Vincent J. Gallo, Esq., "A checklist as to what an attorney should NOT DO in the course of properly representing a Purchaser."
Blanco v. Polanco, 2014 NY Slip Op 02735 (April 23, 2014) The Plaintiffs purchased a two-
family home from the Defendant, Your First Home, LLC. They did so without first conducting
an inspection of the premises. At the closing, the Seller agreed to make certain repairs set forth
on a punch list within 10 business days following closing. Shortly after the closing, the
Purchasers took occupancy of the premises.
The Seller never completed the punch list. Furthermore, after the Purchasers moved into the
premises, they discovered mold in various areas and found that water accumulated in the
basement whenever it rained. Additionally, when the Purchasers tried to rent the second floor
apartment of the house, they were informed that they could not do so because the house did not
have a Certificate of Occupancy (hereinafter CO), and that there were numerous "outstanding
requirements" that needed to be satisfied before one could be obtained.
The Purchasers commenced an action against, among others, the Seller and their attorney who
represented them in the transaction, alleging that the Defendants in the action colluded to defraud
them in connection with the purchase of the premises by, inter alia, dissuading them from
obtaining an inspection (as did the Seller), representing that any repairs and construction required
on the premises would be performed and paid for by the Seller before or immediately after the
closing, misrepresenting the condition of the premises, and misrepresenting that the apartment on
the second floor could be rented immediately upon closing and that the premises had a CO. The
Purchasers sought to recover damages from their attorney for legal malpractice, fraud, breach of
fiduciary duty, negligence, unjust enrichment, and conspiracy to commit fraud.
The Purchasers submitted evidence that their attorney had his non-attorney assistant pose as him
and counsel them throughout the transaction. They also supplied proof that their attorney
hastened them to sign the Contract of Sale without reading it and failed to advise them that by
signing the Contract, they were agreeing to purchase the premises "as is" and waiving their
opportunity to conduct an inspection. They also presented proof that their attorney reassured
them that the Seller would make needed repairs and advised them that they should trust the
Seller's opinion that a professional inspection was not necessary. They also presented proof that
their attorney failed to ask the Seller to fulfill its obligation under the Contract of Sale to provide
a CO or "a letter from the Building Department . . . to the effect that no CO is required."
Furthermore, the Purchasers submitted a report from the New York City Department of
Buildings indicating that subsequent alterations may have been made to the premises, triggering
the need for a CO and that various "outstanding requirements" needed to be satisfied before a CO
could be obtained.
Compounding the above, the Purchasers submitted evidence showing that their attorney had a
relationship with the Seller, pursuant to which he received more than 100 referrals from the
Seller, and when they were in the Seller's office, they were introduced to the non-attorney
impostor posing as their attorney who told them that he was the attorney. The Court held that
when viewed as a whole, it may be inferred from this evidence that the attorney and the Seller
may have colluded to defraud the Purchasers in connection with their purchase of the premises.
Accordingly, the attorney’s motion for summary judgment was, in large part, denied.
Succinctly, this case stands as a checklist as to what an attorney should NOT DO in the course
of properly representing a Purchaser.
mortgage contingency clause wherein the Purchaser was required to make an application to an
institutional lender, to pursue the application with due diligence, and to cooperate in good faith
with the institutional lender. The Court held that the Seller established, prima facie, that the
Purchaser breached the Contract of Sale by failing to make an application to an “institutional
lender”. There was evidence that the Purchaser made an inquiry to a mortgage broker, but the
mortgage broker never submitted an application to a lending institution. Consequently the Court
held that the Purchaser failed to comply with his or her obligation to submit an application to an
“institutional lender”, thereby forfeiting their down payment as liquidated damages.
This case is important for a few reasons. An attorney representing a Purchaser should be
extremely diligent in closely examining the precise language contained in the mortgage
contingency clause, so as to not allow for a Purchaser to place himself or herself in harm’s way
by failing to comply with his or her obligations therein, and thereby risking being held in default.
Accordingly, if the precise language requires the applicant apply to an “institutional lender” and
the borrower/applicant accepts this language, then apply to an institutional lender. If the
borrower intends, or possibly intends to utilize the services of a mortgage broker, then he or she
should be certain to allow for the inclusion of such language in the Contract of Sale, allowing for
same, so as to not risk being held in default.
The Court was unclear as to how it would have held had the mortgage broker actually submitted
an application on the borrower’s behalf to an “institutional lender”, and whether this would have
sufficed for purposes of satisfying the mortgage contingency clause. Since the Court was not
clear in this regard, one should not want to be the test case. Accordingly, an attorney should be
careful so as to craft the Contract language as to not place the borrower at risk of being held in
Carol Wojtowicz's, former law secretary of Hon. Judith McMahon, father (Peter I. Wojtowicz) passed away. The wake for him will be at Zajac Funeral Home, 319 24th Street, Niagara Falls, NY 14303 on at 2-4 and 7-9. The funeral will be on at Divine Mercy Parish, 2437 Niagara Street, Niagara Falls, NY 14303.
HERE for the flyer.
HERE for more info.
It is with deep regret that I have to inform all of you of the passing of Justice Robert J. Collini.
There will be a viewing at Scaparci Funeral Home, 6989 Amboy Road, Staten Island, NY 10312
The Funeral Mass will be held onat Church of St. Joseph - St. Thomas (St. Thomas), 6097 Amboy Road (enter on Maguire Ave.) Staten Island, NY 10312.
Rite of Christian Burial to immediately follow at Resurrection Cemetery.
It is with great sadness that I have to report that Richard LaRosa's mother (Lucy LaRosa) passed away.
The wake will be onfrom Matthews Funeral Home on Victory Blvd.
The wake will be fromand from
The burial will take place on Monday, March 9, 2015. There will be a mass at at St. Charles Church .
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