MTA Property Can Be Subject to Adverse Possession Peter Moulinos Moulinos & Associates

In a unique action brought against the Metropolitan Transit Authority (“MTA”) the Court ruled that property belonging to the MTA is not immune from adverse possession. In Brocho V’Hatzlocho Corp. v. MTA, the Plaintiff claimed that it acquired title to an adjacent property which was owned by the MTA through adverse possession. Adverse possession effectively allows a party to gain title to another person’s real property where the claiming parties possesses the property in a manner which is hostile and under claim of right, actual, open and notorious, exclusive, and continuous for a period of 10 years. The MTA sought to defeat the Plaintiff’s claim by asserting that property owned by the government cannot be taken through adverse possession. However, the Court disagreed with this contention.

The Court first determined that the MTA is a public benefit corporation which is empowered by the State Legislature to acquire, hold and dispose of real property in the exercise of its powers. While the Court ruled that government entities are immune from adverse possession, that immunity does not apply where the government holds property which is not inalienable. The MTA’s power to acquire and dispose of real property reflects the simple fact that property which is acquires is not considered inalienable.

Time Warner Condo Board Buys Unit On Behalf of Rejected Purchaser Peter Moulinos Moulinos & Associates

The Condominium Board at the Time Warner Center Condominiums was allowed to exercise its right of first refusal and purchase a condominium unit on behalf of a prior prospective purchaser who was unable to purchase the unit from the Seller.

In The South Tower Residential Board of Managers of Time Warner Center Condo. v. The Ann Holdings, LLC, the seller, Ann Holdings, had been in negotiations with a prospective buyer for the purchase of a unit at $7,800,000. When negotiations floundered, the seller sought to sell the unit to another buyer for the price of $7,400,000. Pursuant to the condominium’s by-laws, the Seller gave notice of the sale to the Condominium Board so that it would waive its right of first refusal. The Condominium Board however exercised its right to acquire the unit and entered into an agreement with the first prospective purchaser to assign the unit to him for additional consideration. When the Seller discovered this, it refused to close and the Condominium Board sued for specific performance.

In his decision, Judge Anil Singh ruled that the Condominium Board was within its right to acquire the unit and then exercise its right to assign the unit to the prior prospective purchaser for an additional fee. The Court ruled that this additional fee was in the interests of the Condominium’s unit owners and was protected under the business judgment rule applicable in the State of New York. The fee generated for the unit owners was in furtherance of their interests and benefited the Condominium. Thus, the Court had no authority to interfere with the good business judgment of the Condominium.

Peter Moulinos indicated that this case was significant as it insulated a condominium board from liability in a decision taken which contrary to the interests of a unit owner but in furtherance of the interests of the entire Condominium.

Are Home Inspections Necessary by Natalie Frazier

This is a common question from first time homebuyers in the city. Opinions vary as to their usefulness in NYC home purchases, but here are some basic things to consider when tossing around the idea of getting an inspection. With the right information, you can be in the best position to make the most favorable decision for your particular purchase.

WHEN YOU SHOULD DEFINITELY GET ONE: You should always get an inspection before buying a free standing home, which includes townhomes, as the quality of the property and/or the history of maintenance and repair may not be fully documented by an objective source. You’re only getting the seller’s side of things and they may not be valuing the same issues from their perspective that you value from yours.

WHEN YOU MIGHT WANT TO SKIP ONE: For large, well maintained buildings, you will usually find what you need to know about the structural and performance history of a particular unit and/or building by taking a careful look at the building minutes. Review of the building minutes is part of a real estate attorney’s due diligence process.

Peter Moulinos, founder and managing partner of Moulinos & Associates explains. “As part of our due diligence, we take a careful look at the building minutes which chronicle the workings of the building as a whole. Those minutes may discuss the maintenance and condition of the electrical and mechanical systems of a building, including any major defects or repairs, evidence of infestations, functioning of the heat and water, etc. If the building appears to have kept regular and thorough records, and we don’t see any red flags, you may feel comfortable skipping an inspection.”

WHEN YOU MIGHT WANT TO GET ONE: “While it’s uncommon, some buildings might have poor record keeping practices‐ intentionally or unintentionally, “says Sean Hayden, of The Hayden Law Office. “In that case, we could request that the management company answer a questionnaire to fill in gaps as to the condition of the property.” If you’re still left with questions after that, an inspection might be the only way to get answers.

Hayden mentions other instances when an inspection might be worthwhile. “If the apartment is in a bad state of repair or if it’s a high‐end apartment with significant square footage or an apartment recently completed by a sponsor, then an inspection may be a good idea.”

“Generally, a risk assessment on a sliding scale is great way to help the buyer determine the usefulness of an Inspection,” Moulinos adds. “How much information do we have from the building minutes and then, without knowing more, what are the buyer’s possible risks. Far greater responsibility would rest upon an owner in a four unit building versus one in a building with 300 units if, for example, a roof collapsed.”

WHY GETTING ONE COULD BE A BAD THING: In a low inventory market, a buyer should also keep in mind how much time it will take to get to the contract signing phase. The decision to get an inspection (or even to have the management company fill out a questionnaire) could postpone contract signing by a week or more. “Because of the competition for NYC apartments, asking for an inspection can often cool the seller to you or allow another qualified buyer to swoop in and take your place,” adds Hayden.

WHAT TO DO: There are a dozens of variables that could change how you feel about getting an inspection on a potential purchase. Solicit the advice of your real estate broker and your attorney; we are here to work in your best interest. While the decision to inspect must ultimately be made by you, the buyer, it’s important to note that you’ll never be 100% sure about everything. There is always some risk involved in buying a home, in NYC or anywhere. The best you can do is be as informed as possible about your choices, follow the best practices for your situation, and then go with your gut on the rest.

This article was written by Natalie Frazier, a real estate agent with Fenwick Keats in New York. She may be reached by telephone at 212-352-8135 and by email at NFrazier@FenwickKeats.com.

Judge Rejects Purchaser’s Claim in Commercial Real Estate Anticipatory Breach

In a commercial real estate litigation, a company, contracted to purchase a 23-acre piece of land on Staten Island’s waterfront for development. The seller, failed to obtain all of the necessary approvals before the closing deadline that the two parties had agreed upon. The purchaser the sought an abatement of the purchase price by suing Seller.

The contract however, clearly expressed that Purchaser was not to commence any legal action against Seller if they were unable to obtain the approvals. The purchaser then filed a lawsuit which sought specific performance to rescind and retain the down payment. Seller subsequently claimed that Purchaser was liable for anticipatory breach of the contract by filing the lawsuit. Purchaser claimed that Seller had to show that they were ready, willing and able to close the deal. However, Seller had not done so due to their lack of approvals.

In his ruling, Supreme Court Justice Charles Ramos rejected Purchasers claim that Seller had to show that they were ready, willing and able to close the deal by stating, “[t]he ready, willing and able requirement only applies when the non-breaching party is seeking to recover lost profits or expectation damages, and does not apply where, as here, a party merely seeks to recover a down payment.” Judge Ramos concluded that a seller in a transaction claiming anticipatory repudiation against the buyer doesn’t need to demonstrate that it was ready to close on the deal if it is not seeking lost profits. Accordingly, The Court dismissed Purchaser’s case in its entirety and ruled that the Seller was entitled to retain the down payment as a result of the Purchaser’s anticipatory breach of the Contract.

Peter Moulinos indicated that this decision was significant as it set out a situation where a court will award a seller a down payment in a contract dispute in light of an anticipatory breach by a purchaser.

This post was written by Nicholas Moneta. This case is cited as Princes Point LLC v. AKRF Engineering, P.C., Index No.: 601849/2008, (Sup.,Ct, New York County, Decided July 19, 2012).

Property Fraud Action Allowed To Proceed Peter Moulinos, Esq.

In a case where Peter Moulinos represents the Plaintiff, a Defendant sought to dismiss an action filed by the Plaintiff which alleged that, while the Plaintiff was incarcerated in federal prison, his real property was illegally transferred to the Defendants by way of a forged signature on a deed.

In its motion to dismiss, the Defendant argued that Plaintiff’s claims are barred by the Statue of Limitations and laches. It based its argument on the allegation that Plaintiffs’ ignorance of the fact that his signature may have been forged on the deed resulted from his incarceration due to his engaging in illegal offenses, with arrest and imprisonment a foreseeable consequence. Defendant therefore sought to assert blame upon the Plaintiff stating that Plaintiff chose the conduct which resulted in his felony conviction and prison sentence. The Defendant also argued that Plaintiffs’ wife was a joint owner and was at no time incapacitated or unable to protect their real property.

Plaintiff argued that the inherently unknowable injury doctrine tolls the three year statute of limitations that applies to his Complaint. The inherently unknowable injury doctrine provides that a statute of limitations is tolled where the injury is inherently unknowable and the claimant is blamelessly ignorant of the wrongful act and the injury complained of. Under such exception, the limitations period does not begin to run until the plaintiff has reason to know that a wrong has been committed.

The Court disagreed with the Defendant and denied its motion. The Court ruled that because the Plaintiff’s Complaint asserted a cause of action that on its face accrued outside of the three year statute of limitations, he has the burden of pleading facts leading to a reasonable inference that one of the tolling exception doctrines adopted by Delaware court applies. The Court also denied the motion on the basis that Plaintiff successfully argued that the inherently unknowable injury doctrine tolls the three year statute of limitations that applies to his Complaint.

This post was written by Nicholas Moneta. This case is cited as Luis Barbosa v. Bob’s Canine Academy, Inc., Dorothy Ball, and H. Cubbage Brown. C.A. No. 7834-ML filed in the Court of Chancery in the State of Delaware.

Cooperative Board Not Allowed To Reverse Prior Resolution Based on Self Interest

In 2005, the board president at the 7 East 35th Street Owners Corp., housing cooperative sought approval from the Board to remove a bulkhead structure on the roof, and create a master bedroom suite and bath by enclosing most of his rooftop terrace in his apartment. At a special board meeting held in June 2006, where the board president did not vote, the board approved this alteration. The board also determined at this meeting that “[n]o additional monthly charges such as maintenance and/or assessments would be charged to the apartment”.

Six years later, on June 8, 2012 with several new persons sitting on the board, and where the former the former board president no longer presided, an executive committee of the board passed a resolution allocating 400 additional shares to the former board president’s unit which effectively increased the maintenance payable on the unit on the basis that the alterations in 2006 justified this increase. The board contended they had been misled during the approval process in 2006 and that the board proceeded with that vote with the mistaken belief that the opinion of the board president’s attorney, regarding the alterations, also represented the position of the managing agent and the cooperative’s attorney. The former board president brought an action seeking to reverse the cooperative’s resolution.

The Court found that the cooperative’s resolution, to allocate more shares to the unit, was an improper attempt to rescind the earlier resolution and was not protected by the business judgment rule, which protects a board from actions taken in good faith and in the exercise of honest judgment in the lawful and legitimate furtherance of corporate purposes. The Court found that while the evidence before them demonstrated that the former board president had clearly acted in his own interest with respect to the alterations, the board was unable to prove that the former board president was acting as a fiduciary in connection with the alteration. Thus, the former board president had no duty to disclose the opinions of the board’s attorney and managing agent and his request for approval of the alterations was not misleading.

Peter Moulinos of Moulinos & Associates LLC stated that this decision was significant in that it negated the board president’s obligation to act in the best interests of the cooperative, and disclose the position of the cooperative’s attorney and managing agent to the board, while he was acting in his own self interest.

This post was written by Daniel Bateman. The case is cited as Goldman v. 7 East 35th Street Owners, (Sup.Ct. New York County 2013) Index No.: 104187/12

Bank of America to Pay Fees to Borrower by Peter Moulinos

US Bank and Bank of America have been ordered to pay a borrower in foreclosure her late fees, interest charges, attorney fees and costs which the borrower incurred as a result of the lenders’ failure to negotiate a settlement of the foreclosure action in good faith.

In U.S. Bank v. Shinaba, Judge Robert Torres lambasted the lenders for dragging settlement discussions throughout seventeen (17) settlement conference and for providing conflicting information to the borrower, missing deadlines to respond to modification applications and failing to appear at conferences with attorneys who were familiar with the case. The total interest charges alone which the lenders will have to pay amount to over $120,000.

The action was filed in the Supreme Court of the State of New York, County of Bronx.

Cooperative Can Make Changes to Apartment Over Owner Objections Peter Moulinos

A cooperative is allowed to make changes to an apartment over the objections of a cooperative shareholder even though the changes would violate the shareholder’s proprietary lease.

In Goldstone v. Gracie Terrace Apartment Corp., the Court found that the cooperative could make necessary changes to the unit in order to effectuate repairs which would insulate the unit and building from potential water damage. The repairs and renovations effectively reduced the unit’s size by 50 square feet. The appellate court reasoned that while the repairs were necessary, the cooperative would be required to compensate the unit owner with money damages for the reduction in the size of the unit. The Court also ruled that the repairs, and breach of the shareholder’s proprietary lease, was the best option open to the board in effectuating the repairs.

NY Times Article Outlining A Closing

Here is a great article which appeared in the New York Times outlining what happens at a closing.

Click Here to read the article

Yellowstone Injunction Maintains Status Quo in Commercial Real Estate Litigation

This matter involved a commercial real estate litigation. Weinberg Holdings LLC is a commercial tenant on 68 Second Avenue, New York, operating two bars and a delicatessen in the building since the mid 1990’s pursuant to a written commercial lease. On October 4, 2011 the landlord, Bar None, sold the building to Ruru & Associates, and transferred the lease to them as well. Upon inspecting the building Ruru found Weinberg had its belongings in the basement. Ruru’s counsel sent Weinberg a letter demanding they move their belongings as their lease did not extend to the basement. Weinberg replied they’d been using the basement for years, and there was nothing in the lease excluding them from the basement.

Seven months went by with no communication between either party in regard to the basement.
On July 20, 2011 Ruru, served Weinberg with a “Fifteen Day Notice of Default”, stating that Weinberg was using the basement contrary to the lease. It was at this time Weinberg sought a Yellowstone injunction. A Yellowstone injunction, “maintains the status quo so that the commercial tenant, when confronted by a threat of termination of its lease, may protect its investment in the leasehold…” In addition Weinberg also stated that it “is willing to cure any purported lease defaults by ceasing its occupancy of the Basement Space if the Court finds that the Basement Space is not part of the Lease Agreement.”

The Court found that the lease did not explicitly conclude whether or not Weinberg was authorized to use the basement space. Due to Weinberg’s willingness to cure the alleged default and “in light of conflicting allegations” the Court granted Weinberg Holdings LLC’s motion for a Yellowstone injunction. This injunction is necessary to maintain the status quo until a trial can be conducted and this issue may be resolved.

This case is cited as Weinberg Holdings LLC v. Ruru & Associ. LLC, (Sup.Ct. NY 2013) Index #103430/2012.