Real Estate Litigation

November 12, 2015

The Online Conduct of Cooperative and Condominium Disputes

With the prevalent use of the internet, grievances against cooperative and condominium boards can spread like wildfire. The means used may be standard e-mail forwarded to all unit owners, a specifically developed Facebook or Google chat page, a publically accessible website, or another type of private intranet system. The New York Times recently published an article concerning the airing of disagreements online with an audience of all unit owners and the implications. In the past, if a neighbor had a complaint, she would approach one of the board members individually and directly, so that all unit owners would not be aware of the grievance. As an alternative, it is almost expected that a unit owner will raise concerns loudly and perhaps not so politely during the annual meeting. Such concerns will be addressed in front of all unit owners present.

Now it is not uncommon for unit owners to have a day-to-day online community, allowing for constant communication of all matters. Online discussions may concern such matters as whether a neighbor is willing to watch a pet while someone is away, whether someone wants to buy unneeded furniture or more serious matters concerning how the building is being run. The board may be publically attacked for building conditions or for the manner in which a financial transaction was handled. Modern online communities make it almost too easy for unhappy unit owners to gather strength. Some proponents argue that such an online community encourages transparency of the board. The board is continually required to state and justify their actions. Even though the board is legally required to be responsive to all unit owners and must follow the business judgment rule , the current expectation that every action of the board should be known and debated among all unit owners is likely to diminish the authority of a current board.

With the potential reduced authority of a board, the takeover of a board is a potential concern. Opponents of such online communities argue that such communities are developed merely for the purpose of such a takeover. Using the online method as an easily disseminated platform, it is easier than ever for dissident groups to develop allies and arrange for other unit owners to elect them to the board. Once opinions are readily shared, the slate of dissident candidates likewise develops more easily than in the past.

November 5, 2015

Arbitration as an Option to Resolve Legal Disputes in New York

By Weiss & Weiss

A recent series of articles in the New York Times discusses the growing prevalence of arbitration in resolving legal disputes. This blog has previously discussed arbitration proceedings in the context of New York Yankees slugger Alex Rodriguez (hereinafter “A-Rod”), discussing his attempt to reverse an arbitration ruling which upheld his long suspension. As baseball fans are aware, A-Rod was unsuccessful in having his suspension overturned, and ended up sitting out the entire 2014 season, and returned for the 2015 season, leading the Yankees in home runs.

A-Rod aside, the issue to be discussed is whether arbitration may be a better vehicle for dispute resolution than the traditional court system. In arbitration, parties agree to submit a dispute to a neutral, third party arbitrator, rather than to the court system. The first issue is the arbitrator to be utilized. Many contracts will state that the dispute should be submitted to a local branch of the American Arbitration Association (AAA). The AAA will generally supply a list of arbitrators with expertise in the area of the dispute, and the parties are allowed to rule out any arbitrators who may have a conflict of interest.

Other agreements may allow the dispute to be submitted to a religious tribunal, such as a Beth Din. This usually occurs when the disputing parties are members of the same religious group and prefer than their dispute be heard by members of their group, rather than in the Court system. Of course, if one of the disputants is not a member of the group, they may feel that they are at a disadvantage when the dispute is heard. Another aspect is that a religious arbitrator may apply religious doctrine and scripture, rather than civil law, in making their decision.

October 29, 2015

Evictions and “Stuff” Left Behind by Tenants in New York

By Weiss & Weiss

Prior blog posts have discussed the possibility of terminating a lease prior to its legal end date. However, in a residential setting, such a situation is not always cut and dried. If there is no formal document, executed by both parties, terminating the lease, then the lease between the parties may still control the situation. This blog post will examine the different possibilities, and advise both landlords and tenants regarding the disposition of property left behind by a tenant.

Our first example would be when a tenant simply leaves the premises, but does not advise the landlord in writing that he is moving out. In such situations, the tenant may also leave behind personal property at the rented premises. The first question is whether the tenant has legally abandoned the property. If the tenant does not return the keys to the landlord (or their attorney) and state in writing that they are surrendering possession, then they are still considered a legal tenant and the original lease will still control the landlord-tenant relationship.

Even if it appears to the landlord that the tenant has moved out, in the absence of a formal surrender, the landlord will still have to legally evict the tenant. This means service of a Notice of Petition and Petition of Eviction, obtaining a warrant of eviction in Court, and then having the City Marshal or Sheriff serve and execute the warrant. This will give the landlord legal possession and allow the landlord to dispose of the personal property left behind by the tenant. If the landlord decides not to follow this legal procedure, the tenant could return, and claim that they did not formally surrender possession. The landlord in such a case could be liable for an illegal eviction, as well as the cost of replacing the disposed-of property.

October 8, 2015

Settlement of Partition Actions in New York State

By Weiss & Weiss

Prior posts on this blog have discussed the general aspects of property partition actions. A partition action arises when there are two or more owners of real property, and the co-owners cannot agree on the disposition of the property. The property may be residential or commercial in nature. This blog post will discuss possible out-of-court resolutions to a partition action.

A partition action may be brought by any of the co-owners to force a sale of the property, with the proceeds being divided among the owners according to their percentage of ownership. However, it is a fact that most lawsuits are settled prior to trial or another resolution by a Court. In a partition action, there are several alternatives to explore when deciding to resolve a case without the need for further Court intervention.

The first alternative would be for the parties to agree to sell the property to a third party who is not one of the current co-owners. In such a situation, the co-owners should agree on sale terms, and, in most situations, hire a professional real estate broker to list and show the property in question. The parties would also agree to share the costs of the broker, which is usually a set percentage of the sales price. It is advisable at this stage that a formal written agreement, usually called a “Stipulation of Settlement,” be entered into between the parties. Such an agreement should contain an initial listing price for the property. It should also state that any offer at or above the listing price will be accepted by all of the owners. In the event that the property cannot be sold at or above the listing price, the agreement should also delineate a set period of time in which the parties will attempt to sell the property at the initial listing price, such as three months. After this time period expires, the agreement should state that the listing price will be reduced by a set percentage, such as five percent. This will allow the property to be sold at a price acceptable to all parties, and will prevent any co-owner from refusing to sell the property. Our firm has handled many partition actions and has a standard Stipulation of Settlement that contains the necessary clauses for an effective resolution.

July 16, 2015

Evictions and Warrants of Eviction in New York State

By Weiss & Weiss

Many of our clients are landlords who own only one property, such as a single or multi-family house or an apartment. Although they may be renting to a tenant, it is not their primary business or livelihood. As such, our firm is often asked to assist in removing a tenant due to a default under the lease, or due to the expiration of the lease in question. As discussed in a prior blog post, a Court proceeding is necessary in order to gain legal authority to evict a tenant.

The legal document allowing an eviction to occur is known as a warrant or warrant of eviction. It is similar to a judgment, except that instead of stating that a certain sum of money is owed, it states that the landlord has the legal right to evict a tenant. A warrant can be obtained in several ways during a Court proceeding. If the parties agree to settle a landlord-tenant action, the tenant may agree to vacate by a certain date. A condition of such agreement (known as a Stipulation or Stipulation of Settlement) would be that if the tenant does not vacate voluntarily, the landlord is entitled to a warrant of eviction. Often, the agreement will allow the warrant to be issued immediately, but the parties will agree to stay, or delay, enforcement of the warrant until after the date on which the tenant agreed to vacate the premises.

The Stipulation allows the landlord to have a warrant of eviction, but gives the tenant a reasonable amount of time (usually a month or two) in which to vacate. A crucial part of such an agreement is also that the tenant must pay use and occupancy during the period of time between settlement and moving out. Use and occupancy is a legal term which applies to rent paid after the tenant has agreed to surrender possession. The agreement will usually state that if the tenant fails to pay such use and occupancy, the warrant may be executed immediately upon notice of default sent to the tenant, rather than on the later date previously agreed to by the parties.

June 17, 2015

Adverse Possession: The Fundamental Elements have Changed in New York

By Weiss & Weiss

One of this author’s first lessons in Property Law class involved the concept of adverse possession. Under this legal principle, one party may acquire title to the property belonging to another. In New York, the elements required to establish adverse possession in the governing statute have been modified after 2008.

Prior to 2008, the following items had to be proven in order to establish the right to acquire title through adverse possession: hostile/adverse with claim of right/title (meaning that the possessor must believe that he owns the property); actual (an act on the part of the possessor must be conducted on the subject property); open/notorious (the possessor must be acting in a manner that an observant property owner would be able to see their activity); exclusive (if a fence, gate or wall is installed it may prevent other parties from entry and make the possession exclusive to the possessor); continuous for ten years (the owner is out-of-possession for at least ten years); and likely to be cultivated or improved (gardening, lawn mowing and the like have been conducted by the possessor or the possessor built a structure such as a shed or other building) or protected by an enclosure (such as a gate or fence). Permissive use does not give rise to an adverse possession claim.

As a result of the New York recent case known as Walling v. Pryzyble , the “hostile” element from the adverse possession standards has been removed. Further, property need not be cultivated or improved to give rise to an adverse possession claim. The updated standard is that there is a reasonable belief that the property belongs to the possessor.

June 4, 2015

Foreclosure and Bankruptcy in New York

By Weiss & Weiss

A recent decision by the United States Supreme Court raises important issues for those whose homes are in foreclosure and are considering filing for federal bankruptcy protection. This case involved a borrower whose home was “underwater,” which means that the mortgage debt on the property (both a first and second mortgage) exceeded the current value of the home. In such cases, the bankruptcy counsel will often seek to have the second mortgage “stripped off,” that is, removed, so that it is no longer a lien on the property.

The Supreme Court ruled that, in such situations, the second mortgage could not be removed simply because the house was worth less that the total mortgage debt. This ruling will prevent such homeowners from having second mortgage loans (which are often in the form of home equity loans) discharged by the Bankruptcy Court in a Chapter 7 liquidation proceeding. This ruling protects banks that make second mortgages from having these mortgages dismissed in bankruptcy proceedings where the home currently has a negative equity.

Our firm handles many cases in which we defend homeowners who are in foreclosure. We are often asked what the effect of a bankruptcy filing would be on such a proceeding. The first effect of a bankruptcy filing is to freeze all current litigation against the person filing for bankruptcy, as well as all collection efforts on any debts. Therefore, if an individual is delinquent in their mortgage payments, a bankruptcy filing would suspend all collection letters, phone calls, and, of course, litigation relating to all debts, including mortgage debts. Failure to comply with the automatic bankruptcy stay may subject the lending institution to Court sanctions, including fines.

May 14, 2015

“Time of the Essence” Closing Dates in New York State

By Weiss & Weiss

Parties to real estate transactions often ask us whether it is appropriate to include a time of the essence clause in their real estate contract. A time of the essence clause provides that if the parties do not close on the specified date, then the party who is not ready, willing and able to close will be in default of the contract. If the seller is in default, the remedy available to the buyer would be a lawsuit demanding specific performance, requiring the seller to transfer ownership of the property. If the buyer is in default, the seller’s remedy would be to retain the downpayment. In addition, the particular contract between the parties may dictate additional remedies available.

In New York, it is legally assumed that if a contract does not specify time of the essence, then it is not time of the essence, unless the procedure described herein is followed. Typically contracts will have the language “closing on or about x date”. This has been interpreted by Courts to mean that such a date is an approximate target and not necessarily the precise date on which the parties should presume that they are closing. Purchasers often have difficulty with on or about closing dates, as they need to know that they can close before their children are expected to enroll in school and need to arrange for movers and contractors. We advise our clients not the schedule specific moving dates or contractor start dates until the closing is imminent.

Time of the essence closing dates are not standard in residential sales transactions. Customarily, a seller does not want to be liable if unable to perform on a specific date. A purchaser does not want to potentially lose his downpayment for matters outside of his control, such as the lender not clearing the file to close. Time of the essence closing dates are more typical in residential matters where a person is purchasing directly from a developer/sponsor. In this type of transaction, the seller’s time of the essence clause provides that purchaser will pay closing adjustments such as common charges and real estate taxes as of the time of the essence closing date, even if the actual closing takes place at a later date. Further, it is not unusual to see a time of the essence clause in a commercial real estate contract.

April 30, 2015

Recent Developments in New York Religious Corporation Law

By Weiss & Weiss

News outlets have recently reported a case involving a dispute over the sale of a synagogue located on the Lower East Side of New York City. Certain individuals, claiming to be members of the Board of Trustees, have submitted a petition to the New York State Attorney General seeking approval for a sale in the amount of Thirteen Million Dollars.

At issue is a dispute over whether the individuals who claim to be Board Members are, in fact, legally elected Board Members of the institution in question. Since the synagogue has been in existence for seventy-six years, there are many legal issues related to the authority of any individuals may have the authority to petition the Court to allow a sale of the property, which is also being used as a nursing home for the aged. An excellent overview of this highly contentious case to date may be found by reviewing a recent article in the New York Observer.

Readers of this blog may recall that this subject has been written about by us previously. A dispute involving a Hindu temple was analyzed in a recent post. Of course, every case has its own unique set of facts, but it is important to note that Courts are reluctant to intervene in decisions that are essentially religious in nature, for example, if a spiritual leader decides to excommunicate certain members. Such excommunicated members will have a difficult time finding a Court to overturn such a decision, due to First Amendment concerns.

April 16, 2015

Illegal Acts and Evictions in New York State

By Weiss & Weiss

A recent gas explosion in Manhattan’s East Village destroyed an entire building, and, more unfortunately, caused the deaths of at least two individuals and injuries to other people who were unlucky to be in the building during the explosion. Of course, the human cost of such a tragedy cannot be measured. This blog post will attempt to explain some of the legal issues that relate to illegal actions on the part of a landlord or a tenant.

Apparently the gas explosion may have been caused by the illegal siphoning of a gas line by the building’s landlord. If this is indeed the case, the landlord would be legally responsible for any injuries caused by the explosion, including the deaths of the individuals. Such legal responsibility be in both the civil and criminal categories. This means that the persons responsible for the illegal siphoning may face charges of criminal negligence, and be subject to arrest and jail time.

In addition, any persons damaged by the explosion may file civil suits seeking money damages for their injuries. This may also include wrongful death actions brought by the legal heirs of those killed in the explosion. A wrongful death suit usually seeks damages in the amount of future earnings by those who may have been legally dependent on the person who died. It is usually brought by a surviving spouse or child of the decedent. Those found to be legally responsible for the death of the individuals in the explosion may have to pay compensation in the amount of estimated lifetime future earnings of the person who died as a result of their negligence.