You are here: / Real Estate
, ,

THE BROKERAGE AGREEMENT DID NOT GIVE PLAINTIFF THE EXCLUSIVE RIGHT TO NEGOTIATE A LOAN ON DEFENDANT’S BEHALF; THEREFORE PLAINTIFF WAS NOT ENTITLED TO A COMMISSION ON A LOAN PROCURED BY DEFENDANT WITHOUT PLAINTIFF’S ASSISTANCE; “EXCLUSIVE RIGHT TO …” CRITERIA IN THIS CONTEXT EXPLAINED (SECOND DEPT).

The Second Department, in a full-fledged opinion by Justice Warhit, determined the brokerage agreement did not give plaintiff the right to a commission when the defendant procured financing on its own:

This appeal presents the opportunity to examine the law of brokerage agreements granting an “exclusive right to sell,” as well as the application of such agreements outside the context of transactions involving the sale or lease of real property. In the present case, the plaintiff broker contends that it had an exclusive agreement to secure certain financing on behalf of the defendant and that it was entitled to a commission even though it was not the procuring cause of a loan the defendant ultimately obtained. * * *

The agreement did not clearly and expressly provide the plaintiff with the exclusive right to deal or negotiate on the defendant’s behalf … . The defendant demonstrated that the plaintiff was not the procuring cause of the loan … . Angelic Real Estate, LLC v Aurora Props., LLC, 2025 NY Slip Op 04223, Second Dept 7-23-25

Practice Point: Consult this opinion for an explanation of the contractual terms necessary to confer on a broker an exclusive right to procure a loan, such that a commission is owed even when the loan is procured without the broker’s assistance (not the case here).

 

, , ,

THE CITY OF KINGSTON PROPERLY OPTED IN TO A RENT STABILIZATION REGIME PURSUANT TO THE HOUSING STABILITY AND TENANT PROTECTION ACT (HSTPA), PROPERLY DECLARED A HOUSING EMERGENCY, AND PROPERLY PROMULGATED RELATED GUIDELINES (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Halligan, determined the City of Kingston properly opted in to a rent stabilization regime pursuant to the Housing Stability and Tenant Protection Act (HSTPA) and properly declared a housing emergency. Petitioners, a group of private landlords and an association representing landlords in the Hudson Valley, unsuccessfuly sought to invalidate Kingston’s Emergency Tenant Protection Act (ETPA) opt-in and two guidelines subsequently promulgated by the Kingston New York Rent Guidelines Board (KRGB). The opinion is too detailed to fairly summarize here:

To enter into the ETPA’s rent-stabilization regime, a municipality’s “local legislative body” must make “[a] declaration of emergency” as to all or any class of housing accommodations within the municipality. It may do so only if the vacancy rate for those housing accommodations “is not in excess of five percent” … . Once the municipality makes such a declaration, it must recommend members to be appointed to a newly formed rent guidelines board by the State Division of Housing and Community Renewal’s (DHCR) commissioner … . Matter of Hudson Val. Prop. Owners Assn. Inc. v City of Kingston, 2025 NY Slip Op 03691, CtApp 6-18-25

 

, , , , ,

THE JUDGMENT OF FORECLOSURE AND SALE WAS REVERSED ON APPEAL; THE DEFENDANT IN THE FORECLOSURE ACTION DID NOT SEEK A STAY PENDING APPEAL; THE FACT THAT THE NOTICE OF PENDENCY, FILED BY THE BANK AT THE OUTSET OF THE FORECLOSURE PROCEEDINGS, WAS STILL IN EFFECT AT THE TIME OF THE FORECLOSURE SALE DID NOT AFFECT THE TRANSFER OF TITLE TO A GOOD FAITH PURCHASER AT THE FORECLOSURE SALE (SECOND DEPT).

The Second Department, reversing Supreme Court, in a full-fledged opinion by Justice Brathwaite Nelson, determined the defendant in the foreclosure action, Yesmin, upon reversal of the judgment of foreclosure and sale on appeal, was not entitled to cancel and discharge the referee’s deed transferring title to a good faith purchaser of the foreclosed property. It is significant here that the defendant in the foreclosure action did not seek a stay pending appeal. The notice of pendency, filed by the bank in the foreclosure action, which was still in effect at the time of the foreclosure sale, did not affect the title acquired by the good faith purchaser:

This appeal raises the question of what effect an extant notice of pendency has on the title to real property acquired by a third party from a judicial foreclosure sale when the judgment of foreclosure and sale is reversed on the appeal of a defendant to the foreclosure action. For the reasons that follow, we hold that a notice of pendency that was unexpired at the time of the foreclosure sale has no effect on the title acquired by a good faith purchaser for value from a sale conducted pursuant to the judgment of foreclosure and sale. * * *

Once a judgment is entered, the need to obtain a stay pending appeal in order to protect the right to restitution of the property is shared equally by a defendant or a plaintiff against whom the judgment is entered. Where a judgment has been entered against a plaintiff, “the plaintiff’s right to impair the marketability of the property during the pendency of an appeal [is conditioned] upon the issuance of a discretionary CPLR 5519(c) stay” … . Thus, regardless of whether the judgment is issued in favor of a defendant or the plaintiff, once a judgment is entered, a stay is necessary to protect the property, and in the absence of a stay, the winning party is free to transfer the property as it sees fit. * * *

Since [the good faith purchaser of the foreclosed property] established that it is “a purchaser in good faith and for value” whose title would be affected by restitution of Yesmin’s property rights lost by the judgment of foreclosure and sale, Yesmin may not seek restitution by canceling the referee’s deed and, instead, is limited to monetary relief against the plaintiff to the foreclosure action (CPLR 5523 …). Yesmin v Aliobaba, LLC, 2025 NY Slip Op 02964, Second Dept 5-14-25

Practice Point: If the defendant in a foreclosure action which is appealed does not seek a stay pending appeal, the reversal on appeal does not affect title transferred to a good faith purchaser at the foreclosure sale.

 

, , ,

HOLDOVER RENT IN AN AMOUNT THREE TIMES EXISTING RENT CONSTITUTED APPROPRIATE LIQUIDATED DAMAGES, NOT A PENALTY; DEFENDANT, THE SELLER OF THE COOPERATIVE APARTMENT, REQUESTED POSSESSION FOR THIRTY DAYS AFTER THE CLOSING (FIRST DEPT).

The First Department, reversing Supreme Court, determined the holdover rent, which was three times the existing rent, constituted appropriate liquidated damages, not a penalty. Plaintiffs are purchasers of defendant’s cooperative apartment:

Defendant seller, who requested continued possession of the apartment after closing for one month, complains that the holdover rent set in the liquidated damages provision of the post-closing possession agreement is grossly disproportionate because, over the course of 30 days, it amounted to three times the amount of rent set for the initial 30-day period of possession. However, “[w]hether a provision in an agreement is an enforceable liquidation of damages or an unenforceable penalty is a question of law, giving due consideration to the nature of the contract and the circumstances” … . The party “seeking to avoid liquidated damages” bears the burden “to show that the stated liquidated damages are, in fact, a penalty” … .

Plaintiffs’ cross-motion for summary judgment should have been granted. “[L]iquidated damages clauses that permit a landlord to recover between two or three times the amount of the existing rent or license fee in a holdover proceeding are not ‘grossly disproportionate’ to the probable loss and therefore, not a penalty” … . Moreover, defendant does not account for plaintiffs’ payment during the holdover period of the maintenance and assessment, in addition to the mortgage. The agreement further provides that defendant is responsible for plaintiffs’ costs of administering the agreement, among other things, which were unknown at the time the agreement was signed. Thus, “the amount liquidated bears a reasonable proportion to the probable loss and the amount of actual loss is incapable or difficult of precise estimation” … . Sang Min Kim v Bedouet, 2025 NY Slip Op 02875, First Dept 5-13-25

Practice Point: Here holdover rent in an amount three times the existing rent was deemed appropriate liquidated damages, not a penalty.

 

, , , , ,

PETITIONER JUDGMENT-CREDITOR WAS ENTITLED TO THE TURNOVER OF CERTAIN REAL PROPERTY WHICH HAD BEEN FRAUDULENTLY TRANSFERRED TO A TRUST BY THE RESPONDENT JUDGMENT-DEBTORS, AS WELL AS THE CONTENTS OF RESPONDENTS’ SAFETY DEPOSIT BOX (SECOND DEPT).

The Second Department, reversing Supreme Court, determined petitioner was entitled to real property which was fraudulently transferred by respondents to a trust, as well as to the contents of respondents’ safety deposit box, to satisfy a judgment against respondents in the approximate amount of $338,000:

… [P]etitioner commenced this proceeding pursuant to CPLR article 52, seeking … the turnover of a safety deposit box maintained by the respondents Zakhar Brener and Ninel Krepkina and of certain residential real property owned by the respondent B and K Trust. * * *

… [P]etitioner established her prima facie entitlement to judgment as a matter of law on the cause of action seeking relief pursuant to Debtor and Creditor Law former § 273 by submitting evidence that Brener was insolvent at the time of the conveyance of the property, which was made without fair consideration … .  * * *

… [P]etitioner established her prima facie entitlement to judgment as a matter of law on the cause of action seeking relief pursuant to Debtor and Creditor Law former § 276. “Pursuant to Debtor and Creditor Law former § 276, every conveyance made with actual intent to hinder, delay, or defraud either present or future creditors is fraudulent. The requisite intent required by this section need not be proven by direct evidence, but may be inferred from the circumstances surrounding the allegedly fraudulent transfer” … . “In determining whether a conveyance was fraudulent, the courts consider the existence of certain common ‘badges of fraud,’ which include ‘a close relationship between the parties to the alleged fraudulent transaction; a questionable transfer not in the usual course of business; inadequacy of the consideration; the transferor’s knowledge of the creditor’s claim and the inability to pay it; and retention of control of the property by the transferor after the conveyance'” … . “A prime example of this type of fraud is where a debtor transfers his property to another while retaining the use thereof so as to continue . . . free from the claims of creditors” … . Here, the petitioner submitted, among other things, the Brener respondents’ answer, wherein they admitted that Brener continued to occupy and use the property with Krepkina. …

… [P]etitioner established her prima facie entitlement to judgment as a matter of law on the cause of action to direct Chase Bank to turn over of the contents of the safe deposit box maintained by Brener and Krepkina by submitting a letter establishing that Brener and Krepkina jointly held a safe deposit box at one of Chase Bank’s branches in Brooklyn … . Matter of Schiffman v Affordable Shoes, Ltd., 2025 NY Slip Op 02786, Second Dept 5-7-25

Practice Point: Consult this decision for a concise description of a CPLR Article 52 turnover proceeding by a judgment creditor against judgment debtors based in part upon respondents’ fraudulent transfer of real property to avoid creditors (Debtor and Creditor Law sections 273 and 276).

 

,

HERE THE PROVISIONS IN THE LETTER AGREEMENT DID NOT GIVE PLAINTIFF THE EXCLUSIVE RIGHT TO SELL THE PROPERTY (FIRST DEPT). ​

The First Department, reversing Supreme Court, determined the letter agreement did not give plaintiff an exclusive right to sell the property:

Plaintiff’s argument that the parties’ letter agreement gave it an exclusive right to sell is unavailing. To create an exclusive right to sell, a contract “must clearly and expressly provide that a commission is due upon sale by the owner or exclude the owner from independently negotiating a sale” … . The agreement here lacks express language excluding a direct conveyance by defendants, nor is that a necessary implication of its terms … . The agreement’s language requiring defendants to “inform” plaintiff if contacted about potential transactions is insufficient to create an exclusive right to sell … . Moreover, plaintiff fails to show that the agreement’s tail provision, entitling plaintiff to a fee for efforts at procuring a transaction during its engagement even if the transaction were completed only after the termination of that engagement, necessarily implied that the parties intended to create an exclusive right to sell. Cantor Fitzgerald & Co. v ObvioHealth Pte Ltd., 2024 NY Slip Op 06421, First Dept 12-19-24

Practice Point: This decision gives some insight into the criteria for conferring the exclusive right to sell property.

 

, ,

THERE WAS A QUESTION OF FACT WHETHER THE TIME-OF-THE-ESSENCE CLOSING DATE SET IN SELLER’S LETTER PROVIDED SUFFICIENT TIME FOR BUYER TO CLOSE; THEREFORE SELLER WAS NOT ENTITLED TO SUMMARY JUDGMENT REQUIRING SPECIFIC PERFORMANCE; CRITERIA EXPLAINED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined there was a question of fact whether the time-of-the-essence closing date set in a letter from seller’s counsel allowed sufficient time for the buyer to close. Therefore the seller was not entitled to summary judgment requiring specific performance based on the buyer’s failure to appear:

“Where there is an indefinite adjournment of the closing date specified in the contract of sale, some affirmative act has to be taken by one party before it can claim the other party is in default; that is, one party has to fix a time by which the other must perform, and it must inform the other that if it does not perform by that date, it will be considered in default” … . “The notice setting a new date for the closing must (1) give clear, distinct, and unequivocal notice that time is of the essence, (2) give the other party a reasonable time in which to act, and (3) inform the other party that if he [or she] does not perform by the designated date, he [or she] will be considered in default” … . “It does not matter that the date is unilaterally set, and what constitutes a reasonable time for performance depends upon the facts and circumstances of the particular case” … . “Included within a court’s determination of reasonableness are the nature and object of the contract, the previous conduct of the parties, the presence or absence of good faith, the experience of the parties and the possibility of prejudice or hardship to either one, as well as the specific number of days provided for performance” … . “‘[T]he question of what constitutes a reasonable time is usually a question of fact'” … . Fink v 218 Hamilton, LLC, 2024 NY Slip Op 06026, Second Dept 12-4-24

Practice Point: Consult this decision for an explanation of the law surrounding setting an enforceable time-of-the-essence date for the closing.

 

, ,

THE LAWSUIT SOUGHT RETURN OF A DOWN PAYMENT UNDER A REAL ESTATE CONTRACT; BECAUSE THE LAWSUIT DID NOT AFFECT TITLE, POSSESSION, USE OR ENJOYMENT OF THE PROPERTY A NOTICE OF PENDENCY IS NOT APPROPRIATE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the notice of pendency should have been cancelled because the lawsuit, which sought the return of a down payment under a real estate contract, did not affect title, possession, use or enjoyment of the real property:

Pursuant to CPLR 6501, “[a] notice of pendency may be filed only when ‘the judgment demanded would affect the title to, or the possession, use or enjoyment of, real property'” … . “When the court entertains a motion to cancel a notice of pendency in its inherent power to analyze whether the pleading complies with CPLR 6501, it neither assesses the likelihood of success on the merits nor considers material beyond the pleading itself; ‘the court’s analysis is to be limited to the pleading’s face'” … .

Here, the complaint, on its face, only asserts causes of action to recover monetary damages and does not seek relief that would affect the title to, or the possession, use, or enjoyment of, the property. Mallek v Felmine, 2024 NY Slip Op 02808, Second Dept 5-22-24

Practice Point: A notice of pendency is appropriate only when the underlying lawsuit involves title, possession, use or enjoyment of real property. A suit for the return of a down payment does not warrant a notice of pendency.

 

, , ,

A MANAGING AGENT IS NOT LIABLE FOR INJURY CAUSED BY A DANGEROUS CONDITION ON THE MANAGED PROPERTY UNLESS THE MANAGING AGENT EXERCISES COMPLETE AND EXCLUSIVE CONTROL OVER THE OPERATION OF THE PROPERTY (SECOND DEPT). ​

The Second Department, reversing (modifying) Supreme Court, determined the property managing agent did not exercise complete and exclusive control of the operation of the property and therefore could not be held liable for plaintiff’s trip and fall over a stub-up pipe protruding from a step:

Supreme Court should have granted that branch of the defendants’ motion which was for summary judgment dismissing the complaint insofar as asserted against CBRE [the managing agent] on the ground that CBRE does not own, operate, or control the premises. “Where, as here, a managing agent is accused of nonfeasance which causes injury to a third party, it is subject to liability only where it has complete and exclusive control of the management and operation of the property in question” … . “A managing agent is not in complete and exclusive control of the premises where the owner has reserved to itself a certain amount of control in the written agreement” … .

Here, CBRE established, prima facie, that it was a managing agent of the premises and that the management agreement was not so comprehensive and exclusive as to displace the duty of the owner of the premises to maintain the premises safely … . Quezada v CBRE, Inc., 2024 NY Slip Op 01829, Second Dept 4-3-24

Practice Point: A managing agent is not liable for injury caused by a dangerous condition on the managed property unless the agent exercises complete and exclusive control over the operation of the property.

 

,

HERE THE LIQUIDATED DAMAGES CLAUSE WAS DEEMED AN UNENFORCEABLE PENALTY BECAUSE THERE WAS NO RELATONSHIP BETWEEN THE AMOUNT OF THE LIQUIDATED DAMAGES AND THE ACTUAL DAMAGES (SECOND DEPT). ​

The Second Department noted that a liquidated damages clause in a contract will constitute an unenforceable penalty if the amount bears no relation to the actual damage. Here, pursuant to the real estate purchase agreement,  $35,000 was put in escrow pending the resolution of three open building permits. The purchaser demanded the escrow funds because two of the three building permits remained open. The Second Department found there was no relationship between the $35,000 liquidated damages and the actual damage:

… [T]he record demonstrates that the sum deposited into the escrow account had no relationship to the estimated cost of “closing out” the open building permits in relation to the subject improvements to the property. Furthermore, the record demonstrates that at the time that the escrow agreement was entered into, the estimated actual damages were readily ascertainable. Under these circumstances, the purported liquidated damages clause constituted an unenforceable penalty … . Schmuelian v Bichoupan, 2024 NY Slip Op 01738, Second Dept 3-27-24

Practice Point: A liquidated damages clause will not be enforced if the amount has no relationship with the actual damages. In that circumstance the liquidate damages constitute an unenforceable penalty.

 

Categories

Sign Up for the Mailing List to Be Notified When the Site Is Updated.

  • This field is for validation purposes and should be left unchanged.

Copyright © 2025 New York Appellate Digest, Inc.
Site by CurlyHost | Privacy Policy