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The Appellate Division ruled that specific performance was an appropriate remedy for this contract. The court modified the lower court's decision and granted summary judgment in favor of the buyer. Summary judgment means the court decided the case without a full trial because the facts were clear enough. The court looked at the specific contract language, which gave the buyer the right to seek specific performance if the seller failed to close. It also considered testimony from the seller's own principal, an experienced attorney familiar with IAR sales.
A developer wanted to buy 21,000 square feet of Inclusionary Air Rights, called IARs, for a project in Manhattan. These rights let builders add extra space in exchange for supporting affordable housing. After negotiations, the seller agreed to sell its IARs for $155 per square foot. Both sides signed a purchase agreement in May 2021. Soon after, the seller learned it might get a much higher price elsewhere, around $250 per square foot. The seller tried to renegotiate. The buyer refused. When the closing date arrived, the seller refused to transfer the rights at the agreed price, claiming it was misled about other offers in the market.
The buyer sued, asking the court to force the sale at the original price. This remedy is called specific performance, which means making someone actually complete a contract instead of just paying damages. The seller argued IARs weren't unique like real estate, so money damages should be enough. The main legal question was whether a contract to sell these air rights could be enforced through specific performance.
This case shows that courts can treat certain unique assets, like transferable air rights, as eligible for specific performance, not just traditional real estate. It highlights how contract language spelling out remedies can influence how disputes get resolved. Businesses negotiating similar specialized asset sales may want to understand how courts have treated these remedy clauses.
Talk to a licensed real estate lawyer in New York.