Adam Leitman Bailey, P.C. represented owners of a Manhattan cooperative apartment who contracted in June 2021 to sell the apartment to sophisticated buyers, securing a standard 10% deposit on signing. The purchase contract contained standard terms, including an unconditional approval from the sellers’ co-op board. The apartment in question had previously been outfitted with central A/C and a laundry washer/dryer unit, which buyers were assuming. As required under the contract, buyers quickly obtained board approval permitting them to purchase the apartment in its present condition (including the central A/C and washer/dryer units) with no conditions; the board also noted that purchasers would – like every proprietary lessee in the co-op – be subject to the house rules and any future rules or determinations, including unanticipated future determinations regarding A/C and washer/dryer policies.
Based solely on the unanticipated and speculative potential that a future board decision might impact their apartment’s A/C and washer/dryer status, the buyers sought to cancel the sales contract and demanded the return of their entire deposit, eventually filing suit in New York County Supreme Court on the same basis. The sellers found themselves in a conundrum: although they clearly had the superior argument, the cost of litigating could quickly exhaust the full amount of the contract deposit; even though the sales contract provided for reimbursement of attorneys’ fees to any party that prevailed in contract-related litigation, there was no guarantee that sellers would both win at trial and receive enough of their fees to come out ahead; in the meantime, the sellers, who had vacated the apartment, would be left paying nearly $6500/month in carrying costs on the apartment at the same time they were paying for costs related to their new home. Moreover, the litigation would impact sellers’ ability to market the apartment to another buyer, even at what was now a more than $200,000 COVID-related reduction in the market value of the property since the June 2021 contract.
The sellers turned to Adam Leitman Bailey, P.C.’s for a quick resolution; in less than a month, Adam Leitman Bailey, P.C.’s Supreme Court Practice Group negotiated a stipulated dismissal of the buyers’ lawsuit under which the sellers retained 50% of the entire deposit, more than enough to cover carrying costs and legal fees, leaving some profit to offset diminished value in the property. These recent victories are only a two of the many favorable outcomes Adam Leitman Bailey, P.C. has achieved for our clients navigating the very challenging COVID real estate landscape.
Eric S. Askanase, John M. Desiderio, and Courtney J. Lerias of the Supreme Court Practice Group represented sellers in the co-op contract litigation.