Condominiums Archives - New York Appellate Digest

JUDGE SHOULD NOT HAVE, SUA SPONTE, APPOINTED A RECEIVER BECAUSE THAT RELIEF WAS NOT REQUESTED BY A PARTY (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the judge should not have, sua sponte, appointed a receiver and should not have referred an issue to a court attorney referee in this dispute between plaintiff condominium boards and homeowners association and their management company and attorney. The complaint alleged breach of contract and negligence:

The Supreme Court improvidently exercised its discretion in, sua sponte, appointing a receiver to manage the plaintiff entities, since the complaint did not seek the appointment of a receiver, no “person having an apparent interest” in the plaintiff entities sought such relief, and there is no evidence that such a drastic remedy was warranted (CPLR 6401[a] …).

The Supreme Court should not have referred the issue of which Board of Managers and/or which management company shall be implemented to manage the affairs of the plaintiffs to a court attorney referee to hear and report, since the defendants lack standing to challenge the alleged violations of the plaintiffs’ bylaws in the elections of new board members (see N-PCL 618 …). Further, the reference of the issue of attorney’s fees was premature … . Board of Mgrs. of Golfview Condominium I v Island Condo Mgt. Corp., 2020 NY Slip Op 02070, Second Dept 3-25-20

March 25, 2020/by Bruce Freeman

Civil Procedure, Condominiums

FAILURE TO JOIN A NECESSARY PARTY JUSTIFIED DISMISSAL AFTER THE STATUTE OF LIMITATIONS HAS RUN (FIRST DEPT).

The First Department determined dismissal of the Article 78 proceeding, rather than joinder of the condominium board as a necessary party, was the proper remedy. The New York City Department of Environmental Protection had denied petitioner’s request to order removal of backflow prevention devices installed in the condominium unit:

Petitioner’s failure to join as a party the condominium board, which installed the backflow prevention device in dispute, constitutes a failure to join a necessary party (see Matter of Ferrando v New York City Bd. of Stds. & Appeals, 12 AD3d 287, 288 [1st Dept 2004]). Since the applicable statutory period has expired and the condominium board can no longer be joined, and proceeding in its absence would potentially be highly prejudicial to it, the proper remedy is dismissal of the proceeding rather than joinder of the condominium board (id.; see also CPLR 1001, 1003). Matter of Stephen & Mark 53 Assoc. LLC v New York City Dept. of Envtl. Protection, 2019 NY Slip Op 00072 [168 AD3d 440], First Dept 1-8-19

January 8, 2019/by Bruce Freeman

Attorneys, Condominiums

PRODUCTION OF CONDOMINIUM RECORDS PROPERLY REQUESTED, THE BOARD’S PAYMENT OF THE SUBPOENAED PARTIES’ LEGAL EXPENSES IN RESISTING THE SUBPOENAS FOR THE RECORDS WAS PROPER (FIRST DEPT).

The First Department determined the production of certain of the condominium’s books and records was properly requested by petitioners and the subpoenaed parties’ legal expenses in resisting petitioners’ subpoenas were properly paid by the condominium board:

In item (j), petitioners seek “all correspondence with . . . NY Urban [or its principal] from 2011 to the present.” This body of correspondence is relevant and necessary to petitioners’ investigation into NY Urban’s dealings with respondents, and therefore is a proper subject of the common-law right of inspection … .

In item (g), petitioners seek “[a]ll documents and records relating to the Condominium’s settlement agreement with the Condominium sponsor.” We agree with petitioners that understanding how the Condominium reached the settlement agreement is a valid purpose. Indeed, respondents concede that petitioners are entitled to receive a copy of the final settlement agreement itself. The documents specified in item (g) following the word “including” are also reasonably relevant and necessary to the stated purpose of exploring the settlement process. We reject respondents’ conclusory assertion that some unknown number of documents are protected by the attorney-client privilege or work product doctrine.

In paying the subpoenaed parties’ legal expenses, respondents were acting within the scope of their authority and in furtherance of the legitimate purpose of resisting litigation disclosure of Condominium documents, and there is no evidence that they were acting in bad faith … . Matter of Healy v Carriage House Condominium, 2018 NY Slip Op 07970, First Dept 11-20-18

CONDOMINIUMS (PRODUCTION OF CONDOMINIUM RECORDS PROPERLY REQUESTED, THE BOARD’S PAYMENT OF THE SUBPOENAED PARTIES’ LEGAL EXPENSES IN RESISTING THE SUBPOENAS FOR THE RECORDS WAS PROPER (FIRST DEPT))/ATTORNEYS (PRODUCTION OF CONDOMINIUM RECORDS PROPERLY REQUESTED, THE BOARD’S PAYMENT OF THE SUBPOENAED PARTIES’ LEGAL EXPENSES IN RESISTING THE SUBPOENAS FOR THE RECORDS WAS PROPER (FIRST DEPT))

November 20, 2018/by Bruce Freeman

Condominiums, Contract Law, Trespass

PLAINTIFF, PURSUANT TO THE CONDOMINIUM DECLARATION AND OFFERING PLAN, WAS THE OWNER OF THE BASEMENT SPACE USED BY DEFENDANTS, PLAINTIFF WAS ENTITLED TO SUMMARY JUDGMENT ON ITS TRESPASS ACTION, BECAUSE THE DECLARATION AND OFFERING PLAN, AND THE REFERENCE TO IT IN THE DEEDS, WERE UNAMBIGUOUS, PAROL AGREEMENTS TRANSFERRING OWNERSHIP OF THE AREA TO DEFENDANTS WERE NOT ENFORCEABLE (FIRST DEPT).

The First Department determined plaintiff was entitled to summary judgment on its trespass action against defendant condominium owners based on defendants’ use of a basement storage area which, according to the Declaration and Offering Plan, was owned by plaintiff. Any attempt to transfer ownership of the basement area to defendants’ condominium was ineffectual because there was never a meeting and vote by unit members:

The Declaration and Offering Plan are unambiguous and clearly state that the disputed basement space was a Limited Common Element of the front unit owned by plaintiff. The deeds to both parties’ units were silent on this issue, but provided that each buyer agreed that their ownership was subject to the Declaration. Paragraph Fifth of the Declaration provided that the use of the basement space was deemed conveyed with the conveyance of the front unit, even if the interest was not expressly described in the conveyance. In order to amend the Declaration, pursuant to paragraph Tenth(b), the board was required to execute an instrument upon the affirmative vote of 80% of the unit owners held at a duly called meeting. Moreover, paragraph Tenth(b)(I) provided that an amendment which altered the right to portions of the common elements required the consent of 100% of the affected unit owners.

Here, there was never a duly held meeting of the unit owners at which 80% voted to amend the Declaration to permit transfer of the right to use the basement space from the front unit to the rear unit. Thus, plaintiff retained the right to use the basement space. Parol evidence of the parties’ contrary intent is irrelevant in the face of the unambiguous governing documents … . Plaintiff’s acknowledgment in the contract of sale that it was not purchasing the right to use the basement storage space is not controlling because the deed contained a provision that the sale was subject to the provisions of the Declaration, which stated that the storage space was for the use of the front unit. P360 Spaces LLC v Orlando, 2018 NY Slip Op 02749, First Dept 4-27-18

CONDOMINIUMS (PLAINTIFF, PURSUANT TO THE CONDOMINIUM DECLARATION AND OFFERING PLAN, WAS THE OWNER OF THE BASEMENT SPACE USED BY DEFENDANTS, PLAINTIFF WAS ENTITLED TO SUMMARY JUDGMENT ON ITS TRESPASS ACTION, BECAUSE THE DECLARATION AND OFFERING PLAN, AND THE REFERENCE TO IT IN THE DEEDS, WERE UNAMBIGUOUS, PAROL AGREEMENTS TRANSFERRING OWNERSHIP OF THE AREA TO DEFENDANTS WERE NOT ENFORCEABLE (FIRST DEPT))/CONTRACT LAW (CONDOMINIUMS, PLAINTIFF, PURSUANT TO THE CONDOMINIUM DECLARATION AND OFFERING PLAN, WAS THE OWNER OF THE BASEMENT SPACE USED BY DEFENDANTS, PLAINTIFF WAS ENTITLED TO SUMMARY JUDGMENT ON ITS TRESPASS ACTION, BECAUSE THE DECLARATION AND OFFERING PLAN, AND THE REFERENCE TO IT IN THE DEEDS, WERE UNAMBIGUOUS, PAROL AGREEMENTS TRANSFERRING OWNERSHIP OF THE AREA TO DEFENDANTS WERE NOT ENFORCEABLE (FIRST DEPT))/TRESPASS (CONDOMINIUMS, PLAINTIFF, PURSUANT TO THE CONDOMINIUM DECLARATION AND OFFERING PLAN, WAS THE OWNER OF THE BASEMENT SPACE USED BY DEFENDANTS, PLAINTIFF WAS ENTITLED TO SUMMARY JUDGMENT ON ITS TRESPASS ACTION, BECAUSE THE DECLARATION AND OFFERING PLAN, AND THE REFERENCE TO IT IN THE DEEDS, WERE UNAMBIGUOUS, PAROL AGREEMENTS TRANSFERRING OWNERSHIP OF THE AREA TO DEFENDANTS WERE NOT ENFORCEABLE (FIRST DEPT))

April 27, 2018/by Bruce Freeman

Condominiums, Fair Housing Act

PLAINTIFF CONDOMINIUM OWNER STATED A CAUSE OF ACTION AGAINST THE CONDOMINIUM DEFENDANTS FOR VIOLATION OF THE FAIR HOUSING ACT 2ND DEPT.

The Second Department, reversing Supreme Court, determined plaintiff had stated a cause of action for violation of the Fair Housing Act. Plaintiff, a condominium owner, alleged she was denied access to common areas of the defendants’ (Vista’s) condominium complex because of her ethnicity:

The Supreme Court … erred in granting that branch of the Vista defendants’ motion which was pursuant to CPLR 3211(a) to dismiss the third cause of action to recover damages for housing discrimination in violation of the federal Fair Housing Act (42 USC § 3601 et seq.) insofar as asserted against them. That statute provides, in relevant part, that “it shall be unlawful . . . [t]o discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith, because of race, color, religion, sex, familial status, or national origin” (42 USC § 3604[b]). At the motion to dismiss stage, all that is required are sufficiently pleaded allegations that plaintiffs are part of a protected class and that defendants took actions against them that are forbidden by the Fair Housing Act on the basis of their membership in the protected class … . In this case, the complaint alleged, inter alia, that the Vista defendants discriminated against the plaintiff and her family “in an effort to prevent [them] from utilizing the facilities upon the common area,” and that the Vista defendants had engaged in a pattern of discrimination against the plaintiff and her family because they are of Hispanic descent. Accepting these allegations as true, and affording the plaintiff the benefit of every possible favorable inference, the complaint adequately stated a cause of action to recover damages for housing discrimination in violation of the Federal Fair Housing Act (42 USC § 3601 et seq.) insofar as asserted against the Vista defendants. Gutierrez v McGrath Mgt. Servs., Inc., 2017 NY Slip Op 05425, 2nd Dept 7-5-17

FAIR HOUSING ACT (PLAINTIFF CONDOMINIUM OWNER STATED A CAUSE OF ACTION AGAINST THE CONDOMINIUM DEFENDANTS FOR VIOLATION OF THE FAIR HOUSING ACT 2ND DEPT)/CONDOMINIUMS (FAIR HOUSING ACT, PLAINTIFF CONDOMINIUM OWNER STATED A CAUSE OF ACTION AGAINST THE CONDOMINIUM DEFENDANTS FOR VIOLATION OF THE FAIR HOUSING ACT 2ND DEPT)/DISCRIMINATION (FAIR HOUSING ACT, PLAINTIFF CONDOMINIUM OWNER STATED A CAUSE OF ACTION AGAINST THE CONDOMINIUM DEFENDANTS FOR VIOLATION OF THE FAIR HOUSING ACT 2ND DEPT)

July 5, 2017/by CurlyHost

Condominiums, Contract Law

CONDOMINIUM BOARD STATED BREACH OF CONTRACT CAUSES OF ACTION AGAINST THE FIRM WHICH INSPECTED THE CONDOMINIUMS DURING CONSTRUCTION 2ND DEPT.

The Second Department determined plaintiff, suing on behalf of condominium owners, had stated breach of contract causes of action against the defendant (KEPC) which had inspected the condominiums during construction on behalf of the developer (SDS). The complaint sufficiently alleged plaintiff was a third-party beneficiary of the oral contract between KEPC and SDS and was a successor-in-interest to the contract between KEPC and SDS:

A nonparty to a contract may maintain a cause of action alleging breach of contract only if it is an intended, and not a mere incidental, beneficiary of the contract … . However, “the identity of a third-party beneficiary need not be set forth in the contract or, for that matter, even be known as of the time of its execution” … . A party asserting rights as a third-party beneficiary must allege: (1) the existence of a valid and binding contract between other parties, (2) that the contract was intended for its benefit, and (3) that the benefit to it is sufficiently immediate, rather than incidental, to indicate the assumption by the contracting parties of a duty to compensate it if the benefit is lost … . “In determining third-party beneficiary status, it is permissible for the court to look at the surrounding circumstances as well as the agreement” … .

Here, taking the allegations in the complaint as true and affording the plaintiff every favorable inference, the plaintiff sufficiently pleaded a cause of action against KEPC to recover damages for breach of contract on a third-party beneficiary theory… . Moreover, KEPC failed to come forward with competent documentary evidence that refuted, as a matter of law, the plaintiff’s allegation that it was a third-party beneficiary of its contract with SDS … .

Condominium unit owners may also be considered successors-in-interest to the condominium sponsor’s construction contracts under certain circumstances … . Whether a party is a successor-in-interest to the performance of a particular contract is generally a question of fact that depends on the circumstances of the case … . Board of Mgrs. of 100 Congress Condominium v SDS Congress, LLC, 2017 NY Slip Op 05414, 2nd Dept 7-5-17

CONTRACT LAW (CONDOMINIUM BOARD STATED BREACH OF CONTRACT CAUSES OF ACTION AGAINST THE FIRM WHICH INSPECTED THE CONDOMINIUMS DURING CONSTRUCTION 2ND DEPT)/THIRD-PARTY BENEFICIARY (CONTRACT LAW, CONDOMINIUM BOARD STATED BREACH OF CONTRACT CAUSES OF ACTION AGAINST THE FIRM WHICH INSPECTED THE CONDOMINIUMS DURING CONSTRUCTION 2ND DEPT)/SUCCESSOR-IN-INTEREST (CONTRACT LAW, CONDOMINIUM BOARD STATED BREACH OF CONTRACT CAUSES OF ACTION AGAINST THE FIRM WHICH INSPECTED THE CONDOMINIUMS DURING CONSTRUCTION 2ND DEPT)/CONDOMINIUMS (CONTRACT LAW, CONDOMINIUM BOARD STATED BREACH OF CONTRACT CAUSES OF ACTION AGAINST THE FIRM WHICH INSPECTED THE CONDOMINIUMS DURING CONSTRUCTION 2ND DEPT)

July 5, 2017/by CurlyHost

Civil Procedure, Condominiums, Foreclosure

DEFENDANT IN THIS CONDOMINIUM ACTION WAS NOT ENTITLED TO A MANDATORY FORECLOSURE SETTLEMENT CONFERENCE.

The First Department determined the defendant in this condominium foreclosure action was not entitled to a mandatory mortgage foreclosure settlement conference. The court had ordered settlement conferences in the past and defendant had refused to participate:

The express language of the condominium’s bylaws permitted the appointment of a receiver, without notice, to collect unpaid common charges in this foreclosure action. Further, the record demonstrates that while defendant, an owner of an apartment in the condominium, paid maintenance arrears after plaintiff board filed a notice of lien and commenced the action to foreclose on the lien, she still owed plaintiff for assessments, late fees and associated attorney’s fees. Accordingly, plaintiff was entitled to seek judgment for these fees, which constitute common charges under the bylaws… . We reject defendant’s claim that she was entitled to a mandatory mortgage foreclosure settlement conference, particularly since the court directed the parties to engage in settlement conferences to resolve this matter, and it appears that defendant, for the most part, refused to participate. Board of Mgrs. of St. James’s Tower Condominium v Kutler, 2017 NY Slip Op 03605, 1st Dept 5-4-17

FORECLOSURE (CONDOMINIUMS, DEFENDANT IN THIS CONDOMINIUM FORECLOSURE ACTION WAS NOT ENTITLED TO A MANDATORY FORECLOSURE SETTLEMENT CONFERENCE)/CIVIL PROCEDURE (FORECLOSURE, MANDATORY SETTLEMENT CONFERENCE, DEFENDANT IN THIS CONDOMINIUM FORECLOSURE ACTION WAS NOT ENTITLED TO A MANDATORY FORECLOSURE SETTLEMENT CONFERENCE)/CONDOMINIUMS (FORECLOSURE, MANDATORY FORECLOSURE SETTLEMENT CONFERENCE, DEFENDANT IN THIS CONDOMINIUM FORECLOSURE ACTION WAS NOT ENTITLED TO A MANDATORY FORECLOSURE SETTLEMENT CONFERENCE)

May 4, 2017/by CurlyHost

Condominiums

FAILURE TO PAY CONDOMINIUM COMMON CHARGES WAS A PROPER BASIS FOR EJECTION FROM THE CONDOMINIUM.

The First Department, in a full-fledged opinion by Justice Tom, determined defendant condominium owner was properly ejected from the condominium for failure to pay the common charges:

… [T]he Condominium Act and the applicable bylaws for the subject condominium authorize a lien for unpaid common charges and permit a lien foreclosure action and an action for the appointment of a receiver where appropriate (see Real Property Law §§ 339-z, 339-aa). Further, the order appointing the receiver in this matter authorized the receiver to take certain actions, including ejectment of defendant from the property … . * * *

Ejectment of defendant from the unit was not unconstitutional, since he failed to comply with the court’s prior order directing him to pay the “reasonable fair market rent” of $6,500 per month for his use and occupancy of the unit. Contrary to defendant’s contentions, he was properly required to pay rent on the unit, regardless of the fact that he was the unit’s owner, since both Real Property Law § 339-aa and section 5.9 of the bylaws provide that in a lien foreclosure action, “the Unit Owner shall be required to pay a reasonable rental for the use of said Unit Owner’s Unit.” It is inconsequential and irrelevant to this action that defendant defeated plaintiff’s motion for summary judgment in the 2011 action. Nor does ejectment under these circumstances deprive defendant of his “real property ownership/occupancy rights without due process of law.” Heywood Condominium v Wozencraft, 2017 NY Slip Op 00257, 1st Dept 1-12-17

CONDOMINIUMS (FAILURE TO PAY CONDOMINIUM COMMON CHARGES WAS A PROPER BASIS FOR EJECTION FROM THE CONDOMINIUM)/COMMON CHARGES (CONDOMINIUMS, FAILURE TO PAY CONDOMINIUM COMMON CHARGES WAS A PROPER BASIS FOR EJECTION FROM THE CONDOMINIUM)/EJECTION (CONDOMINIUMS, FAILURE TO PAY CONDOMINIUM COMMON CHARGES WAS A PROPER BASIS FOR EJECTION FROM THE CONDOMINIUM)

January 12, 2017/by CurlyHost

Condominiums, Foreclosure, Real Property Law

CONSOLIDATED MORTGAGES CONSIDERED FIRST MORTGAGE OF RECORD WITH PRIORITY OVER COMMON CHARGES LIEN.

The Court of Appeals, in a full-fledged opinion by Judge DiFiore, determined a lien for unpaid (condominium) common charges did not take priority over the second of two Citibank mortgages which were consolidated. Plaintiff was the winning bidder in a foreclosure action commenced by the condominium board for unpaid common charges. Plaintiff took the property subject to the “first mortgage of record.” Years before the common charges lien two mortgages taken out by the previous condominium owner had been consolidated. Plaintiff argued the second of those two consolidated mortgages should be extinguished by the foreclosure action because, by statute, the lien for the common charges was subject only to the “first mortgage of record.” The Court of Appeals held the two consolidated mortgages should be considered the “first mortgage” in this context:

Given the practical realities of this case, … the agreement between Citibank and the previous unit owner to consolidate the mortgages “into a single mortgage lien,” recorded years before the common charges lien, qualifies as “the first mortgage of record.” To hold otherwise places form over substance. Indeed, the ease with which a formulaic application of the term “first mortgage of record” can be manipulated demonstrates that such holding would not promote the statutory purpose. Plotch v Citibank, N.A., 2016 NY Slip Op 03648, CtApp 5-10-16

FORECLOSURE (CONSOLIDATED MORTGAGES CONSIDERED FIRST MORTGAGE OF RECORD WITH PRIORITY OVER COMMON CHARGES LIEN)/REAL PROPERTY LAW (CONDOMINIUM COMMON CHARGES, CONSOLIDATED MORTGAGES CONSIDERED FIRST MORTGAGE OF RECORD WITH PRIORITY OVER COMMON CHARGES LIEN)/MORTGAGES (CONDOMINIUM COMMON CHARGES, CONSOLIDATED MORTGAGES CONSIDERED FIRST MORTGAGE OF RECORD WITH PRIORITY OVER COMMON CHARGES LIEN)/CONDOMINIUMS (COMMON CHARGES LIEN, CONSOLIDATED MORTGAGES CONSIDERED FIRST MORTGAGE OF RECORD WITH PRIORITY OVER COMMON CHARGES LIEN)

May 10, 2016/by CurlyHost

Condominiums, Negligence, Real Property Law

Individual Condominium Owners Are Not Responsible for Conditions in the Common Elements of the Condominium, Which Are Under the Control of the Board of Managers—In a Case Stemming from a Slip and Fall in a Vestibule (a Common Element) the Individual Owners’ Motions for Summary Judgment Were Properly Granted

Plaintiff slipped and fell in a vestibule, one of the common elements of a condominium. The common elements of a condominium are under the control of the board of managers, not the individual condominium owners. Therefore the condominium owners’ motions for summary judgment were properly granted:

As a general rule, liability for a dangerous or defective condition on real property must be predicated upon ownership, occupancy, control, or special use of that property … . “[C]ondominium common elements are solely under the control of the board of managers” … . Here, the defendants, moving separately, each established their prima facie entitlement to judgment as a matter of law by demonstrating that as individual unit owners of the condominium, they had no duty to maintain the vestibule where the accident occurred, as it was one of the condominium’s common elements … . In opposition, the plaintiff failed to raise a triable issue of fact as to, inter alia, whether the defendants created the alleged wet condition that caused the plaintiff to slip and fall … . O’Toole v Vollmer, 2015 NY Slip Op 05655, 2nd Dept 7-1-15

July 1, 2015/by CurlyHost