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Current Developments in the Commercial Divisions of the
New York State Courts
Posted: July 17, 2018

Claim for Return of Down Payment Survives Dismissal Based on Allegation That Sellers Were Not Ready, Willing and Able to Close

On July 5, 2018, the Second Department issued a decision in 313 43rd St. Realty, LLC v. TMS Enterprises, LP, 2018 NY Slip Op. 05013, holding that a claim for the return of down payments was sufficient based on allegations that the sellers were not ready, willing and able to close, explaining:

As a general rule, to prevail on a cause of action for the return of a down payment on a contract for the sale of real property, the evidence must demonstrate that the seller was not ready, willing, and able to perform on the law day.

Contrary to the sellers’ contention, the complaint contained sufficient factual allegations to state a cause of action to recover the disputed down payments. . . .

Here, the allegations in the complaint that the sellers unilaterally set an unreasonable closing date were inadequate to constitute a positive and unequivocal repudiation of the contracts of sale so as to form the basis for a cause of action premised on anticipatory breach of contract. Nevertheless, the complaint adequately alleged that the sellers were not ready, willing and able to close under the contracts of sale. Construed liberally, the complaint states a cause of action for the return of down payments on contracts for the sale of real property. Accordingly, we agree with the Supreme Court’s determination to deny that branch of the sellers’ motion which was pursuant to CPLR 3211(a)(7) to dismiss the complaint for failure to state a cause of action.

(Internal quotations and citations omitted).

We frequently litigate disputes over the purchase and sale of commercial property. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you are involved in a dispute regarding a commercial real estate transaction.

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