Court Rules Purchaser is Unable to Recover Downpayment from Seller on Contract of Sale for Real Property

In Doony, Inc. v. Mark Palmiotto, et al., (decided March 20, 2019) the Appellate Division, Second Department affirmed the Westchester County Supreme Court’s decision denying Plaintiff’s motion for summary judgment.

Plaintiff entered into a contract of sale to purchase certain real property for $435,000.00 from Defendant on June 23, 2017.  Plaintiff tendered a downpayment in the amount of $43,500.00.  Under the contract, Plaintiff was required to promptly apply to one or more lenders for a mortgage.  The contract also was contingent upon Plaintiff obtaining a loan commitment within thirty days of contract signing, not subject to an appraisal.  On August 7, 2017, Plaintiff received a loan commitment which was conditioned upon a fair market appraisal.  On August 31, 2017, the appraisal was issued and valued the home lower than the purchase price.  Plaintiff asserted that no loan commitment was issued and demanded a refund of the downpayment.  Defendant refused.

Plaintiff commenced an action to recover its downpayment and moved for summary judgment.  The Supreme Court denied the motion finding that Plaintiff delayed her mortgage application and failed to state the dates she applied to the lenders and the date its attorney received the fully executed contract.  Therefore, the Court could not ascertain if Plaintiff properly and timely cancelled the contract.  Plaintiff appealed and the Second Department agreed with the lower court’s determination.

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