Scott Mollen, Partner at Herrick, Feinstein LLP

Contracts—Specific Performance Denied—Contract Subject to Land Use Approvals—After Expiration of Time Period For Obtaining the Approvals, Seller Had Right To Cancel the Contract

A plaintiff and a defendant entered into a purchase and sale agreement pursuant to which the defendant agreed to sell an undeveloped parcel of land for $1 million. The agreement was contingent upon the purchaser "obtaining all governmental approvals for the development of the parcel within 24 months from the end of a 90-day due diligence period." The contract provided that the date pursuant to which the plaintiff was to obtain the approvals was referred to as the "Approval Date." The contract permitted the plaintiff to extend the Approval Date by three months on two occasions. The closing was to occur 30 days after the Approval Date.

Either party was permitted to cancel the agreement if all necessary approvals had not been obtained by the Approval Date, as extended by the plaintiff. The defendant had granted a 30-day extension of the due diligence period. Thereafter, the plaintiff "obtained most of the governmental approvals contemplated under the agreement."

On Sept. 28, 2017, the plaintiff advised the defendant that the "final permit" from the NYS Dep't of Transportation "was expected within 60 to 90 days." By letter dated Oct. 2, 2017, the defendant cancelled the agreement and directed his attorney to return the down payment. By letter dated Oct. 3, 2017, the plaintiff declared time to be of the essence, "waived the contractual contingency of obtaining all governmental approvals, and stated that it was ready, willing, and able to close."