Law School Case Brief
Miller v. Almquist - 241 A.D.2d 181, 671 N.Y.S.2d 746 (App. Div. 1998)
When a contract for sale of real property does not specify that time is of the essence, either party is entitled to a reasonable adjournment of the closing date. In granting an adjournment, the other party may unilaterally impose a condition that time be of the essence as to the rescheduled date. The effectiveness of this condition, though, is contingent on the specificity of the notice and on the reasonableness of the time period. What constitutes a reasonable time to close depends on the facts and circumstances of the particular case. Among the factors to be considered 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 hardship or prejudice to either one, as well as the specific number of days provided for the performance.
Plaintiff Millers (buyers) entered into a contract of sale with defendant Almquists (sellers) of a cooperative apartment in Manhattan. The contract provided for a down payment but did not contain any financing contingency clause. The buyers never represented that they would not seek financing, and they applied for a loan. The contract specified a closing date of April 1, 1997 but did not specify that time was of the essence. The contract provided that if the buyers defaulted, the sellers could terminate the contract and keep the down payment. The closing date was adjourned by the buyers to April 16, 1997. On April 2, 1997, the sellers' attorney signed a letter, stating that time was of the essence. However, the buyers postponed the April 16, 1997 closing date and tried to reschedule for April 18, 1997. When the buyers did not appear at closing on April 16, 1997, the sellers informed the buyers that they were in default and sought to keep the down payment. The buyers filed suit, seeking to enjoin the sellers from terminating the contract. The parties filed cross-motions for summary judgment. The Supreme Court in New York County granted the sellers' motion for summary judgment, dismissing the complaint. The buyers appealed.
Was the sellers' attempt to terminate the contract and keep the down payment appropriate?
The appellate court held that the sellers acted unreasonably and breached the covenant of good faith implied in every contract when, after declaring time to be of the essence on April 2 after agreeing to an adjournment until April 16, the sellers terminated the sales contract when the buyers indicated that they could not close until April 18. While the sellers had the right to unilaterally impose a condition that time was of the essence in granting the adjournment, the post-notice time period did not provide the buyers a reasonable time period in which to close. Here, only a single adjournment had been sought during a two-week period, it would be unreasonable to inflexibly hold the buyers to the April 16 date on the basis that the buyers had made the initial selection. The previous conduct of the parties, as well as the time periods involved, do not reveal extensive delays or acts of bad faith on behalf of the buyers. Accordingly, the appellate court reversed the judgment in favor of the sellers and directed the trial court to enter summary judgment in favor of the buyers to the extent of directing the sellers to return the $54,500 down payment plus interest to plaintiff buyers.
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