## Facts

- A purchaser contracted in writing (June 21, 1975) to buy two contiguous parcels from a seller, each improved with a freestanding building; the price was allocated between the parcels.
- The contract contained no clause allocating the risk of casualty loss between contract and closing.
- About one week after execution, the older building was substantially destroyed by fire; the newer building was not damaged.
- The seller proposed a modification allowing the purchaser to collect insurance proceeds and apply them to reconstruction or reduction of the purchase-money mortgage, with mortgage subordination for reconstruction financing.
- The purchaser did not sign or formally accept the proposed modification and waited while the seller processed the insurance claim.
- The seller later received more than $45,000 in insurance proceeds and attempted to refund the purchaser’s $1,000 deposit.
- The purchaser promptly returned the refund check and stated an intent to close with an abatement reflecting the fire loss.
- The purchaser sued for specific performance with an abatement of the purchase price.

## Issues

1. Under N.Y. General Obligations Law § 5-1311, may a purchaser obtain specific performance with an abatement when a material part of the property is substantially destroyed by fire before closing and the contract has no risk-of-loss provision?
2. Did the purchaser’s post-fire conduct constitute waiver, abandonment, or rescission barring statutory and equitable relief?

## Decision

- The Court of Appeals affirmed the order granting specific performance with an abatement.
- Section 5-1311 grants the purchaser a privilege to rescind after material casualty loss without the purchaser’s fault; it does not bar specific performance with an abatement.
- The purchaser did not waive rights or abandon the contract as a matter of law; returning the deposit refund and insisting on closing supported continued enforcement.
- The court left undisturbed the Appellate Division’s abatement determination.

## Legal Principles

- When a real estate contract lacks a risk-of-loss clause, N.Y. General Obligations Law § 5-1311 shifts the pre-closing risk of material casualty loss (without purchaser fault) to the vendor.
- After such a loss, the purchaser may elect either rescission with recovery of payments or enforcement of the contract on equitable terms.
- Specific performance with an abatement remains available; the statute does not eliminate traditional equitable power to adjust the purchase price to reflect partial destruction or diminution in value.
- Waiver or abandonment requires clear conduct inconsistent with an intent to enforce; delay awaiting insurance and non-execution of a proposed modification do not, without more, establish waiver.

## Conclusion

The Court of Appeals held that, absent a contractual allocation of risk, a purchaser may enforce a real estate sale contract after a pre-closing fire by taking title with a fair abatement under § 5-1311, and the purchaser’s post-fire discussions and delay did not amount to waiver or rescission.


Lucenti v. Cayuga Apartments, Inc., 48 N.Y.2d 530, 399 N.E.2d 918 (N.Y. 1979)