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Department of Community Affairs v. Atrium Palace Syndicate

Decided: April 29, 1991.

DEPARTMENT OF COMMUNITY AFFAIRS, DIVISION OF HOUSING AND DEVELOPMENT, COMPLAINANT-RESPONDENT,
v.
ATRIUM PALACE SYNDICATE, RESPONDENT-APPELLANT



On appeal from the Department of Community Affairs.

King, R.s. Cohen and Stern. The opinion of the court was delivered by Cohen, R.s., J.A.D.

Cohen

This is the second appeal by Atrium Palace Syndicate ("APS") this term from orders of the Department of Community Affairs requiring APS to return deposits to contract buyers of residential condominium units. Once again we affirm the Department's orders.

In our first opinion, Department of Community Affairs v. Atrium Palace Syndicate, 244 N.J. Super. 329, 582 A.2d 821 (App.Div.1990), certif. denied, N.J. (1991), we outlined

the statutory framework provided by the Planned Real Estate Development Full Disclosure Act, N.J.S.A. 45:22A-21 et seq., and the regulations adopted to implement it, N.J.A.C. 5:26-1.1 et seq. We also quoted the relevant provisions of the buyers' identical contracts. 244 N.J. Super. at 331-332, 582 A.2d 821. A summary of the contract terms will suffice for the present opinion.

Closing of title was agreed to take place on or before October 1, 1988, on which date the unit was to be substantially complete, as evidenced by a temporary certificate of occupancy ("TCO") issued by the Building Department of Fort Lee. Closing could be postponed by APS, without liability for damages, for a period up to 180 days. However, if there is no closing within the additional 180 days, the buyer "may elect to terminate . . . on not less than ten (10) days written notice," and get the deposit back, with interest. The time for performance by the buyer "is of the essence of" the contract. APS "shall give Purchaser ten (10) days notice of the closing date."*fn1

In the first cases before us, APS called for time-of-the-essence closings on March 30, 1989, the 180th day of the extension period. APS was not ready to close on March 30, because it did not have TCOs covering the units involved. We held that the contract required substantial completion to be evidenced by the issuance of TCOs; therefore APS breached its contract by being unready to perform at the time of closing which it demanded. In those circumstances the buyers were entitled to return of their deposits, whether or not they were individually ready to perform on March 30. Since the seller was unable to tender performance at the time it chose, it did not matter whether the buyers would have been able to perform if put to the test. In our prior opinion we should have emphasized that APS had called for the March 30 closings on a

"time-of-the-essence" basis. Absent that emphasis, our prior opinion could be misread to say that the buyers were entitled to their deposits solely because March 30 came and went without any action on anyone's part.

In the present appeal, six units are involved. The first was under contract to David Cybul. He contracted to buy on May 27, 1987. There were some months of correspondence about his dissatisfaction with the construction of his unit. By March 30, 1989, the last day of the extension period, no closing date had yet been set. Therefore Cybul wrote to APS terminating his contract and demanding return of his deposit within ten days.

We need not decide if the actual effect of Cybul's March 30 letter was to terminate immediately and demand repayment in ten days, or to make time of the essence of APS's performance in ten days. APS cannot now claim confusion over the effect of the March 30 letter or the parties' postures at the crucial times. It is clear that APS could not perform at any time in the months after March 30, and therefore Cybul was entitled to his deposit. Cybul's unsatisfied demands for inspection of the premises under construction and for an interval of time between inspection and closing did not waive his right to demand timely performance by APS.

On May 10, two days after Cybul secured a Superior Court order to show cause why his deposit should not be returned, APS responded with a notice making time of the essence as of May 23. On May 23, there still was no TCO covering the unit. Anyway, APS had ...


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