NY Court Awards Buyer Return of Deposit & Attorneys' Fees
In a rare decision, a NY County trial court awarded the jilted prospective purchasers of a co-op on Manhattan's Upper East Side not only the return of over $400,000 - representing their 10% downpayment that was being held in escrow - but awarded them the legal and attorneys' fees they reasonably incurred in securing this order as well.
"How did they manage to get that?" you ask.
The truth is, it was fairly simple. There was a provision in the contract providing that "the 'prevailing party' in any litigation regarding this contract shall be entitled to a judgment against the non-prevailing party for all expenses and costs incurred, including reasonable attorney's fees, as a consequence of such litigation."
In case you were wondering why the Court went in the buyer's favor, the answer was a bit more complicated; although the boilerplate portion of the contract forbade the purchasers from seeking any financing for the unit - which is precisely what they did, thereby breaching the contract - the seller failed to abide by the notice provision of the agreement, which stated that
"[B]efore either party claims entitlement to any remedy to which he may be entitled arising from a breach of contract, other than the Closing date, the non-breaching party shall provide the breaching party with notice of the breach and a five (5) day opportunity to cure."
As a result, the Court held, the seller was not entitled to retain the downpayment as liquidated damages after the co-op's board denied permission for these buyers to purchase the seller's shares.