Legal Question in Real Estate Law in New York

Time of the essence letter

I am currently in contract to sell my home to a family who has a 60 day contract effective 8/8/2004. The broker whom I hired is a friend of this family, and he works closely with the mtge broker, lawyer etc, who are assisting this family to qualify for a loan. They are unable to give me a closing date for my home in NYC. I have an attorney who overlooked a contingency in the contract that says the buyers will not close until they sell their current home. My attorney claims this was an oversight on his behalf. I have to close on a newly built house in Florida, which is completed and the builders set a date for closing in Fl on October 12, 2004. I am very scared that I would not have the funds available to close in time, and I could loose my $20,000 down payment along with my house if I don't show up for closing in Florida. My attorney in NYC is nonchalant to this situation and I feel that I'm not being represented properly - because these people (the broker and mtge lender, including the buying family) are getting away with murder because they are avoiding my calls and not giving any confirmation as to why they have not set a date for closing in NYC. Can a Time of the Essence letter work on my behalf?

Asked on 9/29/04, 11:38 am

5 Answers from Attorneys

Kevin Connolly Kevin J. Connolly
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Re: Time of the essence letter

A time of the essence letter will not overcome the contingency language that allows the buyers to hold off their closing until they sell their home.

A lawyer would wish to see all of the documents before giving you real legal advice. However, based on what you have said, you have a burning need to tell the builders in Florida what your situation is. Before doing so, I would engage new counsel and advise the "nonchalant" NYC attorney that he needs to notify his malpractice carrier, because an event has occurred that makes it very likely that a claim will be asserted. I would then put the NYC attorney on very explicit notice as to the basis of the malpractice claim in allowing the buyer to condition their closing on their prior sale of their home. I would also tell the NYC attorney that he must immediately refund any deposit you have given him on account for the transaction.

There are a number of solutions that can be put into play, but they would require hiring an attorney to represent you in the deal. Ultimately, success or failure depends on how hard a line is taken by the builder in Florida. You should be able to secure a reasonable adjournment of the closing, but if your buyers do not sell their home, there is not a whole lot you can do beyond suing your attorney for malpractice.

This post is not legal advice and does not create an attorney-client relationship. It is a comment on the legal question posed by the poster and should not be relied upon unless and until an attorney-client relationship is entered into. Doing so would require signing an engagement letter and depositing a retainer to secure payment of legal fees.

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9/29/04, 11:48 am
Robert R. Groezinger GroezingerLaw P.C.
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Re: Time of the essence letter

The real answer is "who knows". A time of the essence letter affects the closing date in the contract...but the closing date in the contract is subject to the sales provisions of the Seller's home-which outs you in the bind....

Can the Florida issue be put off a bit?

The only real way to know is to review the docs in both.

Good Luck

RRG

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9/29/04, 11:52 am
David Slater David P. Slater, Esq.
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Re: Time of the essence letter

I doubt a court would interpet the contingency clause as open ended and would only require a reasonable time be extended. I suggest you so advise the buyer in writing of your situation.

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9/29/04, 12:26 pm
Walter LeVine Walter D. LeVine, Esq.
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Re: Time of the essence letter

I concur with Kevin. Since the contract has contingencies that have not been satisfied, you cannot send a time of essence letter. Such letter can only be sent once all contingencies have been satisfied and the projected closing date has been stated not to be met. It appears that your prior attorney might have committed malpractice by missing the sale contingency, or at least not advising you of it and getting your approval. You also may have acted prematurely by contracting to buy the Florida property, relying on a closing date that preceeded your closing in NY. I am not sure what you mean when you state your NY contract is "a 60 day contract". Did it require a closing in 60 days, or would only be good if all contingencies were met within 60 days? My suggestion, if you have equity in your NY home, take a home equity loan to cover the Florida closing, and try to close in NY ASAP. If the present deal falls through, relist the house for sale and sell it ASAP. The few months cost of carrying 2 houses will certainly be less than the possible loss of your new-home deposit. Additionally, you may have claims against your broker for conflict of interest, if he did not disclose the information about the relationship with the buyer and allowed the sale of home contingency to get into the contract without your permission or disclosure. Finally, you might want to inquire in FL if they will permit the deferral of their closing to allow you the time to sort out the NY problem. Again, the additional costs you might incur should be cheaper than losing the deposit. In all instances, change attorneys and get a new one to assist you.

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9/29/04, 12:49 pm
Phroska L. McAlister PHROSKA LEAKE McALISTER
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Re: Time of the essence letter

A "Time of the Essence" Letter, that you want to include and incorporate into your Sale CONTRACT would require that ALL parties that signed the Original Contract, sign the "Time of the Essence" writing. Which is not likely to happen, since it is not to the Purchaser's advantage. Even if the purchasers agreed, enforcement of same can be costly, complicated and time consuming.

However, if you have a "FIRM" contract, the purchasers are solvent and will "likely" be able to obtain a mortage that will permit Closing on their purchase from you, you should consider applying for a "BRIDGE LOAN."

Consult with [your] Bank/s, Lender, Mortgage Broker and Attorneys, in NY & in FA, about a "Bride Loan;" which is a loan designed to cover contingencies like what you have described.

Good luck,

Phroska L. McAlister,ESQ

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9/29/04, 3:32 pm

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