- Co-Op Purchaser Made ‘Wise Lifestyle Decision’ to Back Out of Deal, But Must Lose $4.7M, Judge Says
Real Estate & Property Law
Co-Op Purchaser Made ‘Wise Lifestyle Decision’ to Back Out of Deal, But Must Lose $4.7M, Judge Says
Posted Aug 23, 2012 5:00 AM CST
By Debra Cassens Weiss
The purchaser of a luxury suite at the Mark Hotel in Manhattan probably should have read the contract a little more closely.
The “one-sided” contract requires the purchaser, Roberta Campbell, to forfeit her $4.7 million downpayment, despite her observation on inspection that the 14th floor suite lacked heat, hot water, air conditioning, cooking gas, closet rods, shower enclosures, and reliable elevator service, according to U.S. District Judge William Pauley III. On Monday, Pauley ruled (PDF) in favor of the developer, Mark Hotel Sponsor, after a four-day bench trial, the New York Times reports.
Under the purchase agreement, Campbell was obligated to close after the temporary certificate of occupancy was issued for the apartment. A freight elevator and passenger elevator were working, Pauley said, and the developer had disclosed they could be taken out of regular service to accommodate construction. Con Ed activated gas service soon after the inspection. Other punch list items could be quickly completed.
Pauley disclosed another possible motive, citing an email by Campbell’s architect. He wrote his building consultant that Campbell was "increasingly concerned that the Mark is going to go bust and does not want to be forced into a closing .... Can you provide any ammunition for her?"
“This diversity case presents an ‘only in New York’ story,” Pauley wrote. “In the 15 month interval between the contract signing and the scheduled closing, Lehman Brothers collapsed and the United States tumbled into a recession. In April 2009, issues arose with heat, hot water, closet rods, and attorneys' egos, and the parties' deal never closed.”
Only two of the luxury co-ops at the hotel have sold. “Ultimately, Campbell may have made a wise lifestyle decision to abandon her purchase at the Mark Hotel,” Pauley wrote. “Had she closed in the spring of 2009, even today Campbell would be one of the only owner/residents atop the Mark Hotel. Nevertheless, based on the evidence presented at trial and the one-sided language of the parties' agreement, Sponsor is entitled to the down payment.”