COVID-19 Update: How we are serving and protecting our clients.

surplusfunds-300x200Prior blog posts have discussed the concept of surplus monies in foreclosure proceedings.  When a foreclosed property is sold at public auction, the winning bid may exceed the total amount owed to the entity foreclosing on the property.  In such a case, the excess funds are considered “surplus funds,” and the Court-appointed Referee will then deposit the surplus funds with the New York State Department of Finance, which has the authority to disburse the funds to the proper party, upon receipt of a Court order from the Court that handled the original foreclosure case.

The question of who exactly is the “proper party” is one that our firm has encountered fairly often.  There are several situations in which more than one entity may have claims to the surplus funds.  This post will further discuss those situations.

In general, the original owner of the property (prior to the foreclosure sale) has the first claim to any surplus funds.  If it is an individual, he can retain experienced counsel to file the proper motion papers to obtain a Court order allowing disbursements of the funds.  There may be situations where the property was owned by a corporation or other entity with multiple owners.  In such cases, the entity itself would be entitled to the surplus funds.  If it is a corporation, the funds would be payable to the corporation itself.  The corporation’s governing documents would then determine how the corporation would disburse the funds.

good-cause-eviction-1-678x381-1-300x169A recent article in the New York Post discusses a proposed bill relating to evictions which is being considered by the New York State legislature.  The “Good Cause” eviction bill would limit evictions in New York to only the narrowest of circumstances.

Since the expiration of the COVID-19 eviction moratorium in January, evictions have generally resumed in New York.  Under the moratorium, landlords were prevented from evicting tenants, unless they were an actual danger to people and property.  As COVID-19 waned, the Governor allowed the moratorium to expire.  As a result, landlord-tenant Courts have generally resumed normal operations, and tenants have been subject to evictions after proper Court proceedings have been held.

However, as a result of the temporary eviction moratorium, there have been some advocates who are attempting to further limit evictions, even though COVID-19 has waned and available vaccines have greatly reduced the risk factors for most individuals.  Under the proposed “Good Cause” eviction bill, landlords would not be allowed to evict tenants, except for non-payment of rent and lease violations.

cold-feet
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.

maskOur 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.

hochul-300x169With 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.

settlementOur 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.

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