Real Estate Litigation

August 30, 2012

Actions for an Accounting in New York Real Estate

There are several situations where ownership of real estate in New York generates the need for an accounting procedure. When a new owner takes over a property as a result of a lawsuit or successful foreclosure action, the property in question may have been managed by third parties, such as a managing agent, over a period of time after a new owner has legal title to the property, but before the new owner can hire a new managing agent and transition from prior ownership to new ownership.

Other similar situations occur when there are multiple owners of a property, but where not all owners take an active role in the property management. There may come a time where the “inactive” owners feel that they are not receiving their fair share of the property’s profits, or simply want an accurate accounting of the income and expenses from the property in question.

Finally, there may be a situation where a managing agent is hired by an owner to run the property, and the owner feels that the managing agent is not accurately reporting the property’s profits or turning over the profits as is their legal obligation.

July 26, 2012

Fair Housing in Westchester County, New York

By Weiss & Weiss

A recent article in the Journal News discusses the latest developments in the Westchester County, New York fair housing settlement. For those who are unfamiliar with the situation, a lawsuit was brought by a public interest group against Westchester County, alleging housing discrimination. In order to settle the lawsuit, then-County executive Andrew Spano agreed to build at least 750 units of “affordable housing” in Westchester. This blog post will discuss the ramifications of the settlement, as well as the legal issues associated with the sale and resale of affordable housing.

Long-time Westchester residents will recall that in 1980, a similar case was brought against the City of Yonkers, also alleging discrimination in housing. While it is beyond the scope of this post to address the merits of this case (as well as the case against Westchester), the legal issues become important for potential buyers and sellers of property in Westchester. In the Yonkers case, Judge Leonard Sand ruled that Yonkers had discriminated against minorities and ordered the city to provide low-income housing in all areas of Yonkers for minority applicants.

Of course, implementation of such a remedy is far from simple, and the Yonkers case involved many years of litigation over the issue of whether the city was in compliance with Judge Sand’s directives. Unfortunately, the same issues now seem be arising in the Westchester County lawsuit. Once a municipality enters into a settlement of a discrimination lawsuit, as Mr. Spano did on behalf of the residents of Westchester County, there may be no end to judicial enforcement of a remedy. It seems unlikely that a Court will ever reach a finding that no further discrimination exists and end its supervision of the construction of affordable housing.

July 19, 2012

The Role of a Receiver in a Foreclosure Action in New York State

By Weiss & Weiss

Once a plaintiff files a foreclosure action, the next step in the procedure is generally to have a Receiver appointed by the Court. The reason for this is that foreclosure actions can take quite some for a Court to resolve. It would not be unusual for a Court with a busy docket (such as those in Queens, Brooklyn, or Manhattan) to take more than a year to resolve a foreclosure action. During this period of time, it is important that the property be physically maintained, the property’s expenses be paid in a timely fashion, and that the property’s income, if any, be collected by the proper party.

The court-appointed Receiver is the mechanism generally used to achieve these goals. A Receiver is an individual appointed by the Court to manage a property during the foreclosure process. Generally, they are attorneys, but this is not a legal requirement. Retired court personnel, such as judges, also are often appointed as Receivers.

The first step in having a Receiver appointed in a foreclosure action is to consult the legal documents which are the basis of the action, such as the mortgage and note. If the documents have been properly prepared, they will contain a clause permitting a Receiver to be appointed, without notice, in the event of a default on the loan. Once a foreclosure action has been filed, the attorney for the foreclosing party should then file an ex parte (without notice) application with the Court, requesting that a Receiver be appointed for the property in question. This application should contain an Affidavit from the plaintiff stating that the loan is in default, as well as copies of the documents entitling the plaintiff to the appointment of a Receiver in the event of default.

July 5, 2012

Legal Responses to Defaults by New York Cooperative and Condominium Unit Owners- Part II

By Weiss & Weiss

Our readers should be aware that if the default remains uncured and an auction is necessary, that the distinction between cooperatives and condominiums becomes pronounced. The auction procedure in a cooperative is non-judicial, meaning that it does not require the intervention of a Court, unless a party specifically requests judicial intervention. After a lien is filed against a defaulting condominium owner, all proceedings, including the foreclosure proceeding and the oversight of the auction process, require the intervention of a Judge and take place in a Court.

Cooperative clients should understand what is accomplished once the Proprietary Lease is terminated. In order for the cooperative or another party to obtain legal ownership of the cooperative, the legal auction procedure is then commenced. A Notice of Auction is placed in a newspaper of general circulation and delivered to the unit owner in a legally compliant manner. At the auction, the Terms of Sale and a Memorandum of Sale as prepared by our firm are presented and read aloud by the auctioneer. The successful bidder will obtain the transfer of the apartment in the time frame provided by the Terms of Sale.

While the auction process allows for the obtaining of legal ownership, a Landlord-Tenant procedure is then required to obtain physical ownership of the unit. This proceeding is even required if the unit owner does not leave the unit during the default response procedure. Once the auction notice is advertised in the newspaper, it is not uncommon for our attorneys to entertain telephone calls where a person states incredulously that they can get the apartment for “only $18,000.00” (the amount that may be owed for maintenance). We will remind the caller that there are no warranties as to the status of occupancy or unit condition. The “successful” auction bidder may merely be buying what may be a protracted landlord-tenant case.

June 28, 2012

Legal Responses to Defaults by New York Cooperative and Condominium Unit Owners- Part I

By Weiss & Weiss

The efficient operation of a cooperative or condominium building in New York depends upon unit owners respecting and abiding by the rules contained in the governing documents. Unit owners in cooperatives should refer to their Proprietary Lease, while those in condominiums should refer to their By-Laws. In both cases, the building’s House Rules should also be consulted. As described in our website , those who own a cooperative or condominium unit have common legal responsibilities, including the payment of maintenance or common charges, adhering to house rules, compliance with renovation and subleasing restrictions, and the like. In the event that a unit owner fails to abide by the rules and regulations of the building, our firm has extensive experience in responding to defaults and enforcing compliance by the issuance of the proper legal notices as required by the applicable governing documents. Said procedures may lead to litigation or auctioning of the units, depending upon the development of the case.

Our first course of action is usually to discuss the specific breach with our client contact, be it the representative Board Member or managing agent for the building. If monies are owed, we identify the period of time for which the money is due and the type of charges, such as maintenance, common charges or an assessment and any late fees, interest or other penalty charges properly added. If the breach involves “behavior”, rather than money owed, we determine whether same relates to an illegal sublet, an unapproved alteration or even a behavior that may not fall neatly into any particular category, such as being too noisy or permitting “unreasonable” odors to escape from the unit. Our initial discussion will also identify if any prior written notices have been sent to the unit owner.

Following our initial fact gathering, the next step involves insuring that any further legal notices are completely in compliance with the building’s governing documents. Failure to comply with such details could invalidate legal notices and proceedings at a future date. This step is important because clients may become impatient and demand that actions be taken without regard to the requirements of the governing documents and because well-meaning but not legally trained managing agents often send “legal letters” which ignore the legal requirements contained in the governing documents.

June 21, 2012

The Effect of Bankruptcy Filing on Creditor’s Litigation in New York

By Weiss & Weiss

It is not uncommon when our firm is involved in litigation against a debtor, that the debtor files for bankruptcy protection. In the United States, bankruptcy law is federally governed, and a debtor in the New York metropolitan area would file for such protection in the United States District Court for the Southern District of New York or United States District Court for the Eastern District of New York. The Southern District governs filings in Manhattan (New York County), the Bronx, and Westchester County, while the Eastern District covers filings in Brooklyn, Queens, and Long Island.

There are several different types of bankruptcy filings, depending on whether the debtor is an individual or a corporate entity. In addition, a debtor may file for liquidation, under which all eligible debts are discharged, or reorganization, in which the debtor submits a plan to make partial payment of their debts over a scheduled period of time. Not all debts are eligible for discharge under a bankruptcy filing. While this blog is not intended to be a comprehensive bankruptcy primer, debts such as child support obligations and student loan obligations are not dischargable under current bankruptcy law. When necessary, we consult and recommend specialized bankruptcy counsel with whom we work in concert.

By law, when a debtor files for bankruptcy protection, all litigation and collection efforts from the creditor must cease. This is known as the “automatic stay.” The automatic stay provides protection to the debtor from all pending lawsuits, collection of all judgments, and communications with respect to delinquent obligations. For example, one of our clients had an income execution relating to a judgment that we had obtained against the debtor. After several years of collecting a portion of the judgment through the income execution, the debtor filed for bankruptcy protection. Our firm was required to inform the sheriff’s office that the debtor had filed bankruptcy, and the income execution was closed. Once the judgment was discharged by the Court, we were legally prohibited from further collection of the judgment, much to our client’s dismay.

June 6, 2012

Credit Card and other Collection Lawsuits

By Weiss & Weiss

As the reader of this blog is probably aware, there has been a large increase in personal debt in the United States over the past decade. As credit cards, credit lines, and other non-secured loans have become more easily available, and the stigma against being in debt greatly diminished, the result is that many more people are in debt, and for larger amounts, than at any time in our country’s history.

This post will explore the general legal issues associated with debt collection in New York State. When a consumer defaults on credit card debt, generally, the credit card company will sell or assign the debt to another company after it has engaged in minimal preliminary collection efforts. The bank which issued the credit card is therefore often not involved in collecting the unpaid balance from the delinquent credit card holder. Instead, the debt is sold or assigned to a collection agency. A collection agency usually attempts to collect the debt in exchange for a percentage of the amount collected. The collection agency may also buy the debt for less than its face value, and then attempt to make a profit on any amount collected.

For example, a consumer incurs a $15,000.00 credit card debt. The credit card company may sell the debt to a collection agency for ten cents on the dollar ($1,500.00). The collection agency now owns the right to collect on the obligation. Any amount that it can collect from the debtor in excess of $1,500.00 will be a profit to the collection agency. The original creditor will then write off the debt and may no longer be involved in its collection.

April 30, 2012

Property Partition Actions in New York State

By Weiss & Weiss

Often in New York, property is jointly owned by two or more individuals or legal entities, such as corporations. This can happen with both residential property and commercial property. One of the major causes of joint ownership of property can occur when the original owner passes away and leaves the property in their will to their children, or other multiple owners. In addition, there can be situations where two or more individuals buy property jointly, and then one of those individuals transfers their interest in the property to another person.

In the case of residential property, conflicts can arise when there are multiple owners of property. It may be that one of the joint co-owners lives at the property, and the other does not. In that case, the person who lives at the property is usually responsible for the upkeep of the property, including routine maintenance, as well as paying the costs and expenses of the property. These costs and expenses can include property insurance, utilities such as electricity and heating, and property taxes. However, the person living at the property also derives the benefit of living at the property without paying rent. The non-occupying party may not agree to be financially responsible for a property in which he does not live. Having co-owners who do not both live at the property can be an inherent source of conflict.

Where the property is commercial in nature, there can be similar conflicts, although of course no one is living at the premises. If the property was purchased as an investment, the joint owners may not agree on the proper time, if at all, to sell the property. There can also be disagreements as to the type of commercial tenants to seek for rental of the property, the length of the lease to offer to potential tenants, as well as other lease terms.