Commercial Division Blog
Posted: March 5, 2016 / Categories Commercial, Contracts, Real Property
Real Estate Binder Not Binding Contract Where It Fails to Identify Parties
On March 1, 2016, Justice Demarest of the Kings County Commercial Division issued a decision in 929 Flushing LLC v. 33 Development Inc., 2016 NY Slip Op. 26055, holding that a real estate binder was not a binding contract because it failed to identify the parties to the agreement, explaining:
[A] real estate binder of sale can be enforced as a contract where it identifies the parties, describes the subject property, and recites the essential terms and is signed by the party to be charged. If these conditions are met, binder agreements may represent enforceable contracts provided that all of the essential elements are recited therein and the document reflects a meeting of the minds.
Here, however, while the binder states a price, and a time for closing, it fails to designate the parties to be charged. The named "Purchaser" in the Binder is Joel Jacob and no reference to the Plaintiff at bar, 929 Flushing Avenue LLC, or any "LLC to be formed" is otherwise made on the face of the document. That neither Plaintiff nor Defendant is identified in the Binder is fatal to its enforcement as a binding contract in that the parties to be charged are not identified. Plaintiff contends that at the time of the execution of the Binder, while it had not yet been incorporated, the parties were aware that Mr. Jacob was the principal and agent for a single-purpose entity to be formed at a later date for the purpose of executing the purchase. With respect to judicial enforcement of an agreement, however, if the contract is incomplete and it is necessary to resort to parol evidence to ascertain what was agreed to, the remedy of specific performance is not available. Despite the alleged relationship between Mr. Jacob and the Plaintiff, the actual named party to act as buyer to the transaction is an essential element of a binding agreement and the limited liability entity now bringing suit for performance under the purported agreement is nowhere recited as a party to the disputed transaction, nor was it even in existence at the time the Binder was executed.
(Internal quotations and citations omitted) (emphasis added).