LIEB BLOG

Legal Analysts

Monday, November 28, 2011

Lease Renewal Notice Provision not to be Strictly Construed

Lease Renewal Notice Provision not to be Strictly Construed
In a recent controversial case in Manhattan, 135 East 57th street v. Daffy's Inc., the Appellate Division ruled that a tenant's failure to provide their landlord with a timely notice that they wished to renew their lease did not foreclose the tenant's ability to renew nonetheless in the face of the landlord's desire to evict.

The Court ruled that regardless of the terms in a lease, equity or fairness could trump the parties agreement. Specifically, the Court stated a test for the tenant to exercise the option even where it failed to notice the landlord pursuant to the terms of the lease. The test is: (1) The landlord was not prejudiced by the delay in notice; (2) The delay was excusable; and (3) The tenant created value (which can only be for the tenant's behalf) in the premises or had made improvements to the premises

This is a scary decision for landlords who rely on the terms of their agreements to make proper business decisions. In the wake of this decision, landlords should assume that a tenant's failure to renew by notice is not grounds to evict. Instead, the landlord must now go the extra step of getting confirmation that the tenant wishes to vacate in order to have a reliable working premises for their property. Basically, the Court puts the burden on the landlord for determining the tenant's intent to not renew regardless of the agreement of the parties. While its always been a residential tenant's world, it appears that the commercial tenant is not falling far behind in default rules in its favor. Landlords beware.
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Wednesday, November 23, 2011

A Teaching Law Firm - Pace and the Long Island Education Board

A Teaching Law Firm - Pace and the Long Island Education Board
For the past 4 years, Lieb at Law, P.C. has continuously pushed the advantages of a teaching law firm, where attorneys are teaching at a New York State Licensed Real Estate School as they develop their careers. The belief has always been that teaching is the best way to learn and it forces attorney educators to know exactly what is happening on the cutting edge of our field. The model isn't original, but instead it is a replica of the medical model.

It seems law schools are catching on as Pace Law School has just launched a "Legal Residency Program" for entry level attorneys.

While the Pace Law School program is geared towards training new attorneys while they provide low cost legal services to the public, as their public statements represent, the Long Island Education Board, a division of Lieb at Law, P.C., is focused on Lieb at Law, P.C. attorneys becoming teachers themselves to achieve the highest level of client services. Therefore, two different aspects of the medical model are being replicated. Its theorized that a combination of the both; whats done in medical school, will be what ultimately results in the best results.

Congrats to Pace and their innovative approach. Your friends at the Long Island Education Board support this endeavor and will monitor your success. Best of luck.
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Monday, November 21, 2011

The Empire has Fallen - Baum to Close

The Empire has Fallen - Baum to Close
In a remarkable piece of news, foreclosure powerhouse, Steven J. Baum P.C. is closing. They have had a tough month first with their photographs mocking homelessness at their Halloween party to being kicked out of the Fannie / Freddie inner circle. Yet, this is a striking day in the history of the foreclosure crisis. Even the king of foreclosure is now homeless, Steven J. Baum P.C. is no more.

To read a NY Times Article, click here.
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Wednesday, November 16, 2011

New York Supreme Court rules Court can continue to sell case information

New York Supreme Court rules Court can continue to sell case information

The New York City Housing Court (“NYCHC”) maintains a database of every matter that passes through its court. “Okay…so what’s the problem with that?” you may ask. Well, a Landlord may obtain this information for a fee from one of the various organizations who purchase this information from the Court. This practice may result in prospective tenants being rejected and/or blacklisted for a housing application due to the Landlord’s perception that the prospective tenant is a “problem tenant” due to the tenant’s name surfacing in a search. However, an attorney has challenged this operation as it paints an incomplete and unfair picture with respect to prospective tenants.

For example, the information obtained does not include a tenant’s reasons behind filing or their ultimate disposition of the case. Meaning, even if the tenants were “in the right” for bringing and/or defending an action, the Landlord is not privy to this information. Instead, the Landlord merely ascertains that the prospective tenant has been a party (it does not even specify whether the tenant brought the action or is defending it) to a NYCHC action and may subsequently unfairly dismiss this tenant as problematic.

As of yesterday, the tenant in Whelan v. Lippman lost the bid to bar the Court System from selling this potentially harmful information to third-party companies by denying the tenant’s motion for a preliminary injunction. The underlying case concerning the “blacklisting” of tenants, however, was not dismissed. We will continue to monitor both the underlying case and any potential appeal of the related case. In the interim, be wary that your potential Landlord may utilize these services when reviewing your application.

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Monday, November 14, 2011

Nassau DA faces eviction from Co-Op

Nassau DA faces eviction from Co-Op
The Nassau District Attorney is being evicted from her Co-Op for violating the Co-Op's house rules.

Apparently the Co-Op adopted a new house rule that requires "no new pet without prior approval policy". Well, the District Attorney got a new pet without prior approval. Yet, she thinks she should be able to keep the pet.

The District Attorney appears to be fighting the eviction by saying she only bought the Co-Op because it permitted pets, she wasn't properly notified about the new policy and that by allowing other inhabitants who had a pet prior to the policy to be grandfathered in without prior approval, the rule is improper.

Yet, the District Attorney should realize that when you purchase a Co-Op, you purchase an apartment subject to ever changing rules. If you don't like rules, get a house. While Co-Ops offer ease of living, it does not afford autonomy or privacy. Instead, its communal living with community rules.
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Wednesday, November 02, 2011

Can an advertisement describe the property's walkability?

Can an advertisement describe the property's walkability?
At a recent course entitled "To be Green or not to be Green, that is the question...", an agent suggested that discussing walkability in a listing was a violation of the Fair Housing Act because it discriminates based upon disability.

While I did not believe this to be true as the term walkability is utilized in common parlance to discuss distance, I acknowledged its potential to offend and thereafter decided to check the Department of State's Administrative Hearing Decisions for such a licensing decision. Thereafter, I checked Westlaw for case law decisions on the topic. After an exhaustive search, I found nothing. Does this mean someone can't claim a violation? No. It just means no violation has been recorded concerning the term walkability in an advertisement for property.

As we always teach, opinions are not really relevant, only facts, laws, and prior decisions should dictate our behavior. Therefore, real estate agents are always directed to check prior licensing decisions by clicking here if they have a question about the propriety of their proposed actions.
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Thursday, October 20, 2011

Sellers Concession without disclosed Gross-up = Subterfuge

Sellers Concession without disclosed Gross-up = Subterfuge
So says the Committee on Professional Ethics to the New York State Bar Association in Opinion 882 (10/14/11). This Opinion is a follow-up and clarification of Opinion 817 (2007), which has been the subject of great discussion in the real estate world since its issuance.

In essence, these Opinions discuss the ethics of increasing a purchase price, to in effect, increase a mortgage, to thereafter pay the buyer's closings costs (which is traditionally a sellers concession), but now a seller's concession without a concession on the part of the seller. The issue is this: A seller's concession with a gross-up changes the Loan to Value ratio and consequently the risk of the investment for the mortgagee. Further, this risk is shared with whomever later purchases the mortgage coupled with tax assessors and the like. Yet, without full disclosure in all of the closing documents, future mortgage purchasers / property assessors will not be placed on appropriate notice of the increased risk, consequently paying more for the purchase than the value; hence, the Subterfuge.

In essence, the closing parties circumvent the Banking Law's restrictions on closing costs to mortgage ratios & manipulate public records on closing prices.

The Opinion goes on to state a lawyer, whether the seller's, buyer's and lender's, who participates in a transaction with a sellers concession and gross-up without full disclosure in all closing papers is violating Rule 8.4(c) of his ethic's rules.

Lastly, the Opinion states that a lawyer is not discharged from this obligation by the suggestion of the mortgage broker, loan officer or other employee of the bank. Therefore, its a non-waivable requirement to disclose a sellers concession and gross-up.

The disclosure required is that: "The sales prices has been increased by a sum equal to the seller's concession". Write it in all your real estate papers and your are in the clear. Now lets go close some deals.
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Wednesday, October 19, 2011

Limits on the Roommate Law

Limits on the Roommate Law

Just about a week ago, I was co-instructing our Real Estate School’s course, the Long Island Landlord. We were presented with a thought provoking question about the ability of a landlord to limit the occupants in a rental premises. The buzz and chatter in the room that commenced when we mentioned the roommate law made it clear that this was a hot topic.


If you don’t know about the roommate law, you can read it by clicking here. This law has been around since 1983 for the protection of tenants and occupants, not landlords. So it's about time to know this law.


It is essential for a landlord to know and understand the roommate law because it enables a tenant to prevent an eviction regardless of the terms of the lease. Yet, it is further important for tenants to know and understand what their rights are with relation to occupancy so that they can exercise those rights in preventing such an eviction. This is true particularly with regard to family members who are afforded the greatest rights under the law.


While the rights of immediate family members of the leasing tenant, as defined in the Real Property Law, are great, other roommates are not afforded such broad protection. Nonetheless, and as a matter of illustration, Section 8 landlords can impose occupancy restrictions regardless of the roommate law. This is because the law states: “Nothing in this section shall be construed as invalidating or impairing the operation of, or the right of a landlord to restrict occupancy in order to comply with federal, state or local laws, regulations, ordinances or codes”.


Consequently, we always advise landlords to be familiar with all the laws applicable to their rentals as some lease provisions are void as a matter of public policy according to the tenant-friendly New York State laws.

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Friday, October 14, 2011

Free Foreclosure Seminar - Suffolk Bar

Free Foreclosure Seminar - Suffolk Bar
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Monday, October 10, 2011

Yes, tenants must pay rent during foreclosure

Yes, tenants must pay rent during foreclosure
While case law was established over a year ago, we consistently get

The Question: If I am in foreclosure, how can I make my tenants pay their rent?

The Answer: Bring a summary proceeding pursuant to RPAPL Article 7.

Yet, if a receiver is appointed in a foreclosure action, the receiver & not the owner should bring the action.

In General Elec. Capital Corp. v. Loretto-Utica Residential Health Care Facility, the Court held that landlord's default does not relieve tenants responsibility to pay rents.

It should be noted that some Counties, like Suffolk, require the landlord to provide notice to the tenants if they are in foreclosure. Yet, this has nothing to do with the requirement to pay rent.
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