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Current Developments in the Commercial Divisions of the
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Posted: September 25, 2018

Time is of the Essence Letter Found Ineffective

On September 19, 2018, the Second Department issued a decision in Rodrigues NBA, LLC v. Allied XV, LLC, 2018 NY Slip Op. 06129, holding that a time is of the essence letter was ineffective, explaining:

When, as here, a contract for the sale of real property does not make time of the essence, the law permits a reasonable time in which to tender performance, regardless of whether the contract designates a specific date for performance. Where there is an indefinite adjournment of the closing date specified in the contract of sale, some affirmative act has to be taken by one party before it can claim the other party is in default; that is, one party has to fix a time by which the other must perform, and it must inform the other that if it does not perform by that date, it will be considered in default.

In order to make time of the essence, there must be a clear, distinct, and unequivocal notice to that effect giving the other party a reasonable time in which to act. What constitutes a reasonable time for performance depends upon the facts and circumstances of the particular case. Included within a court’s determination of reasonableness are the nature and object of the contract, the previous conduct of the parties, the presence or absence of good faith, the experience of the parties and the possibility of prejudice or hardship to either one, as well as the specific number of days provided for performance. The determination of reasonableness must by its very nature be determined on a case-by-case basis. The question of what constitutes a reasonable time is usually a question of fact.

Here, the seller failed to establish, prima facie, that the time of the essence letter provided the buyer with a reasonable time within which to close. Furthermore, the seller’s submissions failed to eliminate triable issues of fact as to whether the property was the subject of ongoing administrative proceedings, in violation of the contract of sale, which could be completely resolved at the scheduled closing or within a reasonable time thereafter. Under these circumstances, the seller failed to sustain its burden of demonstrating that it was ready, willing, and able to convey title in accordance with the contract of sale. Since the seller failed to establish its prima facie entitlement to summary judgment on the complaint and dismissing the buyer’s counterclaims, we agree with the Supreme Court’s determination to deny those branches of its motion, without consideration of the sufficiency of the buyer’s opposing papers.

(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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