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Articles Posted in Real Estate Litigation

770-300x200A recent Court decision from the Civil Court of the City of New York (Kings County) involves a dispute regarding possession of real property located in Brooklyn, New York.  More importantly, the building which is the subject of the litigation houses a synagogue which also serves as headquarters for the Lubavitch movement, a  Chasidic (Jewish Orthodox) sect.

The Court decision is quite lengthy (over 100 pages), which is quite unusual for a landlord-tenant matter.  It discusses the history of the dispute, as well as the controlling law.  This blog post will summarize the pertinent issues, and how they may apply to similar situations in New York State.

The Agudas Chasidei Chabad of the United States is a religious corporation which was incorporated in 1940 to establish, maintain, and conduct a place of worship in accordance with the Chasidic ritual and mode of worship of the Jewish Orthodox faith.  In order to do so, they acquired property located at 770 Eastern Parkway in Brooklyn.  The organization later acquired adjacent properties and joined them together to form one building.

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.

partition-300x168A prior blog post discussed inheritance of real property.  For example, a parent passes away and leaves a house in equal shares to her three children.  The three children are now co-owners of the property.  Of course, each co-owner may be in a different life situation.  For example, one of the adult children may have been living with the last parent to pass away, and wishes to remain residing at the property indefinitely.  The other co-owners may have moved from f the property many years ago, and simply want to sell the property and receive their respective one-third of the net proceeds from the sale.  All of the co-owners have certain legal rights, which rights have now been modified by a recent (2019) amendment to existing New York law on partitions and inherited property.

Under the original New York Real Property Actions and Proceedings Law (Article 9), any co-owner of the property who wishes to no longer own the property has an absolute right to petition the Court for a sale of the property.  As long as the party can prove that he is the valid owner of a portion of the property, and that the property could not be physically divided between the co-owners, the Court would order a sale of the property, assuming the parties could not work out a resolution to the situation among themselves, or through their counsel.

Therefore, the only way for the parties to avoid a Court-ordered sale and public auction of the property would be to agree to a buyout by the party who wishes to retain the property exclusively, or for all parties to agree to sell the property to an unrelated person and share the proceeds in the same proportion as their ownership interests, without further Court intervention.  This is what happens in the majority of partition actions handled by our firm.  However, the absolute right to have the property sold led to an abuse of the partition law, resulting in the 2019 amendment.  What was occurring was that third parties would purchase a small stake in an inherited property, and then use their newly-acquired ownership share to force an unwanted sale, or use the threat of same to extort above-market settlements from their fellow co-owners.  For example, an individual inherits a small share (10%) of a property.  They then sell that share to a third party.  That third party now threatens a partition sale, is her right, unless she is “bought out” for an amount much larger than her share would be worth on the open market.  The co-owners are forced to acquiesce so as to avoid losing the property in a Court-ordered sale.

eviction-300x165A prior blog post discussed the effects of the coronavirus situation on real estate in New York.  Since that post, things have certainly escalated quickly.  Most of the economy, not just in New York, but throughout our entire country and the rest of the world, has shut down, as governments have ordered people to stay isolated, observe “social distancing”, and avoid large crowds.  Most people are working from home or are out of work because their place of business has been ordered closed until the crisis passes.

The New York Times recently posted an article which discusses the effect of the current situation on landlords and tenantsOur firm is rare in that it represents both landlords and tenants.  We will discuss the effects from a landlord’s perspective. The New York State government has ordered a three-month moratorium on evictions.  In addition, the local courts which would have handled such eviction cases are also closed until further notice.  This means that all pending eviction matters have been adjourned.  For example, an eviction petition could have been served on a tenant prior to the Court shutdown, but with a return date after the shutdown.  The Courts will have to reschedule these cases when they reopen.  This will inevitably lead to a backlog of cases, especially in the busier New York City Courts.  Westchester town courts, with their smaller caseloads, are likely to be less affected when they reopen but will still experience a backlog.

Since the Courts are closed and there is a New York State moratorium, no new cases can be started.  An eviction Petition is generally commenced by filing it with the Court clerk in the local Court in which the property is located.  The clerk will assign a Court date and stamp the Notice of Petition and Petition as filed.  It will then be formally served on the tenant by a licensed process server.  Because the Courts are currently closed, it is not possible for a new action to be commenced.  Without court clerks and regularly scheduled hearings, no new eviction cases can be brought until the Courts reopen.  Of course, once the Courts do reopen, expect a large number of new cases to be filed because of the growing backlog and situations that have arisen due to a tenant’s inability to pay.

foreA recent decision in a case in upstate New York discusses issues relating to the denial of an application for a foreclosure judgment.  In a foreclosure case, the plaintiff, who is usually a bank or other lending institution, must apply to the Court for a judgment.  Often, after the case has first been referred to the settlement conference part, and then, in Westchester County, assigned to the Mandatory Appearance Part, the plaintiff will move for summary judgment.

In a summary judgment action, the moving party argues to the Court that there are no issues of fact which would require a trial.  This may occur in several situations.  The first is when the defendant fails to file an Answer to the foreclosure Complaint.  If the defendant’s time to answer has expired, then the plaintiff may move for a judgment of foreclosure and sale on default.  However, the plaintiff must show to the Court that it has met the elements of proof to obtain a foreclosure judgment.

The first element is to show to the Court that they are the proper party and the holder of the mortgage and note in question.  This is usually done by having an officer of the lender submit an Affidavit in Support of the motion showing that the mortgage is being held by the plaintiff.  In support of the Affidavit, complete copies of the Mortgage and Note should be annexed as exhibits.  In addition, if the loan has been assigned to a different lender than the one listed on the Mortgage and Note, complete copies of the assignment documents should also be annexed as exhibits.

court-300x128New York State has passed several laws that protect homeowners who may be subject to a foreclosure action.  One of these laws requires that a settlement conference be held for a homeowner when his primary residence is in foreclosure, due to his failure to pay their mortgage, taxes, or other amounts due to the lender.

Prior blog posts have discussed what may occur at a foreclosure settlement conference.  We recommend engaging experienced counsel to appear at the foreclosure settlement conference.  At this conference, attempts will be made, with the Court’s assistance, to resolve this matter, often through a modification of the existing mortgage.

However, there may be cases in which the parties are unable to reach a resolution in the settlement part.  There may be several conferences held, but, for various reasons, the parties are unable to reach a resolution.  What happens at that point?  The first step is that the Court will generally release the case from the settlement part.  Under the law, when the case is in the settlement part, all litigation, including motions, are “stayed” by the Court, which means that no litigation can occur in the action until the case is released by the settlement part.  Depending on the overall circumstances of the case, the settlement part may order that the stay on litigation be extended for a period of time after the case is released, generally 30, 45, or 60 days.  This may give the party being foreclosed additional time to negotiate a resolution, or, if there is sufficient equity, to sell the property and use the proceeds to pay off any amounts due, thus ending the foreclosure suit.

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.

church-300x224A recent New York Supreme Court decision relates to the intersection of two major practice areas of our firm, foreclosure and Religious Corporation law.  The case involved a mortgage loan taken out by Grace Christian Church, located in Brooklyn, New York.  According to the Court, the Church mortgaged its property to the plaintiff, John T. Walsh Enterprises, LLC, in exchange for a loan of $350,000.00.  When it failed to make payments under the terms of the note, the plaintiff brought a foreclosure action against the Church property.

This case is an excellent example of the interaction between these two areas of law. The reason for this is that, under New York’s Religious Corporation Law, a religious corporation cannot sell, mortgage, or lease its property for a term exceeding five years without the consent of the New York Attorney General.  Prior blog posts have discussed the legal procedures necessary for a religious institution to obtain such consent.  Recent changes in the law have made it possible to obtain such permission directly from the office of the Attorney General, without the necessity of a Court proceeding. However, if the Attorney General’s Office does not give initial consent, the religious institution then has the option of bringing an action in Supreme Court to obtain such consent.  Such action must be served upon the Attorney General’s Office, and, if the Court subsequently approves the transaction, whether it be a sale, lease, or mortgage, then the religious institution may proceed with its real estate transaction.

In the Grace Christian Church case, although the Church’s Board of Directors approved the loan transaction, they did not seek approval of the New York Attorney General, as the law requires.  In addition, the loan terms were significantly altered at the loan closing, without the consent of the Church’s Board of Directors.  A title search performed by an experienced title company would have shown that the property was owned by a religious corporation, and would have required such consent by both the Board of Directors as well as the Attorney General as a condition of closing the loan.

foreclosure-300x170A recent article in the New York Law Journal discussed the possibility of public foreclosure defense services being in jeopardy due to government funding cuts.  What does this mean for the homeowner whose home may be in danger of being foreclosed?

Homeowners who are having problems paying their existing mortgages may be in danger of having a foreclosure action brought against them.  New York State currently provides public services to assist such parties.  These agencies may provide legal advice on avoiding foreclosure, help with loan modifications and refinancing, and other financial services related to mortgages.  Generally, these services may be provided free of charge by non-profit agencies, such as Legal Services of the Hudson Valley.

However, many of these agencies are overwhelmed by the demand for their services.  As stated in the article, state budget cuts may result in these agencies being unable to provide assistance for all homeowners who may be at risk of foreclosure.  What should these homeowners do in this situation?  We would recommend hiring a private attorney with experience in defending foreclosure lawsuits.  Prior blog posts have shown the various ways in which an experienced attorney can defend a foreclosure case in litigation.  Even delaying a foreclosure action can buy a homeowner valuable time in which to negotiate a loan modification, obtain a refinance commitment, or even sell the property and pay off the mortgage, if there is sufficient equity.

wall-300x118
Our readers who follow the news are aware that the Federal government has been partially shut down for several weeks.  President Trump has taken the position that he will not agree to re-open the government unless a wall is erected along our southern border.  The Democratic leadership has responded that it will absolutely not agree that a wall is to be installed.  It is not the goal of this author to side with either of these positions.  Rather, we find it striking that neither side is negotiating effectively.  By stating an absolute, such as there must or must not be a wall, both sides are preventing a satisfactory resolution; which requires agreeing to terms that inherently will be neither of these positions.  Presenting an “all or nothing approach” is not how matters are successfully concluded.  This post will address one of the tools that experienced attorneys have at their disposal- strong negotiating skills.  We will explore how these skills are utilized in various legal matters.

Negotiation strategies can take the following course in real estate transactions.  We recommend that parties to a proposed deal let their attorneys “do the talking” and thereby prevent themselves from showing emotion or desperation to sign the contract.  Otherwise, such a party is vulnerable to agreeing to issues in the contract that may not be beneficial and result in regret.  For instance, a seller who needs to sell for financial reasons or who may be facing foreclosure, without other viable offers, may agree to excessive demands from the buyer like making repairs, credits for inspection issues, etc.  On the flip side, a buyer “in love” with a particular house that has multiple offers in a strong Spring market may agree to risky decisions such as waiving the mortgage contingency, allowing violations to remain and the like.  The more prudent negotiation move is to allow only a qualified attorney to be aware of these factors, not display feelings and allow the attorney to be the only one to negotiate on a party’s behalf.

Commercial lease negotiations  contain their own strategy.  A tenant may want to be in a particular location and find it necessary to tolerate the unreasonable expectations of a landlord.  For instance, a landlord may wrongfully impose snow removal obligations on the tenant.  The tenant’s attorney can get more leverage in this negotiation if the tenant is willing to walk away and find another location instead.  Such flexibility may help to achieve better results for the client.  Perhaps the landlord has an opportunity to rent to a “big box” nationally known tenant.  In such a case, the tenant will require that its form of lease be signed and will not be amenable to many landlord requirements.  Locating another tenant who is willing to accept landlord demands could be best in some situations.

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