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Adam Leitman Bailey, P.C. Wins Case for Commercial Property Seller: Contract Disclaimers Are Enforceable


Adam Leitman Bailey, P.C. Wins Case for Selling of Commercial Property: Contract Disclaimers are Enforceable

This case strongly reaffirms that with respect to real property transactions, the parties will be held to the terms of the agreement(s) they made. In this case, the plaintiff had entered into agreements with the seller to purchase a building in a piecemeal fashion. The purchaser first purchased a 7 % interest for two million dollars and agreed to purchase the remaining 93% for approximately another 16 million dollars by a date certain. The agreement contained a provision that in the event that the purchaser did not close on time, that the deed for the 7% interest would revert to the seller. Stated differently, the purchaser would lose two million dollars.

The agreements also contained provisions stating that the purchaser was taking the property “as is” and after an inspection, etc. Also, the parties agreed the purchaser would not file a lis pendens for any reason.

Purchaser could not come up with the remaining 16 million and the seller took back the deed. Purchaser sued and placed a lis pendens on the property. Purchaser asserted, among other things, that the building was violative of the zoning ordinance because it was too tall and therefore he had a valid reason for not closing and that he had been defrauded, along with several other causes of action.

We moved to dismiss the complaint based on the language of the contract as well as the fact that the building had a valid certificate of occupancy and was violation free. The Supreme Court dismissed most of the complaint but let the purchaser replead the breach of contract cause of action. The court also vacated the lis pendens.

On appeal, the Appellate Division affirmed the dismissal of the causes of action and the vacatur of the lis pendens but modified slightly to provide that the cause of action for a breach of the implied warranty of good faith and fair dealing was dismissed, without prejudice.

As noted, the case is important because it reaffirms that businessmen dealing with real property transactions will be held to the terms of their bargain, no matter how unwise it might appear for one party on hindsight.

Jeffrey R. Metz argued the Appeal in front of the Appellate Division.

Once back in the Supreme Court, the seller attempted to assert new and different causes of action. Motion practice ensued but Jeffrey Metz was able to bring the buyer back to the table resulting in a sale where the buyer paid two million dollars more for the property.

Jeffrey Metz and Scott Pashman represented the owner in the subsequent proceedings and the Adam Leitman Bailey, P.C. transactional team successfully brought the settlement to fruition.

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Jeffrey R. Metz

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