Adam Leitman Bailey, P.C. Winter 2017-18 Newsletter

ADAM LEITMAN BAILEY, P.C.new york real estate attorneys

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Sheltering the Homeless in Rent-Stabilized Units

How to Navigate HPD’s Alternative Enforcement Program

NEWSLETTER WINTER 2017

by Adam Leitman Bailey and Dov Treiman

As the city of New York seeks to phase out its use of rent-stabilized apartments as shelters for homeless people,1 the organizations that administer this program struggle for funding, and the courts struggle to find the correct theoretical framework to determine if the units are still rent stabilized and, once the homeless persons are replaced with conventional tenants, into which legal category to place the new occupants. The race is on. With homeless populations continuing to swell2 and charitable organizations looking to help house them, a thorough understanding of the applicable principles of

rent stabilization is becoming increasingly essential. The recent decision of the Appellate Term, First Department in 2363 ACP Pineapple v. Iris House3 highlights practitioners’ misunderstanding of the theoretical issues.

PineappleIn Pineapple, in under 1,000 words, the Appellate Term for the First Depart-

ment ruled in a case where, at the behest of the city, a private landlord rented premises to a city-funded program for the temporary housing of homeless per-sons. Assured that such units were exempt from rent regulation, at the conclusion of the lease, the landlord sought to evict the occupants, using one of the charita-ble-use exceptions to rent stabilization. The court refused to allow it.

Basic PrinciplesThe basic principle of rent stabilization in New York City,4 is, with certain

exceptions, that it applies to all apartments “except (certain classes of ) housing accommodations for so long as they maintain the status” that gives them the exemption.5 These categories of exemption are (a) rent control, (b) government ownership, (c) Mitchell-Lama and similar programs, (d) small buildings, (e&o) substantially rehabilitated buildings, (f ) apartments held by affiliates of charities, (g) certain hotels, (h) motels and trailers, (i) boarding houses, (j) charitable accom-modations, (k) nonprimary residences, (l) cooperatives and condominiums, (m) employee occupied apartments, (n) nonresidential apartments, (p) expired 421-a in small buildings, (q) exempt lofts, (r&s) luxury decontrolled units, (t) units specifically deregulated by other laws.6

Theories of Shelter ExemptionFor private landlords, this presents three conceivable categories for deregulation

of these apartments, each with its own problems.7

Fully stated, the categories are as follows:(f ) housing accommodations owned, operated or leased or rented pursuant to

governmental funding by a hospital, convent, monastery, asylum, public insti-tution or college or school dormitory or any institution operated exclusively for charitable or educational purposes on a nonprofit basis and occupied by a tenant whose initial occupancy is contingent upon an affiliation with such institution; however a housing accommodation occupied by a nonaffiliated tenant shall be subject to the RSL and this Code;

(j) housing accommodations in buildings operated exclusively for charitable purposes on a nonprofit basis; (k) housing accommodations which are not occu-pied by the tenant not including subtenants or occupants as his or her primary residence as determined by a court of competent jurisdiction.

Affiliation ExemptionThe first of these, §2520.11(f ), is the so-called “affiliation exemption,” most

fleshed out in cases involving Columbia University and New York University. This grants an exemption to apartments that are owned by certain kinds of educational institutions and charities for apartments rented to these organizations’ affiliates. That case law does little to reflect what “affiliation” is, but typically it means...

by Massimo F. D'Angelo

The New York City Department of Housing Preservation and Development (“HPD”) touts its Alternative Enforce-ment Program (“AEP”), which was es-tablished in 2007, as one of the City’s “most effective enforcement tools for addressing distressed properties.”

In theory, AEP’s fundamental pur-pose is to combat the City’s urban blight

by forcing building owners to take swift corrective rehabilitation action to remedi-ate Housing Maintenance Code (the “Code”) violations under threat of stiff civil penalties which, if unpaid, may result in foreclosure.

Thus, with the possibility of losing their valuable investment, owners are strongly incentivized to take immediate remedial measures to repair their build-ings in order to get out of the Program’s clutches and save their buildings from...

REAL ESTATE LITIGATION

LANDLORD-TENANT / DUE DILIGENCE

Continue reading at alblawfirm.com/navigate-hpd-aepContinue reading at alblawfirm.com/sheltering-the-homeless

The Appellate Divisions for the First and Second Department are split on their interpretations of a common clause in proprietary leases for cooperative apart-ments. The clause speaks to the issue of whether a proprietary lessee must live in the apartment simultaneously with a close family member for the family mem-ber’s occupancy to be legal under the proprietary lease. The First Department says the clause means that cohabitation is required for the family member to be present; the Second Department holds that no cohabitation is necessary.

The ClauseA representative example of the kind of clause the Departments are disagreeing

over reads as follows:the Lessee shall not, without the written consent of the Lessor on such con-ditions as Lessor may prescribe, occupy or use the apartment or permit the same or any part hereof to be occupied or used for any purpose other than as a private dwelling for the Lessee and Lessee’s spouse, their children, grandchildren, parents, grandparents, brother and sisters and domestic employees…Mastering Two IdeasThe legal question raised here stands at the intersection of two distinct but

distinctly related concepts, illegal subletting and unauthorized occupancy. Sloppy analysis conflates the two, fails to perceive the highly significant differences, and lumps it all together under the title “illegal subletting.” Two statutes highlight the differences between the two ideas: Real Property Law §226-b regulating a tenant’s right to sublet and Real Property Law §235-f regulating a tenant’s right to over-ride occupancy restrictions in leases. §226-b recognizes that money flowing to the tenant from a subtenant is the essence of the landlord/tenant or sublandlord/sub-tenant relationship those parties are establishing. §235-f, on the other hand, looks entirely at the number of persons who are to be occupying the rented premises and what relationships they bear to the tenant of record.

The law, however, takes a pragmatic look at human behavior. It understands that a landlord can, with any kind of diligence, readily observe who is living in a particular apartment. However, seeing cash change hands is far more difficult to achieve. While in the overwhelming bulk of cases, an illegal sublet is also an... Continue reading at alblawfirm.com/departmental-divide

The Departmental Divide on Shareholder Family Occupancyby Adam Leitman Bailey and Dov Treiman

CONDOMINIUM-COOPERATIVE

“I don’t think I’d ever received a letter like it,” said New York County District Attorney Cyrus Vance of the memo written by Adam Leitman Bai-ley that tripped up a criminal inves-tigation, “calling it 'a signficant and

important' communication.” According to The Real Deal on October 4, 2017,

“the Trump Soho saga has become a 'watershed case' in the world of condo litigation. As part of an in-vestigation by TRD last year, condo attorneys said that developers are now far more reluctant to dis-close sales information to buyers’ attorneys, for fear of legal repercussions if they turn out to be wrong.”

The investigation also found that “developers of-ten provided misleading numbers when it came to condo sales, creating a false sense of robust business at their projects. That impression can hurt the mar-ket, experts said, by making buyers feel they need to act fast, and hurt competing projects.”


www.alblawfirm.com [email protected] 2

practice areas

Adam Leitman Bailey, P.C.’s “Watershed Case” Changes Condominium Development

After Board of Managers of the Palm Trees Condominium v. Shebar, et al., Adam Leitman Bailey, P.C. suc-cessfully negotiated payoffs for liens that survived a foreclosure sale due

to the Board’s prior counsel botching the common charge lien foreclosure proceeding, resulting in a payday for the Board of $215K after the sale of the affected unit.

The Board’s common charge lien foreclosure proceeding was riddled with errors like a late filed notice of pendency and junior lienholders that were erroneously not named in the foreclosure proceeding by the Board’s prior counsel. After foreclosure, there-fore, while the Board was the high bidder and took back the unit, there were approximately $650K in open liens and judgments still secured by the prem-ises.

Instead of advising the Board to take the loss and move on, however, ALBPC continued the fight to get a profit for its client. With paying tenants now in the unit generating monthly funds for the Board, ALBPC had time to stall the first position foreclosure proceeding and procure reduced payoffs for all open liens and judgments. Combining its vast library...

Adam Leitman Bailey, P.C. Gets $215K for Board after a Botched Common Charge Lien Foreclosure

Adam Leitman Bailey, P.C. is a full service real estate and business law firm. For more information about the firm or for a complete copy of any of the decisions and articles mentioned,

please contact Adam Leitman Bailey at 212-825-0365 or email him at [email protected].

by Hiten Samtani and Will Parker

APPEALS

COMMERCIAL LEASING SERVICES

CONDOMINIUM & COOPERATIVE REPRESENTATION

FORECLOSURE LITIGATION

HOMEOWNER ASSOCIATIONS

CONDOMINIUM/ BOARD OF DIRECTORS

CONSTRUCTION DEFECTS

INSURANCE DEFENSE LITIGATION

LANDLORD REPRESENTATION

MORTGAGE FINANCE PRACTICE

PURCHASE & SALE OF HOMES

SHAREHOLDER REPRESENTATION

REAL ESTATE ADMINISTRATIVE PROCEEDINGS

PURCHASE & SALE OF MULTI-FAMILY DWELLINGS / BUILDINGS


TENANT REPRESENTATION

TITLE INSURANCE CLAIMS

BANKRUPTCY & CREDITOR’S RIGHTS

DUE DILIGENCE AND TRANSACTIONAL RISK

ASSESSMENT OF MULTI-FAMILY DWELLINGS

BUYOUTS & SALE OF APARTMENT LEASE

Read more at alblawfirm.com/watershed-caseRead more at alblawfirm.com/lien-foreclosure

FORECLOSURETITLE INSURANCE

TOP 100TOP 100

ADAM LEITMAN BAILEY, P.C.we get results


Adam Leitman Bailey, P.C. Twice Saves Tenant’s Business from Certain Death

Adam Leitman Bailey, P.C. Protects Theater Sublease from Termination by Bankrupt Prime Tenant


BANKRUPTCY / TENANT REPRESENTATION

A high end restaurant’s new land-lord was alleging multiple defaults in the restaurant’s obligations as a tenant, and multiple legal proceed-ings were brought so as to process each of these alleged defaults. Var-ious law firms were handling these various suits, but the client soon sought ALBPC to handle the entire galaxy of cases.

At the time that Adam Leitman Bailey, P.C. was retained, the restaurant had only a few hours within which to move for an injunction before its expensive leasehold terminated. ALBPC immediately obtained additional time for the restau-rant and instructed the restaurant’s insurance brokers to obtain the necessary insurance policies and limits required by the restaurant’s lease, and most impor-tantly, to have its then expired commercial general liability policy deemed retroactive by the carrier. This alone was an extraordinary accomplishment on the restaurant’s behalf, as insurance companies rarely, if

ever, apply insurance coverage retroactively. Indeed, this is why, usually, if there is a lapse in a commercial tenant’s insurance coverage, the lease is dead beyond hope. Based on getting the retroactive coverage, how-ever, ALBPC drafted emergency papers for a Yellow-stone injunction, along with a Temporary Restraining Order seeking to enjoin the landlord from terminat-ing the restaurant’s lease. ALBPC then appeared in court and successfully argued and obtained the TRO saving the restaurant, against all odds, from the for-feiture of its valuable lease.

With only minutes remaining prior to its lease being terminated for failure to timely remove a Me-chanic’s Lien that one of the restaurant’s unpaid con-tractors filed against the landlord’s property, ALBPC performed its second miracle. The firm’s attorneys arranged an emergency conference call with the court and opposing counsel and persuaded the court to is-sue an order discharging the lien of record in time even though the Court lacked the formal paperwork in front of it.

In a decision demonstrating how Adam Leitman Bailey, P.C. applies its real estate law expertise in the bank-ruptcy context, the Manhattan Bank-ruptcy Court held that a prime tenant in Chapter 11 could not evict its sub-tenant or collect use and occupancy because the sublease did not include an early termination right.

Subtenant is a performing arts ven-ue at 45 Bleecker Street in Manhattan

which hosts a broad range of artistic programming and private events. Based on the strength of its sublease with [prime tenant], under which it shared expenses but paid only a nominal rent, subtenant spent more than $1.5 million to redevelop what had been a de-crepit and disused basement space, to an intimate and inviting theater with top-quality sound and lighting technology.

After prime tenant went into bankruptcy due to its rent arrears, it claimed in Bankruptcy Court that it had terminated the subtenant’s sublease and was enti-tled to full market rental use and occupancy payments, rather than the nominal rent payment under the sub-lease.

In analyzing the sublease for subtenant, Adam Leitman Bailey, P.C. found that it gave prime tenant “all rights and remedies available at law or in equity,” but did not specifically provide for termination in the

event of default. Tracing the history of lease termina-tion law back to the 17th Century, the firm argued be-fore a skeptical Bankruptcy Judge Michael Wiles that the sublease could not be terminated early absent an express clause allowing such early termination.

In a 20-page written decision, Judge Wiles accepted the firm’s arguments in full, dismissing [prime ten-ant]’s lease termination, use and occupancy, fraud, and lease rejection claims, without needing to reach the firm’s alternate arguments that the purported lease termination, even if permissible, was ineffective. Most significantly for subtenant by avoiding the termina-tion of the sublease, Adam Leitman Bailey, P.C. pre-served subtenant's right to take over occupancy of the full leased premises under a sublease consent executed by the landlord.

Read online at alblawfirm.com/saves-tenants-business

Read more at alblawfirm.com/board-mgrs-repairsRead online at alblawfirm.com/protects-subtenant

CONDOMINIUM & COOPERATIVE

Adam Leitman Bailey, P.C. Prevails: Court Rules That Board of Managers Has No Duty to Repair Owner’s Unit

Condominiums—Construction Defects—Suit Against Sponsor, Board and Manager—Alteration Agreements—Res Judicata

A DEFENDANT CONDOMINIUM board of managers (board), individual board members and a defendant management company (manager), moved to dismiss a complaint pursuant to CPLR 3211(a)(1); (5) and (7). The board and individual board member defendants also sought costs, sanctions and attorney fees. The plaintiff opposed the motions and cross-moved for sanctions against the defendants and their counsel and for attorney fees.

This action is “the latest in a dispute between the parties over alleged structural defects in the concrete substrate slab beneath the floor” of the plaintiff’s condominium unit. The complaint alleged that the plaintiff and her husband purchased the unit from the sponsor for $3,075,000 in 2005. “They received property tax exemptions under the City of New York’s 421-a tax exemption program….” The plaintiff as-serted that the parties’ relationship deteriorated after she had rejected a request “to pay a portion of the property tax abatement for the benefit of other unit owners.” The plaintiff further alleged that the defen-dants had “ignored repeated requests to repair and maintain” the cracked slab. The plaintiff also alleged that she and her husband had “been barred” from liv-ing in their unit for approximately seven years, “while continuing to pay millions of dollars for the unit.”

The plaintiff and her husband had commenced an action in 2007 against the board defendants over “construction defects in the floor of the…unit.” The plaintiffs had claimed in that action, that the slab had not been “properly leveled and flattened, resulting in numerous loose floorboards and warping in some ar-eas….” The sponsor defendants had allegedly acknowl-edged that the floors in the unit had been “improp-erly installed” and “undertook to replace the floors...”

by Scott E. Mollen



Non-Disclosure Agreements Defend Against Fishing Expeditions

Adam Leitman Bailey, P.C. Obtains Injunction to Prevent Renovations That Violated Adjacent Townhouse Owners’ Right to Due Process REAL ESTATE LITIGATION

When the owners of a townhouse sought Adam Leitman Bailey, P.C.’s help after the owner of the adjacent townhouse notified them that they intended to perform an extensive ren-ovation to substantially expand the

footprint and height of their town-house, Adam Leitman Bailey, P.C. successfully obtained an injunction preventing the adjacent owner from performing any demolition and/or construction activities on the town-

house for over a six month period by arguing that the New York City Landmarks Preservation Commission had violated the owners’ right to due process, and had acted outside of its jurisdictional authority when it approved the adjacent construction.

By way of background, the adjacent owner had submitted plans to substantially renovate and expand the size of the townhouse to the Commission. A pub-lic hearing was held before the Commission, at which the owner and members of the community were per-mitted to testify. The attorneys at Adam Leitman Bai-ley, P.C. also testified at the hearing, and demonstrat-ed to the Commission that the adjacent owner had misrepresented the visibility of the proposed rooftop and rear extension from the street, a key concern in

the Landmarks district. The attorneys also empha-sized to the Commission that the public had inade-quate notice of the proposed renovations to the town-house, and the impact such renovations would have on the community. The attorneys concluded their tes-timony by requesting the Commission to leave the re-cord open to provide the public with an opportunity to more fully analyze the proposed construction, and submit additional information and testimony to the Commission regarding the impact such construction would have on the community.

The Commission agreed with Adam Leitman Bailey, P.C., and mandated that the adjacent owner make substantial revisions to the proposal, including completely eliminating the rooftop addition, scaling back the rear yard extensions, and redesigning the rear façade of the townhouse. The Commission also granted the attorneys' request that the record con-

cerning the proposal be left open to permit additional submissions by the public.

Using a grass-roots approach, the attorneys at Adam Leitman Bailey, P.C. organized over two dozen community owners, activists, and architects to testify at a local Community Board hearing against the re-vised proposal submitted by the adjacent owner. The Community Board agreed with the testimony, and unanimously voted against the proposal by the adja-cent owner, and urged that the Commission deny the revised application.

Next, the public meeting was held before the Commission. However, unlike the public hearing, the attorneys and the public were not permitted to testify, a clear violation of the right to due process. The Commission approved the second proposal, not-withstanding the substantial changes between the first and revised proposals, and the unanimous vote by the local Community Board against the revised proposal.

The attorneys at Adam Leitman Bailey, P.C. then acted quickly to stop the adjacent construction. Researching the Landmarks Preservations Commis-sion’s rules, and relevant New York State statutes and case law, the attorneys concluded that not only had their clients’ right to due process been violated by the Commission’s intentional failure to permit...

CONDOMINIUM & COOPERATIVE

Read more at alblawfirm.com/non-disclosure-agreements

Continue reading at alblawfirm.com/renovations-due-process

by Frank LoveceIn 2011, [attorney] at [firm] at [address], began

a lawsuit to gain access to board documents. [Attor-ney], who suspected the board of serious mismanage-ment, said she wanted to get the contact information of all unit-owners in the building and also extensive access to condo records, including monthly financial statements.

Three years later, after suing the board over a reno-vation dispute at his co-op at [address], [unit owner] discovered what seemed to be financial irregularities. “The building took on a very large facade renova-tion project [that] went 90 percent over budget with no coherent explanation,” says [unit owner], whose apartment was once the home of the late [celebrity restaurateur]. [Unit owner] began seeking access to pertinent co-op documents.

For boards in such situations, what are the risks and protections when granting access? “Many times, there are troublemakers who just want to get docu-ments…to fuel a lawsuit,” observes Adam Leitman Bailey, an attorney at his eponymous firm. “On the other hand, it can be a good thing. After all, it’s a de-mocracy. In that sense, who are [boards] to withhold documents?”

In the aftermath of the [attorney] and [unit own-er] rulings, boards face the question of how they can

allow increased access while still protecting the prop-erties and residents through such devices as non-dis-closure agreements (NDAs). “The rights of an owner to review books and records must be balanced with maintaining the integrity of confidential informa-tion,” says [attorney], a principal at [firm] and board counsel for [residence].

The [attorney] case reiterated that condo unit-own-ers have the right to see financial reports, invoices, minutes of board meetings, and redacted legal in-voices “so long as [it is] in good faith and for a val-id purpose … at the managing agent’s office, during convenient weekday hours.” But now – citing prece-dent that said case law already allowed condo owners the right to make paper copies – the court affirmed a lower court’s ruling that said they also have the right to make “electronic copies.”

In addition, the ruling declared that condo unit-owners have the right to see lists of owners and their contact information, a right co-op sharehold-ers already have. The court also said unit-owners could be required to sign a confidentiality agreement. While that ruling concerned only condos, the [unit owner] decision a few months later cited [attorney] as precedent to determine that co-op shareholders also...

Adam Leitman Bailey, P.C. Is Only New York Real Estate Law Firm of Its Size to Receive “Best Law Firms” Honors and Have Over Half of Its Attorneys Named by Super Lawyers

Adam Leitman Bailey, P.C. is ranked in the 2018 edition of U.S. News – Best Lawyers® “Best Law Firms” for its work in Real Estate Law. It is one of less than 13 per cent of firms in New York to receive this honor.

Fifteen ALBPC attorneys have also been named to the New York Metro Super Lawyers and Rising Stars lists for 2017. Over half the firm received this honor, an achievement that no other New York real estate firm with under 30 attorneys can claim.

Read online at alblawfirm.com/super-lawyers-2017 and alblawfirm.com/best-law-firms-2018

A Day in the Life of the Cooperative Transfer Agent: Saving the Closing Against Money Judgments



An adult daughter had stopped living with her seriously ill mother many years ago. The mother, however, did not feel secure being the only signatory on her lease and kept insisting that her daugh-ter sign the lease as well. The mother was living in the apartment with her rent paying roommates and her health aides, but was not paying the rent.

The daughter had no idea how bad things had gotten until a court appoint-

ed guardian for her mother informed her that there were eviction proceedings pending, eviction was soon, and there was a judgment not only against the mother, but against the daughter as well for unpaid rent.

The daughter contacted Adam Leitman Bailey, P.C. with whom she had previously dealt. The firm’s research showed that the City wanted the mother to stay in place, but the mother and daughter were not going to come up with the rent money to make that happen and the land-lord had no interest in letting the daughter off the hook for the judgment and the rest of the lease.

ALBPC then brought an Order to Show Cause to have the entire case thrown out both as to the mother...

Adam Leitman Bailey, P.C. Saves the Collateral Security of a Mortgage Loan from Total Loss

TITLE INSURANCE

TENANT REPRESENTATION

Adam Leitman Bailey, P.C. Releases Daughter from Lease, Allows Her to Avoid Nonpayment Proceeding

In Federal National Mortgage Associ-ation v. Dennis Papa, Jr., et al., a de-fendant and predecessor in title to the borrower moved to vacate judgment of foreclosure, claiming he owned fee title to the collateral property. Our client had given a mortgage loan to a differ-ent defendant, the claimant’s mother. The claimant had not executed the mortgage and alleged he had not con-sented or ratified it, either. The claim-

ant alleged that his mother owned only a life estate in the collateral and he sought to set aside the judgment so that when the property was sold at foreclosure auc-tion, only a life estate with a negligible value could be sold to satisfy the debt.

The claimant became owner of the collateral prop-erty by deed from his mother in 1985. On the same day, the claimant alleged he conveyed back a life es-tate to his mother. The deed from the claimant to his mother recited that title was transferred:

For the term of the natural life of [Mother] and for the natural life of [Mother’s husband] so long as he shall remain married to [Mother].TO HAVE AND TO HOLD to the parties of the second part for and during their natural lives …Since the claimant alleged that his mother had

only a life estate in the property and he did not exe-cute the mortgage, he alleged that the mortgage did not encumber his reversionary interest as the fee own-

er. Therefore, according to the claimant, the mort-gage was secured by only a life estate and upon the death of his mother any title to the property sold at the foreclosure auction would revert to him, leaving the mortgage as an unsecured debt.

The Adam Leitman Bailey, P.C. team parsed the terms of the deed and dug into old New York real property law. The team explained to the court that the “habendum clause” in the deed, reciting “to have and to hold” is the usual form of conveying fee title to the property. Under New York law, the habendum clause for a deed conveying a life estate generally conveys the property “to use and occupy.” In addition, the team explained that under New York law a life estate can-not be conveyed on a condition. Therefore, the team concluded that the condition that the mother and her husband remain married negated a life estate.

The Court agreed, finding that the deed, despite purporting to convey the property for the “natural life of” the mother, actually conveyed the fee title...

Continue reading at alblawfirm.com/collateral-security

Adam Leitman Bailey, P.C. Writes Chapter on the Default Clause for Latest Edition of Commercial Leasingby Adam Leitman Bailey and John Desiderio

Read more at alblawfirm.com/default-clause

COMMERCIAL LEASINGCommercial leases require an effective default

clause that allows the landlord to force a tenant to comply with all lease obligations. The default clause commonly provides the procedure for obtaining an eviction or the threat of an eviction for a commercial tenant’s violation of the lease.

Adam Leitman Bailey, P.C. recent-ly represented a New York City co-op board as the transfer agent for a cooperative unit. The owner was de-ceased and the estate was selling the unit. A lien search revealed a money

judgment against the deceased seller, raising concerns among the attorneys at Adam Leitman Bailey, P.C. as well as the buyer, buyer’s counsel, and buyer’s lender.

Adam Leitman Bailey, P.C. turned to Article 52 of the CPLR for guidance. We found that a sharehold-er’s interest in a cooperative unit is an interest in per-sonal property rather then real property. To enforce a money judgment against real property, such as a house or a condominium, the creditor only needs to take one step; according to CPLR 5203, the creditor must docket the judgment in the county in which the property is located and the lien will be secured by the property.

However, securing a money judgment against per-sonal property – in this case, the seller’s stock certif-

icate and proprietary lease to the coop – involves a second step after docketing. An execution must be delivered to the proper sheriff and only at that time will the lien be secured on the personal property. At this point the sheriff is required to seize the personal property, sell it and apply the proceeds to the money judgment. A creditor can execute at any time during the life of a judgment.

There are two different ways a sheriff can execute on a judgment and levy the personal property. If the personal property (stock and lease) is in the share-holder’s possession, levy by seizure will take place (CPLR 5232(b)). The sheriff will serve a copy of the execution to the shareholder and take the property into custody. Then, the sheriff will sell the personal property within 60 days of the execution unless the creditor gives a 60 day extension (CPLR 5233).

If the personal property (stock and lease) is not in the shareholder’s possession and is instead with one who has the superior right to possess it – for... Continue reading at alblawfirm.com/cooperative-transfer-agent

Continue reading at alblawfirm.com/albpc-releases-daughter



Adam Leitman Bailey, P.C. Wins $1.2 Million on Behalf of Small Brokerage Firm, Gets Judgment Paid in Months

Adam Leitman Bailey, P.C. Maximizes and Collects Surplus Money Funds for Condominium Board after Bank Foreclosure Sale of Condominium Unit

“You can do everything right in this business … and if someone wants to f*ck you, they will f*ck you.”

A pair of brokers who were cheated out of com-mission on a $28 mil-lion contract got paid off

— with interest — after a six-year battle.Herb Hirsch, who now leads the commercial

team at Berkshire Hathaway NYC, and Bloom Real Estate Group’s Michael Burak received a $1.2 mil-lion commission after interest accrued for years on a 2009 contract, according to the brokers’ attorney. The two were originally owed a $750,000 commis-sion for a contract on a Murray Hill property that investors flipped to hotel kingpin Richard Born.

“Too many times the smaller brokerages are bullied out of money and do not have the cour-age to fight the giants,” said attorney Adam Leit-man Bailey, who represented Hirsch and Burak. “This case should serve as an example of why

the smaller brokers should never ever give up.”The case stretches back to 2009, when Hirsch

and Burak, then at the firm CitySites Commercial Group, were representing Salvation Army in its sale of 145 East 39th Street, court records show. The team provided Born with information on the prop-erty, but the hotelier’s offer for the site was rejected.

A few months later, investor Michael Yanko entered into an agreement with the brokers to view the prop-erty. Hirsch and Burak claimed that Yanko and his girlfriend, Kerry Wellington — both of whom work at real estate development firm WY Management — created a new LLC designed to go around the bro-kers and submitted a winning bid for the property.

Yanko and Wellington, who could not be reached for comment, then flipped the contract to Born, who purchased the site for $27.8 million in 2010 and converted it into his POD 39 hotel.

A representative for Born declined to comment on the suit, except to point out that the hotelier had been indemnified from the other defendants.

Hirsch and Burak filed a lawsuit in 2011 seeking

their commission on the sale. During the discovery phase of the case, Yanko claimed that the records Bai-ley’s firm was seeking had been stored on computers that were destroyed in a flood. But attorney David Smith found an unrelated criminal case in which authorities seized those computers from Yanko.

Upon learning this, the judge oversee-ing the commission dispute ruled in fa-vor of Hirsch and Burak in November 2015.

“I consider the behavior of the defendants in this case … to be frankly a snub in this court’s eye and I consider that behavior to be total-ly, totally wrong,” Supreme Court Justice Eileen Bransten said, according to a court transcript.

Yanko and Wellington appealed the case, and earlier this month an appellate court ruled against them. But Bailey said they still refused to pay up, and it was only when the attorneys got the sheriff’s department to schedule an auction for the proper-ty that they finally decided to pay the commission.

“You can do everything right in this... Read more at alblawfirm.com/brokers-win-commission-battle

Adam Leitman Bailey, P.C. Helps Co-op Secure Long-term Capital Projects by Refinancing MortgageAfter a years-long battle, including

a bank’s foreclosure proceeding against a condominium unit and several bank-ruptcy filings by the unit owners, a frustrated board of managers of a New York City condominium turned to Adam Leitman Bailey, P.C., for help. We then enforced the condomini-um’s lien for unpaid common charges against the unit and obtained 100% of the post-foreclosure sale surplus mon-

ies for the condominium.Following years of delays, the condominium

board—which was owed hundreds of thousands of dollars in unpaid common charges, assessment fees, late fees and interest, which accrued prior to our re-tention—retained Adam Leitman Bailey, P.C.

As is often the case, when the unit owners default-ed on their mortgage payments to their bank, they also stopped paying their condominium common charges and related fees. The bank, which is protected by a first priority lien against the condominium unit, commenced a foreclosure action to force a sale of the unit to enforce its lien. The board filed a lien for com-mon charges against the unit, but became embroiled in the bank’s foreclosure action, forced to wait until the bank enforced its lien.

Under New York Real Property Law, the condo-minium’s lien for unpaid common charges is general-ly second in line in priority after the bank’s mortgage. However, as other lienholders and judgment creditors battle for lien position, as the fees and default interest owed to the bank continually grow throughout the foreclosure action and as there often is insufficient equity in the property to cover the sums owed to all lienholders, the condominium’s lien may be wiped out by the bank’s foreclosure.

Making matters worse, the three unit owners in this case each successively filed various bankruptcy proceedings, delaying the foreclosure case for years. As the unit owners’ personal debt obligations were discharged in the bankruptcies, the condominium's...

FORECLOSURE

Continue reading at alblawfirm.com/surplus-money

by Rich BockmanBrokers Win $1.2M in Six-Year-Long Commission Battle


Every eight to ten years, most coop-erative housing corporations in New York City refinance their underlying mortgages. That is because many co-ops, rather than taking 15/30 year self-amortizing mortgages which are

paid in full at the expiration of the loan term, take out 10-year loans that are often interest-only or “bal-loon” mortgages where the entire amount borrowed is due and payable at the expiration of the 10-year term. The “balloon” payment must be fully paid at the end of the loan term, which is why co-ops frequently find themselves contemplating a mortgage refinance.

Adam Leitman Bailey, P.C. recently represented a luxury co-op on the Upper East Side of Manhattan in connection with the refinancing of their underlying mortgage. The co-op refinanced the prior underlying mortgage of $3,000,000 with an interest-only mort-gage in the amount $4,000,000 at an astonishing interest rate of only 3.666%. The co-op realized net proceeds of more than $835,000 as a result of the refi-nance which will be used to fund long-term capital... Continue reading at alblawfirm.com/capital-projects

MORTGAGE FINANCE



Adam Leitman Bailey, P.C.One Battery Park Plaza

Eighteenth FloorNew York, New York 10004

Tel: 212-825-0365Email: [email protected]

Adam Leitman Bailey Lectures for New York State Bar Association on Easements, Adverse Possession, and Arcane Laws and Presents Advanced Real Estate Topics: “Advice from a Litigator”

MEDIA | COMMUNITY | EVENTS

Adam Leitman Bailey recently gave two talks for New York State Bar Association Continuing Legal Ed-ucation courses.

At the first event, which took place at the New York

Society of Security Analysts on November 2, 2017, Mr. Bailey used the facts from the most prominent ap-pellate cases to teach the complicated rules on adverse possession. Mr. Bailey then entered a discussion about terminating easements, noting various unknown laws that can be used as a shield or sword.

Using the most recent case law and newest statutes, Mr. Bailey discussed how the courts are using the 2008 and former adverse possession statutes and how the courts are applying the laws.

Mr. Bailey again joined a panel of esteemed practi-tioners on December 5, 2017 to discuss how transac-tional attorneys can improve their lease writing skills.

Using his experience as a commercial leasing litiga-tor, Mr. Bailey applied practical experience and tricks of the trade to demonstrate ways to improve default clauses, motivate tenants to comply with their leases,

and allow tenants to have a fair lease. Mr. Bailey also provided insight into controversial

lease provisions, various lease clauses, damage issues, and more.

Continue reading at alblawfirm.com/access-agreement

Jeffrey R. Metz and Supreme Court Judge Gerald Lebovits Author New York Residential Landlord-Tenant Law and Procedure


Read online at alblawfirm.com/nsyba-overcoming-obstacles Read online at alblawfirm.com/nysba-lease-litigation

Adam Leitman Bailey, P.C. was re-tained by a building owner of prime commercial retail space in the heart of Greenwich Village to negotiate an access agreement with the tenant of ground floor tenant space in the

building to perform structural work to the columns in the space necessary to permit the construction of residential units on the roof of the building. Because the work would shutter the tenant’s operation for at least thirty days, the tenant tried to hold up the own-er by requesting a large payoff upfront to permit such access. The firm then devised a strategy to move the tenant off its demands. The tenant had several pieces of mechanical equipment on the roof and its lease...

Adam Leitman Bailey, P.C. Negotiates Favorable Access Agreement with Tenant

Adam Leitman Bailey Shares the City’s History with Harlem Academy Students on Tour of Downtown Manhattan

Read more at alblawfirm.com/harlem-academy-students Read more at alblawfirm.com/landlord-tenant-book

Jeffrey R. Metz, Chief of ALBPC's Appellate Bureau, teamed up with the Hon. Gerald Lebovits to author the 2016-2017 New York Residential Landlord-Tenant Law and Procedure Publication, a practical guide on the fundamentals of residen-tial landlord-tenant law.

LANDLORD-TENANT

ADAM LEITMAN BAILEY, P.C. One Battery Park Plaza, Eighteenth FloorNew York, NY 10004

Tel: 212-825-0365Email: [email protected]

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