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The court agreed with the buyer. Records showed the property still had a mortgage and other liens on the closing date. The seller had not even obtained title to the property by that date. Because the agreement required clear title before closing, the seller was not ready, willing, and able to perform. This meant the buyer did not have to attend the closing or try to perform himself. The court reversed the lower court's decision and granted summary judgment for the buyer, ordering the return of his down payment.
In 2016, a buyer agreed to purchase a company's ownership interest for $2,200,000. That company was under contract to buy property in Brooklyn. The buyer paid a $110,000 down payment. Their agreement said the buyer did not have to close unless the property came with clear title, free of liens. The seller later set a closing date and said time was of the essence, meaning the buyer had to close on that exact date or face penalties. The buyer did not show up to closing. The seller then said he would keep the down payment. The buyer sued to get it back.
The key question was whether the seller was actually ready to complete the sale on the closing date. Under New York law, a seller must be ready, willing, and able to perform on that date to keep a down payment after a buyer doesn't close. The buyer argued the seller could not deliver clear title, so the buyer had no duty to show up at all.
This case shows that a seller cannot enforce a strict closing deadline if they can't actually deliver on their own promises, like clear title. It reminds parties in real estate deals that contract conditions work both ways. Buyers may be protected from losing a down payment if the seller fails to meet key requirements first.
Talk to a licensed real estate lawyer in New York.