Buyers who purchase homes in new developments can face a myriad of potential problems from construction delays to workmanship issues. However, during the overheated upstate pandemic real estate rush, a new hazard arises when unscrupulous developers cancelled contracts in favor of better offers, which was the very situation faced by Adam Leitman Bailey, P.C.’s clients, who paid for an option to purchase and build a new house in a luxury Orange County, N.Y. community, only to have their deposit returned and contract illegally terminated when the developer found a buyer for a higher price.
Our clients, a married professional couple who had vacationed in the area for many years, fell in love with the new development – a residential community of luxury homes with ample community facilities and parks surrounded by woodlands. In August 2021, after touring the development in its early stages, they selected a prime corner lot, paying a premium fee for the site and upgraded luxury amenities for the large house the developer would build in consultation with the clients. Although tax lot numbers had not yet been issued, the clients paid a substantial deposit and negotiated and signed an option agreement requiring that they would sign final contracts and make further deposits within 10 days after the tax lot numbers had been issued – information that was solely within the control of the developer.
Over the course of the next several months, the clients had numerous, professional, and amicable conversations with the developers’ agents concerning build choices, timing, and the status of the tax lot numbers, during which they were repeatedly assured by the Developer that the tax number had not yet been issued. During that same period of time, upstate housing prices were increasing by the month, reassuring our clients that they made the right choice. In November 2021, within days after the developer finally notified the clients that the tax lot number had been issued – and that it was now time to make appointments with the builders to select final home finishes – the clients signed the final contracts and wired the required deposits. However, only hours later, the developer’s agent notified our clients that – even if it was illegal – they were going to cancel the contract and could sell to someone else at a higher price and that the developer was not interested in moving forward with the client. The developer returned the various deposits and refused to entertain any further discussions; and our clients believed they had been used as a pawn by the Developer to increase its purported sales numbers while still secretly marketing the very home they had optioned.
After being retained, Adam Leitman Bailey, P.C. promptly filed a complaint against the developer demanding that it meet its contractual obligations to build and sell the home to our clients, or pay damages. The developers shockingly responded that, despite their assurances that the tax lot numbers had not yet been issued, they had received them long before notifying our clients, and so the option fulfillment had been untimely. Following extensive motion practice and limited discovery, it became clear that the developers had numerous motives for breaching the contract which presented a prime opportunity for a negotiated settlement that could both stem legal costs and offset our client’s financial loss.
Although the Developer initially refused to provide a reasonable settlement offer, through careful negotiation and ongoing pressure, Adam Leitman Bailey, P.C. was able to finally secure a settlement that both made our clients whole and gave them the closure they needed to move on.
Adam Leitman Bailey, P.C.’s Supreme Court Litigation Practice Group in this matter was led by Eric Askanase and John Desiderio.
