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The Persistence of Adam Leitman Bailey, P.C. in the Face of Judicial Hostility Allows Divorcing Woman to Obtain Refund of Condominium Contract Deposit

By Adam Leitman Bailey


A woman who had contracted to purchase a luxury condominium in newly constructed building had become embroiled in an acrimonious divorce. The condominium’s sponsor had given her a “time of the essence” notice requiring her to close by a stated date, or else face the loss of her contract deposit, which was 20% of the purchase price. The sponsor had anticipated that because of the circumstances of the divorce, the woman wouldn’t have the finances to close by the date, and therefore had allowed the buyer of the next-door apartment to file building plans to combine his apartment with the woman’s.

The woman came to Adam Leitman Bailey, P.C., shortly before the closing date, and the firm immediately filed an Order to Show Cause in New York County Supreme Court to stop the closing. At the first court hearing, the sponsor was forced to concede that the apartment was not in the physical condition required in the contract, and withdrew its closing notice. However, the very next day after the sponsor’s in-court withdrawal, it served a new closing notice requiring the woman to close 30 days later, when the sponsor would have the apartment ready for sale.

Adam Leitman Bailey, P.C. filed a second Order to Show Cause, arguing that the closing date should be temporarily stayed because, even though the apartment was physically ready for the closing, the fact that the neighbor had approved building plans that reconfigured the woman’s apartment was a title defect preventing the sponsor from demanding that she close. The sponsor argued that the building plans were just a contingency, and would be withdrawn if the woman actually closed. As the second court hearing, the judge held that the fact of the approved building plans was not a legal impediment to closing, and denied a temporary stay. Despite the judge’s strong suggestion that it would be futile, Adam Leitman Bailey, arguing on behalf of the firm, demanded that the judge schedule a preliminary injunction hearing. The hearing that the court scheduled, however, was after the date the woman would have to close or default.

After the stay was denied by the Supreme Court, the firm filed for a stay in the Appellate Division, but that application was also denied.

All stays having been exhausted, the woman defaulted on her purchase contract.

At the post-default preliminary injunction hearing, the judge explained that in addition to his prior ruling that the approved building plans were not an impediment to closing, the time for closing had now passed. Mr. Bailey argued vehemently that there was no such thing as contingent building plans, as the sponsor contended, and the filed plans were legally improper modification of the condominium unit, and that all of the sponsor’s closing notices were thus void, vitiating any default. Although the judge was highly skeptical, he gave Mr. Bailey less than 48 hours to produce a supplemental brief documenting why sponsor could not demand that the woman close with the building plans pending.

As directed by the judge, the firm quickly produced a 15 page brief carefully documenting how the Martin Act and the Attorney General’s offering regulations, the law of condominium declarations, the New York City Building Code and the terms of the sponsor’s offering plan all worked together to require that prior to a unit being sold, the condominium declaration and offering plan must both be amended to be in harmony with any approved building plans, and failure to do so was a breach of the sale contract.

Following this supplemental briefing, the judge reversed course, and issued a preliminary injunction which reversed the default, and provided that the woman could either rescind the contract and obtain a full return of her contract deposit, or the sponsor would have to withdraw the building plans before demanding that the woman close.

Because of the persistence of the Adam Leitman Bailey, P.C. team despite multiple adverse judicial rulings, the divorcing woman was able to free herself of the burden of her pre-divorce condominium purchase contract and obtain a full refund of her contract deposit.

Adam Leitman Bailey, Jeffrey R. Metz, William J. Geller and Andrew Jorges were the Adam Leitman Bailey, P.C. team leading this hard-fought effort.

Adam Leitman Bailey, P.C.

NEW YORK REAL ESTATE ATTORNEYS