New York Real Estate and Business Law :: Moulinos & Associates

A cooperative shareholder, who owned shares in two cooperative apartments at the 111 Tenants Corp., had subleased both apartments since they were acquired in 1972.  In 2003, the cooperative board passed a resolution restricting the subleasing of apartments and, in passing this resolution, targeted the shareholder.  The shareholder claimed that the board resolution should not apply to her because, at the time she acquired the units, she was told by the Sponsor that she would have “full, unconditional and perpetual sublet rights”.

The cooperative shareholder challenged the board resolution and sought to have it set aside as being unenforceable against her.  However, the Court ruled that pursuant to the shareholder’s proprietary leases, the right to sublet that she acquired when she purchased the shares to her apartments always required board consent, and there was no protection against consent being unreasonably withheld.

Moreover, the Court ruled that even if the shareholder had been granted preferential unfettered sublet rights, Business Corporations Law §501(c), which provides that “each share [issued by a corporation] shall be equal to every other share of the same class,” precludes any special subletting rights.

The action is entitled Bregman v. 111 Tenants Corp., and was decided in the Appellate Division, First Department, of New York.

None of plaintiff’s submitted documents provides otherwise.

A Supreme Court judge in Suffolk County has decided that Bank of America should be penalized for its abusive tactics against a homeowner whose property was in foreclosure by reducing in half the amount owed by the homeowner to Bank of America.

Judge Arlen Spinner, who as previously issued harsh and newsworthy decisions against banks in foreclosure cases, ruled in Bank of America v. Lucido, deliberately acted in bad faith” while prosecuting the foreclosure over 34 months and ordered the bank to pay $200,000 in damages to the homeowner, John Lucido.  Judge Spinner stated that “repeated and persistent failure and refusal to comply with the lawful orders of the Court including those which directed production of documentation that was essential to address critical issues in the present matter, it has repeatedly caused to be put forth material misstatements of fact which appear to have been calculated to deceive the Court and has delayed these proceedings without good cause, thereby needlessly increasing the amount owed upon the mortgage debt, to say nothing of the needless waste of the Court’s time and resources, as well as those of Defendant.”

Bank of America was originally represented by the law firm of Steven J. Baum, P.C., which has since shuttered its doors. Spinner wrote that he had “serious and substantial questions” on whether the Baum firm, along with the bank, acted in good faith.  Judge Spinner cited that court rules under Uniform Rules for the Trial Courts 22 NYCRR §202.12-a required that both homeowners and lenders negotiate in good faith at the settlement conferences, pursuant to CPLR §3408(f). Based on Bank of America’s conduct in this action, Judge Spinner found that the bank had violated this rule.

In a significant ruling last month, the Appellate Division, First Department, ruled that a cooperative resident may sue a cooperative for claimed injuries suffered by the resident as a result of being exposed to mold spores in the building.

The cooperative resident, Brenda Cornell, presented to the Court scientific studies which confirmed that respiratory injury may be suffered by someone who is exposed to mold spores released into the air.  Previously, courts in New York had ruled that it was disputable that exposure to mold spores may cause illnesses.  However, the Appellate Division now has ruled that “[i]t is undisputed that exposure to toxic molds is capable of causing the types of ailments from which plaintiff suffers. Plaintiff’s expert, via differential diagnosis, arrived at the scientifically sound conclusion that exposure to the toxic molds in plaintiff’s apartment was a cause, within a reasonable degree of medical certainty, of her documented medical ailments.”

Crucial to the Court’s ruling was the cooperative’s own expert who stated that “[m]olds can cause a wide spectrum of illnesses, including allergies, irritation, hypersensitivity pneumonitis and direct infection.”

The case is entitled Cornell v. 360 West 51st Street Realty LLC, 2012 NY Slip Op 1643 (1st Dept. 2012).

Normally, a cooperative can terminate a proprietary lease of a shareholder after a shareholder defaults on its obligations under the lease.  If the shareholder does not vacate the cooperative unit, the cooperative can commence holdover proceedings to evict the tenant.  However, what happens when a bank forecloses on cooperative shares after the shareholder defaults on payment of its loan.

The answer is that the bank also has the right to evict the shareholder from the cooperative unit.  In Emigrant Mortgage Co v. Greenberg, the Court ruled that a bank has the right to evict a shareholder who did not vacate a cooperative unit after having his shares foreclosed upon. The court ruled that even though the cooperative shares were deemed personal property, the bank became the owner of the shares after the foreclosure and could assert its right to remove a party who remained in the unit without legal authority or basis.  The case was decided in the District Court of New York, Nassau County.

A property encroachment is an instance where a party’s property, such as a garage or other structure, extends across the property line of an adjoining landowner.  The encroachment may be intentional or by mistake.  It may involve bushes extending past a property line, a swimming pool being situated across a property line or a garage being built over the property line of an adjoining property.

Often times, a landowner whose property is being encroached, will unilaterally destroy or remove the items which extend over the property line and into his property.  This however gives the other owner, whose property is destroyed, a right of action for destruction of property.   While the encroachment may be gone, a claim for damages remains.

The best way to deal with a property encroachment is to first verify that property of an adjoining landowner extends past your property line.  This can be done by hiring an engineer or a surveyor to definitively identify the location of the property line and prepare a survey to evidence the encroachment.  Photographs of the encroachment should also be taken to preserve an image of the encroachment.  Of course, having a rationale discussion with the adjoining property owner and asking him to remove the encroachment is always a good way to address the problem as well.

If a land owner needs to resort to taking legal action, it will require seeking an injunction to enjoin the encroachment and trespass.  Normally, irreparable harm must be shown to the landowner who is being encroached upon.  This involves proving to the Court that money damages alone will not be enough to remedy the encroachment.  What you should keep in mind is that the adjoining landowner who has created the encroachment has rights too which should not be disregarded.  Doing so, may lead to the landowner who is encroached upon to be subject to monetary penalties.

In a stunning decision, the condominium sponsor of the Rushmore Condominium in Manhattan has been ordered to return $16 million worth of down payments to potential buyers based on the fact that the sponsor failed to effectuate the first closing of the condominium by September 1, 2008 as stated in the Offering Plan.

The sponsor conceded that it did not effectuate the first closing by the date stated in the Offering Plan.  However, it argued however that its attorneys, at the prestigious law firm of Stroock & Stroock & Lavan, made a scrivener’s error, and that the Offering Plan should have read that unless the first closing took place by September 1, 2009, the buyers could terminate their agreements.  A” scrivener’s error” is legal terminology for a law firm’s mistake. The Court did not agree with the sponsor and stated that, after carefully reviewing all extrinsic evidence in regard to the offering, it could not find any indication that there was a “meeting of the minds” that the buyer and sponsor intended the date to be September 1, 2009 instead of September 1, 2008.

The decision is important as it hold sponsor’s accountable for every representation made in an Offering Plan.  The case is cited as CRP/Extell Parcel I, L.P. v. Cuomo, (NY Supreme Court Index #113914-2010).

Property owners in New York City who believe they are being overcharged or incorrectly assessed taxes against their property by the NYC Department of Finance have until March 1, 2012 to file an application with the NYC Tax Commission to have their assessment corrected for the coming tax year of 2012/13.

The NYC Department of Finance doesn’t always properly calculate property taxes.  Errors are made in assessing the value of the property and, in many instances, even the type of property that is assessed.  For example, the Department of Finance may tax a property at a commercial tax rate because the property is mis-classified as a commercial property and not a residential one.  The remedy available to a property owner is to file an application with the NYC Tax Commission to correct the value of the property from which the assessment calculation is made or the tax classification of the property.

The process can be drawn out and complicated. It does not require a hearing, although in certain instances one is recommended.  The result however may be a reduction in a property’s assessed taxes which, in the long term, may result in substantial savings to the property owner.

The U.S. Congress is currently considering enacting new legislation to combat foreign websites which infringe on U.S. copyright content, such as movies, songs and t.v. shows, by essentially blacklisting those websites.  The legislation, known as the Stop Anti-Piracy Act (SOPA), is already very controversial. It prompted many websites, such as Wikipedia and Reddit, to shut down last Wednesday in protest of SOPA.

Why are websites such as Wikipedia against SOPA?  Essentially, there are some pitfalls in this legislation which could have unintended adverse effects for U.S. users.  For example, any U.S. internet user who accesses or links to a site that has copyrighted content, uploaded illegally, could be punished.  This means that a violation of SOPA would occur if a link appears on Youtube which directs a user to a foreign site containing a U.S. movie or song which is not obtained legally.

Another pitfall would arise if a U.S. user stores information on a web site, which provides cloud storage or video hosting,  and that web site also contains copyright infringed material.  This would cause the web site to become blacklisted by the U.S. government and thereafter not be accessible to the U.S. user.

Most web sites argue that the uploading of copyright infringed material is hard to track and that SOPA would punish those sites where there is no intent to harbor such materials.  In light of the protests, the U.S. government has promised to review SOPA.  Stay tuned.

In a matter involving internet law, a photography studio was hired by a couple to take wedding pictures of the bride and groom pursuant to a contract.   When the studio posted on is website pictures of the bride, in her underwear, taken just prior to the wedding, the bride sued the studio for violation of privacy and civil rights laws.

The Court in Bostwick v. Christian Oth Inc., found that the terms of the contract between the parties allowed the studio to post all pictures taken of the bride and groom on its website.  There was no further consent required from the couple for the pictures to be posted. Additionally, the pictures were not deemed advertising and, even if they were, they would still allow them to be posted and the terms of the contract granted the studio the right to do so.

While violent crimes have fallen during the past decade, the boom in real estate, and even the real estate depression, has afforded ill-intended individuals the opportunity to engage in fraudulent practices involving real estate.

A type of fraud which has become very common involves the fraudulent transfer of title to properties.  Most times, the fraudulent transfer of a person’s property, to a third party, involves someone who knows the homeowner.  It can be a mortgage broker who the property owner visited to inquire about a loan.  It can even be a lawyer who knows the homeowner will not become aware of the fraudulent transfer.  Often times it involves children taking advantage of elderly parents to transfer title of property from their parents’ name into their own name.  Most of this is accomplished by having someone forge the name of a homeowner on a deed or fraudulently inducing the property owner to sign a deed under false pretense.  Many such cases have recently been prosecuted by authorities in New York.

In the State of California however this type of fraudulent practice is becoming more difficult.  The State has implemented a “Fraud Notification Program” which notifies a property owner every time there is a transfer of title of their property.  Once the homeowner is notified of a transfer, they can take immediate action and notify the authorities if the transfer was fraudulent.

This type of program would be very effective in New York however its implementation may be difficult.  Each county in New York State is responsible for recording deeds transferring title of property and the City Register of New York is responsible for doing so for all five boroughs.  Accordingly, if the State does not take an initiative to follow the lead of California, the City of New York should and can do so on its own.