In Z* v. C*, the Appellate Division, First Department, affirmed a lower court’s ruling in favor of the seller, C in a failed Manhattan condominium transaction. The dispute arose after the plaintiff, Z, failed to close on a $1.375 million apartment at ** Wall Street, despite multiple extensions and a formal time-of-the-essence notice issued by C*.
The original contract did not designate the closing date as “time of the essence,” which under New York law allows either party to later impose such a condition with reasonable notice. C* did exactly that—sending a letter 45 days after the original closing window had lapsed, setting a new closing date 30 days out. The court found this notice to be clear and unequivocal, satisfying the legal standard for enforcing a time-of-the-essence clause.
Z*, however, declined to close on the new date, citing financing issues and requesting a return of her $137,500 deposit. The court rejected this defense, noting that the contract explicitly lacked a mortgage contingency. Her refusal to close was deemed a wrongful repudiation, which entitled C* to retain the deposit and relieved him of any further performance obligations.
The court also upheld C*’s breach of contract counterclaim, finding that he had been ready, willing, and able to perform, while Z* had defaulted. However, the appellate panel reversed a supplemental order awarding C* over $105,000 in attorneys’ fees. While the contract did entitle the prevailing party to fees, the trial court had approved the full amount without giving Z* a chance to contest its reasonableness. The matter was remanded for further proceedings on that issue.
This case underscores the importance of clarity in real estate contracts—particularly around contingencies and closing timelines—and reinforces the enforceability of time-of-the-essence notices when properly executed. It also serves as a reminder that even prevailing parties must justify fee awards with transparency and procedural fairness.
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DECISION
Z* v. C*