Articles Posted in Cooperative and Condominium

bankruptcy-300x200Prior blog posts have discussed the effect of filing for bankruptcy on properties which may be in foreclosure.  This post will explain what may happen to the property after a bankruptcy filing; namely, can the property still be sold to a third party, and under what circumstances.

Once a party to a foreclosure action files for federal bankruptcy protection, the Bankruptcy Court issues a stay on all pending legal proceedings.  A stay means that all pending legal proceedings must cease, and no new proceedings can be commenced.  This often occurs when the property in question is on the verge of being sold in a foreclosure auction.  Once a creditor has obtained a foreclosure judgment, and complies with all preliminary requirements (such as public advertising) for a public sale, in general, the only way to stop such a sale is for the debtor to file for bankruptcy.

The bankruptcy filing can even happen on the day before the scheduled auction sale.  Once the filing is made, notice is given to all creditors, who must cease all litigation and post-judgment proceedings, including a scheduled foreclosure auction.  If the creditor wants to proceed with the sale, it must file a motion with the Bankruptcy Court to lift the automatic stay of all proceedings.  This may take several months.  In addition, they are only permitted to proceed against the property in question, and not against the individual filing for bankruptcy.

fatherOur firm wants to extend its best wishes to all Dads for a happy Father’s Day.  We would like to mention some gift ideas of a legal nature that cannot be purchased in an ordinary department store.

Your Father may be on the verge of retirement.  As such, he may be in the market for a qualified attorney  who will negotiate and document the terms of his business sale.  Such a sale may involve preparation of a contract of sale, coordination of the payoff of a business or equipment loan, closing document drafting and the like.  Once the transaction is complete, your Dad can enjoy a care-free retirement.

If your Father is not ready to retire, he may have an ongoing business in the process of relocation.  Our attorneys would welcome the opportunity to negotiate the commercial lease for the new space. We would negotiate its terms in a manner most favorable to dear old Dad.

roof-300x237Now that the weather has finally improved in the New York metropolitan area ny-300x154  and Memorial Day weekend is fast approaching, many of our readers  may want to consider whether their cooperative building  provides access to their rooftop.  Carole King and Gerry Goffin , and later James Taylor , have sung these words while imagining their roof decks: “I climb way up to the top of the stairs and all my cares just drift right into space.”  Our readers must wonder is such a “…paradise…trouble proof?” This post will examine the legal issues to consider when converting an ordinary roof of a cooperative building into a recreational roof deck.

First, we will examine this situation assuming that the roof deck amenity is to be shared by all residents of the cooperative.  A qualified attorney  should review the cooperative’s governing documents to determine whether the Board of Directors or all shareholders are required to approve this project.  If a building-wide assessment needs to be implemented to fund the project, the governing documents may also advise your attorney  whether a Board resolution or a vote of the shareholders at an annual or special shareholders meeting  is required to authorize the assessment.

Next, let’s consider another situation, where the roof deck amenity is to be used exclusively by only one shareholder, usually the resident on the top floor.  The shareholder has agreed to buy this common area space, thus enhancing the cooperative’s coffers.  Prior to the project, the roof is common space owned by the cooperative.  For any particular shareholder to purchase this space, shares of stock need to be allocated to the space.  Unissued stock is called treasury stock.  Hopefully, the cooperative at issue has not already issued all of its stock.  A specialized real estate broker needs to determine that the number of shares to be issued to this area bear a reasonable relationship to the proportion of shares already issued for apartments in the building.  For instance, the broker will consider that 100 shares are issued for apartment 5A with 1,000 square feet and likewise for other apartments.  From that data, the broker will determine how many shares should be issued for the roof deck and the resulting purchase price.  Also, the cooperative attorney  will need to obtain a “no-action letter’ from the Attorney General of the State of New York  authorizing that a certain number of shares be issued for the space and that the cooperative is legally authorized to sell it to the shareholder.

springmarketkNow that we’re entering the Spring real estate market , we should anticipate that our real estate clientele will be entering into new real estate contracts for their real estate purchases.  Certain clauses of such contracts should be negotiated in a particular manner, depending upon whether your attorney  is representing a buyer or a seller.

A seller may have decided to forego the services of a professional real estate agent  or the property may have been on the market for an extended period of time.  In these situations, the seller may be more amenable to certain requests of the buyer, such as making certain repairs before closing.  The seller may not know that some of the requests are not customary or may need to move the property, which may result in more flexibility on such matters.

Your attorneys  should pay particular attention to personal property issues , whether representing a buyer or a seller.  The seller will be disappointed to find that a treasured chandelier was not excluded from the personal property to be sold with the house.  A buyer may not approve of the removal of wall scones, without repairs being made to the wall after removal.

transitionOne of the hallmarks of our country’s democracy is the peaceful transfer of power that will occur tomorrow.  Americans recently endured a polarizing election process.  Republicans will now hold the office of the Presidency instead of the Democrats.  Nonetheless, the forty-fifth President of the United Statestrump is expected to take the oath of office by peaceful transition.  This administrative transition occurs no more than every four years on the national level.  However, in the New York metropolitan area, such an administrative change happens much more often.  This author is reminded of the transitions that occur when a new board is elected to run a cooperative or condominium building.

Contested elections for cooperative or condominium boards  can become just as divisive as our country’s elections.  Perhaps unit owners feel that the existing board is out of touch with the current needs of the building.  Shareholders may disagree as to the prudence of agreeing to sell the building’s air rights or as to the extravagance of a lobby renovation.  Boards can also turn over when long-term board members sell and are replaced by much younger board members who may not follow the way in which matters have been handled in the building.

The harmonious tenor of the building may start to unravel once unit owners start to share their concerns about the board online and find that other unit owners agree with them.  Then, a successful takeover of the board may result.  Even though a new board may be in place, certain steps should be undertaken to ensure a peaceful transition.

stopOur firm is occasionally consulted by a party against whom a judgment of foreclosure has been entered.  Prior blog posts have discussed the foreclosure process in detail.  Among the last actions to be taken in a foreclosure case are the issuance of a judgment of foreclosure and the actual foreclosure sale.  This post will discuss the few options available to a foreclosure defendant at this point.

The issuance of a judgment in foreclosure by the Supreme Court of the County in which the property is located usually occurs at two points in the foreclosure litigation.  The first point would be if the defendant fails to answer the initial foreclosure Summons and Complaint, and the lending institution is granted a judgment by default.  If the default was inadvertent, and the defendant has a reasonable excuse for not answering, as well as a meritorious defense, it is possible for the defendant’s attorneys to file a motion to vacate the default judgment.

Another point in the litigation allowing for a foreclosure judgment would be when the plaintiff moves for summary judgment and the motion is granted by the Court.  Once a final judgment is submitted to the Court and signed by the Judge, the foreclosure process is in its final stages.  The plaintiff must advertise a public foreclosure sale in a local newspaper for four weeks prior to the sale, and then conduct the sale, usually at the Supreme Court Courthouse in the county in which the property is located.

trumpAs a result of the recent election of Donald J. Trump to the Presidency, the area around Trump Tower in New York City has been subject to greatly increased security, including closures of streets, as well as guards and other restrictions on pedestrian access to the shopping areas around Trump Tower.  Of course, this additional security has had a detrimental effect on businesses located in and around Trump Tower.

What legal recourse do these businesses have regarding their leases?  This post will discuss the legal issues related to businesses and their leases in situations when access to their properties may be limited.

New York Courts have interpreted commercial leases to incorporate a warranty of habitability for the premises.  The warranty of habitability means that the landlord warrants that the property is fit to be used for its intended purpose.  For example, if the ceiling collapses at a store, causing the store to be closed, then the landlord is generally responsible for making the necessary repairs.  Should access to a portion of the store be limited by damage caused by a fire, or other such event, the tenant may be entitled to a partial rent abatement until full access is restored.

duediligenceYou have found the perfect house, cooperative or condominium apartment after a long search.  It has the ideal updated kitchenkitchen to show off your culinary skills and a beautiful bathroom that rivals a spa-like retreat.  Is there anything that should delay the signing of the contract and procession to closing?  Yes, there is.  A prudent purchaser needs to conduct the appropriate due diligence to make sure that the property and surrounding neighborhood is financially and physically sound.  Otherwise, the purchaser may acquire a property that is a long-term headache and difficult to sell when desired.

First, an inspection should be conducted by a professional engineer when buying a house.  Some condominium and cooperative purchasers also find it appropriate to conduct an inspection. For a house, such an inspection may reveal a serious condition, such as a crack in the foundation.  In this case, the buyer may want to search for another property.  An inspection may also show items that the buyer will want to monitor once she is a homeowner.  For instance, if the inspection predicts that the remaining useful life of the roof or the hot water heater is going to be five years, the homeowner may want to budget for such replacement and should not be surprised if these elements need replacement at such time.  The inspection may also list items that your attorney may wish to request for inclusion while negotiating your contract.  The seller may agree to repair the dishwasher, replace a broken smoke detector and the like prior to closing.

Inspections when purchasing a foreclosed property  serve another purpose.  Although properties offered for sale after foreclosure are generally strictly “as is”, inspection results that are unsatisfactory to the buyer may allow the buyer to cancel the contract or present the opportunity to ask the seller to remedy a particular condition or offer a price reduction.  In any case, the buyer will have knowledge as to the condition and the expectations going forward.

airbnbNew York Governor Andrew Cuomo recently signed a bill into law that would impose fines on Airbnb hosts who do not follow local housing laws.  For our blog readers who may not be familiar with Airbnb, it is a web-based service that allows property owners and tenants to rent out their properties for a short period of time, often to tourists visiting their home city.

For example, a person with an apartment or home in an area where tourists may visit can list their property on Airbnb, giving a proposed rental price as well as the dates on which the property is available for short-term rental.  Anyone responding to the listing may “rent” the property for a short period of time, sometimes just for a few days or less than a week.

Prior blog posts have discussed the legal issues associated with these short-term rentals.  These issues generally arise more often in large cities, many of which have strict laws regarding short-term property rentals.  For example, many co-ops and condominiums have strict rules regarding sublets, which is what the Airbnb listings constitute.  Their governing documents, such as the proprietary lease, house rules, and condominium by-laws, usually restrict the owners from renting their properties for a short term, usually less than a month.  In addition, board approval is often required for any sublets in many buildings.  The reason for these rules is that most buildings prefer that their units be occupied by their owners, and not by sublessees.  An exception to these rules may be where the owner is actually present during the proposed occupancy.  It is important to review the rules regarding sublets for any building in which an individual may be considering purchasing a unit, as they will likely prohibit an Airbnb-type short-term rental.

interviewAfter a long search, you have finally located your dream apartment.  In New York, such an apartment is likely to be a cooperative apartment.  You have been fortunate enough to obtain your loan commitment.  Are you ready to close?  No, because you now need approval for your purchase from the board of the cooperative.  Such a condition is contained in the form contract for cooperative purchases.  This post will discuss what is entailed in obtaining cooperative board approval.

The contract will specify a timeframe for the submission of your board application package.  Your attorney should monitor this deadline, along with other deadlines to confirm that you have made the submission within the proper timeframe.  It is preferable to work with a professional real estate agent who is familiar with the building or its managing agent, so that the board package is prepared in a manner pleasing to the board.  Typical items for submission include financial records such as bank statements, and personal and professional letters of reference, along with the completed board application and credit check authorization.  Each building specifies the number of copies required to be submitted.  Most buildings will require that the application not be submitted unless it is also accompanied by a loan commitment letter from your lender.

The managing agent will review the application with the building’s interview committee (usually a smaller portion of the board).  If such application on its face is not acceptable to the board (usually for financial reasons), they will decline to interview the candidate.  This is a wise move, so that the board is not accused of discrimination in the event that the applicant happens to be a member of a protected class, which is not discoverable unless the applicant is met face-to-face.  Otherwise, the board will schedule the interview.  Potentially during the summer months or holiday season, meetings may occur more sporatically.