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

Articles Posted in Landlord and Tenant

talleyhouse-300x169A recent news story in the New York Post discusses a real property dispute between Andre Leon Talley, a former Vogue editor, and his (former) friend, George Malkemus III, who also worked in the fashion industry.  Mr. Malkemus is a former shoe executive who expanded Manolo Blahnik in the United States.

The dispute concerns ownership of a mansion located in White Plains, the same City in which our firm’s offices are located.  This post will discuss some of the legal issues involved in the property dispute.

The dispute started when Mr. Malkemus filed a Notice of Petition in Greenburgh Town Court late last year to evict Mr. Talley from the premises.  The Petition was filed after the necessary predicate notices were given to Mr. Talley.  The Petition also demanded back rent from Mr. Talley in an amount over $500,000.00, which is an unusually large amount to be demanded in a residential eviction action.

eviction-moratorium-2-600x270-1-300x135As readers of this blog may be aware, there is currently a moratorium on eviction cases in New York State.  This means that, with certain exceptions, new eviction cases cases cannot be filed with the appropriate Court, and cases which have already been commenced have been “stayed.”  Legally, a case which has been stayed cannot progress towards a resolution, such as a Judgment and Warrant of Eviction, while the stay remains in effect.  In addition, if a Court has already issued a Warrant of Eviction prior to the stay being in effect, the Marshal or Sheriff will generally not proceed with the actual removal of the tenant, unless certain exceptions apply.

Currently, there are two eviction stays in effect, one from New York State, and the other from the federal government.  These stays will be discussed further in this article.

The eviction stay in New York State is currently in effect until May 1, 2021.  However, there are several legal challenges to this stay.  The first involves the current scandal involving the Governor relating to the concealment of the exact figure of New York State nursing home deaths due to COVID-19.  As a result of this, and other controversies involving the Governor, there have been discussions of removing his emergency powers, which were granted to him due to the pandemic.  The executive orders staying New York State evictions were issued by Mr. Cuomo under these emergency powers.  If he his stripped of these powers, he will not have the necessary authority to extend the New York State moratorium when it expires on May 1.  As a result, evictions and eviction cases may resume at that time, unless the state legislature decides to pass emergency legislation extending the moratorium.

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.

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.

justice-300x200At the start of the coronavirus pandemic, all of the Courts in New York State closed for health and safety reasons.  Recently, as the numbers of those afflicted in New York continue to decrease, some Courts are reopening.  This blog post will discuss the current situation as of the writing of this post, and how this effects certain practice areas covered by our firm.

Foreclosure matters, generally heard in New York State Supreme Court, are still subject to a stay from Governor Cuomo’s executive order.  It is possible that the stay may be lifted next month, but, at this point, no foreclosure cases are proceeding in the Courts.  This stay also applies to the filing of new foreclosure actions.

Other real estate litigation, such as partition actions, are proceeding, generally as usual.  A partition action occurs when a co-owner of real property no longer wishes to co-own the property.  Litigation is commenced by the co-owner, which will allow the property to be sold with the proceeds shared between the owners.  If an owner does not want to sell, they must agree to purchase the interest of the other owner at a fair price.  Courts are accepting new partition actions for filing, and cases are proceeding relatively normally through the Court system.  However, due to health concerns, in-person appearances at courthouses are being limited.  As a result, many appearances are being made by telephone or video-conferencing.  In addition, motions and pleadings can be filed through e-courts, limiting the need for attorneys to physically appear at courthouses.  Whether this situation will change in the future, as conditions to continue to improve in New York, is unknown at this point.

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Rockland County, New York  is an area served by our firm.  Surprisingly, this area has become a hotbed of competition for the hot dog consuming customer.  Perhaps the contestants in the annual 4th of July hot dog eating contest sponsored by Nathan’s  could even practice for the big event in Rockland.

All kidding aside, there is a classic commercial leasing issue that has arisen in this area.  A fast food restaurant known as Dawg House  developed and was enjoying financial success selling its popular hot dogs.  Recent news outlets have reported  that the large national chain Shake Shack  is planning to lease space in the same center where Dawg House is located.  Dawg House engaged skilled counsel  when it negotiated  its lease.  This issue was foreseen and an exclusivity clause was included in the final lease.

In this case, the exclusivity clause provided that the landlord was forbidden from leasing another space in the same center to a tenant whose primary business is the sale of hot dogs and wieners.  Certainly, Shake Shack sells hot dogs.  However, it also sells burgers, chicken sandwiches, french fries, frozen desserts and particular alcoholic beverages, which menu items Dawg House also sells.  These overlapping menu items are not necessarily forbidden by the exclusivity clause, but common sense dictates that the businesses of Dawg House and Shake Shack overlap.  It may be a matter of litigation as to whether the overlapping menu items as opposed to the primary business in selling hot dogs and wieners triggers the exclusivity clause and its ramifications.

openworkWe hope that our readers have been fortunate enough to have stayed healthy during these trying times.  Finally, our home region has commenced the post-Covid re-opening process.  We are currently in Phase II.  Our attorneys hope that all business activities will return to “normal” as soon as possible, just as baseball fans want to hear the “crack of the bat” as their favorite player hits a home run.  Since it is time for us to catch up on routine medical care, it is also prudent to consider returning to meeting your legal needs.  This post will address the specific areas that can be covered by our lawyers at this time.

New real estate transactions have diminished in recent months.  This author anticipates a delayed Spring market, meaning that contracts that may have been signed in March and April will likely be signed in the upcoming weeks instead.  Covid shutdown regulations forbid in-person showings by real estate agents.  Property owners were scared to allow potential buyers into their homes for viewings.  Phase II allows real estate agents to show properties in person, rather than merely virtually.  Sellers have become aware that buyers concerned with diminished quality of city life may now crave serene suburban living.  It is potentially an optimal time to sell one’s house.

Restrictions on retail establishments have started to loosen, allowing for curbside pickup and potential additional shopping options.  Restaurants are permitted to serve with outside seating.  While these sound like positive developments, the income stream to the commercial tenant with such restrictions is severely limited.  As such, it may be time to request that your attorney  review your commercial lease and seek a modification.  Tenants are otherwise expected to pay full rent, without being able to fully occupy the space and generate the same amount of income per square foot.

baseballmoney-300x133A recent news story in New York relates to New York Mets right-hander Noah Syndergaard and his lease for a New York City apartment.  It appears that the pitcher, nicknamed “Thor”, signed a lease for a penthouse in the Tribeca area of downtown New York City for ten months, starting in March of this year.  His rent was $22,500 a month and the  $17,000 broker’s commission was to be paid by the tenant.  The lease was signed in February, before the coronavirus pandemic shut New York City down a month later.  In addition, the hurler then discovered in early March that he would need the dreaded “Tommy John” surgery to replace a ligament in his elbow, and would miss the entire baseball season, which, at that point, was scheduled to begin in late March.

We therefore have a situation where the tenant’s circumstances changed a great deal after he signed the lease.  The pandemic shut down much of New York City.  Then, because of injury, he probably no longer needed an apartment in New York City, because he will most likely rehabilitate his injury at the Mets training facilities in Florida, and will not need to live in New York City during the upcoming season (which, due to the pandemic, has not even started, and may not happen at all).  On top of it all, Major League Baseball has recently proposed a plan to re-start the season with players being forced to accept major cuts in salary, which would limit Snydergaard’s ability to pay the agreed-upon rent.

There are several legal issues raised in this situation.  One issue concerns using the media to attempt to obtain publicity for one’s legal conflicts, as the parties have done in the Syndergaard case.  Our firm disagrees with litigating through the media, as we believe it is best for the parties to attempt to work out disputes privately, through counsel, rather than by using media outlets to espouse their positions.  If negotiations are unsuccessful, then the Court system remains the best avenue for resolving such disputes.

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Commercial leases in New York are not immune to the effects of COVID.  Enforced shutdowns of “non-essential” businesses by governmental authority has led to mass closure of many retail stores and restaurants and record-high unemployment rates.  Even restaurants limited to the restriction of takeout and delivery service are suffering severely reduced revenue.  The current business climate has inherently altered the lease obligations that a tenant can maintain.  This post will address how the parties to a lease should be addressing the changes to New York’s commercial lease landscape.

It is not unusual for commercial leases to contain a requirement by the tenant to maintain business interruption insurance.  Tenants with such coverage should file a claim with their insurer.  Many insurers may initially deny the claim on the basis that pandemics are not included in their coverage.  This tactic is likely to be subject to future litigation.  Ultimately, the insurers may be required to cover such losses.

A tenant should have an experienced attorney review the particular lease that has been signed to determine whether a force majeure clause may excuse the tenant from its rent obligations.  This clause excuses a tenant from obligations for circumstances beyond its control such as terrorist attack, war, famine, strikes, catastrophic weather conditions and acts of God.  A particular lease needs to be evaluated to determine whether a pandemic is considered to be a force majeureForce majeure may also provide the tenant with a defense if conditions prevented it from obtaining a building permit, completing a build-out according to an established schedule, opening for business by a particular date and the like.

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