The Appellate Division, First Dept., just handed down a case that makes it clear the buyer must still buy a co-op even if it’s from his grave. In the case of Warner v. Kaplan the buyer had contracted to purchase a co-op and had even obtained board approval but something happened prior to closing. The buyer died.
Now this wasn’t any old co-op. This apartment cost $2.3 million and the buyer had put down a 10% deposit upon signing the contract. Well, her estate wanted the sellers to return that $230,000 and sued them under the theories of impossibility of performance and frustration of purpose. The sellers won on summary judgment, having argued that the contract was enforceable because it clearly stated that it was binding on the parties’ “heirs, personal and legal representatives and successors in interest.” (Oh, that!)
On appeal, the A.D. affirmed summary judgment for sellers, holding that neither impossibility of performance nor frustration of purpose applied. Impossibility of performance applies when performance of the contract becomes impossible as the result of destruction of the property by an unforeseen event. The doctrine of frustration of purpose applies where the reason for performing the contract is defeated by an unforeseen event. However, since the parties clearly stated that the contract was binding on “heirs, personal and legal representatives and successors in interest,” the death of the buyer was irrelevant and the contract was enforceable.
Further, “While a contract for personal services is terminated by the death of the servant (See: Minevitch v Puleo, 9 AD2d 285, 287 ), a contract of sale is not terminated by the death of the purchaser. On the contrary, as a general rule. . . . [i]t is the duty of the fiduciary for a deceased vendee to complete payments under a contract entered into by such vendee for the purchase of real property.”
On a practical note, it may be worth trying to exclude that boiler plate language in future real estate contracts. (As if the real estate closing process in NYS wasn’t difficult enough already!)