Cut your losses or wait thru a painful rebound?

Question

I was set to close in late March on the sale of my multifamily property in Manhattan;  then COVID-19 hit.  The building's only tenant (condition of close) defaulted on its rent and is probably going to go bankrupt (GNC).  We passed the contract's time is off the essence closing date. The buyers have given extensive bullshit why they aren't in default, but at the end of the day they are.  The courts are closed, so I can't enforce their default. Now they want a discount of at least 10%.

The reality is that supporting a building in NYC is expensive and the hold time through litigation for the deposit could be a year + when the courts finally do re-open. I expect the economy will not come back to the place where it was immediately. Would you guys fight for the money or just move on?

Always welcome everyone's thoughts.

Todd Rasmussen · Answer

@Roger R.

I don't think this is an either or situation. You should be able to send them a notice to perform and then when they fail to, end escrow and go back on the market. The release of earnest money requires your approval which you don't need to provide if you are disputing the earnest money. It's their earnest money sitting in escrow so I would think they would sweat waiting for the courts to reopen more than you and be motivated to settle before court. In the meantime sell to a buyer that is able to perform.

I'm not offering legal advice and the last test I passed was for Covid, so please consult a lawyer or at least someone who's done business in the state. All this hinges on the fact that you can carry the property until you find a new seller, and only you know if that's feasible.

Good luck!