Allison Witlow hadn't paid rent for about a year and had also stopped paying her utility bills for her Kip's Bay apartment.

By December 2006, all of her belongings had been removed and another tenant leased the space. Yet, some seven months later, Allison filed a proceeding with the New York County Civil Court seeking to get her apartment back.

After finding she was "illegally evicted," the Housing Court ordered a hearing be held to determine whether Allison should be restored to possession or whether the new resident could remain in the space.

On appeal, the Appellate Term, First Department, took a different view of the situation.

Since Witlow hadn't honored her rent payments for an extended period of time, delayed seeking relief, and wasn't successful finding a new home, the appellate court concluded Allison "abandoned" the unit and wasn't entitled to relief in her favor.

That had to have triggered some displaced anger.

To download a copy of the Appellate Term's decision, please use this link: Witlow v. Kip's Bay JV LLC

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

In Lovelace v. Krauss, Carey Lovelace sued Eugene Krauss to get her $955,450 down-payment back.

Like most other cooperatives, the building in which Lovelace wanted to buy an apartment required Board approval not only of the purchaser, but any pets. Although the contract of sale specifically indicated Lovelace wished to have her dog occupy the unit with her, the Board conditioned the sale's approval upon the animal's "occasional" presence.

When the New York County Supreme Court ordered the return of Lovelace's deposit, Krauss appealed to the Appellate Division, First Department.

According to the AD1, the contract's unambiguous language permitted cancellation of the transaction if Lovelace couldn't get "unconditional" approval. Absent evidence the building would have "unconditionally" allowed Lovelace's pooch, the AD1 believed she had a bonafide basis to back out of the deal.

That must have ticked Krauss off.

For a copy of the Appellate Division's decision, please use this link: Lovelace v. Krauss

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

In Group 88, Inc. v. AGA Capital NY, Inc., Group 88 went to a licensed mortgage broker -- AGA Capital -- for assistance with financing of a deal. But when the terms of that loan weren't as originally represented a lawsuit was filed.

Group 88 wanted to acquire nine cooperative apartments. After its loan request was rejected by one lender, AGA was able to get financing from another entity and Group 88 accepted the terms of that deal. Yet, it still sued alleging breach by AGA of certain oral representations.

After the Kings County Supreme Court dismissed the case, the Appellate Division, Second Department, agreed AGA hadn't guaranteed any deal related terms.

In other words, Group 88 couldn't Capitalize on that.

To download a copy of the Appellate Division's decision, please use this link: Group 88, Inc. v. AGA Capital NY, Inc.

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (0)

CONDOMINIUM APARTMENTS FOR SALE AT 140 EDGECOMBE AVENUE IN MANHATTAN

140 Edgecombe Avenue Condominiums is a five-unit boutique condominium developed under the Homeworks Program of the NYC Department of Housing Preservation and Development. Unit 1 is being offered for immediate sale on a first-come, first-served basis subject to primary residence requirements but no maximum income or asset restrictions.

140 EDGECOMBE AVENUE CONDOMINIUMS CONSISTS OF FIVE TWO-BEDROOM, TWO-BATHROOM, FLOOR-THROUGH UNITS IN A FULLY-RENOVATED BUILDING. THE BUILDING RENOVATION INCLUDED THE INSTALLATION OF AN ELEVATOR, ALL NEW PLUMBING AND ELECTRICAL SYSTEMS, INTERIOR CONSTRUCTION (NEW WALLS, FLOORS, CEILING, ETC.), INSULATED WINDOWS, NEW ROOFING, AN AUDIO-VISUAL INTERCOM SYSTEM AND WIRING FOR TELEPHONE, CABLE TV AND PCS. THERE IS A SHARED STORAGE AREA AT THE BASEMENT-LEVEL AND A SHARED REAR YARD. EACH UNIT OCCUPIES AN ENTIRE FLOOR IN THE BUILDING AND FEATURES CEILING HEIGHTS OF APPROXIMATELY 10-FEET, AMPLE CLOSET SPACE, OAK FINISHED FLOORS, MODERN KITCHENS WITH DISH WASHERS, CERAMIC TILED BATHROOMS AND A WASHER/DRYER CLOSET (WASHER AND DRYER NOT INCLUDED).

140 EDGECOMBE IS LOCATED ON A QUIET STREET AND IS ALSO ONLY A FEW BLOCKS AWAY FROM CITY  COLLEGE, LONDEL'S RESTAURANT, THE HARLEM SCHOOL OF THE ARTS, ST. NICHOLAS PARK, PATHMARK, THE NY SPORT CLUB, THE A, B, C AND D TRAINS AND MORE. IT OFFERS VALUE AND CONVENIENCE.

THE ONLY UNIT THAT REMAINS FOR SALE IS UNIT 1. IT IS A COMFORTABLE 872 SQUARE FOOT GROUND FLOOR UNIT THAT FEATURES AN OPEN KITCHEN AND HAS A SUBSIDIZED SALES PRICE OF $295,000.

MONTHLY COMMON CHARGES ARE ESTIMATED AT $772.80. ASSUMING A MINIMUM DOWN-PAYMENT OF 5% AND A 30-YEAR FIXED-RATE MORTGAGE AT A 5% INTEREST RATE, THE MINIMUM HOUSEHOLD INCOME REQUIRED TO PURCHASE THIS UNIT IS ESTIMATED TO BE APPROXIMATELY $76,500. NO MAXIMUM HOUSEHOLD INCOME OR ASSET LIMITS APPLY. PURCHASERS WHO REQUIRE A CONDOMINIUM LOAN MUST QUALIFY FOR SAME. BUYERS MUST OCCUPY THE CONDOMINIUM UNIT AS THEIR PRIMARY RESIDENCE. CLOSING COST ASSISTANCE MAY BE AVAILABLE TO ELIGIBLE PURCHASERS. THE QUOTED SALES PRICES, MINIMUM REQUIRED HOUSEHOLD INCOME, MONTHLY PAYMENTS, SQUARE FOOTAGE, ETC. ARE ESTIMATES AND SUBJECT TO CHANGE.

HOW TO APPLY: APPOINTMENTS TO VIEW UNIT 1 MAY BE SCHEDULED BY CONTACTING HARLEM CDC, THE MARKETING AGENT FOR THIS PROJECT, AT THE NUMBER INDICATED BELOW AND SPEAKING WITH FRANCISCO GUZMAN. APPLICATIONS MAY BE REQUESTED BY PHONE OR FAX AT THE ADDRESS, TELEPHONE AND FAX NUMBERS INDICATED BELOW.

NO APPLICATION FEE. NO BROKER FEE. CREDIT CHECK FEES APPLY AND ARE DUE AT THE TIME OF THE QUALIFICATION INTERVIEW WITH HARLEM CDC. THE CREDIT CHECK FEE IS $25 PER INDIVIDUAL (E.G.: TWO UNMARRIED INDIVIDUALS APPLYING TOGETHER PAY $50) AND $40 FOR MARRIED COUPLES.

THE COMPLETE OFFERING TERMS ARE INCLUDED IN THE 140 EDGECOMBE AVENUE CONDOMINIUM OFFERING PLAN, AS AMENDED, AVAILABLE FROM THE SPONSOR. FILE NO.: CD070157

SPONSOR: SPONSOR: 140 EDGECOMBE LLC, 3152 ALBANY CRESCENT, BRONX, NY 10463.

Posted by Lucas A. Ferrara, Esq. at 10:00 AM | Permalink | TrackBacks (0) | Comments (1)

In Alter v. Levine, Daniel Alter tried to sell his co-op to Richard Levine, but when the latter  was rejected by the building's board, Alter sued to retain the $62,000 down payment.

The contract of sale provided Alter could keep the money if Levine acted in "bad faith."

Although Alter claimed Levine submitted false data which, in turn, triggered the rejection, the Westchester County Supreme Court sided with the rejected buyer and directed the seller to return the money.

On appeal, the Appellate Division, Second Department, affirmed the outcome. Apparently, since he lacked any proof and his allegations were conclusory in nature, Alter was unable to establish the board's rejection was due to any misconduct by Levine.

(The AD2 also affirmed dismissal of Alter's anticipatory breach claim, because the board's refusal to approve the sale made the contract's performance impossible.)

O ye of little faith!

  To download a copy of the Appellate Division's decision, please use this link: Alter v. Levine 

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (0)

In Sassi-Lehner v. Charlton Tenants Corp., Christina Sassi-Lehner wanted a court to declare her the holder of unsold shares in a cooperative corporation and that she could "assign, sell or transfer the shares without board approval.

Charlton Tenants Corp. owned a six-story residential apartment building. In 1982, when the cooperative was formed, the non-purchasing, rent-controlled tenants living in apartment 4C declined to purchase their unit and the shares attributable to the apartment took on "unsold" status and were retained by the sponsor. Three years later, Mark Greenbaum acquired the shares (as reflected in amendments to the cooperative's offering plan). He later defaulted on his mortgage, and the shares were sold by the Federal National Mortgage Association ("Fannie Mae") to Michael and Christina Sassi.

In 2001, when Michael died, the shares were transferred to his daughters, Christina Sassi-Lehner and Gabriella Sassi-Hill.  However, after Greenbaum, none of the subsequent shareholders were identified in any amendments to the cooperative's offering plan.  When the tenants of 4C stopped paying rent and surrendered possession, the Sassis sought to sell the unit, but Charlton Tenants Corp. wouldn't permit the sale unless the Sassi sisters complied with the co-op's rules governing such transfers

Because they were never officially designated "holders of unsold shares," the New York County Supreme Court concluded the ladies couldn't claim such status. On appeal, the duo contended that the offering plan wasn't controlling and the certificate of incorporation, the bylaws, and proprietary lease were of critical importance. They argued that, according to the lease, "the person owning the shares has all the rights of a holder of unsold shares until such time as he or she occupies the apartment or the shares are owned by a purchaser who occupies the apartment." Because the Sassis never lived in the unit, they claimed to be owners of "unsold shares."

Since who was a "holder of the unsold shares" was determined by the offering plan (and its amendments), and Greenbaum was the last person cited in those documents, the Appellate Division, First Department, found the sisters weren't exempt from complying with the co-op's procedures.

Now, wasn't that sassy?

To download a copy of the Appellate Division's decision, please use this link: Sassi-Lehner v. Charlton Tenants Corp. 

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (1)

In Hopp v. Raimondi, Susan Hopp was a rent-controlled tenant who lived in the building for over forty years, even after it converted to cooperative ownership back in the 80's.

In 2003, Michael Raimondi acquired the shares and proprietary lease to Hopp's unit.

When Hopp refused to provide Raimondi with a key to the apartment, he served her with a notice claiming that she violated her lease and gave her an opportunity to remedy the default. Before that cure period ended, Hopp filed suit seeking a court to declare her in compliance with her lease and simultaneously asked for a special injunction -- commonly known as "Yellowstone relief" -- stopping the running of the timeframe delineated in the landlord's notice.

When the Westchester County Supreme Court denied her request, finding such equitable relief was only available to commercial tenants or those residential tenants who owned shares in their coop apartments, an appeal to the Appellate Division, Second Department, followed.

While Yellowstone injunctions aren't usually needed by New York City residential tenants because of a state law -- RPAPL 753(4) -- which grants them a ten day post-judgment period to correct a default and avoid a forfeiture of a tenancy, no comparable statutory protection exists for those apartment dwellers outside of the five boroughs.

As a result, the AD2 concluded equitable relief should be granted and Hopp's right to cure preserved in the event the Supreme Court ultimately found against her.

Bet Susan's glad she hopped to the AD2.

To download a copy of the Appellate Division's decision, please use this link: Hopp v. Raimondi  

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (1)

In Koeppel v. 895 West End Avenue Coop. Corp, John Koeppel sued 895 West End Avenue Coop (895 WEA) to recover damages for alleged apartment related damage and efects.

After the New York County Small Claims Court awarded Koeppel $5,000, 895 WEA appealed to the Appellate Term, First Department, which reversed the outcome.

Not only did Koeppel agree to accept the apartment "as is," he "specifically disclaimed his reliance on any promises or warranties concerning the [apartment's] condition."

The AT1 also found Koeppel's assertion that the apartment's defects were hidden or "latent" to be unpersuasive, since he failed to present "any professional opinion or ... competent evidence" as to what caused a wall within his unit to collapse some 16 months after the apartment had been purchased.

The AT1 certainly didn't have any latent disdain for this case.

To download a copy of the Appellate Term's decision, please use this link: Koeppel v. 895 West End Avenue Coop. Corp

Posted by Lucas A. Ferrara, Esq. at 3:25 PM | Permalink | TrackBacks (0) | Comments (0)

Last December, we looked at the case of 565 Tenant's Corp. v. Adams, an Appellate Term decision wherein a cooperative shareholder faced eviction from his apartment based on "nuisance."

The underlying case was settled by way of an agreement (dated July 31, 2006) which provided the tenant would "not permit his dogs to defecate or urinate in the [apartment or common areas of the building] and/or if same occurs shall promptly [and] properly clean so as to avoid issuance of any odor. If [tenant] or any authorized individual is in [the apartment] said clean-up to be done immediately."

For a period of two years, any breach by the tenant was to be treated with "zero tolerance" and would result in the issuance of a warrant of eviction on as little as five days' notice.

As luck would have it, about a month later (August 22, 2006), one of the tenant's Afghans defecated on the unit's hallway floor and there the deposit remained for about a three week period - until the tenant returned from a Caribbean vacation.

When the cooperative alleged breach and sought to evict the tenant for his noncompliance with the parties' agreement, the New York County Civil Court was of the opinion the tenant had not seen the "accident" occur (as he had been leaving for a vacation) and removed the pile upon his return -- thus satisfying the "immediate" clean-up requirement.

On appeal, the Appellate Term, First Department, reversed.

The AT1 didn't buy the tenant's "professed unawareness of the dog's mess," since it had been "conspicuously deposited immediately outside tenant's bedroom." Undeniably, the tenant's "ignorance defense" didn't pass the smell test:

In evaluating tenant's breach using the "zero tolerance" standard formulated by the parties, it is not unreasonable to charge tenant with knowledge of what he ought to have discovered through the ordinary use of his senses.

The appellate court also professed concern for the sanctity of the agreements reached in Housing Court, and noted owners would be discouraged from amicably resolving disputes if settlements were dishonored and unenforced by our courts.

In an attempt to forestall an eviction, the case was taken to the Appellate Division, First Department, which was also unreceptive to the tenant's explanations. In a decision released on September 18, 2008, the AD1 concluded as follows:

The Appellate Term correctly held that under the terms of the parties' stipulation, tenant's admitted presence in the apartment at the time his dog defecated on the floor required that the mess be immediately cleaned up. Tenant's claim that the dog must have defecated while he and his girlfriend were in another area of the apartment and in a hurry to make a plane, and that they were unaware of the mess until they returned from vacation three weeks later, is unavailing (see Hotel Cameron, Inc. v Purcell, 35 AD3d 153 [2006]), especially in view of the clause that the stipulation was to be applied with "zero tolerance" and that no violation was to be deemed "de minimus" (sic) (see 1029 Sixth v Riniv Corp., 9 AD3d 142, 149 [2004], appeals dismissed 4 NY3d 795 [2005]).

To download a copy of the Appellate Division's decision in this case, please use this link: 565 Tenant's Corp. v. Adams   

To download a copy of the Appellate Term's decision, please use this link: 565 Tenant's Corp. v. Adams

To view a copy of the Civil Court's Decision/Order in this case, please use this link: 656 Tenant's Corp. v Adams (Civil)

To view our related posts on this topic, please use this link: Stipulations  

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (1)

In Hirschmann v. Hassapoyannes, Constantine Hassapoyannes sought to stop a cooperative corporation from withdrawing its approval of his application to purchase a unit in the building.

At his board interview, Hassapoyannes agreed to abide by the coop's policy which prohibited washers and dryers in apartments. However, prior to closing, Hassapoyannes informed the building's managing agent he required the machines due to a disability. Upon learning of that development, the board withdrew its approval of the sale, arguing he was late in disclosing his need for a washer and dryer and this indicated he was "dishonest and uncooperative" and would likely "not work with the co-op to ensure a safe installation."

After the New York County Supreme Court directed the coop to reinstate its approval and allow the transfer to proceed, the cooperative appealed to the Appellate Division, First Department, which upheld the injunction.

Hassapoyannes established the board discriminated in its handling of the application, while the entity was unable to present a non-discriminatory reason for its revocation.

The AD1 further noted Hassapoyannes wasn't legally required "to disclose, and the co-op was not permitted to inquire into, buyer's disability, and consequent need for a reasonable accommodation, at the interview, or indeed at any time prior to its decision on the application."

That's far from a wash.

To download a copy of the Appellate Division's decision, please use this link: Hirschmann v. Hassapoyannes  

Posted by Lucas A. Ferrara, Esq. at 3:25 PM | Permalink | TrackBacks (0) | Comments (0)

In 1725 York Venture v. Block, 1725 York Venture started an eviction proceeding against Michael & Nomi Block for harboring a dog in their apartment without the owner's consent.

While the building was "pet-friendly," the Blocks' lease didn't allow them to harbor a dog in their apartment without permission. When the owner sought to enforce that rule, the Blocks claimed 1725 had waived its right to enforce the prohibition since it didn't bring a case within 3 months of discovering the dog's presence.

After the New York County Civil Court awarded 1725 possession of the apartment, the Blocks appealed.

Since the building's employees knew of the dog, the Appellate Term, First Department, found their knowledge applied to 1725. The AT1 believed "[a]bsentee landlords cannot avoid having 'imputed knowledge' of the presence of pets by 'turning a blind eye to [an] open and notorious fact.'"

That must have been ruff!

To download a copy of the Appellate Division's decision, please use this link: 1725 York Venture v. Block

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (2)

Here's a free CLE that's being offered tomorrow morning (July 22, 2008) by Wells Fargo and American Land.

(Sorry about the last minute nature of the invite. We just got it moments ago!)

Continue reading "INTO CO-OPS AND CONDOS?" »

Posted by Lucas A. Ferrara, Esq. at 5:00 PM | Permalink | TrackBacks (0) | Comments (1)

Just in case you missed it, our partner, Lucas A. Ferrara, appeared in yesterday's (May 4, 2008) edition of the New York Post's Page Six Magazine.

Of course, that isn't Lucas pictured on the front cover.

You'll find him quoted on page 28 in an article entitled "Co-op Showdown," a piece on the growing number of New York area conflicts involving "annoying neighbors."

What can people do when they're faced with too much noise, foul odors, or other nuisance?  

After giving their neighbors -- and the landlord (such as a co-op) -- notice  of the offending conduct, Lucas addresses the pros and cons of taking these kinds of disputes to court.

Unfortunately, no link to an electronic version of the story is currently available. But we'll post a copy of the piece as soon as we're able. (We'll add them below.)

In the meantime, special thanks to Page Six Magazine contributor Kate Torgovnick for the ink!

Cheers!

Continue reading "LUCAS MAKES PAGE SIX!" »

Posted by Daniel Finkelstein, Esq. at 6:00 AM | Permalink | TrackBacks (0) | Comments (5)

Typically, "time of the essence" means that a specified performance obligation must occur on or before the date specified in the parties' agreement. Without that "mumbo jumbo," the governing deadlines contained in a contract may not be "set in stone."
 
A case in point is ADC Orange, Inc. v. Coyote Acres, Inc. In that dispute, ADC agreed to buy (from Coyote) a plot of land in Orange County, New York, for $600,000.

ADC made an initial down payment of $100,000 and was to make an additional payment of $250,000 "upon the later of the preliminary approval [of the contemplated construction] … from the applicable authorities for the subdivision or December 31, 2001, but in no event later than December 31, 2001."  The $250,000 payment wasn’t made until on or about January 11, 2002.
 
After attempts to reach a settlement failed, ADC filed suit in the Orange County Supreme Court seeking "specific performance" -- an order compelling the seller to convey the property in accordance with the contract of sale’s terms. Coyote, on the other hand, alleged that ADC violated the agreement by its failure to timely remit the $250,000, and this default entitled Coyote to walk away from the deal and keep the $100,000 down payment. (Coyote also claimed that the deal ended when ADC was unable to secure final approval of the subdivision by the applicable deadlines.)
 
The Supreme Court found that Coyote improperly repudiated the contract, as there was no “time of the essence” clause, and granted ADC’s “specific performance” request.

On appeal, the Appellate Division, Second Department, found that ADC’s failure to tender payment in a timely fashion had materially breached the contract’s terms thereby allowing Coyote to cancel the contract and keep ADC’s downpayment.

On review, the New York State Court of Appeals concluded that the absence of a “time of the essence” provision implied a reasonable time for payment. Standing alone, the payment due date, without a default provision, did not afford ADC adequate notice that a delay would jeopardize the contract. Additionally, our state’s highest court found that there were questions -- or “material issues of fact” -- as to whether Coyote had intentionally frustrated ADC’s ability to perform, and remitted those issues to the Supreme Court for further review and consideration.

Get the essence of that decision? (We’re outta time!)

For a copy of the Court of Appeals’ decision, please use this link: ADC Orange, Inc. v. Coyote Acres, Inc.
 
For a copy of the Appellate Division's decision, please use this link: ADC Orange, Inc. v. Coyote Acres, Inc.

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (0)

In Landry v. Harris, Christopher Landry sought to evict his former girlfriend, Taquana Harris, their 3-year-old son, Azlan, and, Harris’ daughter from a prior relationship, from a Chelsea three-bedroom cooperative apartment. (Obviously, the couple’s relationship wasn't going well.)

There was a case against Landry for “aggravated harassment” pending in New York County Criminal Court (which had issued a temporary order of protection against him), while custody, visitation, and support proceedings were pending in New York County Family Court.

Harris moved to dismiss the eviction case, arguing that Landry couldn’t bring a holdover proceeding against her since she was not a “licensee” whose interests could be revoked.

While acknowledging case law is divided on whether a party can prevail in a licensee proceeding against a former paramour, the New York County Civil Court concluded that the following factors needed to be considered: “Whether the parties moved into the subject premises together; how long they lived together; whether they held themselves out as husband and wife or as nontraditional family members; whether they have a child in common; whether they shared household expenses; whether the supposed licensee contributed toward the home’s purchase price, maintenance, or improvements, and what  type of home is at issue -- a rent-regulated unit, real property like a house or condominium, or personal property like shares appurtenant to a cooperative unit.”

Relying on Blake v. Stratford -- which decided that a licensee proceeding may be brought against a former paramour but not against the couple's child -- the Civil Court dismissed the holdover petition against Landry’s son, Azlan. But it recognized that, if it allowed a trial to take place, Azlan might still be evicted because of his mother’s removal. As a result, the court determined that if Landry won the holdover case, the eviction would be stayed for however long it took the Family Court to resolve the custody and support issues --  particularly where, and with whom, Azlan would live.

Where will Azlan ultimately land?

To download a copy of the Civil Court’s decision, please use this link: Landry v. Harris

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (2)

In 905 5^th Assoc., Inc. v. 907 Corp., Dr. Pamela Lipkin sued to recover damages she sustained as a result of renovation work that had been performed by the Weintraubs, her upstairs neighbors.

After granting a request made by the cooperative and its managing agent to be dismissed from the case, the New York County Supreme Court also granted motions made by the Weintraubs and My Home (the Weintraubs’ contractors) to strike a “punitive damage” claim that had been filed against them (but otherwise denied their request to have the case dismissed against them).

On appeal, the Appellate Division, First Department, agreed that Lipkin had no viable claim against the cooperative and its managing agent since there was no evidence of wrongful acts perpetrated by those parties.

While it was arguably the cooperative’s duty to keep the concrete slab -- which separated Dr. Lipkin’s office from her upstairs neighbors -- in good repair, Lipkin failed to present any evidence cause. As a result, “negligence” by the coop hadn't been sufficiently established.

Without any proof that the cooperative acted unreasonably in addressing her complaints, the AD1 further concluded that the entity’s refusal to take action was  shielded from judicial review as a result of the “business-judgment rule” -- a special legal doctrine which precludes “second-guessing” of Board decisions in the absence of some illegality or other wrongful conduct.

The AD1 agreed that the lower court should have dismissed a “constructive eviction claim” which had been made against the Weintraubs and My Home, because that relief could only be made against a landlord. And, any purported “tortious interference” with Dr. Lipkin’s leasehold rights was also not viable in the absence of any underlying liability by the cooperative.

And while her request for “punitive damages” had been rightfully dismissed -- because the complaint failed to allege “egregious culpable conduct or wrongdoing” aimed at the general public -- the AD1 did not believe the two remaining defendants should be released from the case because an expert raised questions as to whether the contractor’s work caused the damage, and whether the prophylactic measures it had recommended (but Lipkin rejected) would have been effective.

And since there was a question as to whether My Home had agreed to indemnify the Weintraubs from Lipkin’s claims, My Home’s request to eliminate the cross claims which the Weintraubs had filed against the contractor was also properly denied.

This ain’t a My Home town.

To download a copy of the Appellate Division's decision, please use this link: 905 5^th Assoc., Inc. v. 907 Corp.

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (8)

A Manhattan condo dweller sued his fellow owners for $23.5 million in compensatory damages based upon "an alleged failure to make handicap accessible the residential condominium in which the disabled plaintiff and his wife" resided.

In Pelton v. 77 Park Avenue Condominium, Dean Pelton was unable to maneuver common-area steps due to muscular dystrophy, a degenerative disease. In June 2002, the condominium’s president was advised of Pelton’s physical disability and a request was made to make the building “handicap accessible.” While there was an initial period of inactivity, in late 2003, after an informal complaint was filed with the New York City Commission on Human Rights (HRC), architects were eventually retained by the building to advise of possible wheelchair-accessible modifications.

It was not until June of 2004 that the board finally advised Pelton that it had a plan to address his concerns. In the short term, to facilitate access to the stairs leading to the passenger and service elevators, the board offered to install a portable wheelchair lift which would be operated by building personnel (who were on duty 24 hours a day). Over the long-term, the building would install platform lifts to both the passenger and service elevators.

Discussions faltered when Pelton refused to sign a letter agreement consenting to the proposal. Despite this impasse, and Pelton’s filing of a lawsuit in the New York County Supreme Court, the condominium installed a portable stair climber in the building’s lobby at the cost of $13,000 and secured the vote of the building’s other unit owners to a special assessment in the amount of $130,000 to fund the renovation plan.

When the condo asked for the case's dismissal, the New York Supreme Court denied the request asserting that the condo board enjoyed no immunity for its actions since unlawful discriminatory conduct had been alleged.

On appeal, the Appellate Division, First Department, disagreed and found that considerable deference must be given to a board's decision-making process unless a shareholder can establish the existence of elements espoused by the Court of Appeals in its 2003 case of 40 W 67th St. v. Pullman. As our state's highest court noted in that opinion:

To trigger further judicial scrutiny, an aggrieved shareholder-tenant must make a showing that the board acted (1) outside the scope of its authority, (2) in a way that did not legitimately further the corporate purpose or (3) in bad faith.

Since he couldn't prove the existence of at least one of these three factors, Pelton's case could not survive. Because the building employed several measures to accommodate him -- including retaining architects, debating possible structural solutions, purchasing a temporary lift and holding a board meeting to discuss financial plans -- the the AD1 did not believe that Pelton was able to show any "bad faith" or discrimination by the board or its members. Moreover, his claim that the board employed discriminatory “stall tactics” was found to be without merit.

The AD1 was concerned that exposure to suits would discourage volunteer service on boards. In that regard, the appellate panel wrote:

Courts must hold those who would challenge the decisions of condominium and cooperative boards to the requirement of pleading with specificity claims of discriminatory conduct or wrongdoing. Otherwise, the threat of baseless litigation, with its attendant serious financial and personal burdens, would pose a formidable obstacle to those willing to volunteer their talent, experience and knowledge for the common good of their homeowner communities by serving on such a board.

The AD1 was quite accommodating, wouldn't you agree?

To download a copy of the Appellate Division's decision, please use this link: Pelton v. 77 Park Avenue Condominium

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (0)

In Sugarman v. Malone, Lydia Sugarman sought to secure a Manhattan cooperative apartment from her sister-in-law’s husband by way of “adverse possession.”

Sugarman had lived in the apartment since 1984 with her late husband, Howard, who died in 1990. The owner of the shares was Howard’s father, who died in 1995, leaving the shares to Howard’s sister. She then died a year later, leaving the shares to her husband, Laurence Malone. Malone didn’t assert his interest in the apartment for some nine years. Consequently, Sugarman filed suit in 2005, “seeking a declaration that she is the rightful owner of the shares through adverse possession.”

When the New York County Supreme Court granted Malone’s request to dismiss the case, Sugarman appealed to the Appellate Division, First Department.

The AD1 determined that the element of “hostility” -- which is one of the elements required in any adverse possession case -- was lost when Sugarman offered to buy the apartment in 1998, while the governing ten-year statutory period was still running.

We're guessing Sugarman found nothing sweet about that.

To download a copy of the Appellate Division’s decision, please use this link: Sugarman v. Malone

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

In 565 Tenant's Corp. v. Adams, a cooperative shareholder faced eviction from his apartment based on "nuisance."

The underlying holdover proceeding was settled by way of an agreement (dated July 31, 2006) which provided that the tenant would "not permit his dogs to defecate or urinate in the [apartment or common areas of the building] and/or if same occurs shall promptly [and] properly clean so as to avoid issuance of any odor. If [tenant] or any authorized individual is in [the apartment] said clean-up to be done immediately."

For a period of two years, any breach by the tenant was to be treated with "zero tolerance" and would result in the issuance of a warrant of eviction on as little as five days' notice.

As luck would have it, about a month later (August 22, 2006), one of the tenant's Afghans defecated on the unit's hallway floor and there the deposit remained for about a three week period - until the tenant returned from a Caribbean vacation.

When the cooperative alleged breach and sought to evict the tenant for his noncompliance with the parties' agreement, the New York County Civil Court concluded that the tenant had not seen the "accident" occur (as he had been leaving for a vacation) and removed the pile upon his return -- thus satisfying the "immediate" clean-up requirement.

On appeal, the Appellate Term, First Department, reversed.

The AT1 didn't buy the tenant's "professed unawareness of the dog's mess," since it had been "conspicuously deposited immediately outside tenant's bedroom." Undeniably, the tenant's "ignorance defense" didn't pass the smell test:

In evaluating tenant's breach using the "zero tolerance" standard formulated by the parties, it is not unreasonable to charge tenant with knowledge of what he ought to have discovered through the ordinary use of his senses.

The appellate court also expressed concern (as had been cited in an earlier Appellate Division decision) for the sanctity of the contractual arrangements reached in Housing Court, and noted that owners would be discouraged from amicably resolving disputes if settlements were dishonored and unenforced by our courts.*

The Appellate Term, 2nd and 11th Judicial Districts, didn't share that sentiment in 600 Hylan Associates v. Polshak. In that case, Ilonka Polshak sought to vacate a money judgment and a possessory judgment which she had agreed to in a nonpayment case. While she initially stipulated to owing some $11,000 in "back rent, costs and fees," she later retained counsel and sought to be relieved of her obligations under that agreement, claiming to have "inadvisably" waived certain defenses to the landlord's claim.

Since her motion failed to cite any of the typical factors -- fraud, collusion, accident or mistake --which would have triggered an entitlement to relief, the Richmond County Civil Country denied the request. On appeal, the AT2 reversed.

Since the tenant had "made it clear" she was unable to remit payment of the monies sought to be recovered without assistance from the Department of Social Services, and, in view of the possibility that the landlord may have waited too long -- i.e., two years -- to bring the nonpayment case, the AT2 was of the opinion that the tenant had made "a sufficient showing of prejudice arising from landlord's delay" in filing its lawsuit.

Having demonstrated a "meritorious and substantial laches defense," the AT2 rescinded the parties' agreement and restored them to the status quo ante - so that there could be a full and complete trial on the parties' respective claims.

A lone dissenter, Justice Michelle Patterson, did not agree with the appeal's outcome and noted as follows:

[T]he record shows that the tenant entered into the stipulation freely and knowingly in open court and that the amount agreed to was in fact owed. To unravel a stipulation of settlement under these circumstances would have a chilling effect upon future litigants entering into such settlements and, indeed, would render them meaningless. While the Court is sympathetic to this self-representing litigant, it must be mindful of its role to administer justice fairly and evenly and cannot ignore the basic tenets of the law.

This much is certain, folks: There are no absolutes in landlord-tenant law.

And, that's no crock. 

To view the Appellate Term decisions, please use these links: 565 Tenant's Corp. v. Adams or 600 Hylan Associates v. Polshak

To view a copy of the Civil Court's Decision/Order in the Adams case, please use this link: 656 Tenant's Corp. v Adams (Civil)

To view our related posts on this topic, please use this link: Stipulations

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*We understand that the tenant's attorney is seeking leave to appeal to the Appellate Division, First Department. (Unfortunately, we do not hold out much hope for that application being granted.)

Continue reading "WHAT'S THE POOP WITH THE APPELLATE TERM?" »

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (3)

Just in case you missed it, our partner Lucas A. Ferrara was in yesterday's New York Times.

In a piece, entitled "Improvements in a Rental," Lucas offered his insights on whether or not tenants may make improvements to their apartments without the owners' consent.

Here's the piece in its entirety:

 

 

November 18, 2007

Improvements in a Rental

Q I live in a rent-stabilized apartment in Manhattan. As apartments become vacant, the owner is making major improvements to the kitchens (new refrigerators, stoves, cabinets, etc.).

Being handy, I would like to replace my appliances and make some of these improvements myself, possibly with a little outside help from a plumber. Am I entitled to do this, and can I do it without it affecting my rent?

A “Unauthorized repairs and renovations to a rental unit, whether or not the premises are subject to some form of rent regulation, could result in a tenant’s eviction,” said Lucas A. Ferrara, a Manhattan real estate lawyer.

With few exceptions, Mr. Ferrara said, tenants are prohibited from removing their fixtures or appliances or from undertaking renovations, other than those that are purely cosmetic, without the owner’s consent.

“The items the letter writer wants to replace probably belong to the landlord,” he said. “And if they are removed or replaced, a claim may be made that the tenant has substantially violated the lease agreement.”

Mr. Ferrara said the letter writer would be well advised to get the landlord’s consent before making any improvements or modifications. “If the landlord refuses, the choices are to either not do the work or allow the landlord to do it,” Mr. Ferrara said. And if the landlord does the work, he will be entitled to a permanent monthly increase equal to one-fortieth of the cost of the improvement.

Posted by Daniel Finkelstein, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

Christopher Measom filed a lawsuit against his coop -- Greenwich & Perry Street Housing Corporation -- alleging breach of his proprietary lease.

In a prior appeal, the Appellate Division, First Department, had determined that Measom's cellar apartment was not legally habitable for residential purposes and that he was entitled to damages.

On remand, the Supreme Court transferred the case to the New York County Civil Court, which awarded Measom $77,000, together with interest thereon from January 8, 1988, and, $128,264 in attorney’s fees as damages for the coop's breach of the lease.

On appeal, Appellate Term, First Department, modified the judgment by advancing the date from which interest would be measured from January 8, 1988 (when the apartment was purchased) to October 1, 1990, to comport with a governing four-year statute of limitations.

On review, the AD1 held that any objections as to the case's timing had been “abandoned” by the coop, and that the AT had erred in setting the commencement of interest on any date other than when the initial breach had occurred.

Time for us to wave.

For a copy of the Appellate Division’s decision, please use this link: Measom v. Greenwich & Perry St. Hous. Corp.

Posted by Lucas A. Ferrara, Esq. at 12:30 PM | Permalink | TrackBacks (0) | Comments (0)

In Hersch v DeWitt Stern Group, Inc., after his apartment burst into flames, Dennis Hersch discovered that he had also been burned by his insurance broker.

In 1992, Hersch contacted the DeWitt Stern Group, Inc. and secured a policy covering his co-op unit.

Some 13 years later, on November 5, 2005, a fire broke out in Hersch’s apartment, causing extensive damage to the flooring, carpeting, curtains, walls and bookcases. When Hersch filed a claim, he was advised that he was only covered for 10% of the value of the damaged items. Although he could have purchased an “additions and alterations” rider which would have provided full coverage for those items, Hersch was allegedly not told that such a rider was necessary.

Hersch filed a lawsuit against DeWitt in the New York County Supreme Court alleging negligence, breach of contract, breach of fiduciary duty, and further claiming that DeWitt should have disclosed the existence of a commission arrangement between it and the insurance provider. When DeWitt moved for summary judgment, the Supreme Court denied the request.

While the Appellate Division, First Department, agreed there were triable issues of fact as to whether Hersch had requested coverage for the “additions and alterations” made to his unit, the appellate court did not believe that his breach of fiduciary duty and commission claims could survive.

Although “the parties’ relationship lasted a considerable period of time and defendant assured plaintiff that his insurance needs were being met,” this did not rise to the level of a fiduciary relationship. And, absent, a “special relationship,” DeWitt was under no obligation to disclose the nature of its commission arrangements with the insurer.

Despite the incalculable value of the services provided by insurance brokers, they generally have no more than a common-law duty to procure the insurance coverage requested by their clients.[1]

A rather Stern outcome, wouldn’t you agree?

A copy of the Appellate Division's decision, please use this link: Hersch v DeWitt Stern Group, Inc.

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[1] Ironically, New York law recognizes that a “special relationship” can arise with other professionals, such as lawyers, engineers, architects, accountants, and even “public weighers.”

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (0)

In Precision Mirror & Glass v. Dicostanzo, the Appellate Term, Second Department, reversed a Staten Island Civil Court order which granted Ben Dicostanzo summary judgment and dismissed Precision Mirror & Glass’ (PM&G) breach of contract suit.

Dicostanzo entered into an agreement with PM&G to install two custom glass shower doors over an existing bathtub in his home. Although the Administrative Code of the City of New York, § 20-387(a), requires “home improvement” contractors to be licensed, PM&G contended that the work performed was cosmetic and thus no license was required. The Staten Island Civil Court disagreed.

On appeal, the AT2 pointed to work that was structural in nature, such as driveways, swimming pools and terraces, as examples of  “home improvements;” while cosmetic items such as the installation of linoleum, carpeting and venetian blinds have been found to be exempt from the code’s purview. As a result, the appellate court found  the installation of glass doors to be fundamentally “cosmetic” in nature and warned that a liberal interpretation of the code would give the law “too broad a reach” and render the activities enumerated therein “meaningless.”

Since it concluded that work in question was not a home improvement for which a license was required, the AT2 reversed the Civil Court’s award of summary judgment and the matter will now proceed to trial.

Let's see you improve on that.

To download a copy of the Appellate Term's decision, please use this link: Precision Mirror & Glass v. Dicostanzo 

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

Earlier today, I received the following e-mail from a reader:

You're against the Coop Disclosure Law that could create lots of real estate litigation???? What kind of lawyer are you?

Seriously, though, I'm in favor of the bill. I know that both racial and sexual orientation (etc.) discrimination goes on behind closed Board doors and think there should be some transparency. I'm not sure if the law would have an exception for small buildings (which I would be open to), but overall, I think it would probably make the process of buying a coop a bit more equitable.

Thank god I live in a condo, though!

M.C.

Dear MC:

The fact that I'm a real-estate lawyer, or that I'd likely profit from misguided legislation, shouldn't cloud my ability to comment on issues which will impact New Yorkers.

Many may be unaware that we don't have a constitutional entitlement to live wherever we want. Nor do we have a constitutional right to be accepted by a cooperative board (or other housing provider). The constitution also doesn't guarantee that someone has to "like" us.

While everyone can agree that owners are not permitted to allow certain factors (like race, color, creed, sexual orientation) to taint their judgment or determinations, the challenge has always been to prove that a decision was based on a prohibited consideration. The ugly reality is that the City's proposed law will not facilitate establishing when such a transgression has occurred, it will likely engender only greater hurdles and denials based on noncompliance with inane requirements or technicalities.

As another reader ("Midtown Apartment Owner") aptly noted:

Requiring coop boards to state a specific reason for denial will only increase the burden on purchasers. In the vast majority of cases, coop boards review packages, interview buyers, and grant approval. In our building, no purchaser has ever been turned down for other than purely financial reasons.

In those cases, the board has always worked with buyers to try to obtain comfort on finances. If the Council's proposal passes, the board will no longer have the luxury of flexibility. It will be required to impose strict standards and live by them, or face lawsuits.

Imposition of time periods for board responses will also cause problems for buyers. The vast majority of the application packages we receive are incomplete. Brokers -- in a hurry to push their deals through -- encourage buyers to submit incomplete packages and then immediately start phoning board members to ask why they haven't received approval yet. If time limits from date of package submission are imposed for response, then boards will be required to reject applicants based upon incomplete packages, rather than defer decision until the missing information is provided.

This legislation is misguided and all coop owners should write their city council members to encourage its defeat.

We wholeheartedly concur!  In fact, we're of the opinion that, in its current form, the law is unworkable.

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For our earlier blog post on this topic, please use this link: Decloaking Coop Boards

Posted by Lucas A. Ferrara, Esq. at 3:25 PM | Permalink | TrackBacks (0) | Comments (2)

Prior to Joan Messner’s purchase of her penthouse apartment, her predecessor secured permission from the cooperative to enclose the terrace and convert it into a greenhouse.

In Messner v. 112 E. 83rd St. Tenants Corp., Messner believed that she was entitled to damages for the co-op’s failure to repair defects that allowed water to leak into her apartment and greenhouse. To that end, Messner filed a claim for breach of the proprietary lease, breach of the warranty of habitability, and further sought specific performance -- that is, an order requiring the co-op to allow the terrace area to be connected to the building’s central heating system.

After the New York County Supreme Court found the co-op was not liable (since an indemnification agreement required Messner to effect repairs to those areas that had been altered by the prior owner), Messner appealed to the Appellate Division, First Department.

On appeal, the AD1 reiterated that because the co-op was under no duty to make the repairs, it could not be held liable for its refusal to do so.

While Messner alleged that the co-op breached the proprietary lease and the warranty of habitability by failing to heat the greenhouse, since that enclosed area was never a habitable portion of the apartment, the AD1 was of the opinion that the co-op was under no obligation to provide that service.

Furthermore, although Messner claimed that she had received permission from the manager to connect to the building’s heating system, without any written proof, that argument was also given the cold shoulder.

Finally, the appellate court also determined that Messner could not amend her complaint to include a breach of fiduciary duty or fraud claim. In the absence of a fiduciary relationship before the closing, and in view of the co-op’s pre-sale disclosure of a report which questioned the greenhouse’s legality, the AD1 was of the belief that the entity's refusal to obtain a certificate of occupancy for the enclosed area was made in good faith and not subject to judicial scrutiny.

In the end, Messner was left out in the cold.

For a copy of the Appellate Division's decision, please use this link: Messner v. 112 E. 83rd St. Tenants Corp.

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

In Breezy Point Cooperative v. Young, the Appellate Term, Second and Eleventh Judicial Districts, affirmed a summary judgment ruling, which allowed a cooperative board to end a shareholder's lease due to objectionable conduct.

Young’s proprietary lease with Breezy Point Cooperative permitted termination for "objectionable conduct," which was defined as the repeated disregard of the co-op's rules and regulations.

In early 2004, 225 stockholders signed a petition calling for a vote at the annual stockholders’ meeting on whether to terminate Young’s lease. After he and other shareholders addressed the annual meeting's attendees, the group voted overwhelmingly in favor of termination. (1,259 to 121)

In October 2004, Breezy served Young with the requisite notice and subsequently initiated a holdover proceeding against him in Queens County Civil Court.

Breezy alleged that, from 1986 to 2004, Young engaged in some 94 instances of objectionable conduct, which included "the repeated harassment of security officers, the defacement of cooperative property, [and] numerous violations of noise, litter, animal and motor vehicle regulations." The co-op also alleged that Young had filed a number of meritless lawsuits, which caused the cooperative to incur hundreds of thousands of dollars in legal fees.

When the Civil Court granted Breezy’s motion for summary judgment on its holdover petition, Young appealed to the Appellate Term, Second and Eleventh Judicial Districts, which affirmed. The "business judgment rule" requires courts to "exercise restraint and defer to good faith decisions made by boards of directors in business settings." Absent a showing of fraud, self-dealing, or other misconduct, courts will usually refrain from overriding a board’s decision, even if the latter may be unwise or improvident.

Because Young was unable to offer any evidence that the board engaged in any wrongdoing, and since the termination process transpired in accordance with the cooperative’s bylaws and the parties' lease, the AT2 deferred to the entity’s determination to terminate Young’s interests in the subject premises.

So, ultimately, Young suffered a Breezy eviction.

For a copy of the Appellate Term's decision, please use this link: Breezy Point Cooperative v. Young

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

In Cincu v. Commissioner of Labor, Viorel Cincu sought unemployment benefits after he was dismissed from his job.

Cincu had worked as a doorman and concierge in a residential co-op building for almost two decades. During his final year of service, a resident entrusted Cincu with an envelope containing a holiday card and cash intended for a housekeeper. An investigation ensued when the envelope mysteriously vanished and Cincu was discharged when a surveillance tape showed him opening the envelope.

The Unemployment Insurance Appeal Board (Board) was not sympathetic to Cincu's request for unemployment benefits and denied his claim because he had been fired for "misconduct."

On appeal, the Appellate Division, Third Department, was equally unmoved, as there had been substantial evidence supporting the Board’s decision and “an employee’s apparent dishonesty can constitute disqualifying misconduct.”

In the end, temptation delivered Cincu from a job and unemployment benefits.

For a copy of the Appellate Division’s decision, please use this link: Cincu v. Commissioner of Labor

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (0)

The New York State Property Disclosure Act requires a seller to provide the purchaser of a one- to four-family home with a Property Condition Disclosure Statement (PCDS). (Unimproved land, new construction, cooperative and condominium units are exempt from this requirement.)

The Act instructs the seller to complete the form based upon the seller’s “actual knowledge” of the property’s condition and touches upon such information as how long the seller has owned and occupied property, the structure’s age, whether there have been any claims made against the property, and whether there are any features “shared in common with adjoining land owners or a homeowners association, such as walls, fences or driveways.” There are also questions regarding environmental and structural conditions, and any mechanical systems and services.

Should a seller fail to provide a PCDS, the purchaser is entitled to a credit of $500 off the purchase price. More importantly, should the document contain information the seller actually knows to be untrue, the seller is liable for the actual damages the purchaser suffers and any other equitable or statutory relief a court deems appropriate. A recent case decided by the Appellate Term, Second Department, reinforces that point.

In Ayres v. Pressman, a purchaser filed a small claims action to recover expenses incurred as a result of real-property transaction that went awry. The defendant had provided a PCDS, which asserted that no features of the property were shared in common with adjoining landowners, and that there was an existing septic system which had no known material defects. It was uncontroverted, however, that the septic system was both materially defective and partially located on a neighbor’s property (which was also a violation of local law).

The trial court concluded that the seller had been aware of the septic system’s location and defect, and deliberately refused to disclose that information. On appeal, the Appellate Term, Second Department, found no basis to disturb those findings.

As a result, the purchaser was entitled to recover his actual damages, which included the cost of the title search and mortgage application fees.

Ouch!

For a copy of the Appellate Term's decision, please use this link: Ayres v. Pressman

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

As we have previously reported, there continues to be a disturbing resistance by our appellate courts to award legal fees to a prevailing party, even when that reimbursement is clearly authorized by the parties' lease agreement.*

Although we have already expressed our concerns about this phenomenon, we couldn't resist writing about it again, particularly after we came across the Appellate Term's decision in East Midtown Plaza Hous. Co. v. Cannings.

In that nonpayment case, after a cooperative was awarded some $4,419.00 in maintenance and additional-rent charges, it also sought to recover some $8,100 in legal fees it had incurred during the litigation's course. While the New York County Civil Court granted the landlord's request for fees, the Appellate Term, First Department, characterized the recovery as "manifestly unfair" and reversed.

In this particular case, deficiencies with the building's multiple-dwelling registration (or "MDR") triggered "substantial delay and expense," and prevented the cooperative from quickly pressing its claim to completion. That, according to the AT1, militated against the grant of fees in the landlord's favor. 

A lone dissenter, Justice William P. McCooe was quite troubled by the request and a bit more vehement in his disapproval of the cooperative's conduct:

The landlord transformed what should have been a garden variety summary non-payment proceeding into one requiring motions and a cross motion because of its misstatements as to the status of the building in the petition and the motion papers which misled the motion court to render an erroneous decision and waste judicial resources. A dismissal of the proceeding at that point for failure to file a multiple dwelling registration statement would have resulted in the tenant being the prevailing party ... The claim for attorneys fees is already twice the award and in large measure was caused by the landlord's conduct. The landlord should not be rewarded for its mistakes nor should the tenant be required to pay for them ....

While we understand that the fees associated with correcting the building's MDR status should not have been chargeable to the tenant, it remains unclear why the balance of the costs incurred by the landlord was denied -- and why not even a pro-rated portion of the owner's costs was awardable in this instance.

Since the cooperative successfully recouped a money judgment against the tenant, we are of the opinion that a blanket denial of all fees and charges was far from a fair, equitable, or just result.

To download a copy of the Appellate Term's decision, please use this link: East Midtown Plaza Hous. Co. v. Cannings

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*For our other blog posts on the issue, please click on the following link: Attorneys' Fees

Posted by Daniel Finkelstein, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

If you live in New York City, chances are that you have been subjected to a co-op board’s interminable and often arbitrary scrutiny (or know of someone that has undergone the ordeal).

Potential purchasers of a cooperative apartment must usually undergo an interview and secure the approval of the entity’s board of directors before the seller may transfer his/her proprietary lease and shares of stock in the cooperative corporation. And to the chagrin of many, there are currently very few regulations governing the process by which co-ops make these determinations.

While discrimination laws prohibit decisions based upon “prohibited categories” including, but not limited to, race, creed, color, national origin, gender, age, disability, family composition, military status, citizenship status, sexual orientation, and marital status, since co-op boards are under no legal compunction to disclose the reasoning behind a rejection, violations of these laws are not readily uncovered.

Critics claim that this silence discourages New Yorkers from seeking homes in cooperative apartment buildings, interferes with the housing market, and reinforces economic, racial, and other forms of segregation. Moreover, a rejected applicant must usually resort to a costly and time consuming lawsuit in order to find out why they were denied approval and even then, unless some form of “bad faith” can be independently established, the chances of securing the pertinent information can still be quite remote.

There are additional pitfalls associated with this cloak of secrecy: sellers are unable to hold purchasers in default should the latter fail to cooperate with board requirements. By way of example, in Rosenthal v. Oakes, Oakes refused to return Rosenthal’s down payment on an apartment after the co-op board declined to consent to the apartment’s transfer.

Since the board’s rejection was supposedly not attributable to any “bad faith conduct” on Rosenthal’s part, the New York County Supreme Court and the Appellate Division, First Department, both concluded that Rosenthal was “entitled to cancel the contract for the sale of the apartment and to the return of the escrowed down payment.” Arguably, disclosure of the co-op board’s reasoning might have triggered the seller’s ability to find the purchaser in breach and might have entitled the seller to retain the contract down payment.

In response to these and other concerns, New York City Council Member Hiram Monserrate has sponsored a new bill (the “Fair and Prompt Coop Disclosure Law,” Intro 119) which would require co-op boards to disclose to prospective purchasers the reason(s) for a rejection.

The bill proposes that whenever a co-op withholds consent to a sale, the purchaser must be given a written statement detailing the reason(s) for the denial. That statement must also include the number of applications received, as well as the number rejected, for the three year period preceding the decision.

Under that law, the statement must be given within five business days of the co-op’s decision. Following a twenty day grace period, a non-compliant entity may be subject to fines, penalties, and legal fees.[i]

In theory, the statement should convey sufficient information to enable the purchaser to remedy the deficiencies in an application or for the seller to avoid a future rejection of a subsequent applicant.

While the bill is supported by two-thirds of the Council, it has met with considerable resistance from co-op boards and various council members, including Council Speaker Christine Quinn.

Opponents claim that the new law will discourage people from serving on co-op boards, invite lawsuits and incite ill will. We agree.

While some form of explanation is certainly better than none, we're of the opinion that the proposed requirements will likely cripple boards’ decision-making processes and open the floodgates to seemingly endless lawsuits.

Fasten your seatbelts!

For a copy of the Appellate Division’s decision, please use this link: Rosenthal v. Oakes

For a copy of the Fair and Prompt Coop Disclosure Act, please use this link: Int. No. 119

[i] Fines for first-time violations would range from $1,000 and $15,000. By the third infraction, fines may be as high as $25,000. 

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (6)

Before a tenant will be evicted for a lease-related violation, a court will usually inquire as to whether the default was "material" or "substantial."

When a breach is found to be inconsequential or "de minimis," courts will not order an eviction. (The law disfavors forfeiture of leases based on trivial or trifling circumstances.) On the other hand, if a violation is found to be of a significant nature, a forfeiture is much more likely to ensue.

That leads us to the inevitable question: What makes a default "substantial?"

According to established precedent, terms like "material" or "substantial" don't lend themselves to a precise, all-encompassing definition. Our favorite quote on the topic can be found in the case of Park East Land Corporation v. Finkelstein, 299 N.Y. 70 (1949), wherein our state's highest court -- the New York State Court of Appeals -- noted as follows:

'Substantial' is a word of general reference which takes on color and precision from its total context. Having little if any meaning when considered in abstract or in vacuum, it must be defined with reference to the peculiar legal and factual setting in which it occurs ....

In other words, what is "substantial" will vary from case to case, depending on the underlying facts and circumstances. However, when the parties to a lease agree that certain conduct will comprise a "substantial obligation," or that misconduct may be deemed a "substantial breach," such private agreements have been honored and enforced by the courts in the absence of some statutory prohibition or affront to some public-policy consideration.
 
By way of example, in Marshall v. Ahamed, a commercial lease required the tenant to provide its landlord with "professionally prepared plans and specifications" before it engaged in any repairs or improvements to the space. In the event of tenant's noncompliance with the governing terms and conditions, the agreement further provided that such misconduct would be a "material" lease-related violation.

As luck would have it, before it even opened for business, the tenant was alleged to have violated the parties' agreement and was served with notices which ultimately resulted in the tenancy's termination. Although the tenant claimed its noncompliance wasn't "substantial," the Kings County Civil Court disagreed and awarded the landlord a judgment of possession and a money judgment in the amount of $17,505.99. On appeal, the Appellate Term, 2d and 11th Judicial Districts, affirmed. Since the tenant had agreed (in advance) that even a single violation of the lease could be deemed substantial in nature, the appellate court concluded that the tenant could be evicted for its transgressions.

"Forgive us our trespasses ....?"

(Not!)

For a copy of the Appellate Term's decision, please use this link: Marshall v. Ahamed

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

In Condor Funding, LLC v Miles, Condor alleged that Ginger Miles had illegally sublet her rent-stabilized apartment in order to pursue a teaching assignment in the Lone Star State.

Although the tenant had formally requested the landlord's written approval of the arrangement by complying with the requirements of New York's "sublet law,"* Condor refused to consent to the transfer, citing a suspicion that the tenant was permanently relocating to Texas.

In an interesting twist, both the New York County Civil Court and the Appellate Term, First Department, slammed Condor for unreasonably withholding consent to the proposed transaction. Here's what the AT1 concluded:

Landlord arbitrarily and improperly refused to consent to the sublease since it raised no objection to the proposed subtenant and its stated skepticism that tenant might be primarily residing in Texas was purely speculative. Tenant satisfactorily explained her intent to temporarily relocate to gain university teaching experience to augment her income. At the time of her sublease request, tenant had resided in the former loft premises for 25 years and had regularly filed New York State income tax returns listing the premises as her address. Under such circumstances, landlord unreasonably withheld consent in derogation of the remedial purpose of the statute to permit sublets of unused apartments during a time of housing shortage ....

Looks like the tenant won this one by miles.

For a copy of the Appellate Term's decision, please use this link: Condor Funding, LLC v Miles

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*Real Property Law section 226-b provides that a tenant (in a building with four or more residential units) may seek a landlord's permission to sublease an apartment (notwithstanding any prohibition or restriction that may appear in the parties' lease agreement). This request must be in written form and include such information as:

• the duration of the proposed sublease;
• the name(s), home and business addresses of the proposed subtenant(s);
• the tenant's address during the sublease;
• the written consent of any co-tenant or guarantor of the lease; and
• a copy of the tenant's lease together with the proposed sublease, acknowledged by the tenant and proposed subtenant(s) as being a true copy of the sublease.

A landlord has ten days from the receipt of this written request to ask for additional information regarding the transaction and has 30 days to accept or reject the proposal. Should an owner fail to adhere to these time parameters or "unreasonably" withholds consent, the law permits the tenant to proceed with the sublease.

Take note: This law does NOT apply to all residential units. By way of example, "public housing" and cooperative apartments are excluded from its ambit.

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (2)

May a tenant sue a landlord for compensatory damages -- like lost income -- as a result of a landlord's unreasonable refusal to consent to a sublease?

According to the Appellate Term, First Department, in Brontman v. Chatsworth Realty, the answer is no.

In the State of New York, a special statute -- known as Rea Property Law section 226-b -- allows residential tenants of buildings with four or more units to sublease their apartments subject to compliance with a certain procedure and the submission of certain documents (including a copy of the proposed sublease). If a tenant completes that process, a landlord's consent to the transaction may not be "unreasonably withheld."

(This law  also overrides any subleasing restriction or prohibition appearing in a tenant's lease agreement.*)

In the event an owner starts "playing games," and acts wrongfully, the statute provides that the "tenant may sublet in accordance with the [sublease] request and may recover the costs of [any] legal proceeding and attorneys' fees ...." Those remedies are "exclusive," which means other avenues of recovery may be foreclosed.

By way of example, the tenant in Brontman argued that it was entitled to damages for "lost sublease income" as a result of the landlord's unreasonable refusal to consent to the arrangement. A New York County Civil Court judge agreed and awarded the tenant $3,383.15. 

On appeal, the Appellate Term, First Department, reversed and dismissed the tenant's case, citing to the limited remedies ("costs of the proceeding and attorneys fees") authorized by the governing statute. 

Puff!

There went 3 grand!

For a copy of the Appellate Term's decision, please use this link: Brontman v. Chatsworth Realty

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*Please note that this law does NOT apply to public housing or to cooperative buildings.

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

Noise is a bane to us all. 

It's often described as one of the ugly realities of urban living.

But nothing is worse than having a noisy neighbor. Loud music, barking dogs, meowing cats, crying babies, incessant banging, thumps and footsteps are enough to drive anyone mad.

So it's no surprise that relationships will sour when neighbors decide to take the law into their own hands or get vindictive or nasty.

By way of example, in Medows v. Stern, Marsha and Jonathan Medows alleged that David Stern, a fellow cooperative apartment owner who lived beneath them, engaged in a plot to intimidate and harass them by banging on his ceiling with a baseball bat and/or broomstick, "at all hours of the day and night for no purpose but to awake, annoy, frighten, intimidate and harass [the Medows] and their three-month old son."

In a complaint filed with the New York County Supreme Court, the Medows sued Stern for "intentional infliction for emotional distress" and for violating the cooperative's bylaws by making "excessive noise." When Stern moved to dismiss the case, alleging that the plaintiffs had failed to state a viable legal claim against him, the Supreme Court did not concur.

While intentional infliction of emotion distress usually requires a very high showing -- that is, "extreme and outrageous" conduct which exceeds "all possible bounds of decency ... utterly intolerable in a civil society,"-- the Supreme Court was of the opinion that, if the allegations made in the case proved true, Stern's "campaign of harassment" would comprise such proscribed behavior.

As for asserting a contract breach based on a neighbor's violation of the cooperative's bylaws, the Supreme Court concluded that the Medows were "third-party beneficiaries" of Stern's lease-related obligations. As a result, and in the absence of any appellate authority to the contrary, the court did not feel compelled to grant dismissal of the second claim at this juncture.

So, this time, Stern batted zero.

For a copy of the New York County Supreme Court case, please use this link: Medows v. Stern

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Special thanks to our friend and colleague Steven B. Shapiro, Esq., for bringing this decision to our attention.

Posted by Lucas A. Ferrara, Esq. at 3:25 PM | Permalink | TrackBacks (0) | Comments (0)

You would think that someone who has lent you money to buy a home (or other real-estate), would want their monies returned sooner rather than later or that you would have the right to pay-down all or part of a mortgage (above and beyond the monthly installment payment).

However, as far as the law is concerned, if loan documents are silent on that issue, a mortgage may not be prepaid.

By way of example, in Friends Realty Associates, LLC v. Wells Fargo Bank, Friends sought to prepay a mortgage but the lender, Wells Fargo Bank, sought a prepayment penalty. When Friends filed a lawsuit, the New York County Supreme Court sided with the bank.

On appeal, the Appellate Division, First Department, affirmed. Citing a quote from a 1987 appellate decision, the AD1 noted as follows:

"It has been settled law since the early 19th century that a mortgagor has no right to pay off his obligation prior to its stated maturity date in the absence of a prepayment clause in the mortgage or contrary statutory authority" ... Because the note here is silent as to prepayment during the sixth loan year, the court did not err in its interpretation that plaintiff/mortgagor did not have an unambiguous right to prepay without penalty.

So much for friends!

For a copy of the Appellate Division's decision, please use this link: Friends Realty Associates, LLC v. Wells Fargo Bank

Posted by Lucas A. Ferrara, Esq. at 3:25 PM | Permalink | TrackBacks (0) | Comments (0)

Just because an air conditioner (a/c) falls on you doesn't mean you'll recover for any injuries you incur. At least, that is what the outcome of Dwayne-Michael Grimaldi v. Manhattan Arms Hotel, Inc. suggests.

In that case, Grimaldi was passing a Manhattan building when he was hit by a falling a/c unit. Apparently, the tenant (to whom the machine belonged) was so dissatisfied with the building personnel's lack of responsiveness to her request to remove the unit that she decided to do it herself; which led to Grimaldi's injury.

The landlord's representative testified that the owner had been unaware of the unit until the incident occurred. (In fact, the installation of a/cs was violative of building policy.) Although the unit was not "inherently dangerous" and the building was not responsible for its installation or removal, the New York County Supreme Court refused to dismiss the case, citing issues of fact which warranted a hearing or trial. (The Supreme Court was of the belief that the tenant's requests for assistance may have made the accident foreseeable and rendered the landlord "negligent" for failing to provide assistance or to "take other steps to protect passersby.")

On appeal, Appellate Division, First Department, reversed and dismissed the case. Here's how the AD1 put it:

Even assuming that appellants were under a duty to help the tenant remove the air conditioner, that such duty gave rise to a corresponding duty of care to members of the public at large, and that the tenant's attempt to remove the air conditioner without assistance rendered the accident foreseeable, there is no evidence that the hotel had reason to believe that the tenant would attempt to remove the air conditioner without assistance.

Is that really so?

Isn't it more likely than not that a tenant would attempt to remove an a/c if requests for assistance were repeatedly ignored by building personnel?  (We certainly think so.)

Under the given facts and circumstances of this case, a hearing or trial was warranted.

What are the chances of that happening?

Watch your step!

For a copy of the Appellate Division's decision, please use this link: Grimaldi v. Manhattan Arms Hotel, Inc.

Posted by Lucas A. Ferrara, Esq. at 3:25 PM | Permalink | TrackBacks (0) | Comments (0)

Cornluis Jennings was trapped in a building's elevator. After manually opening the door, Cornelius fell down the elevator shaft and injured himself after attempting to jump or climb out of the cab.

When Cornelius later filed a negligence case, both the Bronx County Supreme Court and the Appellate Division, First Department, found a few problems with his claim.

Since there was no emergency presented, and the elevator was "well lit, not moving and not making noise," both courts were of the opinion that Cornelius's actions (to find a means of escape) were unforeseeable and that no liability for his injuries could attach. (That Cornelius was "inebriated" and told that help had been on its way, were other factors that didn't work in his favor.)

Can you dig it?

For a copy of the Appellate Division's decision, please use this link: Jennings v. 1704 Realty, L.L.C.

Posted by Lucas A. Ferrara, Esq. at 3:25 PM | Permalink | TrackBacks (0) | Comments (0)

James Sykes purchased a newly constructed penthouse apartment from RFD Third Avenue I Associates (RFD) for $3.9 million. Prior to closing, Sykes found a number of problems with the unit and a punchlist was provided. 

RFD agreed to complete the repairs within thirty days and placed $75,000 in escrow to ensure the work's performance. If litigation ensued, the parties further agreed that "the prevailing party [would] be entitled to recover its legal fees and disbursements."

A lawsuit alleging breach was filed and RFD eventually released the $75,000 (together with accrued interest thereon) to Sykes. Since the parties were unable to reach an accord on legal fees, the New York County Supreme Court assigned the matter to a special referee to hear and determine the issue.

The referee was of the opinion that since the parties had settled the repair/escrow claim, neither side had prevailed and no award of fees was appropriate under the circumstances. On appeal, the Appellate Division, First Department, reversed.

The AD1 concluded that the "true scope" of the dispute was whether RFD had "work[ed] diligently and use[d] reasonable good faith efforts to complete" the open items. Since it apparently did not do so, the appellate court was of the opinion that Sykes had "won" the case, even though he achieved that favorable result by way of a "stipulation rather than than a judicial determination."

While we understand the general premise, we are not certain the AD1 called it right. Shouldn't courts be encouraging the resolution of disputes?

If parties feel it is in their interests to resolve a dispute amicably, then the outcome should be viewed as a "draw" -- with each side absorbing its own fees and costs.

Let's face it. More often than not, disputes are settled because of the perceived "nuisance value," particularly when the costs of litigation will exceed the amount in controversy. Since such resolutions are not always a concession that a suit was rightfully maintained or that the adversary's claim had merit, then why allow a mere settlement to trigger an entitlement to fees?

We believe that exposing litigants to an opponent's fees disincentivizes participants from seeking or achieving closure earlier in the process. (That can't be a good thing.)

Each side should bear its own costs unless and until there has been a formal adjudication of a dispute's merits. And, at that point, if an adversary has a right to recover fees, so be it.

Let's make peace, not war!

Onward!

For a copy of the Appellate Division's decision, please use this link: Sykes v. RFD Third Avenue I Associates, LLC

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (4)

While the interests of landlords and tenants frequently diverge, the relationship can get quite contentious when the former decide to  convert existing residential structures into condominiums or cooperatives. Owners often have a financial incentive to evict existing tenants so that the units can be sold at market rates, while tenants would prefer to remain in their apartments to avoid the cost and inconvenience of having to move. They also seek an opportunity to become “owners” themselves, hoping to profit from purchasing their units at “insider” prices.

According to a recent New York County Civil Court decision there are an array of protections available to tenants in buildings undergoing a conversion.

In 322 West 57th Owners LLC v. Penhurst Productions, the owner wanted to convert his rental building into a condominium and submitted an “offering plan” to the New York State Department of Law for formal review. In furtherance of that process, and in order to prepare the units for sale to the general public, the owner refused to renew the leases of some twenty-three unregulated tenants who resided in the building.

When these tenants refused to vacate, the owner commenced summary holdover proceedings in the New York County Civil Court to remove them from the premises on the grounds that their leases had expired. The tenants asked that the court dismiss these cases because of the protections afforded them by the “Martin Act.”

The Martin Act -- part of New York’s General Business Law -- regulates the conversion of buildings to cooperative or condominium ownership, and has three main steps:

1. the owner must submit a plan for filing with the Attorney General and distribute this plan to the current building tenants;
2. the Attorney General reviews the plan and accepts it for filing, thus allowing the owner to enter into purchase contracts for the units; and
3. once the owner has obtained the requisite number of contracts, the plan is declared effective by the Attorney General.

In “non-eviction” conversion plans, all “tenants in occupancy” on the date the Attorney General accepts the plan for filing hold an “exclusive right to purchase” and may not be evicted on the expiration of their tenancies, and, are further protected against unconscionable rent increases. Here, the tenants argued that as “tenants in occupancy,” the owner could only evict them for non-payment of rent or other “good cause.”

Finding that these tenants were in actual possession and occupying their units at the time the conversion plan was accepted for filing, the Civil Court concluded that the tenants qualified for the Martin Act’s protection and dismissed the 23 proceedings.

According to news reports, 322 West 57th Owners LLC will next be converting these dismissals into an appeal. So, stay tuned.

For a copy of the New York County Civil Court’s decision, please use this link: 322 West 57th Owners LLC v. Penhurst Productions

Posted by Jonathan H. Newman, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

In June 2003, Catherine Dupuis started a lawsuit against two fellow shareholders and a cooperative corporation alleging that "excessive noise" emanated from adjoining apartments and that this condition triggered a nuisance, which caused Ms. Dupuis "to become ill and partially disabled." (Ms. Dupuis sought, among other things, injunctive relief and $1 million in compensatory damages.)

About a year after the case was started, Ms. Dupuis elected to sell her apartment and discontinue the litigation. The cooperative, however, would not permit Ms. Dupuis to consummate the sale until she paid $22,476.05 in legal fees, costs and disbursements which the co-op had incurred defending the lawsuit. The parties agreed to placing the funds in escrow pending a court order as to how the proceeds should be disbursed.

Although a New York County Supreme Court Justice determined that the cooperative was entitled to the entire sum, the Appellate Division, First Department, found that the governing proprietary lease did not authorize a recovery in this particular instance. The legal fees provision provided as follows:

If the Lessee shall at any time be in default hereunder and the Lessor shall incur any expense (whether paid or not) in performing acts which the Lessee is required to perform, or in instituting any action or proceeding based on such default, or defending, or asserting a counterclaim in any action or proceeding brought by the Lessee, the expense thereof to the Lessor, including reasonable attorney's fees and disbursements, shall be paid by the Lessee to the Lessor, on demand, as additional rent.

The AD1 interpreted this language to mean that a shareholder is only liable for the payment of fees to the cooperative when there is a breach of the propriety lease. Since there was no allegation made that Ms. Dupuis had been in noncompliance with her leasehold obligations, the AD1 concluded that fees were not properly awardable and reversed the New York County Supreme Court's order.

While we can see how the AD1 arrived at its determination, we are unable to reconcile how or why it chose to ignore the balance of the provision's language. The wording of the latter half suggests that in "any action or proceeding" brought by a shareholder, the cooperative would have a claim for fees (whether or not the dispute arises from a lease-related default).

So much for enforcing the unambiguous language in a contract.

For a copy of the Appellate Division's decision, please use this link: Dupuis v. 424 E. 77th Owners Corp.

Posted by Daniel Finkelstein, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

Hector Vargas, the superintendent of a Bronx apartment building, allowed his mother to live in the basement's "storage area."

Not only was this use illegal (violative of the building's certificate of occupancy), but the area was not part of the first-floor apartment which the super occupied as an incident of his employment. As a result, the Bronx County Civil Court granted a judgment of posession in the landlord's favor.

On appeal, the Appellate Term, First Department, affirmed.

We shudder to think where momma is living now.

For a copy of the Appellate Term's decision, please use this link: 2727 Realty LLC v. Vargas

Posted by Lucas A. Ferrara, Esq. at 3:25 PM | Permalink | TrackBacks (0) | Comments (0)

Most leases restrict what tenants can do within their apartments. Alterations, or other changes made without the owner's consent, are usually prohibited.

By way of example, paragraph 10 of the The Real Estate Board of New York, Inc.'s "Standard Form of Apartment Lease" provides, in substantial part, as follows:

You [Tenant] cannot build in, add to, change or alter, the Apartment in any way, including wallpaper, painting, repainting or other decorating, without getting Owner's written consent before You do anything. Without Owner's prior written consent, You cannot install or use in the Apartment any of the following: dishwasher machines, clothes washing or drying machines, electric stoves, garbage disposal units, heating, ventilating or air conditioning units or any other electrical equipment which, in Owner's reasonable opinion, will overload the existing wiring installation in the Building or interfere with the use of such electrical wiring facilities by other tenants of the Building.

Violations of these kind of provisions can not only get a tenant evicted, but can also lead to liability for the costs incurred by the landlord to restore the unit to its original condition (ordinary wear and tear excepted, of course).

In Ebrahimi v. Martino, Mr. Ebrahimi sued his landlord for the return of his security deposit ($850) together with an additional $200 which had been promised to him if the tenant vacated the apartment and no "damage" was found.

Of course, as one might anticipate, the landlord refused to release the monies, claiming that he  had to pay $1475 to undo the tenant's unauthorized "alterations." For some undisclosed reason, Ebrahimi had decided to paint the apartment's walls "red and green."

After a trial, the Nassau County District Court (small claims part) concluded that Ebrahimi was not entitled to the monies in question. And, on appeal, the Appellate Term, 9th and 10th Judicial Districts, affirmed.

The tenant recovered ZILCH!

Nada!

Nothing.

Which reminds us of a bad joke, which goes something like this:

What's red and green and goes 175 miles an hour?

Answer:

A frog in a blender.

Our sincerest apologies, in advance, to all our friends at PETA.

For a copy of the Appellate Term's decision, please use this link: Ebrahimi v. Martino

Posted by Lucas A. Ferrara, Esq. at 3:25 PM | Permalink | TrackBacks (0) | Comments (0)

It's no fun living next to a construction site. The noise, dirt and debris can be maddening. The work can also disrupt the use and enjoyment of your space, particularly if the construction crew decides to take certain "liberties." 

In McMullan v. HRH Construction, LLC., McMullan filed an action in the New York County Supreme Court seeking to stop HRH Construction from "entering onto [McMullan's] premises and bringing onto or leaving thereon equipment, materials or debris."

Apparently, HRH's crew made itself at home, entering McMullan's backyard, removing fences, obstructing an exit from McMullan's unit, and, bolting closed the building's fire exit. (That was in addition to the damage the crew caused to McMullan's apartment and the construction materials and debris that were left in McMullan's backyard.)

Faced with HRH's "cavalier attitude and disregard of [McMullan's] rights," the New York County Supreme Court granted the tenant's request for preliminary injunctive relief. On appeal, the Appellate Division, First Department, affirmed.

While HRH argued that it was entitled to enter McMullan's space in accordance with Real Property Actions and Proceedings Law (RPAPL) § 881, a special statute that applies to these kind of access disputes, the AD1 razed that analysis since the company failed to show why entry onto McMullan's space was necessary.*

Looks like HRH got hammered this time around, wouldn't you agree?

For a copy of the Appellate Division's decision, please use this link: McMullan v. HRH Construction, LLC

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*RPAPL § 881, entitled "Access to adjoining property to make improvements or repairs," provides as follows:

When an owner or lessee seeks to make improvements or repairs to real property so situated that such improvements or repairs cannot be made by the owner or lessee without entering the premises of an adjoining owner or his lessee, and permission so to enter has been refused, the owner or lessee seeking to make such improvements or repairs may commence a special proceeding for a license so to enter pursuant to article four of the civil practice law and rules. The petition and affidavits, if any, shall state the facts making such entry necessary and the date or  dates on which entry is sought. Such license shall be granted by the court in an appropriate case upon such terms as justice requires. The licensee shall be liable to the adjoining owner or his lessee for actual damages occurring as a result of the entry.

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (0)

On May 17, 2006, we reported on Ms. Eva Schlesinger's travails. In our piece entitled, "All About Eva," we recounted the story of a "near octogenarian" who was found to be a "nuisance" due to an "escalating pattern" of disruptive conduct.

Ms. Schlesinger would reportedly bang on her apartment's ceiling throughout the night and yell epithets at those living directly overhead. The New York County Civil Court found Ms. Schlesinger's behavior to be "vicious" and "vitriol[ic]" and ordered her eviction.

On appeal, the Appellate Term, First Department, affirmed. But, as a result of a dissent filed by Judge Phyllis Gangel-Jacob, the matter was given further review by the Appellate Division, First Department.

Although the dissenter believed that the appointment of a guardian was warranted, since the record suggested the tenant lacked the legal capacity to appreciate the ramifications of her conduct, the AD1 was completely unreceptive to that analysis.

In a decision dated March 29, 2007, the AD1 skirted the tenant's mental condition and some obvious irregularities with the landlord's case and agreed with both the Civil Court and the Appellate Term that an eviction was the appropriate outcome. Here is what the AD1 concluded:

A fair interpretation of the evidence supports Civil Court's findings, largely based on witness credibility, that tenant persistently "inflict[ed] vicious retribution" against the overhead tenants for "the slightest infraction of her rules" against noise by "screaming and pounding [the ceiling] throughout the night," interfering substantially with the overhead tenants' comfort, safety and ordinary use and enjoyment of their apartment ....

While we certainly do not condone the tenant's conduct, we fail to see how condemning a mentally challenged senior to a life of homelessness achieved a fair and just result.

For a copy of the Appellate Division's decision, please use this link: Pinehurst Constr. Corp. v Schlesinger

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For additional blog posts on this topic, please use this link: Nuisance

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

Why are we seeing so many adverse-possession cases in New York County, of all places?

In 1804 Wash. Ave. Corp. v. Lindhe, tenant Peter Lindhe claimed an ownership entitlement to the rear year of a building owned by 1804 Washington Avenue Corp. In Lindhe's case, however, neither the New York County Civil Court nor the Appellate Term, First Department, was buying any of it.

In the absence of the governing legal elements, Lindhe's adverse-possession claim couldn't withstand scrutiny. Here's how the AT1 put it:

Appellant failed to establish adverse possession and/or prescriptive easement with respect to the rear yard of the building premises, there being no showing that his entry into or use of the outdoor area was hostile or under claim of right .... The record conclusively demonstrates that appellant's use of the rear yard was, at best, by license revocable at petitioner's will, and not through any tenancy interest.

After all, who wouldn't want something for nothing?

For a copy of the Appellate Term's decision, please use this link: 1804 Wash. Ave. Corp. v. Lindhe

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For our other posts on this topic, please use this link: Adverse Possession

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (0)

Even when things look pretty bleak for a tenant, and an eviction is imminent, a court retains the power to vacate the warrant and can allow the tenant to remain in possession of commercial or residential space for "good cause shown." [RPAPL section 749(3)]

In Mack-Cali So. W. Realty Assoc., LLC v. Benni's I, LLC, the tenant, Benni's I, LLC (doing business as "Bennigan's"), conceded that it owed its landlord $126,224.59 in rent for the period February 14, 2003 through July 6, 2005, and signed a stipulation of settlement outlining the payment terms. Months later, as a result of Benni's failure to comply with the agreement's terms, the City Court of Yonkers (Westchester County) awarded the landlord a money judgment for all unpaid rent in the amount of $183,719.77, granted a final judgment of possession and issued a warrant of eviction as against the tenant. Benni's later moved by Order to Show Cause to stay the eviction and vacate the court's determination alleging that the judgment incorrectly included "disputed taxes." Upon signing of the stay request, the court directed the tenant to deposit $60,000 into court. After a subsequently scheduled hearing, the court denied the tenant's motion, ordered the release of the $60,000 to the landlord, and stayed the eviction for an additional 14 days.

Within that two week period, tenant remitted the balance of the judgment amount ($123,969.77) and again asked the court to vacate the final judgment of possession and warrant of eviction based upon the tenant's full and complete payment of all sums which had been found to be due.  Although the landlord objected to the request, the court granted relief in the tenant's favor, finding "good cause" to reinstate the tenancy.

On appeal, the Appellate Term, 9th and 10th Judicial Districts, concurred with the District Court, noting as follows:

In our view, the court could properly determine that good cause existed to vacate the warrant (RPAPL 749 (3)). "The law abhors a forfeiture of a lease ...." Here, the court found that tenant had paid the judgment in full. In addition, tenant has allegedly paid more than $2.5 million in rent over the four years of its tenancy, employs more than thirty people, who would be harmed by execution of the warrant, and stands to lose a long-term lease and its investment in the premises. Although full payment of a judgment is not grounds to vacate the judgment, in these circumstances it was not an abuse of discretion for the court to vacate the nonpayment warrant in order to prevent a forfeiture of the leasehold ....

So, for now, it looks like we can still all get together at Bennigan's.

For a copy of the Appellate Term's decision, please use this link: Mack-Cali So. W. Realty Assoc., LLC v. Benni's I, LLC

Posted by Daniel Finkelstein, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

What do you do when you suspect a tenant has permanently vacated a commercial or residential space and has left others in possession (without the landlord's consent)?

Without a tenant's documented surrender, it is best to make no assumptions and to start a holdover proceeding in which the tenant and all those who remain in the premises are named in the legal papers and served. As the Appellate Term, 9th and 10th Judicial Districts, demonstrated in Valley Dream Housing Company, Inc. v. Lupo, only bringing a case against the remaining occupants is a risky strategy, even when it is uncontested that the tenant has left the space and does not intend to return.

In that Nassau County District Court dispute, the landlord alleged that the tenant had permanently relocated to a nursing home, and that the daughter (who remained in the unit) was nothing more than a "licensee," whose right to occupy the apartment had been terminated.

Despite the fact that the occupant conceded that her mother "vacated the premises with no intent to return as she left to reside permanently in a nursing home about March 3, 2002," the District Court still dismissed the holdover proceeding. And, on appeal, the Appellate Term affirmed noting as follows:

'Absent a surrender of possession by the tenant ... the lessor must obtain a judgment of possession against the lessee pursuant to RPAPL 711 and may not proceed directly against the undertenant, whether licensee, subtenant or occupant, pursuant to RPAPL 713' ... In the circumstances presented, the relocation of the tenant of record from the premises to a nursing home, leaving her mildly retarded daughter in the premises, did not constitute a surrender of possession, and this RPAPL 713 proceeding does not lie.

Wanna sleep better at night?

Let Valley Dream show you the way.

For a copy of the Appellate Term's decision, please use this link: Valley Dream Housing Company, Inc. v. Lupo
 
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Note: While the court did not reach the issue, it would appear that the daughter may be able to assert a succession claim (an independent entitlement to remain in the unit as a tenant). For our blog posts on that topic, please use this link: Succession

For our take on why an "illegal sublet or assignment" case might also have been unsuccessful, please download our piece entitled, "Illegal Sublets: When Family Matters," by using this link: FNF Newsletter (May 2006)

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (0)

Most people have a hard time comprehending the legal definition of the word "nuisance," and that is completely understandable. (It often confuses lots of lawyers and other real-estate professionals.)

Ask a lay person to define the term and that individual is most likely going to to think of someone that is "obnoxious" or "annoying,"  and any "objectionable" or "offensive" act committed by another would likely be encompassed by that definition.

In landlord-tenant law, the word is a lot more "nuanced."

In Ocean Neck Apts. Co., LLC v. Weissman occupants of a residential building were allegedly "neck deep" in toilet water as a result of the conduct of a rent-stabilized tenant who lived above them. Incredibly, even though there had been four floods over the course of a seven week period, and notwithstanding the tenant's refusal to cooperate with the landlord's efforts to address the problem, a Kings County Civil Court Housing Judge was not convinced that the tenant's conduct comprised a nuisance.

Luckily, on appeal, drier minds prevailed and the Appellate Term, 2nd and 11th Judicial Districts, reversed. Here's why the AT believed an eviction was warranted:

The testimony of landlord's witnesses at trial established that tenant's conduct was in violation of RSC § 2524.3 (b), in that tenant committed or permitted a nuisance in the housing accommodation; that the flooding interfered with the downstairs tenant's "interest in the use and enjoyment of land" ... and that tenant denied access to landlord's representatives after each incident of flooding to inspect in order to determine the source of the flooding. In these circumstances, a cause of action for nuisance was established ... Accordingly, the matter is remanded to the court below for a determination of the use and occupancy owed to landlord and for entry of a final judgment awarding landlord possession and use and occupancy.

Guess who's all wet now?

For a copy of the Appellate Term's decision, please use this link: Ocean Neck Apts. Co., LLC v. Weissman

For our other blog posts on this topic, please use this link: Nuisance

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (0)

According to Alan Schnurman, a partner at the law firm of Zalman & Schnurman, and host of the Lawline TV show, six simple words are the key to making millions in real estate.

On Wednesday, March 21, 2007, Mr. Schnurman taught a master class at New York Law School entitled, Finding your Fortune in Real Estate. His lecture focused on how anyone can make millions through real estate investing ... as long as you get up every morning and repeat the phrase, "I can, I will, I must."

“Being successful in real estate is all about attitude,” said Schnurman. Because the industry is inherently risky, you can only succeed if you are confident and courageous.

Working from that foundation, Schnurman outlined his "Five Rules of Real Estate."  Here they are:

1) "Location, location, location!"

Schnurman explained that you should always try to buy in the best location your money will allow, and that you should never forget to do your due diligence. Your goal is to know more about the property you are buying and the area in which it is located than your real estate broker does. This will insure that you are getting the most for your money, and, if you buy in a good location, that you make a profit when you eventually sell.

2) Be patient!

Always buy property with the intention of holding onto it for a decade. You don’t necessarily have to retain it for that entire period of time if the right price comes your way but, as Schnurman explained, real estate is not as liquid as the stock market. So, before you begin to see significant results, you may have to be patient.

3) Avoid over-leveraging!

While taking on large amounts of debt will give you more access to possible purchases, Schnurman believes you will never make a profit if you are over-leveraged. Buy what you can comfortably afford.

4) Refinance!

Instead of selling a home to purchase a new one, refinance that home and roll the money over to a new purchase. That will allow you to increase your portfolio of properties and defer tax consequences.

5) There's always another deal!

If you don’t feel comfortable with the property you have researched or the price that is being offered, let it go! There is always another deal right around the corner.

Whether these five rules will really work for everyone is open to speculation but, according to Schnurman, over the long term, you can never get hurt when you invest in real estate because there will always be a demand for your product.

Why is that, you ask?

Well according to Schnurman, “the population keeps growing while land does not. You do the math!”

To learn more about Mr. Schnurman, please use this link: Schnurman bio 

To learn more about NYLS’s Center for Real Estate Studies, please use this link: Real Estate Studies

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (0)

In Dole v. 106-108 West 87th Street Owners Inc., the New York County Civil Court issued an unequivocal warning to parties in a landlord-tenant case: Do what you promised, in the way that you promised, or you'll risk getting hit with significant fees and costs.

In a decision dated November 22, 2006, the New York County Civil Court found a cooperative corporation and its managing agent in "civil contempt" for not following the procedures outlined in the parties’ settlement agreement which had been “so ordered” by the court.

The stipulation called for the cooperative and its agent to ensure that all work to the tenant’s unit would be performed in compliance with the New York City Department of Health’s “Guidelines on Assessment and Remediation of Fungi in Indoor Environments” and that all areas would be HEPA vacuumed once the work was completed.

Although the landlord and its agent took some efforts to address the condition, they failed to adhere to the agreed-upon procedures. Finding this noncompliance to be a substantial violation, the court held the landlord and its agent in contempt of court, directed the problem’s correction within thirty days, and, authorized the tenant to pursue the recovery of her legal fees.

At a hearing conducted last month, the tenant established that she had incurred substantial legal fees as a result of the cooperative’s misconduct. And, since the time expended and the fees charged by the tenant’s attorneys were reasonable in view of the litigation's complexity, by Order dated March 6, 2007, the Civil Court awarded the tenant a recovery in the amount of $100,002.03.

For a copy of the Civil Court’s decision and order finding the cooperative in contempt, please use this link: Contempt
 
For a copy of the decision awarding Ms. Dole her legal fees, please use this link: Legal Fees

For a copy of the NYC DOH’S Guidelines, please use this link: Guidelines

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A note of congratulations to Melissa Ephron-Mandel and Suzanne R. Albin (both counsel to Finkelstein Newman Ferrara LLP) for securing this victory on Ms Dole's behalf.