Case Law Summaries

Procopio v. Tuckahoe Sand & Gravel, Inc.

• Opinion Date: May 16, 2001
• Real Property Law
• E-Mail

CONTRACTS; TIME OF THE ESSENCE—Equity demands that a seller respond within a reasonable time to its buyer’s contractually permitted request for a time extension, and a contractually mandated time of the essence closing date will not be enforced if the seller fails to do so.

A real estate contract provided for closing on or before the forty-fifth day after certain contingencies had been satisfied but not later than a specified calendar date unless that date was extended as set forth elsewhere in the contract. Extension was permitted upon request of the buyer provided that the buyer was making “all reasonable effort” to satisfy the pre-closing conditions. The contract stated, in part, “Notice that the date for closing is being extended by the Buyers must be in writing delivered to the Seller by mailing it to the address hereinbefore set forth. Except as hereinbefore set forth, the time and place of settlement is of the essence of this agreement and cannot be changed except by mutual consent in writing by all the parties hereto.” Before the lower court, the parties stipulated that the buyer requested an extension pursuant to the contract and that the seller did not respond until three weeks later. At that time, the seller requested information in order to “substantiate that you have used your best efforts and have reasonably pursued the required approvals.” The seller required the documentation within five days, “otherwise [the buyer] would be considered ‘in default of this Agreement.’” The buyer responded six days after the “deadline,” but the seller did not declare the buyer to be in default at that time. Instead, they met several days later to discuss the buyer’s progress, and it was six days after that meeting, when the seller sent a letter declaring default and “rendering the contract null and void.” In response, the buyer agreed to close title within forty-eight hours. The lower court, in response to a request by the buyer for specific performance, found that the seller had an obligation to respond to the buyer’s request for an extension sooner than it did in light of the contract-dictated closing date, which was a full month after the extension letter was sent by the buyer. This was because “[e]quity would require as much.” The lower court also held that the seller’s “default” letter was equivocal enough to lead the buyer to believe that the expressed date in the contract was no longer of the essence. Further, the lower court found that the seller waived any right it might have had to require a closing on the calendar date set forth in the contract. Lastly, the lower court noted that the conditions placed on the contract were for the benefit of the buyer, and, had the buyer “known that [the seller] would adhere to the July 1 date as of the essence of the contract,” the buyer would have closed title on that date. On appeal, the seller argued that the lower court erred in reforming the contract, but the Appellate Division rejected that appeal. In addition, the Court made the following comments. “It is clear that the contract contained a time of the essence provision. However, it is equally clear that the closing date was not absolute. That is so, because [the buyer] was allowed to extend the deadline upon request, subject only to a showing that he was making ‘every reasonable effort’ to satisfy the conditions. Once parties to an agreement have inserted conditions upon which the closing date hinges, such as reasonableness in [the buyer’s] attempt to satisfy the conditions, the expectations of the parties change from one of certainty to one of uncertainty.” The Court made the assumption from the seller’s argument that the seller construed its buyer’s conduct to be unreasonable and unworthy of an extension. The Court noted that, if such was the case, since the original closing date had been waived, the seller was at least obligated to give the buyer another time of the essence date.

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