Trung Dai Lam v. Young Mee Lee, 2024 NY Slip Op 50694(U)

Claimant Lam sued for the return of a $2,500 security deposit held by Howard Hanna related to a real estate sale contract with Young Mee Lee (Lee).
The contract included typical structural and financing contingencies. The financing contingency's commitment date was extended to May 5, 2023.
Lee applied for a mortgage but did not obtain financing, and the closing never occurred despite Lam declaring time of the essence.
The contract incorporated "Part B," outlining buyer obligations, including those tied to financing; its terms became central to the dispute.
At trial, the court determined Lee was a necessary party and a Korean interpreter was provided. Part B was ultimately introduced as evidence following a post-trial invitation to parties.
The contract was later terminated by Lam's attorney per accepted procedures outlined in Part B, leading to the request for return of Lee’s deposit.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Was the financing contingency waived by passage of commitment date?	Lam argued the contingency was waived when the commitment date passed without notice, entitling him to the deposit.	Lee argued the mere passage of the date did not waive the contingency and she was still entitled to financing protections.	Court held passage of commitment date did not automatically waive the financing contingency.
Did failure to close constitute a breach by Lee?	Lam claimed Lee's failure to close after 'time of the essence' notice was a default.	Lee argued closing was not required since financing contingency was still active.	Court found failure to close was not a breach, as financing contingency remained in effect.
Did Lee fulfill her contractual obligations regarding financing?	Lam argued Lee failed to make sufficient good faith efforts to obtain financing.	Lee contended she applied in good faith to at least one lender, as the contract required.	Court held Lee diligently pursued the application, satisfying the contract.
Is Lam entitled to keep the deposit based on Lee’s failure to obtain financing?	Lam claimed deposit should be forfeited due to nonperformance.	Lee argued contract and law entitled her to return of deposit since she acted in good faith and contract was terminated.	Court ruled deposit must be returned to Lee under terms of Part B and evidence of good faith.

Crabtree v. Elizabeth Arden Sales Corp., 305 NY 48 (1953) (Contracts may be formed by several connected writings; failure to read incorporated documents does not excuse their effect)
Matter of Augustine v. BankUnited FSB, 75 AD3d 596 (2d Dept 2010) (Obligation to read contracts before signing; cannot avoid contract for not understanding contents)
Shannon v. Simon, 128 AD2d 859 (2d Dept 1987) (Seller can convert contract to time-is-of-the-essence via clear notice to buyer)
Zev v. Merman, 134 AD2d 555 (2d Dept 1987) (Seller may demand performance if no financing contingency)
Blask v. Miller, 186 AD2d 958 (3d Dept 1992) (If contract requires diligent efforts to obtain financing, buyer must pursue all reasonable options)
2 Old, LLC v. Mayer, 90 AD3d 911 (2d Dept 2011) (Good-faith effort to obtain mortgage entitles buyer to return of down payment if financing fails)
Chao v. Chang, 192 AD2d 649 (2d Dept 1993) (Good faith attempts at securing a mortgage suffice for return of deposit if financing is denied)