NYC Condo Refinance Collapses Because There Was No 'Meeting of the Minds'

In Trief v. Wells Fargo Bank, N.A., Index No. 105280/09, — N.Y.S.2d — (Sup Ct, NY County, Apr. 4, 2011) ("Trief"), the plaintiffs sought damages arising out of their attempt to refinance a mortgage loan with the defendant bank (the "Bank"), for breach of contract and violation of New York's Unfair and Deceptive Practices Act, N.Y. General Business Law ("NYGBL") § 349. Justice Charles Edward Ramos granted the Bank's motion for summary judgment on both counts. The parties actually proceeded to closing when plaintiff walked away from the refinancing of a luxury midtown condominium located at 15 West 53rd Street, New York, NY – seemingly over a $518.75 dispute.

The main lesson is that all parties, especially when communicating via more informal modes of communications like email, must clarify and confirm an "agreement on all essential terms" or else a valid contract will not be formed.

The facts – negotiation, informal communications, the exchange of standard loan forms, etc... – follow a seemingly common pattern. A mortgage consultant from the Bank filled out the refinance application on the Triefs' behalf by telephone and then sent an e-mail attaching a Good Faith Estimate of Settlement Charges (the "GFE"). The GFE proposed a 5.125% interest rate and a standard provision indicating that the "fees listed are estimated - the actual charges may be more or less." The cover email asked to "let me know if you would like me to lock you in for 60 days", which Mr. Trief responded "sure." After a small dispute about the rate, the Bank faxed a Conventional Commitment Letter (the "Letter") to the Triefs confirming the rate and other details. Despite language in the Letter that "You must sign and return this commitment letter within that period to ensure receiving the terms specified", neither party signed the Letter. At the scheduled closing, the Triefs refused to proceed because the Bank sought to charge them a rate lock extension fee of $518.75, which the Triefs claim was never negotiated or agreed to.

The main issue was whether a contract was formed. The Court explained the...