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

crown-300x224A recent story in the New York Post discusses a lawsuit brought by the City of New York against a prominent couple who are the owners and landlords of a brownstone located in the Crown Heights neighborhood of Brooklyn.  According to the allegations in the lawsuit, the couple sought to evict their tenants without any legal process.  In more detail, they are accused of, among other actions, using force and threatening to use force to induce occupants to vacate, removing occupants’ possessions from the Premises, and changing entrance door locks to the Premises without supplying replacement keys to the occupants.

The lawsuit seeks civil penalties for violations of the New York City Unlawful Eviction Law, as well as a permanent injunction prohibiting the owners from engaging in any further attempt at unlawful eviction of tenants and occupants, or any further tenant harassment.

Our firm has consulted with many landlords over the years regarding potential evictions of tenants.  One course of action that we would never advise a landlord to do is to attempt to evict the tenant themselves, without the benefit of the legal process.  While there are obviously many problem tenants, all tenants in New York State are protected by laws relating to evictions.  Any eviction must start by serving the tenants with the initial notices (known as predicate notices) which advise the tenants that an eviction action may be brought in the future, either because the lease has expired, or because the tenant has failed to pay rent due.

montauk-300x182A recent news story in the New York Post raises important issues regarding the effects of the coronavirus pandemic on evictions in New York State.  According to the report, an “Intragram influencer” named Marisa Hochberg owes at least $14,000.00 in past due rent on her summer rental in Montauk, and has refused to vacate the premises, even though her lease expired several months ago.

In ordinary times, an eviction action would be brought by the attorneys for the homeowners in the local landlord-tenant Court, seeking to evict the tenant.  In the Hochberg case, the tenant could be the subject of either a holdover action, or a non-payment action.  First, as her lease expired by its terms, this makes her a month-to-month tenant subject to termination on proper notice (holdover action).  Second, as she has failed to pay rent due, this also allows the possibility of a non-payment proceeding being brought against her.

However, as our readers are aware, these are not ordinary times.  Not all landlord-tenant courts, which are local in nature, are scheduling and hearing cases on a regular basis, due to COVID concerns.  Before attempting to file a case in a local landlord-tenant Court, experienced counsel should contact the Court directly to ensure that they are accepting and scheduling new cases.

deliSuccessful contemporary art dealer Andre Zarre passed away and left his massive multi-million dollar estate solely to a deli worker, who was also nominated as Executor to the estate.  Does this situation strike our readers  as a legal result that can be contested?  The answer is yes, for the reasons discussed in this post.

Although Zarre was a successful art dealer, his entrepreneurial spirit led to his eventual ownership of a Queens deli.  The deli worker Jose Yeje was either in charge of the deli or a co-owner, depending upon the version of events that one wants to believe.  Zarre’s health deteriorated to the extent that he eventually became legally blind, had significant mobility issues, and advanced heart disease.  At the same time, the relationship between Zarre and Yeje progressed to the point that Yeje became Zarre’s trusted caretaker.  Then, Zarre signed the subject Will, shortly before his death.

When an estate is administered , the executor of a will needs to obtain waivers from those who could inherit under New York’s intestacy statute .  Otherwise, such persons maintain their legal right to challenge the will being sought to be admitted to probate.  Yeje’s legal counsel approached Zarre’s cousin to obtain such a waiver.  The cousin was shocked because Zarre had previously promised to leave his estate to the cousin and potentially other relatives.  It will remain to be seen how the Surrogate’s Court  will evaluate the validity of this promise.  When a waiver is not delivered, the proponent of the will then needs to serve the person requested to waive with a citation to attend a Court appearance  for the purpose of raising legal issues why the will should not be admitted to probate.

divide-300x225Our firm often handles partition matters where two or more people co-own a property.  Under New York law, no one is forced to co-own property if they do not want to.  As a result, a partition action may be brought to have the property sold by the Court and the proceeds fairly divided between the co-owners.

Most, if not all, of partition actions are settled without actually having a Court-ordered sale of the property.  Usually the parties reach an agreement to either sell the property to a third party or arrange to have one of the parties buy the other’s interest in the property.

However, the question usually arises regarding what may be a fair division of the proceeds in the resolution of a partition case.  This post will explore the various factors which may arise in such a situation.

auction-300x206Some of our prior blog posts have dealt with foreclosure actions concerning real property.  A recent New York Supreme Court case, however, deals with a different type of foreclosure, and the effects of the COVID-19 pandemic on the same.

Most foreclosure cases in New York State are of the judicial type, and deal with the foreclosure of real property.  In a judicial foreclosure, the owner of real property gives a mortgage and note to a lender, in exchange for a loan.  The real property is collateral for the loan.  If the borrower fails to repay the loan, or otherwise defaults on the loan by failing to follow the loan terms, the lender may file a foreclosure action in the appropriate New York State Court, which would be the Supreme Court in the county in which the property is located.

New York State currently has a moratorium, due to the effects of the coronavirus, on judicial foreclosures.  Under this Administrative Order, “no auction or sale of property in any residential or commercial matter shall be scheduled to occur prior to October 15, 2020.”  However, not every foreclosure case in New York is a judicial foreclosure, requiring a Court proceeding.  Non-judicial foreclosures occur most commonly in coop matters.  An owner of a cooperative apartment does not own real property, but, rather, shares in the cooperative corporation, which, in turn, owns the real property on which the building is located.  As a result, if the shareholder defaults on a share loan, the lender may foreclosure on the shares without Court intervention.  The lender can issue notices under the Uniform Commercial Code (UCC), which is integrated into New York law, and have an auction sale under the UCC rules, without going to Court.

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We  note that recent news concerning New York’s commercial real estate landscape has been rapid and stunning.  Iconic businesses such as Sears, JC Penney, Modell’s and Brooks Brothers have filed for bankruptcy protection or closed retail stores, office spaces remain underutilized and the restaurant business is experiencing significant challenges.  Tenants that remain are rethinking their need for expensive commercial space.  Landlords are considering converting properties to new uses in order to fully lease available space.  This post will examine some of the current trends in commercial leasing and provide suggestions as to how such challenges may be overcome.

Century 21, the iconic downtown Manhattan retail fixture, announced that it is closing all of its stores.  As we reflect on the 9/11 terrorist attacks today, we also recall that Century 21 was committed to operating near the World Trade Center, rebuilt and reopened.  Unfortunately, the effects of Coronavirus on its business could not be overcome due to the tenant’s inability to collect on its claim for business interruption insurance.  Such insurance may be required by a landlord in a commercial lease.  It provides that if a tenant’s business is interrupted, that lost revenues and the like will be paid and will cover the rent that the tenant could not pay due to lost revenues.  Business interruption insurance covers lost revenues due to physical damage from terrorist attack or casualty, but often contains exclusions for matters such as a pandemic.  Even though common sense dictates that coronavirus has interrupted business to the extent that insurers should cover the claims, many tenants have been unable to collect on such insurance and use those funds to become current on their rent obligations.  Without revenues, tenants have been otherwise unable to pay their rent and have decided to vacate space.

In the office market, Covid 19 has frightened corporate leaders and employees, leading to many expecting to work from home for months to come.  This is leading to high office vacancy rates and new leases (if any) for shorter terms.  Subleases may become more prevalent so that tenants do not have to commit to long-term financial obligations.

supcourt-300x141As we are all aware, the effects of the COVID-19 virus on commercial leases will be quite substantial.  Many businesses have been forced to limit their hours, or have been forbidden to open at all during this time.  Of course, a business whose income has been limited in this manner will have problems meeting its rent obligations under its lease.

When this occurs, there may be potential liability for the guarantors of such leases.  Under many commercial leases, the principals of the business may be required to personally guarantee payment of the business’ rent obligations.  This means that if the corporate leaseholder fails to pay the rent, the guarantors may be sued personally to remit the sums due under the lease.

There are different types of guarantees under commercial leases, as has been explained in a prior blog postExperienced counsel should carefully review the lease to determine its exact terms and the potential obligations of the guarantors.

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