exitThe region served by this law firm certainly has its share of vacant commercial spaces.  An unproductive business environment at times leads to the consideration of closure by other businesses.  When a commercial lease ends prior to its termination date, it is know in the industry as “going dark”.  It is not unusual for commercial lease terms to extend for anywhere from five to twenty years.  Of course, during such a lengthy timeframe, business conditions can change drastically, making the continued conduct of business to be impractical and not profitable.  There may have even been a lease modification between the landlord and tenant which has still not assisted the tenant in the successful conduct of its business at the premises.  Perhaps the business involves a particular food or fitness craze that is no longer desired by potential customers.  When this occurs, experienced legal counsel  should be consulted to develop the optimal strategy for the tenant’s early exit.

The tenant’s attorney  should first review the fully signed commercial lease to determine the exact date of lease termination.  If the date is far into the future, different advice may be rendered.  The lease may contain a provision as to whether the tenant has the option to terminate the lease prior to its stated termination date.  Potentially a payment will be required by the tenant in order to leave the premises early.  Such a payment may amount to a set number of months and the waiver of the refund of the security deposit.  For instance, if the early termination payment is three months rent and the waiver of the refund of one month’s security deposit, the tenant may be best served to end the lease early rather than continue with the lease that has another four years to run.  In addition, the tenant’s attorney  should make sure that any notice to the landlord regarding early termination is consistent with the notice requirements in the lease, or such notice may not be deemed to be valid.  The notice requirement may be of a certain number of days before it is effective, need to be sent by a certain method such as certified mail and may also need to be delivered to the landlord’s attorney.

Lease guarantors may also need to be considered when early termination is considered by the tenant.  Most tenants sign leases under an entity name such as a limited liability company or corporation.  In such cases, a landlord will typically seek an individual person to guaranty performance by the tenant.  Such an individual may be the principal of the entity or a third party backing the tenant’s business.  In the case of a guarantor who is the principal of the entity, such a guaranty may take the form of a “good guy” guaranty.  This type of guaranty provides that if the tenant leaves the premises in the condition as required at the end of the lease and pays all sums due to the landlord through the vacate date, then the guarantor is released from further obligation to the landlord.  When there is a good guy guaranty, terminating the lease early is low risk to the parties involved.  However, if the guarantor is a third party backing the tenant’s business, such a third party may challenge the tenant’s early vacate because it may have to fulfill the tenant’s obligations after it leaves the premises.  It is prudent to have a separate agreement between the tenant and third party guarantor to define obligations if the lease ends early.

newlaw-1-300x300A recent article reports on a new law signed by New York Governor Andrew Cuomo which is meant to assist defendants in foreclosure actions.  This article will explain the law, as well as its possible impact on both plaintiffs and defendants in foreclosure lawsuits.

The law amended Article 13 of the New York Real Property Actions and Proceeding Law to allow a defendant to raise the issue of “standing” at any time in the legal proceedings.  A non-attorney may first ask what is the issue of standing and how this change in the law benefits a party being foreclosed.  Standing is a legal defense relating to the plaintiff’s basic right to bring a foreclosure action (or any other type of action).  In order to commence a  foreclosure lawsuit, the lender (usually a bank or loan servicer) must show that it is a corporation licensed to do business in New York State, and also it is the holder of the note and mortgage which is the subject matter of the lawsuit.

Failure to meet these requirements may result in the lawsuit being dismissed due to a lack of standing.  Because many loans are transferred between different lenders and loan servicers on a frequent basis, it is entirely possible that the party bringing the foreclosure action may not have “standing” as the loan may have been sold to another entity prior to the case being filed.  In that case, the plaintiff may lack standing, and the action may be dismissed.

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Recent blog posts have discussed the changes to the New York Landlord-Tenant Law as they relate to holdover proceedings.  Holdover proceedings occur when a tenant’s lease has expired, or when a tenant is operating on a month-to-month basis and never had a written lease for the premises being rented.Under the revised law, also known as the Housing Stability & Tenant Protection Act of 2019, which became fully effective in October, 2019, landlords are required to give notice, under certain circumstances, of more than thirty days prior to commencing a holdover proceeding.  The termination notice, also known as a notice to quit, may require more than thirty day’s notice, which was the rule under the old law.  Experienced counsel should be familiar with the revised law and prepare the notices.

However, a recent article discusses another proposed revision to New York’s laws, which would greatly alter holdover proceedings, or, in some cases, eliminate them altogether. This proposed bill would prohibit landlords from evicting tenants without providing a “good legal reason” when a lease expires.  Under current New York law, when a tenant’s lease expires, the landlord is under no obligation to renew it, unless it is a unit subject to rent regulation.  For example, a tenant signs a one-year lease to rent a house, which is not a multiple dwelling subject to rent regulation.  When the lease expires, the landlord may decide, without providing any reason, not to offer a renewal lease.  If the tenant fails to vacate the premises after receiving the proper notices, they would be subject to a holdover proceeding, and eventual eviction.

The new proposal has been called “good cause eviction,” but it has implications beyond what it states.  Requiring a property owner to provide “good cause” when they decide not to renew a lease would in effect subject every property in New York to some type of rent regulation.  It is unclear what “good cause” would mean under this proposal.  The owner of property may simply decide that she wants to use her property for her own use, or rent to a friend or relative.  She may want to raise the rent beyond what the current tenant is willing to pay.  A landlord may simply decide it is too much trouble to have a tenant, and may simply want to keep the rental property vacant.  Under this proposal, these reasons may not be considered “good cause”, forcing an owner to continue renting to a tenant, and then being forced to offer renewal leases to that tenant in perpetuity.  “Good cause” may not be explicitly defined by the revised law, causing courts to entertain lengthy litigation to determine whether a landlord has shown “good cause” when he decides not to renew a residential lease.  As with many well-meaning proposals, the full implication of the change in the law is not being considered.

statute-300x140Prior blog posts have discussed the operational aspects of holdover landlord-tenant eviction proceedings.  Holdover proceedings, unlike non-payment proceedings, occur when a tenant’s lease term has expired, or when a tenant has never had a lease, and either party exercises their legal prerogative to terminate the tenancy.  This is in contrast to a non-payment proceeding, which is when a tenant with a valid lease fails to make his rent payments.

Recently, the New York State Legislature passed the Housing Stability & Tenant Protection Act of 2019, which became fully effective in October, 2019.  This legislation comprises multiple amendments to the Real Property Actions and Procedure Law and the Real Property Law of New York State and has a significant effect on holdover proceedings.  This blog post will explore the changes created by the new law.

The first important revision relates to the notice period prior to commencing a Court proceeding in a holdover action.  Under the previous law, either party had the right to terminate a month-to-month tenancy upon thirty day’s notice.  This notice period applied in two situations – if the tenant had an existing lease which expired by its term, or if the tenant never had a lease.  Once the lease expires, or, after a month for which the tenant paid rent, the party seeking termination would serve a “Notice to Quit” upon the other party.  This Notice would state that the month-to-month tenancy would terminate in thirty days.  If the tenant had paid rent for the month, the termination notice would have to be dated at least thirty days after the month for which rent was paid.  For example, the month-to-month tenant has paid rent for the month of October.  This covers the period from October 1st through October 31st.  The thirty-day termination notice would have to terminate the lease as of the end of the month after October, so it would state that the tenancy would terminate as of November 30th.  In addition, once the notice was served, but prior to a Court action being commenced, the landlord would not be allowed to collect rent for the following month (in our example, November), as it would make the termination notice ineffective, and subject any Court action to being dismissed on that basis.

cars-300x156News outlets have recently reported  the death of an eighties icon, the “Cars” lead singer Rick Ocasek.  When he passed away, he was in the process of divorcing his wife of several decades who was “…dancing ‘neath the starry sky…”.  The Will filed for his estate  stated that although his divorce may not be final at his death, his wife is to be denied her elective share because she abandoned him.  This post will discuss the legal concepts involved in such an estate structure and whether Ocasek’s wishes are likely to be implemented.

We  have previously evaluated marital rights in a New York estates.  If a person dies without a Will, an estate administration would be conducted and the intestacy statute dictates the persons who will inherit.  In the case when a spouse and children survive, the surviving spouse would receive Fifty Thousand Dollars and one-half of the balance of the estate.  When there is a Will, a probate proceeding will be necessary.  New York’s elective share statute provides in effect that a spouse cannot be disinherited.  Even if the Will does not provide for the spouse to inherit, the surviving spouse can take her elective share, which is one-third of the value of the estate in most cases.

It is necessary to consult with skilled estate practitioners  when experiencing significant life events such as divorce.  As the “…good times…” may no longer “…roll…”, one’s documents should be reflective of current relationships.  Perhaps Ocasek told his estranged wife that “…you can’t go on thinking nothing’s wrong, who’s going to drive you home tonight?”  Further, it may be helpful in the case of a famous person who may not wish for his Will to be available for viewing by the general public to create a Trust.

theftA recent New York Times article discusses why black homeowners in Brooklyn are being victimized by fraud in the transfer of the ownership of their properties without their consent.  Of course, deed theft is not limited to any particular part of New York, or any color.  Homeowners of all races should beware of predatory individuals and companies who may seek to defraud them when they may be in financial distress.  This blog post will discuss this issues a homeowner must be aware of in such situations.

The most common scenario is when a homeowner is facing foreclosure.  A foreclosure may occur when a mortgage is unpaid, or when property taxes are not paid. In such cases, the homeowner is entitled to at least ninety day’s notice prior to a foreclosure action being filed with the Court and an action is commenced in the Supreme Court located in the county in which the property is located.

The commencement of a foreclosure lawsuit give the potential predator an opportunity to pounce.  Because such lawsuits are public records, any individual or company can look up in the Courthouse or on e-courts and see the location of properties which are in foreclosure, and the name of the individual homeowner in each foreclosure case.  After the information is harvested, the company may then contact the homeowner with a “rescue scheme,” in which they claim they will “save the property” from foreclosure.  They may advance a small sum of money, with the promise of more advances, if the homeowner will execute certain documents.  The documents, rather than being innocuous, may allow the schemer to transfer the property from the homeowner to the “rescue company.”  After the property has been transferred, the company may then quickly “flip” it to an unwitting buyer, while the original homeowner has been deceived into signing away their property.

building-300x198Although the public image is that legal cases are resolved through a trial of the issues involved, the fact is that most cases are settled well before any trial occurs.  This is especially true with regards to landlord-tenant cases.  The Court structure and sheer number of cases which must be heard by a busy landlord-tenant court makes it impractical to have a trial for every eviction matter, or even a small fraction of eviction cases.  What happens to the cases which do not go to trial?  They are usually resolved through an agreement reached between the parties, usually negotiating through their attorneys.  This blog post will explain how the process occurs.

Once an action has been commenced in landlord-tenant court, the Court assigns a return date, which, statutorily, must now be at least fourteen days after the Petition is served on the tenant.  During this period of time, an experienced attorney will contact the attorney for the other party to discuss the possibility of resolving the case without further Court proceedings.  The issues which need to be resolved may be the amount of time in which the tenant is required to vacate the premises, as well as whether the tenant will make payments (called “use and occupancy”) during this period of time.  If the tenant wishes to remain at the premises, outstanding issues such as payment of past due rent, and amelioration of any outstanding property condition issues, may also need to be resolved.  The effect of the newly enacted amendments to New York’s landlord-tenant laws should also be considered.

Assuming the attorneys can come to an understanding which satisfies both the landlord and the tenant, the next step is to prepare a Stipulation of Settlement.  This document will specifically delineate each parties’ rights and responsibilities.  For example, it may state that the tenant will vacate the property as of a specific date.  More importantly, it will state that if the tenant fails to vacate on the agreed-upon date, then the landlord is legally entitled to a Warrant of Eviction, which is a document allowing a Marshal or Sheriff to physically evict the tenant.  Usually, the landlord’s attorney will have to provide the Court with an Affirmation of Non-Compliance, which is a document stating that the tenant has not complied with the terms of the Stipulation of Settlement.  The Stipulation may also call for the tenant to receive notice of such an application, so he has an opportunity to cure his default.