Articles Posted in Landlord and Tenant

Time-to-GoPrior blog posts have discussed eviction actions after foreclosures in New York State.  Recently, due to the increased number of cases going to a final judgment of foreclosure and sale, and then being sold, there is an increased amount of tenants in foreclosed properties.  This post will discuss the legal status of these tenants and the possibility of eviction.

A fast summary of the legal foreclosure proceedings is in order at this point.  Once a Court issues a final judgment of foreclosure and sale, the property in question is then sold at public auction.  The highest bidder then pays the amount bid to the court-appointed Referee, and receives a Referee’s Deed, which is evidence of their ownership of the property.  The former owner’s interest is extinguished, together with the interest of any of the former owner’s judgment creditors.

Of course, the former owner may never vacate the premises.  Once their ownership interest is extinguished, they are subject to eviction by the new owner (the successful bidder at the foreclosure auction).  This may be the original lending institution, or an individual or corporate third party who purchases the property as an investment.  If the former owner is still occupying the premises, they are considered a holdover tenant.  Under the law, they must receive proper notice prior to an eviction proceeding being brought.  If they do not vacate within a particular period of time, the new owner can then commence a holdover eviction proceeding in the appropriate local court having jurisdiction over landlord-tenant matters.  For example, if the property was located in White Plains, then a holdover proceeding would be brought in White Plains City Court.

guarantyMany landlords of commercial property  require that the obligations of the tenant be guaranteed by an individual or affiliated entity.  Most tenants of commercial leases are an entity, such as a corporation or limited liability company, whose only asset is the business engaged in the leased premises.  If the entity tenant cannot perform its lease obligations or leaves before the end of the lease, the landlord has no remedy besides renting the premises to a new tenant.  For this reason, most landlords require that an individual or entity closely affiliated with the tenant guaranty the tenant’s requirements.  That way, other assets of the guarantor may be available to the landlord if the tenant defaults under the lease.  This post will examine the various types of guaranties that may be requested by a landlord.

A full guaranty is the most broad, wherein the guarantor covers all of the tenant’s obligations under the lease.  Such obligations would include paying rent, real estate tax escalations, utility payments, common area maintenance payments, maintaining proper insurance, repair obligations and the like.  Landlords prefer this type of guaranty because there is no limit on the amount or extent of the obligation covered.  Also, the landlord does not need to meet any condition before enforcing the guaranty against the guarantor.

A partial guaranty is more limited.  Perhaps the obligations covered are only those that are monetary in nature or up to a certain amount.  Other limited guaranties may cover lease obligations such as keeping up with maintenance and repair obligations.  Partial guaranties could also “burn down” or “sunset” over time.  For instance, after a certain period of perfect performance by the tenant, the amount guaranteed reduces or the partial guaranty terminates entirely.  In partial guaranties, the landlord may need to meet certain conditions before it is enforced against the guarantor.

18If you are like this author , someone close to you may be about to turn eighteen years of age.  This post will discuss the legal ramifications of turning eighteen.  Additional rights and privileges as well as legal responsibilities occur once a “child” becomes eighteen.  Such a person can now vote, run for office, legally support oneself, and be employed full-time.  An eighteen year old male will be penalized if he does not register for the military draft.  All eighteen year olds are treated as adults if they commit a crime.  Since we  practice particular areas of law, this author will address the implications of turning eighteen as they apply to those areas of law.  Also, rights and obligations vary by state, so this post will only address these matters as they relate to New York.

Eighteen year olds have the right to enter a contract and to apply for credit.  Therefore, our soon-to-be eighteen year old can apply for a mortgage and sign a contract to buy a house.  Contracts involving real estate, whether for sale or for a lease of more than one year must be in writing.

Once a person is eighteen, he can make a Will and other estate documents.  While we do not want to consider that someone so young may pass away, without a Will, his assets will be distributed according to New York’s intestacy law.  Also, an eighteen year old can inherit from someone who named him in a Will or in an Administration proceeding if he is of the proper degree of relation according to the New York statute.  Since many eighteen year olds may not be sophisticated enough to inherit substantial assets, those drafting Wills may decide to leave such assets to the child in trust until such age as they anticipate that the child will be mature enough to manage the assets.

hand-300x169Prior blog posts have discussed foreclosure proceedings, from the commencement of a foreclosure case to the entry of a Judgment of Sale and the public auction of the property.  Many clients then ask, what happens next?  Is it possible for the owner who has been foreclosed already to recover the property after it has been sold at a foreclosure sale?  The answer to this question is a definite yes.

A public auction of foreclosed property will generally have two outcomes.  In the first, the bank or other lending institution which brought the foreclosure case will acquire title to the property.  This usually happens when either no one bids for the property, or when no bid exceeds the amount owned to the lender under the judgment of foreclosure.  The other outcome is when a third party bids over the amount of the judgment, then obtains title, while paying the lender the full amount of its judgment (or a smaller amount negotiated with the lender).

In such cases, the original owner of the property may retain legal possession of the property.  Although he may no longer be the legal owner, he maintains a right of possession, until an eviction action is brought against him.  Sometimes, the owner’s financial circumstances may have improved and he may be in a position to repurchase the property from the successful bidder.  The successful bidder may consider this a positive outcome as he would not have to bring an eviction case to obtain legal possession, and the occupant will pay him more than he paid to acquire the property, ensuring a profit.

gorsuch-300x169Hearings have recently been held to confirm Judge Neil Gorsuch as a Supreme Court Justice.  While the hearings certainly involve a great deal of politics, they also raise the question of the proper role of a Judge in our legal system, whether that person is a Judge in a local Court, such as Westchester’s Village Courts and Justice Courts, in which Landlord-Tenant cases are heard, all the way up to the United States Supreme Court.

In general, a Judge’s role in our legal system is to interpret the laws passed by our legislators.  This role should be the same in any level in which the Judge may serve.  Let’s go through an example that has come up in our firm’s landlord-tenant practice.  A law was passed by the New York State Legislature requiring that the Referee’s Deed be exhibited to any tenant that the owner is attempting to evict after foreclosure.

As with many laws, this statute does not specifically define what “exhibiting” a deed to a tenant actually means.  Is it acceptable to simply mail or e-mail the deed to the person, or is more required?  Does a licensed process server need to come to the person’s place of residence and show them the deed in question, as if they were serving legal process? What if the person is not home, or refuses to answer the door when a process server comes knocking?

stripcenterOur firm is routinely involved in commercial lease negotiations.  This post will address the “give and take” that takes place in such negotiations, while discussing the legal issues that commonly arise.  For convenience sake, let’s assume that our attorney is negotiating on behalf of a retail store tenant engaged in a food business in a suburban strip center.

Commercial leases typically span several decades and are not rent-regulated.  Both landlord and tenant cannot envision business conditions or pricing over such a timeframe.  Most leases will run for an initial term, potentially for ten years.  The parties may wish to include a renewal provision, potentially for another five years.  Is such a renewal term to be a requirement for the landlord to offer or an option to renew on behalf of the landlord or tenant?  If the option to renew is for the tenant, one may find provisions as to the timeframe in which to exercise the option, so that the landlord can make the space available to another tenant without a vacant period of time.

The determination of rent to be charged during the renewal period is tricky.  The parties could state in the current lease that the renewal period rent will be a certain percentage above that charged in the last year of the lease.  This provides certainty but may be too high or too low for market conditions at the time of renewal.  The other option is for the renewal rent to be determined by an appraiser to be mutually selected by the landlord and tenant.  The inherent problems in this formula are that there may be a disagreement on the selection of the appraiser and the rent to be charged would be uncertain.

210deathThe timing of death is never particularly welcome.  Some families are prepared, in that the deceased was elderly, maybe ill, and living in a nursing home.  Perhaps such a person also had the foresight to have their attorney prepare her Will and other estate documents.   Others may pass away at a relatively young age, in the prime of life, with ongoing financial and personal activities.  This post will examine the legal ramifications of passing away while a legal matter is pending.

Imagine that the deceased was a party to a contract concerning the sale of a house which has not yet closed.  The first step that the survivors would need to undertake is to review the contract and determine if it addresses the potential death of one of the parties before the closing.  In most cases, the seller is bound to the terms of the contract through her successors.  This means that the survivors cannot decide to nullify the contract and move into the house.  However, the seller is not available to conclude the transaction.  The attorney for the seller  would need to apply to the Surrogate’s Court  to apply for Letters Testamentary or Letters of Administration , which appoints the appropriate fiduciary to act for the Estate in order to complete the closing.  Should circumstances warrant, it may be prudent to apply for Preliminary Letters Testamentary or Preliminary Letters of Administration, to permit the sale to conclude if it is jeopardized by a continued delay.

If the deceased was the potential purchaser of the house, the contract is likely to allow the purchaser’s survivors to cancel the contract.  This is a logical result, as the transaction is inherently dependent upon the purchaser maintaining a job in order to pay the mortgage and other carrying costs of the house.  Forcing this transaction to conclusion is a cruel result.  In most cases, the downpayment is refundable.  However, some contracts only provide that half or none of the downpayment would be refunded.  It is advisable to have your attorney negotiate a favorable disposition for the downpayment in this instance when representing a purchaser, even if he is a young person.

supreme-300x200
Recently, President Donald Trump nominated federal judge Neil Gorsuch to the Supreme Court of the United States.  While the U.S. Supreme Court is the highest court in the country, New York’s Supreme Court is not even the top court in New York State.

In New York, the Supreme Court is the name given to the trial court for most cases filed within the state.  Any case with an amount in controversy exceeding $25,000.00 may be filed in the Supreme Court.  Cases involving lower amounts may be heard in local courts, such as Justice Courts or City Courts.  In addition, if a case involves possession of real property, it should be filed in landlord-tenant court, which is usually part of a local court such as District Court, Town and Village Courts, Justice Court, or City Court, depending on where the property in question is located.

Appeals from the Supreme Court are heard in the Appellate Division.  Should a litigant want to appeal to the highest court in the state, which is known as the New York Court of Appeals, located in the state capital, Albany.  Any case heard by the New York Court of Appeals which involves U.S. constitutional principles may eventually be appealed to the United States Supreme Court and be heard by Judge Gorsuch (if he is confirmed by the United States Senate), as well as the other eight current Supreme Court Justices.

rescue-300x235Our firm often represents borrowers whose homes may be the subject of a foreclosure action.  While we attempt to resolve all such cases with the lending institutions, sometimes a foreclosure judgment and sale cannot be avoided, or has already occurred by the time the borrower seeks legal counsel.  In such situations, the borrower needs to be on alert for possible “scams,” or individuals seeking to take advantage of a person in distress.

Because foreclosure lawsuits and judgments are a matter of public record, it is easy for unscrupulous individuals or entities to obtain the name and address of the person whose home has been foreclosed and sold at auction.  Because most auctions result in the property being sold back to the original lending institution, some people will claim that they have purchased the property from the lender.  If the borrower is still living at the property, they will contact the borrower directly or leave a note at the property, requesting that the borrower contact them directly.

We would recommend that if a defendant receives such communications, that they contact their attorney immediately.  Using legal counsel will enable a person to avoid the high pressure tactics that these individuals may exert on the defaulting borrower, so that their desperation to reclaim the property or continue to live in it is not used to her disadvantage.

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.