Queens Supreme Court confirms that a plaintiff’s pre-commencement possession of a note indorsed in blank establishes standing and that the plaintiff possessor is not required to provide specific details of how it gained possession. The Court further confirmed that failure to make a loan modification offer does not automatically constitute bad faith. In Wells Fargo Bank, N.A. v. Kim, 10255/12 (Decided March 30, 2017 by Hon. Bernice Siegal, Queens County Supreme), the borrower defendant claimed that the foreclosing plaintiff lacked standing to commence the action because the note was endorsed in blank and the affidavit of plaintiff’s agent did not specify provide specific details regarding how it obtained possession. The defendant also argued that plaintiff had not acted in “good faith” by failing to offer the Defendant a loan modification. The Supreme Court, Queens County rejected both arguments, holding that: (i) a note indorsed in blank is bearer paper and that physical possession of a note establishes ownership so long as it has not been specifically indorsed; (ii) that apart from establishing possession of the note at commencement, a foreclosing-plaintiff does not need to provide specific details of how it gained possession of the note. In response to the Defendant’s claim that the Plaintiff failed to act in good faith the court explained that good faith is determined by a consideration of the totality of the circumstances. Here, the court ruled that the Plaintiff had negotiated in good faith as Plaintiff had not unreasonably declined the Defendant for a modification. More specifically, Plaintiff had reviewed the Defendants for a HAMP mod and issued a denial because the loan exceeded the program’s limits for single family homes.
Housing Court Confirms that Non-Payment Proceedings are Improper Absent an Express or Implied Rental Agreement or Assignment of Rent. In East Farm Holding One LLC v. Smart 60272/6 (Decided March 9, 2017 by Hon. Maria Ressos, New York Housing Court, Kings County, New York) the respondent-occupant argued that tenants non-payment action should be dismissed as there was no rental agreement and that therefore the action was improperly commenced. The landlord sought discovery to ascertain whether the occupant had a lease with a former landlord and claimed that the action was properly commenced as the rent had been sought orally. The court dismissed the action and held that absent evidence of an “express or implied rental agreement or an assignment of rent from a previous landlord” the appropriate remedy was a holdover proceeding and not a non-payment proceeding.
Residential Properties Containing 6 or More Units and Constructed Before 1974 Are Subject to Rent Stabilization Laws Regardless of the Property’s Current Number of Units and the Legality of the Units. In Famous Developers LLC v. Daniel 59613/2016 (Decided March 24, 2017 by Hon. Bruce E. Scheckowitz, New York City Civil Court, Kings County, New York)
The court held that a building constructed prior to January 1, 1974 which contains or contained six or more residential units is subject to rent stabilization coverage regardless of (1) whether or not the building currently contains six or more residential units; and (2) whether or not all six units are/were legal.
Service of Notice of Disapproval Sufficient and Valid when Conveyed by “any method of communication commonly used in the real estate industry,” including Fax or Email. In Conley v. Guerreo No. A-65-15 (076928) (Decided April 3, 2017 by Hon. Lee A. Solomon, New Jersey Supreme Court), two parties signed a standard real estate contract for the sale of a New Jersey condo. The attorney review clause of the contract stated that if either party’s attorney disapproved of the contract that the attorney was to inform the realtor and the other party’s attorney within the three-day attorney review period through certified mail, telegram or personal delivery. During the attorney review period the seller received and accepted a higher offer. Her attorney sent notification to the buyer’s attorney disapproving of the contract via email and fax and not through any of the aforementioned methods. After the three-day period expired the buyer’s attorney notified the seller’s attorney that the contract was now binding as they had not received notification of disapproval through certified mail, telegram or personal delivery. The court held that the emailed and faxed notice of disapproval was sufficient and explained that notice is to be considered valid when conveyed by “any method of communication commonly used in the real estate industry”.
The Consequence of Reliance on Outdated or “Form” Lease Agreements. In Ochs v. Goron, LT-000264-17 (Decided April 4, 2017 by Hon. Scott Fairgrieve; District Court of Nassau County, New York, First District) the landlord commenced a holdover proceeding against an occupant. The initial lease at issue contemplated a term of one year and contained a renewal option for successive one-year terms. The holdover was brought two months into the fifth renewal period (the lease commenced in October 1, 2011 and the action was brought in December of 2016). In support of his dismissal argument, the occupant argued that the 30 day letter was defective as it failed to allege a specific breach of the lease terms and because the lease was two months into a yearlong term. The Court held that where a landlord accepts funds beyond the expiration of the prior lease term, and the lease contains specific renewal terms, that the lease would automatically renew pursuant to said terms. Further, where the occupant had a valid lease said lease could not be terminated by the service of a 30 day letter that failed to allege any violations of the lease.
Written By: Adam J. Friedman
Edited By: Oran Schwager