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Lucenti v. Cayuga Apartments, Inc.

    Brief Fact Summary.

    Plaintiff sued Defendant for specific performance of a sales contract for two of Defendant’s adjacent parcels with an abatement of the purchase price because the building on one of the parcels was severely damaged in a fire between the contract and closing dates. The trial court held that  Plaintiff could cancel the contract or seek its performance without a reduction in price. The appellate division reversed, however, and remanded for a determination of the proper abatement, which the trial court did. Plaintiff appealed again, seeking a greater price reduction, and the appellate division increased the abatement. Plaintiff then appealed that order. Defendant also appealed both orders of the appellate division.

    Synopsis of Rule of Law.

    If a building is substantially damaged during the period between contract signing and closing and the contract does not have a risk-of-loss clause, the buyer is entitled to specific performance with a reduced purchase price.

    Facts.

    Plaintiff agreed to buy two adjacent parcels, each containing a free standing building, from Defendant. One of the buildings was substantially damaged by a fire that occurred between the contract closing dates. Defendant received $45,000 from the property insurance and returned Plaintiff’s deposit money. The plaintiff refused to take back the check.

    Issue.

    Whether a buyer is entitled to specific performance with a reduced purchase price if a building is substantially damaged during the period between contract signing and closing and the contract does not have a risk-of-loss clause.

    Held.

    Yes. The court of appeals’ ruling is affirmed. If a building is substantially damaged during the period between contract signing and closing and the contract does not have a risk-of-loss clause, the buyer is entitled to specific performance with a reduced purchase price.

    Discussion.

    Absent a contrary agreement, the seller bears the risk of loss or damage to the property during the time between contract signing and the closing.However, if there has not been substantial damage, the buyer is entitled to a reduced purchase price but not a rescission of the contract. Furthermore, if the buyer is at fault for the loss, neither remedy is available. 


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