Dolgetta Law

New York High Court Determines How to Measure Damages When Buyer Defaults White v. Farrell

The New York court system is broken up into four separate Judicial “Departments” so that there is a First, Second, Third and Fourth “Department” divided geographically. The New York State Court of Appeals on March 21, 2013 rendered a decision in which it has defined how to measure a seller’s damages for a buyer’s breach of contract in the sale of real property. The Four Departments had reached similar conclusions using different theories of law. New York’s High Court has now placed the State of New York amongst the rest of the fifty states upon holding that, “the measure of damages is the difference, if any, between the contract price and the fair market value of the property at the time of the breach.” The Court went on to also state that a trial court could make a determination about the amount of the loss that included taking into account “[t]he price obtained by the seller on a later resale of the property…”.

The Facts in White v. Farrell

Dennis and Nancy Farrell owned a home on Lake Skaneateles, New York. The Farrells had purchased the property in 2002, tore down the existing structures and built a year round single family home. In May of 2004 they decided to sell their new home having decided to relocate to South Carolina. The Skaneateles house was not completed until a Certificate of Occupancy was issued on May 31, 2005, a year after the Farrells first listed the property for sale.

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