Seller’s Contractual Duty Only to Deliver "Existing" Certificates of Occupancy: Malpractice by Purchaser’s Attorney
A complaint against a purchaser’s attorney has recently been held to state a cause of action for damages for legal malpractice. The contract of sale for a multi-use commercial property provided" "[a]t closing, the Seller shall deliver copies of all existing Certificates of Occupancy for the premises." Seller later asserted that COs did not exist and that he had no obligation under the language of the contract to procure and deliver them. As a result, the purchaser was unable to obtain financing for the acquisition, and the seller declared the buyer to be in breach and retained the $173,000 down payment. Purchaser’s attorney’s motion to dismiss was denied by the Supreme Court, which denial was affirmed by the Appellate Division, Second Department. The purchaser alleged that his attorney negligently negotiated the terms of the contract, thereby permitting the seller to refuse to procure and deliver the COs, resulting in damages of $173,000. The Appellate Division’s opinion said that, taking these allegations as true and according the plaintiff the benefit of every possible favorable inference, they state a cause of action. Malik v. Beal, 864 N.Y.S.2d 153 (2d Dept. 2008).
Here, the purchaser’s attorney apparently missed the limitation of the seller’s delivery obligation to "existing" COs. He did not obtain a representation that COs did exist. Purchasers’ attorneys beware!
Karl B. Holtzschue