Applying the doctrine of specific performance, one of New York's appellate courts recently compelled the seller of a particular property to carry through on the parties' informal letter agreement and convey the property - even though the letter agreement explicitly stated "[t]his letter will suffice until a formal agreement is signed."
Before you react with shock (after all, doesn't a real estate contract have to be reduced to a formal writing in order to satisfy the Statute of Frauds?), consider the following facts:
The plaintiff-buyer in Triple A Supplies, Inc. v. WPA Acquisition Corp., had already fulfilled his obligations under the agreement, and they weren't insignifcant; for 15 years, the plaintiff had paid $2,160,000 to the defendant in monthly installments of $12,000, and had paid all carrying charges for the premises, including insurance and real estate taxes. He also made significant capital improvements to the property, including installating a new roof. Further, the fact that the letter agreement indicated that a more formal agreement was contemplated does not render it unenforceable (see Pescatore v Manniello, 19 AD3d 571, 572; Maccioni v Guzman, 145 AD2d at 416).
So when he made the final installment payment under the terms of this "informal" agreement, you can imagine his surprise when the defendant refused to hand over the title to the premises.
Upon payment of the last installment due under the letter agreement, the plaintiff demanded that the defendant convey title of the premises, and the defendant refused to do so.
In finding in favor of the plaintiff, the Court reasoned as follows:
"Contrary to the defendant's contention, the letter satisfied the statute of frauds (see General Obligations Law § 5-703) by identifying the parties to the subject real estate sales transaction, describing the property to be sold with sufficient particularity, and setting forth the terms of payment (see Omar v Rozen, 55 AD3d 705, 706; Sabetfard v Djavheri Realty Corp., 18 AD3d 640, 641; Century 21 Volpe Realty v Thong Kim, 231 AD2d 667; 160 Chambers St. Realty Corp. v Register of City of N.Y., 226 AD2d 606; Maccioni v Guzman, 145 AD2d 415, 416). Although the letter agreement did not set forth the quality of title to be conveyed, "the law will serve to fill in" a missing provision of this nature (Omar v Rozen, 55 AD3d at 706; see Safier v Kassler, 124 AD2d 944, 945-946)."
The Court went even further, stating:
"[T]he fact that the letter agreement indicated that a more formal agreement was contemplated does not render it unenforceable (see Pescatore v Manniello, 19 AD3d 571, 572; Maccioni v Guzman, 145 AD2d at 416)."