Cooperative and Condominium

March 12, 2015

Foreclosure Settlement Conferences in New York State

Our firm handles many cases in which the client is being sued for foreclosure of their property. In general, a foreclosure lawsuit involves a mortgage loan which has been recorded as a lien against real property, such as a house or condominium unit. Please note that cooperative apartments involve ownership of shares in the cooperative corporation, and therefore are not subject to the judicial foreclosure process.

Due to the large volume of foreclosures in New York in recent times, and the desire to protect homeowners, a law was passed in New York State several years ago requiring mandatory settlement conferences in residential foreclosure actions. This requirement does not apply to commercial foreclosures, nor to situations where the owner of the property being foreclosed does not reside at the property.

The purpose of this law is to attempt to resolve foreclosure cases before extensive litigation occurs. The law requires that, after the party foreclosing (the lender) files proof with the Court that the borrower was served with the foreclosure lawsuit, the Court must hold a mandatory settlement conference within sixty (60) days of such filing. In general, the Court will issue a written notice to all parties advising them of the date, time, and location of the settlement conference. It is important to advise your attorney if you receive such a written notice, so that they will be able to attend the conference on your behalf.

March 6, 2015

Managing Disputes Concerning Fixtures and Personal Property in New York Real Estate Closings

By Weiss & Weiss

Many parties to real estate transactions focus not only on the house or the apartment that is involved in the transaction, but also on fixtures and items of personal property. Should a buyer expect that all lighting fixtures are included in the deal? What if a seller wants to take certain items with him? This post will address these issues.

In New York, generally a seller will remove all easily movable items from the apartment or house being sold. These items include furniture, clothing, personal articles and the like. Of course, a buyer will want the seller to remove these items before closing and will be justified in refusing to close until the premises is in “broom clean” condition, as is required in the standard contract. Appliances, such as the refrigerator and stove, are to remain in the premises, as is covered in most standard contracts that we negotiate on behalf of our clients.

Fixtures may not as obvious. A fixture is an item that is attached to the wall, floor or ceiling. A built-in bookcase is not furniture to be removed by the seller, as it is attached to the wall. Chandeliers, wall sconces and other lighting fixtures are expected to remain after closing. There are cases when a seller wants to keep a particular fixture after closing or other cases where a buyer wants to make sure that a beautiful chandelier is not removed by the seller.

February 12, 2015

Recovery of Attorney’s Fees in Landlord-Tenant Actions in New York

By Weiss & Weiss

One of the most frequently asked questions when our firm meets with a new client relates to the awarding of attorney’s fees. Many of our landlord-tenant clients ask us whether they can recover their attorney’s fees in Court from the other party in the litigation. The answer to this question is not a simple one, and this blog post will answer under what circumstances a party may recover their attorney’s fees from the other party, whether in a landlord-tenant litigation, or other type of case.

The general rule in most United States based lawsuits is that all parties pay their own attorney’s fees, regardless of the outcome of the litigation. This is the standard rule in the U.S., although, in other countries, the loser of the litigation is often obligated to pay the attorney’s fees of the prevailing party.

However, the general rule in the U.S., and, more specifically, in New York State, is subject to certain exceptions. Under these exceptions, which we will discuss, the recovery of attorney’s fees from the adversarial side in litigation may sometimes occur. The first exception is when there is a written contract between the parties that allows for the recovery of attorney fees in litigation. For example, a contract clause may state that if a party defaults in their obligations under a contract, and the other party is obligated to bring a Court action to recover damages, and prevails in that action, then they are allowed to recover attorney’s fees. Careful review of any such contract clause would be necessary to determine whether attorney’s fees would be recoverable.

January 28, 2015

For Sale By Owner

By Weiss & Weiss

Our attorneys handle many real estate transactions on behalf of our clients each year. Most clients selling their houses, cooperative or condominium units use the services of a licensed real estate agent. Other sellers chose to sell without the use of such a professional. These transactions are known as for sale by owner (“FSBO”). While we interact with real estate agents on a regular basis, it is not the purpose of this blog post to argue for the use of a real estate agent in your transaction. Our purpose is to distinguish the nature of our legal representation in transactions with and without real estate agents.

The sales price matters to the seller, but has no bearing on our legal work. The preparation of the contract will just involve the insertion of the agreed offer price. However, if a seller retains the services of an experienced real estate agent, he will potentially avoid two situations regarding the price. First, a seller may list the property at too high a price, which would impede viable offers being made. The real estate agent will know the market and be aware of the realistic price at which the property is to be offered. Second, the real estate agent may also ensure that the property is not offered at a price that is lower than the seller should receive in this market.

Sellers do not want to experience the delay of their transaction due to a property or title defect that could have been resolved. For instance, it is not unusual for a seasoned real estate agent to view the applicable municipal records to confirm that all improvements have been properly permitted and that a Certificate of Occupancy has been issued for the premises. Of course, there is nothing to prevent the homeowner for conducting such a search. Whether the real estate agent or the homeowner conducts such a search is immaterial. However, it is important to be aware as early in the process as to whether such issues exist, so that they are resolved to allow for the timely closing anticipated by the parties.

January 8, 2015

Legal Issues Relating to Subtenants in New York State

By Weiss & Weiss

First, we would like to wish all followers of our blog a happy and healthy 2015. We look forward to continued successful legal outcomes for all of our clients in the New Year.

Our copy of Black’s law dictionary defines a subtenant as “one who leases all or part of the rented premises from the original lessee for a term less than that held by the latter.” What this means is that, ordinarily, a tenant rents premises from a landlord, who is usually the owner of the property. The tenant may, in turn, rent her interest as a lessee to another party. That other party is generally known as a subtenant.

Of course, subletting a property to a subtenant creates many legal issues relating to the landlord-tenant relationship, which we will address in this post. The first issue is whether the tenant has the legal right to sublet the space to a subtenant. The answer to this question is usually found in the lease between the landlord and the over-tenant. The lease may expressly forbid subletting. In that case, the over-tenant is in breach of the lease if they sublet the space. In the alternative, the lease may allow subletting, but only with the permission of the landlord. Some leases will state that such permission is “not to be unreasonably withheld.” In such situations, we recommend obtaining the landlord’s consent in writing. That way, there can be no misunderstanding regarding whether the landlord has consented to a subtenant. Finally, the lease may be silent as to subletting. In such instances, courts have generally held that the subletting is not a breach of the lease and can be allowed.

November 7, 2014

How to Stage a Takeover of Your Coop or Condo Board

By Weiss & Weiss

Board members of cooperative and condominium buildings are hard working volunteers who are subject to what may be undeserved criticism. In other cases, a board may be treating a particular unit owner unfairly or there may be a general sense among neighbors that the board is doing a poor job. Our firm receives inquiries from such unit owners, either on their own behalf or as representatives of a group of unit owners that are “out of power,” as to our recommendations.

If efforts to influence existing board members continue to be unsuccessful, our attorneys will discuss the consideration of a “takeover” of the board. This strategy works best when more than one unit owner is interested in this project. It is prudent for our attorneys to review your building’s governing documents, such as the By-Laws and Proprietary Lease in a cooperative, in order to determine the rules for conducting annual shareholders meetings in your building. It should be noted that, in some cases, the existing board has even failed to call annual meetings for several years, leaving the existing board in power. In such a situation, we will review the governing documents for the procedure for the calling of an annual meeting to determine and follow the procedure required.

Once the existing board has legally noticed the annual meeting or the insurgent group has legally demanded an annual meeting, campaigning can begin. Although feelings can be hurt, it is not improper to approach unit owners in person or in writing to represent the position of the person running for office and to request attendance at the meeting or the delivery of a proxy to the soliciting person containing the vote requested. Our attorneys also advise on the particulars of proxies being solicited. For instance, the incumbent board may only list their suggested candidates, as is legally permitted. However, unit owners may be advised that other candidates may be indicated on the proxy and information may be provided as to whether all votes can be allocated for only one candidate if desired, depending upon the specific wording of your building’s By-Laws. It is a matter of style as to whether names are to be included on written materials, as we are prepared to advise our clients of this issue for their particular circumstances. Those campaigning should be wary about potential libel and slander claims, which could give rise to a lawsuit if written or verbal statements are inaccurate.

October 24, 2014

Surrender of Lease Agreements in New York

By Weiss & Weiss

Quite often, our firm is consulted by both landlords and tenants regarding the termination of a lease prior to its legal end date. For example, a lease may have a term which runs through December 31, 2020. In certain situations, the parties may agree to terminate the lease prior to this date. This can happen for several reasons. A tenant may need to move out for personal reasons, or because conditions at the premises are not acceptable. A landlord may decide not to hold a tenant to a lease term if they believe they can re-rent the premises at a higher rent. In commercial lease situations, a business renting a store or other commercial space may decide it needs to close for financial reasons, and wants to return the space to the landlord without a legal conflict.

In such situations, we recommend that all parties engage legal counsel to draft a Surrender of Lease agreement. A Surrender of Lease Agreement is a document negotiated between a landlord and a tenant through their legal counsel. It amends the original lease agreement so that the lease term can end at an earlier date than initially contemplated by the parties. There are several important issues which must be negotiated and delineated in such an agreement, which will be discussed in this blog post.

The first issue is the date of the surrender. This is the date that the tenant agrees to vacate the premises and return the keys to the landlord. It is standard that the tenant also agrees to leave the premises in “broom clean” condition and without any major damage, just as it had agreed in the original lease. Our firm often recommends that a tenant hire a professional cleaning service to ensure that there are no issues with the condition of the premises after move-out.

October 3, 2014

Landlords, Tenants, and Pets in New York

By Weiss & Weiss

Our firm is often involved in disputes over pets in rental properties. We have represented tenants who have dogs or cats in their rented apartment or house, and whose landlords claim that this is a violation of their lease. We have also represented landlords who are concerned about potential damage which may be done to their property due to an authorized pet, or who are concerned that renting their condominium or cooperative unit to a pet owner may be a violation of the house rules, subjecting them to penalties. This blog post will discuss the legal issues relating to a pet’s presence in a rental unit, whether an apartment or a private house.

The first issue relates to a pet in a privately owned apartment or house (not a cooperative or condominium unit). In this situation, the lease between the landlord and the tenant usually controls whether a pet is permitted. If the landlord does not want pets present at the property, our attorneys will draft and include lease provisions which will forbid the tenant to have a pet at the premises. A tenant who wishes to have a pet at the premises should make sure that the lease includes a provision in which it specifically states that pets are allowed.

Even if the lease in question does not allow pets, there may be legal loopholes and exceptions to this “pet ban.” The first such exception relates to pets which provide services to individuals with disabilities. New York and federal law prohibits discrimination against people with disabilities. Courts have ruled that such protection would apply where an individual with a disability has a companion service animal, such as a seeing-eye dog, at their property. Therefore, such individuals have the right to have an animal, such as a seeing eye dog, at their property, even if their lease prohibits pets.

September 26, 2014

How Your Cooperative or Condominium Board Benefits from Hiring an Attorney

By Weiss & Weiss

Attorneys provide valuable legal services on behalf of cooperative and condominium boards. Some buildings with fewer than ten units and without disputes have managed without an attorney representing the board. Other buildings may continue with the attorney who originally represented the sponsor. The purpose of this blog post is to describe the services that can be provided by an attorney representing a cooperative or condominium board.

Transfers of apartments will occur at some point. It is not unusual for the building’s managing agent to conduct closings. While many managing agents conduct a variety of tasks and are indispensible to the building, their knowledge is largely operational and particularly relevant to the physical plant of the building. Attorneys are properly situated to evaluate legal situations presented before and during a closing. For instance, after a shareholder dies, the family may wish to transfer the apartment to a family member or sell the apartment to a third party. A managing agent is not the best person to evaluate whether the seller/transferor has delivered the proper documents. Does a managing agent know to ask for a Will to make sure that the deceased did not bequeath the apartment to a friend? It may be a mistake with potential legal liability to the cooperative if the apartment is transferred to a purchaser rather than to the friend. Can the managing agent properly review the Letters Testamentary or Letters of Administration to confirm that they are valid to pass the apartment in question? Sometimes estate documents could even be presented from other jurisdictions, requiring a trained legal practitioner to evaluate. The managing agent may mistakenly approve a power of attorney or affidavit of lost stock certificate and proprietary lease that is invalid for some reason, fail to obtain original documents that are necessary for the cooperative to hold, or fail to collect fees on behalf of the building. A variety of issues may be encountered by a transfer agent at a closing which require the judgment and discretion of the building’s attorneys. In this instance, our firm charges the parties to the transaction only, so that engaging our services to be the transfer agent for closings does not cost the building as a whole and potentially benefits the building as a whole by avoiding legal liability.

Cooperatives and condominiums should also engage an attorney for occasional but significant legal events, such as the refinance of the underlying mortgage of a cooperative or the negotiation of a major contract. Such a major contract could pertain to the replacement of windows, renovation of the elevator, or installation of a new roof. Vendor contracts, such as for the laundry room equipment or oil delivery company require review by the building’s attorney because they will contain provisions that are only favorable to the vendor. Since managing agents may have professional relationships with some of these vendors, it may be prudent for “checks and balances” purposes for the building attorney to review these vendor contracts. Certainly an experienced attorney will be in the position of offering terms that are beneficial to the building that an untrained eye may miss.

September 5, 2014

Standards for Purchasers of New York Cooperative Apartments

By Weiss & Weiss

Our readers may be familiar with a cooperative apartment building located in Manhattan by the name of River House. This building is known not only for its distinctive classic architecture and regal location, but also by its stringent admissions standards for purchasers. It has been well known throughout the New York real estate community that the River House has declined the purchase applications of numerous famous people and persons with seemingly substantial assets. This culture has resulted in apartments being listed for sale for years, because potential purchasers cannot get approved by the board. Overly rigorous standards hurt all residents, as apartments will not sell as readily. The New York Times reported that the River House has recently relaxed some of its admissions standards.

As we have discussed in a previous blog post , a purchase of a cooperative apartment in New York is subject to the approval of the board of directors. If the board declines the purchase, it will not proceed. Legally, a board can reject a purchaser for any reason, so long as the denial is not for discriminatory reasons. In another blog post , we advise cooperative clients to treat all shareholders equally.

The governing case on the matter of decisions by cooperative boards is Levandusky v. One Fifth Avenue Apartment Corp. This case stands for the principle that cooperative boards, like corporations, are governed by the business judgment rule. So long as there is a legitimate purpose to the decision of a cooperative board and such decision is beneficial to the shareholders as a whole, the decision of the board will stand and will not be subject to judicial review. Boards acting in good faith and in the exercise of their honest judgment are insulated from judicial review of their decision. The business judgment rule is limited by arbitrary or malicious acts of board members, favoritism and discrimination. For instance, a board can legally decline a purchaser if it does not like the person, but cannot legally decline the applicant because they want to retaliate against a seller that they do not like, or because the candidate happens to be Hispanic. Of course, proving that the denial was based predominantly upon an illegal reason may be difficult.