Weiss & Weiss would like to wish all those who celebrate a joyous Easter and happy Passover 2022. 
Happy Passover, Happy Easter
Cold Feet- Do I have to Close?
We have encountered parties to real estate transactions who get “cold feet” between the time of contract signing and closing. These persons may seek to break the legally binding contract that they have signed and cancel the deal. This post will address when failing to perform a real estate contract may be permitted and the risks involved should the contract not be able to be cancelled.
First, this issue will be examined from the perspective of the buyer. Real estate contracts typically contain conditions, such as the property will appraise for at least the contract price, that the buyer will obtain a mortgage commitment, board approval will be issued if the purchase involves a cooperative apartment and there will not be an insurmountable title issue. If any of these conditions are not met and the buyer’s attorney notifies the seller’s attorney within the timeframe required by the contract, the contract can be legally cancelled and the downpayment will be refunded to the buyer.
At times, a buyer attempts to use issues that should have been addressed during the pre-contract due diligence period to cancel the contract. Most contracts state that the buyer has conducted all due diligence and inspections of the property before the contract is signed. The buyer’s concerns about such issues as property conditions, the amount of real estate taxes, or monthly carrying costs of a cooperative or condominium unit must be raised before the contract is signed and are not causes to unravel the contract. A buyer cannot cancel the contract merely because he no longer wants the property or thinks he cannot afford it.
The Masks are Off- Changes in Commercial Leases Remain
Our readers may be pleased to hear that mask mandates are falling like dominoes throughout the area served by our attorneys. This newfound attitude heralds a time of optimism. However, the scars created by the COVID era remain, particularly with respect to commercial leases. This post will examine some typical provisions in commercial leases that should be reconsidered and negotiated in light of changing times.
In many commercial leases, landlords will prefer strict definitions as to use of the premises and signage permitted on the premises. For instance, if the tenant is a fitness facility, the landlord may draft the use clause very narrowly and identify the permitted use as a boxing fitness studio. Should the tenant have difficulty in operating the location, he will not necessarily be able to sublet to another tenant unless the use is the same. If this particular tenant could not operate a boxing fitness studio during a pandemic, how will he find another tenant who wants to use the space for the same narrow purpose? As such, an experienced attorney will ask the landlord to broaden the permitted use in the lease to fitness studio or any lawful use.
Flexibility is also required with respect to alcohol sales, which may be restricted in a lease. As our readers may recall, during the pandemic struggling restaurants were permitted to sell alcoholic beverages for takeout. This was a lifeline for such businesses and should not be prohibited by a lease, which should permit alcohol sales in accordance with current law and not be further restricted by a landlord. The open restaurants program in New York City permitted restaurants to operate supplemental space on the sidewalk or in the street appurtenant to the restaurant. Lease provisions requiring a tenant to keep the sidewalk clear should be modified to permit use as may be permitted by an open restaurant program.
New York Legal Update – Expiration of Eviction Moratorium
With the beginning of the COVID-19 pandemic, New York, along with many other states, adopted a law temporarily halting evictions. In addition, there was an additional moratorium that prevented foreclosure cases from going forward in Court.
This blog post will focus on the eviction moratorium, its effects, and its expiration as of January 15, 2022. The original moratorium went into effect in March of 2020. The statute initially provided that if a landlord sought eviction against a tenant, the tenant could complete a form which stated that they were suffering from a COVID-19 related hardship which affected their health and ability to move, or from a financial hardship caused by COVID-19. Once the form was completed and send to either the Court, the landlord, or the landlord’s attorney, the eviction proceeding would be stayed until the moratorium was lifted.
The main problem with this statute was that it provided a landlord no opportunity to rebut the tenant’s assertion that they were negatively impacted by the COVID-19 pandemic, and that such impact affected their ability to pay their rent, or to find new living arrangements. A group of landlords challenged the constitutionality of that statute in a lawsuit. Ultimately, the United States Supreme Court ruled that, in order for the statute to be constitutional, the landlords should have the right to challenge the tenant’s hardship declaration in Court. Eventually, the moratorium statute was amended by the New York State legislature to allow landlords to request a hearing if they wanted to challenge a tenant’s hardship declaration in Court. If the Court subsequently found that the tenant could not prove his allegations that he was suffering from a COVID-19 related hardship, then the Court could rule that the eviction moratorium did not apply to that particular case, and allow the eviction matter to proceed in its normal course.
Happy Holidays
Weiss & Weiss would like to wish all happy holidays and a great New Year 2022.
Pre-Litigation Settlements of Partition Matters
Our firm receives many inquiries from co-owners of properties. As longtime readers of this blog are aware, a partition action can be brought in the appropriate Court when co-owners cannot agree on the disposition of real property. Such an action would demand that the Court appoint a Referee to determine the respective shares of the co-owners, and, if necessary, actually sell the property.
However, there are often situations in which the parties may agree to the disposition of the property without resorting to actual litigation. In this pre-litigation period, the parties, through their attorneys, may negotiate a resolution in which either one party can buy the other’s share of the property, or agree to jointly sell the property and share the proceeds. In such a situation, experienced counsel should prepare a written agreement, to ensure compliance with the parties’ understanding.
What provisions should be included in such an agreement? The agreement should first state that the parties are co-owners of the property, and the exact amount of their percentage shares of ownership. Next, there should be terms for the disposition of the property. For example, two brothers inherit a house from their parents, and agree to sell the property and share the proceeds equally. The agreement should state that the parties will cooperate in hiring a licensed real estate broker to market and sell the property. The agreement may even include more details, such as the name of the real estate broker, and the initial listing price for the property.
Happy Thanksgiving
Weiss & Weiss would like to wish all a happy and healthy Thanksgiving 2021.
Partition Actions – Exceptions to the Exceptions
Our firm handles many partition actions. A partition action is brought when two or more people jointly own real property (or shares in a cooperative), and one or more of the owners no longer wishes to co-own the property. In New York State, there is generally an absolute right to a partition in such situations. This means that when a case is brought, the Court will, assuming the basic legal requirements are met, order that the property be sold and the proceeds equitably divided between the co-owners.
However, as is often the case in the law, there are always exceptions to the general rule. This post will discuss some of the exceptions, and how they may affect a partition action. The most common exception is when there is a prior written agreement between the co-owners regarding the ownership of the property. Under New York law, the agreement must be in writing, and cannot be an oral agreement.
What type of agreement is contemplated by this exception? The first type of agreement would be a contract between the parties to sell their interest to a third party, or for one co-owner to sell his interest to the other. If such a contract exists, and is still legally valid, it would prevent the Court from allowing the property to be sold through the Court-ordered partition process, as the terms of the contract would control the disposition of the property.
New Developments Concerning Evictions in New York
As readers of this blog may be aware, the events of 2020 and 2021 relating to the COVID-19 pandemic have had a significant effect on the status of landlord-tenant actions in New York State. By a series of executive orders, then-Governor Cuomo stayed evictions from taking place in New York State, with the last extension of the eviction moratorium to end as of August 31, 2021.
Mr. Cuomo, however, is no longer governor of the State of New York. Due to a series of scandals involving alleged sexual harassment, as well as his handling of nursing home patients infected with COVID-19, he resigned from his position as of August 24, 2021, and was replaced by Lieutenant Governor Kathy Hochul.
Governor Hochul, shortly after taking office, decided to take definitive action regarding the soon-to-be-expiring eviction moratorium. She called a special session of the New York State Legislature, with the express purpose of extending the eviction moratorium. As a result, the eviction moratorium in New York was extended through January 15, 2022. However, due to a recent United States Supreme Court decision, landlords are permitted to have their day in Court to challenge a tenant’s claim that their ability to pay their rent was adversely affected by the COVID-19 pandemic.