Appellate Division Grants Yellowstone Injunction to Commercial Lease Tenant

In the case of Artcorp. Inc. v. Citirich Realty Corp., Peter Moulinos represented the Plaintiff Artcorp which is a tenant under a commercial lease. The landlord, Citirich Realty, sought to evict Artcorp from its commercial lease premises on the basis that it defaulted under its lease by effectuating an illegal assignment via the transfer of the ownership of Artcorp from one person to another.

On an application to the Supreme Court for the State of New York, County of New York, for a yellowstone injunction, the Hon. Nancy Bannon ruled that Artcorp was not entitled to a yellowstone injunction. A yellowstone injunction prevents a landlord from terminating a commercial lease when a landlord serves a notice of termination on a commercial tenant and the tenant indicates a desire to cure any alleged default. The lower court failed to set forth a valid basis for denying Artcorp injunctive relief.

On appeal, the Appellate Division, First Department, reversed the lower Court’s decision and granted Artcorp a yellowstone injunction. The Appellate Division stated that To obtain Yellowstone relief a tenant need not show a likelihood of success on the merits and that a commercial tenant can simply deny the alleged breach of its lease. The Appellate Division ruled that Artcorp “clearly asserted its willingness to cure the allegedly improper assignment of its shares, and had the ability to do so either by
transferring its shares back to the deceased owner’s estate or by seeking consent from the landlord”. More importantly, the Appellate Division ruled that a cure of an alleged improper assignment of a commercial lease may take place after the assignment by seeking the consent of the landlord. This decision sets a favorable precedent for commercial tenants in New York.

Homeowners Allowed to Pierce Corporate Veil In Contractor Suit

In a huge win for homeowners seeking to recover damages against a construction company arising from the company rendering services at the homeowners’ real estate residence, the Court allowed the homeowners to pierce the corporate veil and pursue their judgment against the individual shareholder of the company.

In the case of Irvine v. Raven Industries Inc., the plaintiff homeowners sued the defendant construction company and obtained a judgment for $187,690.55. The company however was insolvent and the homeowners could not collect their judgment against the company. After serving a restraining notice on the company, the company’s owner transferred ownership of a truck which was owned by the company to the owner, individually. The court found that this transfer was deemed a civil contempt and a fraudulent transfer which was not made for any reason other than to avoid the homeowners’ judgment. By doing so, the Court also found that the company was so dominated by its owner that it allowed the piercing of the corporate veil and to hold the owner personally liable for the full judgment in favor of the homeowners.

According to Peter Moulinos, a real estate attorney, this decision was important in that it allowed a plaintiff the opportunity to collect a judgment which would have been worthless and uncollectable against the construction company. Decisions such as this one allow homeowners to pursue claims against contractors who may be tempted to liquidate a company in order to avoid enforcement of a judgment.

NY Launches Recorded Document Notification Program

In an effort to fight the fraudulent conveyances of properties in New York, by deed fraud, New York City has launched an online program that allows every real estate owner, and their attorney, to be notified if a deed is filed on their property.

Deed fraud is a crime in New York and occurs when someone falsely files a deed, by either forgery or false pretenses, seeking to transfer title and ownership of a property from the rightful owner, without the owner’s consent, approval or knowledge. The new website allows property owners to enroll and be notified of all deeds filed against their property. This will immediately alert a property owner if a deed has been filed, seeking to falsely transfer title of the property, without the owner’s knowledge.

Click here to access and enroll in the NYC Document Notification Program.

Bank’s Bad Faith Forfeits Interest and Real Estate Attorney Fees in Foreclosure Peter Moulinos

Pursuant to New York C.P.L.R. §3408, parties in a real estate foreclosure action are mandated to conduct settlement discussions in order to ascertain whether it is possible to avoid having a defendant lose their home. The statute requires all parties to negotiate in good faith to reach a mutually agreeable resolution, including a loan modification.

In Aurora Loan Services, LLC v. Diakite, the parties agreed that the defendant would make three trial payments as part of a HAMP loan modification. After defendant made those three payments, the Bank rejected any further payments, while also keeping the initial three payments. After twenty-five foreclosure settlement conferences, over the course of more than three years, from January 2010 to April 2013, the referee appointed by the Court found that the bank had acted in bad faith in violation of C.P.L.R. §3408. The defendant, in a bad faith hearing, testified that he submitted modification packages over and over to the bank. At the end of 2009, he was offered a trial modification, and he timely made the three trial payments. Defendant then stated that he was required by the bank to continuously submit further documents to his counsel in an effort to modify his mortgage payments, all to no avail. The bank was unable to provide any evidence that it intended to comply with C.P.L.R. §3408 and even failed to produce the original note and mortgage at the bad faith hearing scheduled by the Court.

As a result, the Court found that the bank failed to negotiate in good faith pursuant to C.P.L.R. §3408 and stayed the collection of all interest, costs, and real estate attorney fees are stayed from March 1, 2010 to October 27, 2014. The judge presiding over this action is the Hon. Genine Edwards of the Supreme Court of the State of New York, County of Kings.

Landscaping Stops Adverse Possession Claim Real Estate Attorney

In an action arising in Queens County, New York, Plaintiffs brought suit against their neighbor, which happened to be Apple Bank, claiming that they were entitled to the right and title of a fenced in portion and unfenced portion of their neighbors land by reason of adverse possession. The Plaintiffs’ real estate attorney asserted that, for over 10 years, the land was fenced in and that they planted, cultivated and watered the vacant land. This was not deemed enough to acquire the land by adverse possession.

In regard to the unfenced portion, the Court ruled that Apple Bank submitted evidence showing that its own landscaper cultivated the land for over 16 years and that the Plaintiffs was allowed onto the Bank’s property “as a neighborly accommodation”. It thus denied that Plaintiffs were entitled to adverse possession of the unfenced portion of the land. In regard to the fenced in portion of the land, the Court ruled found that both parties made claims that they routinely entered the fenced in area in order to maintain the Bank’s property. With both parties claiming that they landscaped that portion of the land, the Court ruled that a triable issue of fact existed which warranted a trial on the matter.

This case was cited as Pritsiolas v. Apple Bankcorp Inc., 120 A.D.3d 647 (2nd Dept. 2014).

Chelsea Piers Not Liable For Trespass Real Estate Attorney

In Abraham v. Chelsea Piers Management Inc.,, Chelsea Piers was sued for the death of an individual who trespassed onto Chelsea Pier’s property and drowned in the Hudson River. The decedent scaled a locked gate at Chelsea Piers while intoxicated. He was part of a group that had been earlier escorted off the property by two Chelsea Piers employees. After the decedent re-entered the property, he was spotted in the Hudson River swimming away from Chelsea Piers. He eventually drowned. The decedent’s real estate attorney argued that Chelsea Piers was liable for this individual’s death.

The Court however disagreed. It ruled that the decedent’s actions, in diving into the Hudson River, were not foreseeable and that Chelsea Piers could not be held liable for the decedent’s death. Equally significant is that the decedent was a trespasser who, after being removed from the property, re-entered it without authorization and without the knowledge of Chelsea Pier’s employees who also re-locked the gate.

Are Listings on AirBnb in New York Legal? Real Estate Attorney Peter Moulinos

The growing popularity of the website AirBnb has given many homeowners the opportunity to list their properties for temporary rental to third parties. Typically however a real estate attorney will urge caution. In New York, the recent enactment of the Short Term Rental Law makes illegal the rental of a apartment in a multiple dwelling unit to a person unless that person occupies the apartment continuously for 30 days. Regardless, many condominiums and cooperatives in New York do not permit the rental of an apartment to any party, regardless of the time period, unless approval is granted by the managers of the housing organization or an application is presented pursuant to the rules of the housing organization. This means that renting apartments thorugh AirBnb, for periods even beyond 30 days, may not be valid unless the housing organization approves of the measure.

According to real estate attorney Peter Moulinos, who represents a number of cooperatives and condominiums in New York, many housing organizations now scan AirBnb seeking to determine if any apartments in their buildings are listed for rent. As recently reported in Crain’s New York, The Related Cos., one of the largest owners of luxury residential properties in New York, is warning building managers to keep an eye out for tenants using AirBnb and even considered offering $500 rewards to property owners who report illegal rentals. This action was prompted after it was reported in the New York Post that some apartments listed on AirBnb were utilized for sex by prostitutes and as temporary brothels.

Finally, individual unit owners and rents should be aware that, pursuant to New York’s Roommate Law, it is not illegal to rent out a portion of an apartment to another person so long as the owner or primary tenant occupies the unit simultaneously. Consulting a real estate attorney for matters pertaining to rentals through AirBnb, prior to doing so, is generally advisable.

Top Reasons Cooperatives Reject Buyers – Real Estate Attorney Peter Moulinos

Here is a great article which appeared in the The Cooperator, a real estate attorney and managing agent favorite, listing the top dozen reasons for cooperative boards to reject prospective buyers in New York.

One reason not appearing on the list is the purchaser’s current line of work and the current state of that industry. During the banking crisis, cooperatives regularly looked upon purchase applications by those employed in the banking industry with extreme skepticism and scrutiny for fear that the prospective purchaser may not be employable in the future. During the dot com bubble, persons employed in the tech industry were also subject to such scrutiny. Years ago, real estate attorneys were generally disfavored by cooperatives as they were considered to be too sophisticated in dealing with cooperative boards and would be able to either circumvent cooperative rules or impose their will upon a board. However, the passage of time has created a climate where cooperative boards look upon a real estate attorney favorably as she or he may bring knowledge and experience to assist a condominium or cooperative in managing its affairs.

Click here to view article.

Court Grants Dissolution of New York LLC

In the case of Natanel v. Cohen, the Petitioner, one of the 50-50 partners of a limited liability company (“the LLC”) sought to dissolve the LLC on the basis that he and his business partner had differences in accounting of the LLC’s finances and that they had also parted ways and created new businesses separate and apart from the LLC. No operating agreement was ever executed between Petitioner and his business partner. The LLC was formed so the partners could buy a building that housed a moving and storage company. However, because of the deteriorated relationship between the two, their business closed by mid-2012.
Petitioner asked the Court to be guided by several rulings from the Delaware Chancery Court.

However, theHon. Carolyn Demarest declined this offer stating, “The partnerships in those Delaware cases had operating agreements or other controlling documentation and it does not appear that Delaware law applies in New York.” Judge Demarest further ruled that mere disagreements between partners regarding accounting are not sufficient to warrant dissolution. Instead, Judge Demarest relied upon New York Limited Liability Company Law §702 which provides for judicial dissolution of an LLC “whenever it is not reasonably practicable to carry on the business in conformity with the articles of organization or operating agreement.”

The Court ruled that ‘[t]here is no dispute that the Company no longer functions as a business and, indeed, both partners have formed separate businesses.” She continued, “In such circumstances, the Company’s purpose no longer exists and dissolution is appropriate.” The Court granted Petitioner dissolution and directed both sides to submit the names of prospective trustees to oversee the liquidation of the remaining property.

This post was written by Nicholas Moneta. This case is cited as: Matter of Natanel v. Cohen, 502760/13, Supreme Court of the State of New York, Kings County.

Real Estate Attorney – Borrower Recovers Mortgage Overpayments Peter Moulinos

In a very interesting matter, a borrower who had taken a $275,000 loan from a seller upon buying a real estate property was obligated to re-pay the seller for a period of ten (10) years. After fully paying the seller, the buyer, not realizing that his debt had been satisfied, continued to pay the seller for another three (3) years. He subsequently realized his error and hired a real estate attorney to file suit against the seller to recover the overpayments. The buyer’s real estate attorney also sought pre-judgment interest from the date his mortgage overpayments commenced.

The Court ruled however that the buyer was not entitled to pre-judgment interest from that date. It decided that it was reasonable to start calculating pre-judgment interest from the mid point between the date the overpayments were made and the date the buyer realized he the loan was fully satisfied. The overpayments totaled $156,268.83. The buyer should have been on notice regarding his overpayments and acted sooner to enforce his remedies.

This case was cited as Kost v. Louis Moiser Trust and was decided in the United States District Court for the Northern District of New York.