BSF Represents Real Estate Developer Extell in Dispute Over Typo
Firm Newsletter Spring 2011
Because of a typo in an offering plan, BSF real estate client CRP/Extell Parcel, I, L.P. faced potentially millions in damages. Extell President Gary Barnett told The Wall Street Journal: “There’s an awful lot of money in deposits and we don’t think the process was fair. It was a typo mistake. We don’t think it’s equitable to pay damages well into eight figures.”
In early 2009, as the economy worsened, dozens of purchasers who had made down payments on condominium units in a new Manhattan building claimed a right to rescind their purchase agreements on the basis of a single typo in the offering plan. The Attorney General agreed with the purchasers and in April 2010 ordered the release of $16 million in down payments in escrow.
CRP/Extell argued that the typo does not reflect the parties’ intent. Here’s why: State regulations require a developer to inform purchasers that they can rescind their purchase agreements if no unit in the condominium has closed within a year of when the developer estimates the first closing will occur. The typo in CRP/Extell’s offering plan mistakenly says that the purchasers will have such a right of rescission if no unit has closed on the very same day the closing was estimated to occur. The typo does not reflect either CRP/Extell’s or the Purchasers’ intent, and enforcing the typo affords the Purchasers an undeserved windfall. Therefore, the typo should not be enforceable.
On January 19, 2011, following oral argument, a New York state court denied the Attorney General of New York’s motion to dismiss the Article 78 Petition filed by CRP/Extell Parcel challenging the Attorney General’s determinations and ordered the defendants to respond to the Article 78 Petition.