This is a preview of the full Spring 2024 Quarterly Newsletter. For in-depth analysis and further insights into these topics, Click Here to read the full newsletter.
Piercing the Corporate Veil and Voiding Fraudulent Conveyances in Commercial Lease Litigation and Judgment Enforcement
By Israel A. Katz and Brian Bendy
Israel A. Katz and Brian Bendy dissect advanced legal tactics for landlords dealing with elusive commercial tenants. They explore the judicial doctrine of piercing the corporate veil as a method to hold individuals accountable for corporate debts, and the unwinding of fraudulent conveyances, shedding light on sophisticated strategies to enforce monetary obligations and navigate the complexities of commercial lease disputes.
A Buyer of Real Property Loses Specific Performance Claim
Magda L. Cruz provides a critical analysis of a pivotal appellate ruling that underscores the enforceability of contractual conditions in real estate transactions. The article details the implications of conditions unmet by either party and the resultant legal ramifications, offering a comprehensive examination of how such conditions can dictate the outcome of specific performance claims in property sales agreements.
The ‘Totality of the Circumstances’ Surrounding the New Statutory Definition of a Fraudulent Deregulation Scheme
Anthony Morreale delves into the recent legislative overhaul affecting rent regulation in New York, with a particular focus on the broadened definition of fraudulent deregulation schemes. This piece meticulously unpacks the legislative intent and potential legal challenges posed by the new definition, providing a critical examination of its impact on landlords, tenants, and the broader rental market.
$500 Monthly Fine per Unit Enacted for Missing DHCR Registrations
Logan O’Connor highlights the new punitive measures targeting landlords who neglect their duty to register rent-stabilized units with the DHCR. The article elaborates on the enforcement mechanisms and the retroactive application of fines, urging landlords to meticulously review their compliance status to avoid substantial financial penalties.
Recent Transactions of Note
This section celebrates BBG’s recent successes in high-stakes real estate transactions, including:
Purchases, Sales, and Financing
• Represented a client in connection with its $57 million acquisition (including $45 million assumption of a CMBS loan), for a six-building, 112-unit rental portfolio in Manhattan’s East Village. It was reported by Bisnow that this transaction was the largest multifamily deal of 2023 in New York City.
• Represented a client in connection with its $31 million acquisition of 120-125 Riverside Drive that included acquisition and construction financing, as well as preferred equity financing.
• Represented the purchaser of a $12 million data center in Livingston, New Jersey.
• Represented the owner of a Queens property on its $12.5 million refinancing
Leasing
• Represented the owner of a Queens property on its $12.5 million refinancing
• Represented an East 57th Street office tenant in the negotiation of a full floor sublease to a real estate services company.
• Represented a new fast-casual restaurant group in the negotiation of a retail lease in the East Village, as well as a lease for its corporate office/fabricating facility.
• Represented a national REIT in connection with the negotiation of a lease with a fist-class supermarket chain in Absecon, New Jersey;
• Negotiated a high-end restaurant lease with a well-known chef on behalf of a building owner in the West Village
• Represented the owner in a long-term extension of a medical office lease in Newburyport, Massachusetts.
Construction
• Represented an owner in the negotiation of a design-build agreement for a hotel-residential tower renovation project in Manhattan.
Land Use and Zoning
• Obtained favorable Zoning Resolution Determination from the Department of Buildings authorizing construction of large-scale development in Queens.
• Successfully achieved Opinion of Dedication from New York City Law Department and Bronx Borough President’s Office to allow for development under General City Law and use of street for utility connections to private development.
• Guided clients with community and governmental relations issues involving land use review applications in Manhattan, Queens and Brooklyn.
• Supported architects with design and zoning issues concerning multifamily construction projects.
• Assisted property owner with Department of Transportation revocable consent to authorize proposed construction on City sidewalk.
• Represented developer on Department of City Planning application to authorize commercial use in Manhattan otherwise not permitted as of right.
• Represented co-op in connection with conversion of existing Joint Living Work Quarters for Artists to residential use under the new Soho/Noho regulations.
• Provided developer client and lending client with zoning due diligence and opinion letters related to proposed construction projects.
BBG In the News
Sherwin Belkin:
• City Limits (January 3): Quoted in an article about a bill signed by Governor Hochul aiming to prevent illegal rent hikes, stating the bill’s significance for landlords and tenants.
• The Real Deal (January 5): Discussed the amendments made to the aforementioned bill, highlighting the benefits for landlords.
• The Real Deal (January 30): Spoke on tenant buyout strategies, providing insights into landlords’ tactics.
• The City (February 14): Commented on the large number of rent-stabilized apartments remaining vacant due to the HSTPA, mentioning its unintended consequences.
• City Limits (February 20): Commented on the Supreme Court’s decision not to take up challenges against the HSTPA, interpreting its implications.
• Law360.com (February 20 and 26): Discussed the Supreme Court’s refusal to probe rent stabilization further, providing a legal perspective on the decision’s impact.
• Crain’s New York Business (February): Talked about the effects of the Supreme Court’s decision on Stuyvesant Town’s ownership, emphasizing the decision’s significance.
• Our Town (February 26): Addressed the positive outcomes for tenants following the Supreme Court’s decision regarding rent stabilization in Stuyvesant Town.
• The City (February 28): Expressed concerns about potential negative effects of the “Good Cause Eviction” bill on tenants, highlighting possible unintended consequences.
• The Real Deal (March 4): Commented on a method for property owners to deregulate buildings from rent stabilization, explaining its implications for the real estate market.
• City Limits (March 13): Critiqued a proposed provision of the “Good Cause Eviction” bill, emphasizing its potential downsides.
Martin Heistein:
• NYCLA Seminar (January 30): Featured speaker at a seminar on updates to New York’s rent regulatory scheme, providing expertise on recent legal amendments.
• Bisnow Seminar (March 21): Moderated a discussion on the future of multi-family housing in New York, focusing on affordability and developers’ incentives.
Kara I. Rakowski:
• REBNY Webinar (February 27): Presented an overview of rent regulation and recent legislative changes, educating participants on the current state of rent-regulated apartments in NYC.
Aaron Shmulewitz:
• The Cooperator (January): Responded to an inquiry about board strategies for dealing with inadequately-priced apartment purchases, offering strategic advice.
Magda L. Cruz:
• The Real Deal (January 18): Cited in connection with a legal challenge against rent stabilization in Kingston, providing a legal perspective on the matter.
Lloyd Reisman:
• Habitat (February): Quoted on the topic of governing document revisions by Boards in response to legal and industry changes, emphasizing the need for compliance and adaptation.
Logan J. O’Connor:
• CLE Seminar (February 13): Presented a seminar on new amendments to rent regulation, informing attendees about the latest legal developments in this area.
Groundbreaking Litigation Decision:
• David Skaller and Daniel P. Phillips in The Real Deal (February 29): Represented an owner in a pivotal case regarding possession recovery of a rent-regulated apartment, setting a precedent in the context of “Covid-based absence” defenses.
Co-op/Condo Corner
• Aaron Shmulewitz provides a summary of cases cooperative and condominium communities are facing. From navigating board governance challenges to resolving disputes over alterations and enforcing tenant rights, this column is a guide for board members and residents seeking to abreast of the legal landscape of co-op and condo living.
• Unit owner in a city-subsidized condo cannot sue the city for a neighbor’s failure to comply with primary residence requirements (Graziano v. Hardie).
• Condo not required to install window guards in a leased unit but could be held liable for not informing the tenant about his rights, especially after a tragic incident involving the tenant’s child (Kwan v. Yap).
• Condo board members who acted in bad faith on a unit owner’s leasing and alterations applications are not entitled to indemnification from the condo (Gilbert v. Winston).
• Sponsor allowed to sue condo board over claims to continued ownership and control of unsold parking spaces, with questions of fact regarding the parties’ intentions and actions over 15 years preventing summary judgment (Saratoga Urban Living, LLC v. The Board of Managers of 30 Whistler Court Condominium).
• Elevator modernization project in a condo deemed a repair, not subject to bylaws’ spending cap for additions, alterations, and improvements (Hazen v. Bunning).
• Former managing agent ordered to pay $48,000 in legal fees for failing to turn over books and records to formerly managed boards (The Board of Managers of The Lux Condominium v. Core Management NY, LLC).
• Co-op board’s decision to decline consent to a proposed purchaser upheld under the business judgment rule (Matter of Schulte v. 1125 Park Avenue Corporation).
• Condo not entitled to a preliminary injunction against a unit owner who enclosed a terrace without board consent due to the injunction being the ultimate relief sought and the board not likely to prevail on the merits (Board of Managers of The Crown Condos v. Meir Bernstein, LLC).
• Co-op awarded $51,000 in maintenance arrears plus legal fees from a delinquent shareholder, dismissing the shareholder’s typical excuses for non-payment (36 West 35th Apartment Corp. v. Oliveira).
• Property owner required to pay a $20,000/month license fee plus legal fees to an adjoining property owner for exterior repairs, but avoided contempt charges (50 West Street Condominium v. JDM Washington Street LLC).
• Condo board member not liable for personal injuries suffered due to falling tiles in a common hallway, as the court held the board member was not responsible for maintenance of the property (Gornostaev v. Sunnyside Luxury Condominium Inc.).
• Disgruntled shareholders can sue a co-op’s managing agent for breach of fiduciary duty, even without suing the co-op itself (Harari v. Jamesman Realty Corp.).
• Co-op board’s rejection of two consecutive purchasers upheld under the business judgment rule (Michaelson v. 20 Sutton Place South, Inc.).
• Co-op obtains an injunction against a commercial tenant operating an illegal massage parlor, also holding the tenant in civil contempt for violating a prior court order (315 West 55th Owners Corp. v. Rainbow Spa 23 Inc.).
• Sponsor cannot elect a majority of the condo board but can appoint one designee and vote for regular residential candidates (Matter of Mazumdar v. Board of Managers of Strivers Gardens Condominium).
• Co-op cannot enjoin the removal of directors as the court held that the defendants controlling a majority of the shares meant the co-op had no likelihood of success on the merits (Church Street Apartment Corp. v. Liebert).
• Shareholder can sue co-op, but not individual directors, for various claims involving alterations to an apartment, in litigation now in its ninth year (Real World Holdings LLC v. 393 West Broadway Corporation).
• Co-op shareholder vacates default judgment in a suit for maintenance arrears due to being abroad for cancer treatment (Rockwood Owners Corp. v. Rainess).
• Co-op can be sued for negligence by a shareholder damaged by another shareholder’s alterations, with the case now 12 years old (Fuisz v. 6 East 72nd Street Corporation).
• Co-op shareholders time-barred from suing the co-op’s contractors for ineffective repairs, also ordered to pay the co-op $727,000 in legal fees in a 12-year-old case (Gordon v. 476 Broadway Realty Corp.).
• Condo purchaser cannot sue the sponsor’s principal merely for signing the offering plan certification (Stein v. 594 Marcy Villa LLC).
• Shareholders not entitled to summary judgment on claims regarding a co-op’s failure to stop exterior leaks, with questions of fact existing (Paz v. 52-74th Housing Corp.).
• Former director of HDFC co-op breached fiduciary duty by subleasing commercial space for private profit, ordered to pay $260,000 to the HDFC (67-69 St. Nicholas Avenue HDFC v. Green).
• Condo cannot sue sponsor to enforce air rights resale payment obligation due to the absence of a time deadline in the contract (The Board of Managers of 229 East 2nd Street Condominium v. 229 2nd Street LLC).
• Co-op can consider sale price in deciding whether to approve a sale, based on relevant comps, but questions of fact prevented summary judgment and attorney fees for the co-op (Stromberg v. East River Housing Corp.).
• Condo entitled to a referee’s award for unpaid common charges despite no referee’s hearing (Board of Managers of The Nolita Place Condominium v. Texas Entertainment LLC).
• Co-op not entitled to a preliminary injunction compelling a garage tenant to vacate during repairs, as the injunction was the ultimate relief sought (East 54th Operating LLC v. Brevard Owners, Inc.).
• Evicted shareholder’s suit against co-op, managing agent, and law firm dismissed (Lautman v. 2800 Coyle St. Owners Corp.).
• Suit by a former shareholder against a co-op and managing agent for discriminatory treatment while a shareholder dismissed, with discrimination claims based on having children (Levy v. 103-25 68th Avenue Owners, Inc.).
• Co-op liable for lead poisoning claim by an illegal subtenant’s child, cannot be indemnified by the shareholder (E.S. v. Windsor Owners Corp.).
• Guarantor liable to co-op for unpaid maintenance owed by trust shareholder, without the need for trust administration for liability to attach (Churchill Owners Corp. v. Kent).
• Condo board can sue sponsor representatives on the board for breach of fiduciary duty, with allegations that decisions were made to benefit the sponsor instead of the condo not dismissable at this stage (Board of Managers of The 443 Greenwich Street Condominium v. SGN 443 Greenwich Street Owner LLC).
• Party seeking access under RPAPL ordered to pay attorney fees (Panasia Estate Inc. v. 29 West 19 Condominium).
• Referee report rejected in condo lien foreclosure action due to no hearing held before the report was issued, in violation of CPLR (Board of Managers of The Poseidon Condominium v. Costantino Property Management, LLC).
• Condo board members can be sued over the method of calculation of common charges under bylaws, with conflicting bylaws on key provisions (72 Poplar Townhouse, LLC v. Board of Managers of The 72 Poplar Street Condominium).
• Co-op denied attorney fees in a suit for unpaid maintenance as it was not necessarily the prevailing party, with the shareholder having viable counterclaims for breach of the proprietary lease due to odor complaints (49 East Owners Corp. v. 825 Broadway Realty, LLC).
• Shareholders can sue co-op and directors for retaliatory commencement of eviction proceedings following their complaints about water quality (Gentile v. 2400 Johnson Avenue Owners, Inc.).
• Co-op liable for damage to party wall caused by co-op’s ivy (Vaduz v. 11 East 73rd Street Corporation).
BBG Continues to Expand and Welcomes New Hires
BBG is pleased to announce the hiring of new attorneys and promotions within our team in 2024. We welcome Michael Nesheiwat and Alex B. Pia as associates in our Litigation Group, both distinguished in complex real estate litigation matters. Furthermore, we celebrate Alissa Prairie’s promotion to HR/Office Manager, underscoring our commitment to internal development and excellence.
Firm Announcements
Marking BBG’s continuous growth and commitment to excellence, this section details recent partner promotions and welcomes new talents to the team. It also celebrates BBG’s 35-year legacy of dedicated service to the real estate industry, highlighting the firm’s enduring impact and ongoing evolution.
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