BLOG / 02.25.20 /
Buyer deemed not “able” to purchase where seller fails to obtain short sale approval from seller’s bank
Buyers seeking to enforce their contractual rights by an action for “specific performance” to compel the sale of real property have to demonstrate that they are “ready, willing and able” to acquire the property. Apparently, the determination whether a buyer is “able” to complete the purchase does not refer simply to the buyer’s capabilities, but also depends on the seller’s ability to close the sale.
In a recent case, the Kings County Supreme Court dismissed a specific performance action where the seller was unable to obtain short sale approval from his existing mortgagee to sell the property. Here, the parties contracted for the sale of a single-family residence for $285,000, with a closing to occur on or about sixty days from the short sale approval date. Under the contract, the burden fell on the seller to obtain short sale approval.
The seller’s existing mortgagee refused to give short sale approval, apparently because the property had a fair market value substantially higher than the purchase price. Because the seller was not able to obtain short sale approval, the court determined that buyer was not “able” to purchase the property even though the buyer itself had no intrinsic deficiencies to moving forward. Interestingly, the complaint also did not allege the purchaser was “able” to acquire the property, a necessary element of the specific performance action (perhaps because the buyer already knew that the bank would not release its mortgage lien). In any event, the complaint was dismissed.
 Monroe 485 LLC v Hall (King. Cty. Sup. Ct. 1/10/20)