Real Estate Litigation

September 27, 2012

Lawsuits Concerning Conditions in New York City Cooperative Buildings

The Wall Street Journal recently reported the filing of a lawsuit by “Law & Order” actress S. Epatha Merkerson concerning conditions in her New York City cooperative apartment. While the lawsuit has gained the attention of the press because it involves a celebrity, the conditions described in the lawsuit are commonly experienced by numerous New Yorkers.

The lawsuit alleges that the condition of the building’s roof caused leaks and mold conditions to the cooperative apartment owned by the actress. After the purchase of the cooperative apartment, the cooperative made repairs to the roof over the plaintiff’s apartment. Said repairs are alleged to have been insufficient, causing continued water leaks and mold to develop. The actress claimed that she was unable to live in the cooperative apartment, as well as being unable to sell the apartment or sublet it at market value.

Most of the claims in the lawsuit involve the statute known as New York State’s Warranty of Habitability Law. This law requires that residential premises be fit for human habitation and that residents not be subjected to conditions that are dangerous, hazardous or detrimental to their life, health or safety. The Warranty of Habitability Law is most commonly applied to rental apartments in New York State. Nonetheless, it is longstanding caselaw in New York State that the Warranty of Habitability Law also applies to cooperative apartments. The application of the Warranty of Habitability differs depending on the type of housing to which it is applied. For instance, if a condition is solely within the walls of the apartment and was not caused by an external factor, it is the responsibility of a cooperative shareholder individually. In a rental unit, the same condition would be the responsibility of the landlord, but not the tenant.

September 19, 2012

Property Partition Actions – Additional Issues

By Weiss & Weiss

A prior blog post discussed issues relating to a property partition action in New York State. To summarize, when two or more co-owners of a property are unable to agree on the disposition of a jointly-owned property, a partition action may be brought by one of the owners. The Court will review the evidence and rule on the disposition of the property.

The general legal principle underpinning a partition action is that the property dispute should be handled fairly and equitably for all parties. This means that a Court will attempt to divide the property, if possible, according to the ownership interests of the parties to the case.

The first question that a claimant must answer is whether the property is capable of being physically divided in a fair manner among the co-owners. The physical division of a property is a fact issue for a Court to determine. Residential property such as a house is usually not capable of being sub-divided among the parties. For example, a single or two family house cannot be physically divided into separate properties, each with their own lot and tax bill. If the land in dispute is simply vacant land without any improvements, then it may be possible to divide the lot into separate properties, with the co-owners receiving shares of the new lots in proportion to their ownership percentages of the original property.

September 7, 2012

Legal Debate Over Fair Housing Settlement in Westchester County Continues

By Weiss & Weiss

As a previous blog post has discussed, Westchester County settled a lawsuit brought in 2009 which alleged that the county falsely certified that it had complied with federal fair housing requirements when it accepted community development funds. This lawsuit was settled under a consent order under which Westchester County agreed to use $51.6 million to build 750 units of “affordable” housing over seven years in 31 communities throughout the county.

Any settlement of a complex litigation matter involves necessary compromises for all parties involved. Complicating the situation is the fact that the settlement was negotiated and executed by County Executive Andrew Spano, who is no longer in office. The current county executive is Rob Astorino, who had no role in the original settlement. A recent editorial by Mr. Astorino in the Journal News states his position on the matter. He believes that the county is complying with its obligations under the settlement agreement, but believes that the U.S. Department of Housing and Urban Development (HUD) is overreaching and has misinterpreted the intent of the agreement.

At the core of the dispute is the question of the required goals of the settlement. Mr. Astorino believes that the settlement is meant to promote affordable housing throughout the county, and is committed to building the 750 units as mandated by the agreement. HUD’s interpretation is that the overall goal is to integrate the county’s housing patterns, and that such integration should be the primary purpose of the settlement.

August 30, 2012

Actions for an Accounting in New York Real Estate

By Weiss & Weiss

There are several situations where ownership of real estate in New York generates the need for an accounting procedure. When a new owner takes over a property as a result of a lawsuit or successful foreclosure action, the property in question may have been managed by third parties, such as a managing agent, over a period of time after a new owner has legal title to the property, but before the new owner can hire a new managing agent and transition from prior ownership to new ownership.

Other similar situations occur when there are multiple owners of a property, but where not all owners take an active role in the property management. There may come a time where the “inactive” owners feel that they are not receiving their fair share of the property’s profits, or simply want an accurate accounting of the income and expenses from the property in question.

Finally, there may be a situation where a managing agent is hired by an owner to run the property, and the owner feels that the managing agent is not accurately reporting the property’s profits or turning over the profits as is their legal obligation.

July 26, 2012

Fair Housing in Westchester County, New York

By Weiss & Weiss

A recent article in the Journal News discusses the latest developments in the Westchester County, New York fair housing settlement. For those who are unfamiliar with the situation, a lawsuit was brought by a public interest group against Westchester County, alleging housing discrimination. In order to settle the lawsuit, then-County executive Andrew Spano agreed to build at least 750 units of “affordable housing” in Westchester. This blog post will discuss the ramifications of the settlement, as well as the legal issues associated with the sale and resale of affordable housing.

Long-time Westchester residents will recall that in 1980, a similar case was brought against the City of Yonkers, also alleging discrimination in housing. While it is beyond the scope of this post to address the merits of this case (as well as the case against Westchester), the legal issues become important for potential buyers and sellers of property in Westchester. In the Yonkers case, Judge Leonard Sand ruled that Yonkers had discriminated against minorities and ordered the city to provide low-income housing in all areas of Yonkers for minority applicants.

Of course, implementation of such a remedy is far from simple, and the Yonkers case involved many years of litigation over the issue of whether the city was in compliance with Judge Sand’s directives. Unfortunately, the same issues now seem be arising in the Westchester County lawsuit. Once a municipality enters into a settlement of a discrimination lawsuit, as Mr. Spano did on behalf of the residents of Westchester County, there may be no end to judicial enforcement of a remedy. It seems unlikely that a Court will ever reach a finding that no further discrimination exists and end its supervision of the construction of affordable housing.

July 19, 2012

The Role of a Receiver in a Foreclosure Action in New York State

By Weiss & Weiss

Once a plaintiff files a foreclosure action, the next step in the procedure is generally to have a Receiver appointed by the Court. The reason for this is that foreclosure actions can take quite some for a Court to resolve. It would not be unusual for a Court with a busy docket (such as those in Queens, Brooklyn, or Manhattan) to take more than a year to resolve a foreclosure action. During this period of time, it is important that the property be physically maintained, the property’s expenses be paid in a timely fashion, and that the property’s income, if any, be collected by the proper party.

The court-appointed Receiver is the mechanism generally used to achieve these goals. A Receiver is an individual appointed by the Court to manage a property during the foreclosure process. Generally, they are attorneys, but this is not a legal requirement. Retired court personnel, such as judges, also are often appointed as Receivers.

The first step in having a Receiver appointed in a foreclosure action is to consult the legal documents which are the basis of the action, such as the mortgage and note. If the documents have been properly prepared, they will contain a clause permitting a Receiver to be appointed, without notice, in the event of a default on the loan. Once a foreclosure action has been filed, the attorney for the foreclosing party should then file an ex parte (without notice) application with the Court, requesting that a Receiver be appointed for the property in question. This application should contain an Affidavit from the plaintiff stating that the loan is in default, as well as copies of the documents entitling the plaintiff to the appointment of a Receiver in the event of default.

July 5, 2012

Legal Responses to Defaults by New York Cooperative and Condominium Unit Owners- Part II

By Weiss & Weiss

Our readers should be aware that if the default remains uncured and an auction is necessary, that the distinction between cooperatives and condominiums becomes pronounced. The auction procedure in a cooperative is non-judicial, meaning that it does not require the intervention of a Court, unless a party specifically requests judicial intervention. After a lien is filed against a defaulting condominium owner, all proceedings, including the foreclosure proceeding and the oversight of the auction process, require the intervention of a Judge and take place in a Court.

Cooperative clients should understand what is accomplished once the Proprietary Lease is terminated. In order for the cooperative or another party to obtain legal ownership of the cooperative, the legal auction procedure is then commenced. A Notice of Auction is placed in a newspaper of general circulation and delivered to the unit owner in a legally compliant manner. At the auction, the Terms of Sale and a Memorandum of Sale as prepared by our firm are presented and read aloud by the auctioneer. The successful bidder will obtain the transfer of the apartment in the time frame provided by the Terms of Sale.

While the auction process allows for the obtaining of legal ownership, a Landlord-Tenant procedure is then required to obtain physical ownership of the unit. This proceeding is even required if the unit owner does not leave the unit during the default response procedure. Once the auction notice is advertised in the newspaper, it is not uncommon for our attorneys to entertain telephone calls where a person states incredulously that they can get the apartment for “only $18,000.00” (the amount that may be owed for maintenance). We will remind the caller that there are no warranties as to the status of occupancy or unit condition. The “successful” auction bidder may merely be buying what may be a protracted landlord-tenant case.

June 28, 2012

Legal Responses to Defaults by New York Cooperative and Condominium Unit Owners- Part I

By Weiss & Weiss

The efficient operation of a cooperative or condominium building in New York depends upon unit owners respecting and abiding by the rules contained in the governing documents. Unit owners in cooperatives should refer to their Proprietary Lease, while those in condominiums should refer to their By-Laws. In both cases, the building’s House Rules should also be consulted. As described in our website , those who own a cooperative or condominium unit have common legal responsibilities, including the payment of maintenance or common charges, adhering to house rules, compliance with renovation and subleasing restrictions, and the like. In the event that a unit owner fails to abide by the rules and regulations of the building, our firm has extensive experience in responding to defaults and enforcing compliance by the issuance of the proper legal notices as required by the applicable governing documents. Said procedures may lead to litigation or auctioning of the units, depending upon the development of the case.

Our first course of action is usually to discuss the specific breach with our client contact, be it the representative Board Member or managing agent for the building. If monies are owed, we identify the period of time for which the money is due and the type of charges, such as maintenance, common charges or an assessment and any late fees, interest or other penalty charges properly added. If the breach involves “behavior”, rather than money owed, we determine whether same relates to an illegal sublet, an unapproved alteration or even a behavior that may not fall neatly into any particular category, such as being too noisy or permitting “unreasonable” odors to escape from the unit. Our initial discussion will also identify if any prior written notices have been sent to the unit owner.

Following our initial fact gathering, the next step involves insuring that any further legal notices are completely in compliance with the building’s governing documents. Failure to comply with such details could invalidate legal notices and proceedings at a future date. This step is important because clients may become impatient and demand that actions be taken without regard to the requirements of the governing documents and because well-meaning but not legally trained managing agents often send “legal letters” which ignore the legal requirements contained in the governing documents.

June 21, 2012

The Effect of Bankruptcy Filing on Creditor’s Litigation in New York

By Weiss & Weiss

It is not uncommon when our firm is involved in litigation against a debtor, that the debtor files for bankruptcy protection. In the United States, bankruptcy law is federally governed, and a debtor in the New York metropolitan area would file for such protection in the United States District Court for the Southern District of New York or United States District Court for the Eastern District of New York. The Southern District governs filings in Manhattan (New York County), the Bronx, and Westchester County, while the Eastern District covers filings in Brooklyn, Queens, and Long Island.

There are several different types of bankruptcy filings, depending on whether the debtor is an individual or a corporate entity. In addition, a debtor may file for liquidation, under which all eligible debts are discharged, or reorganization, in which the debtor submits a plan to make partial payment of their debts over a scheduled period of time. Not all debts are eligible for discharge under a bankruptcy filing. While this blog is not intended to be a comprehensive bankruptcy primer, debts such as child support obligations and student loan obligations are not dischargable under current bankruptcy law. When necessary, we consult and recommend specialized bankruptcy counsel with whom we work in concert.

By law, when a debtor files for bankruptcy protection, all litigation and collection efforts from the creditor must cease. This is known as the “automatic stay.” The automatic stay provides protection to the debtor from all pending lawsuits, collection of all judgments, and communications with respect to delinquent obligations. For example, one of our clients had an income execution relating to a judgment that we had obtained against the debtor. After several years of collecting a portion of the judgment through the income execution, the debtor filed for bankruptcy protection. Our firm was required to inform the sheriff’s office that the debtor had filed bankruptcy, and the income execution was closed. Once the judgment was discharged by the Court, we were legally prohibited from further collection of the judgment, much to our client’s dismay.

June 6, 2012

Credit Card and other Collection Lawsuits

By Weiss & Weiss

As the reader of this blog is probably aware, there has been a large increase in personal debt in the United States over the past decade. As credit cards, credit lines, and other non-secured loans have become more easily available, and the stigma against being in debt greatly diminished, the result is that many more people are in debt, and for larger amounts, than at any time in our country’s history.

This post will explore the general legal issues associated with debt collection in New York State. When a consumer defaults on credit card debt, generally, the credit card company will sell or assign the debt to another company after it has engaged in minimal preliminary collection efforts. The bank which issued the credit card is therefore often not involved in collecting the unpaid balance from the delinquent credit card holder. Instead, the debt is sold or assigned to a collection agency. A collection agency usually attempts to collect the debt in exchange for a percentage of the amount collected. The collection agency may also buy the debt for less than its face value, and then attempt to make a profit on any amount collected.

For example, a consumer incurs a $15,000.00 credit card debt. The credit card company may sell the debt to a collection agency for ten cents on the dollar ($1,500.00). The collection agency now owns the right to collect on the obligation. Any amount that it can collect from the debtor in excess of $1,500.00 will be a profit to the collection agency. The original creditor will then write off the debt and may no longer be involved in its collection.