Danyluk v. Glashow, 2004 NY Slip Op 50154(U) (NY 2/20/2004)
Decision Date | 20 February 2004 |
Docket Number | 101633 L&T 2002. |
Citation | 2004 NY Slip Op 50154(U) |
Parties | ANDREW DANYLUK Petitioner, v. JONATHAN L. GLASHOW, M.D., P.C. Respondent. |
Court | New York Court of Appeals Court of Appeals |
On October 8, 1997, Petitioner-Lessor, an individual, entered into a five-year commercial lease for a professional condominium with Respondent-Lessee, a professional corporation.
The lease contained no personal guarantee by the principal of the lessee corporation.
Paragraph 52 of the rider to the lease, the provision giving rise to the present action, states:
PURCHASE OPTION: In the event Landlord shall elect to sell the Premises duringthe initial term hereof to a third-party pursuant to an offer by said third-party which offer is accepted by the Landlord, Tenant shall have the first right to match the sales price and terms as offered by said third-party. The right to purchase as granted to Tenant hereunder shall commence upon the date Landlord gives tenant notice and a summary of the material terms of such third-party offer and such right granted to Tenant hereunder shall automatically expire fifteen (15) days thereafter unless Tenant shall give Landlord timely written notice via certified return receipt mail of Tenant's intent to so match said offer in all of its terms which notice once given shall be irrevocable by Tenant. Upon the giving of such notice by Tenant, Tenant shall become unconditionally liable to Landlord for the full amount of the sales price as contained in such third-party offer and shall have thirty (30) days after the giving of such notice within which to close the purchase of the Premises. If Tenant shall fail to close the purchase within said thirty (30) day period, Landlord may, in his sole and absolute discretion, sell the Premises to any other party upon such terms and conditions as Landlord may determine without any restriction or obligation to Tenant and Tenant shall nonetheless be liable to Landlord for a sum of money equal to the purchase price of the Premises as contained in the foregoing notice by Tenant to Landlord of Tenant's intent to match the third-party offer.
Petitioner-Lessor decided to sell the premises and began negotiations with a third-party. On July 31, 2002, Petitioner notified Respondent of the third-party's offer in a note which stated:
...the current offer is for 540000 [sic]. The current terms are 20% down and the remainder financed at 7.75% rate over a 5-10 year period through me. Please let me know if you wish to match the offer and terms.
On that same date, Respondent sent Petitioner a letter in response:
Re: NOTICE TO EXERCISE
Please be advised that the undersigned, as Tenant under a lease dated October 8, 1996, for premises at 159 East 74th Street New York, New York, does hereby exercise pursuant to Paragraph 52 of said lease, the option of first right to purchase UNIT 6 in 159 East 74th Street, New York, New York, for the amount of and upon the terms and conditions set forth in Landlord's Notice dated July 31, 2002.
Very truly yours,
/s/
Jonathan L. Glashow, M.D., P.C.
by JONATHAN L. GLASHOW
Shortly thereafter Petitioner notified Respondent of another offer that had been made for the premises of $545,000, but Petitioner later withdrew his request that Respondent match that purchase price, so the effect of that proposal is not relevant to these proceedings.
On September 9, 2002, Petitioner forwarded to Respondent a draft of the proposed contract of sale. The draft sales agreement provided, in pertinent part, that:
...Purchaser shall execute a mortgage and a mortgage note (and such other instruments as the Seller shall reasonable require in connection therewith) pursuant to which the Purchaser shall agree to pay to the Seller the $432,000 principal borrowed together with interest thereon at the rate of SEVEN AND THREE QUARTERS PERCENT (7.75%) per annum, with amortization based on a 30-year term, with the unpaid principal balance due TEN (10) years following the closing. Such mortgage document shall provide that the purchaser shall not be permitted to repay same prior to its due date without the prior written consent of the Seller.
The proposed contract also required Respondent's principal to guarantee the agreement personally.
In response to this proposed sales agreement, Respondent requested the name and address of the third-party offeror in order to confirm the terms that had been agreed upon by said offeror and Petitioner.
On September 25, 2002, Petitioner wrote to Respondent inquiring as to its intentions, and indicated that if the proposed sales agreement were not signed by October 7, 2002, Respondent would need to vacate the premises according to the lease provisions.
On October 3, 2002, Petitioner sent Respondent a letter dated October 2, 2002, from the third-party offeror that stated:
On July 31, 2002, I as an individual, offered to purchase the office condominium owned by Andrew Danyluk for $540,000. The terms of the offer were 20% down payment and the remainder financed through Andrew Danyluk for 10 years at a rate of 7.75% without prepayment.
Also on October 3, 2002, Petitioner returned Respondent's rent check for that month, saying that Respondent was to vacate the premises on or before October 7, 2002 (the date on which the lease terminated), so that the premises could be re-let.
On October 9, 2002, Petitioner wrote to Respondent the following:
On July 31 you exercised your right to match the purchase price of an existing offer for my medical condominium. In doing so you established a contract and consequently a liability to me. As you have failed to close on the purchase of the condominium within the allotted time, your liability to me has not been eliminated.
When Respondent failed to close on the sale or to vacate, Petitioner commenced the instant holdover proceeding against it without serving Respondent with any predicate notice. Respondent moved for summary judgment, basing its claim on the fact that it was a vendee in possession and therefore must receive a ten-day notice to quit as a predicate to commencing the summary proceeding. The court denied the motion for summary judgment because of the questions of fact and law that we must now address.
Both parties agree that Respondent exercised its right of first refusal based on the July 31, 2002, communications between them. Further, all sides agree that the "summary of the material terms of the third-party's offer" as stated in Petitioner's note of July 31, 2002, consists of:
c) the remainder of the purchase price to be financed by Petitioner at an interest rate of 7.75&, and
d) the term of a 5-10 year period.
Petitioner contends that the amortization period appearing in the proposed contract for the sale of the premises is neither a material term nor a variance from the summary of material terms appearing in his note of July 31, 2002. Petitioner stated that the third-party offeror was an individual who would be personally liable for the sale. Therefore, the requirement that Respondent's principal agree to guarantee the sale is not a material term nor an alteration of the terms that appeared in his July 31, 2002, communication. Respondent disputes both these assertions.
Respondent argues that this proceeding must be dismissed because, as a vendee in possession, it must be given a ten-day notice to quit as a predicate to commencing a holdover action against it pursuant to section 713(9) of the Real Property Actions and Proceedings Law. Petitioner avers that no predicate notice is necessary because when the sales contract did not go through Respondent lost its status as a vendee in possession and remained on the premises as a holdover tenant.
The threshold question for this court is the determination of Respondent's status with respect to the subject premises. If it is a vendee in possession, it may be entitled to a predicate notice prior to instituting any summary proceeding against it. Conversely, if it is merely a tenant in possession after the natural termination of its lease no predicate notice may be required. The determining factor in arriving at the answer is the state of the contractual relationship between the parties.
Paragraph 52 of the lease agreement executed between the parties gave Respondent a right of first refusal to purchase the leased premises if Petitioner decided to sell the premises during the period of the leasehold and received a bona fide offer for the property from a third party.
A right of first refusal or preemptive right as distinguished from an option does not give its holder the power to compel an unwilling owner to sell; it merely requires the owner, when and if he decides to sell, to offer the property first to the party holding the preemptive right so that he may meet a third-party offer. LIN Broadcasting Corp. v. Metromedia, Inc., 74 N.Y. 2d 54, 544 N.Y.S. 2d 316 (1989). This right of first refusal binds the owner who wishes to sell his property not to do so without giving the holder of the right the opportunity to purchase such property. Kreiger v. Cornelius, 259 A.D. 2d 10, 697 N.Y.S. 2d 766 (3d Dept. 1999).
Simply stated, a right of first refusal is a right to receive an offer. Cipriano v. Glen Cove Lodge # 1458, B.P.O.E., 1 N.Y. 3d 53, 801 N.E. 2d 388 (2003). However, once the holder of the right elects to purchase the property according to the terms of the offer presented by the seller, that right of first refusal is converted into a binding contract. C & D Food Enterprises, Inc. V. Fudoli, 305 A.D. 2d 1093, 759 N.Y.S. 2d 425 (4th Dept. 2003); Yudell Trust I v. API Westchester Associates, 227 A.D. 2d 471, 643 N.Y.S. 2d 161 (2d Dept. 1996).
Both parties agree that Respondent accepted the offer proffered by Petitioner ...
To continue reading
Request your trial