been declared a nullity.

View posts