Condominium Takes Over Sponsor Controlled Board & Receives $450k
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OUTCOME:
The unit owners of a 24 unit luxury new construction condominium in Manhattan hired Adam Leitman Bailey, P.C. after the unit owners' complaints and concerns about construction defects were ignored by t...he sponsor-controlled Board, and demands by the unit owners to the sponsor that the sponsor turn over control of the Board to the residents were denied.
Adam Leitman Bailey, P.C. organized the unit owners, and despite Sponsor's tactics to prevent its loss of power, the residents took control of the Board. Once in control of the Board, the board was officially able to bring Adam Leitman Bailey, P.C. on as board counsel, and Adam Leitman Bailey, P.C. was able to bring in a forensic engineering team to investigate the construction defects at the building. Adam Leitman Bailey, P.C. then made comprehensive demands upon the Sponsor and showcased the strength of the Board's case and its arsenal of legal weapons.
Without ever having to turn to court or utilize intervention of the Office of the Attorney General, Adam Leitman Bailey, P.C. negotiated a settlement with the once stonewalling sponsor. The board gained the following in the final settlement: $450k cash upon signing of the agreement, transfer of the remaining sponsor owned apartment to the board, and two significant construction projects, both of which are secured by a cash escrow and liquidated damages. The value of the settlement for this 24 unit condominium was well in excess of 1 million dollars.
Adam Leitman Bailey and Leni Morrison Cummins represented the board of directors in this matter.
Real estate
Fighting For and Advising On Sandy
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OUTCOME:
In October of 2012, the most destructive storm ever to invade New York City devastated many of Adam Leitman Bailey's clients' buildings— their homes, offices, stores, and restaurants— and changed New ...York City forever, presenting significant legal challenges.
Forgetting about our own comfort, under Adam Leitman Bailey's leadership, we took action. Our regular offices being in a zone of the city without electricity, we set up temporary midtown offices, where we were called on to assist in the immediate emergencies. Besides bringing supplies to meetings, we counseled our clients on basic real estate survival skills. Understanding the danger flooding presented particularly in the form of mold and damage to electrical systems, we counseled our clients on short terms solutions for thousands of homes.
Not limiting our relief efforts to our own clientele, we assisted the entire City by publishing white papers instructing citizens on their legal rights.
We worked with the federal government to focus necessary aid to our clients. We dedicated pro bono attorneys to work full time, educating clients on gathering and preparing the necessary documents for collecting insurance money and obtaining government relief.
Obtaining the monies to rebuild became the next phase and we worked with the insurance companies, many times presenting case law to persuade the companies that our clients' situations qualified under the policy.
Naturally, not every situation can be resolved through persuasion. Litigation sometimes ensued and Adam Leitman Bailey, P.C. brought victory to the owner in the first Sandy related case between a building owner and a tenant restaurant.
Adam Leitman Bailey also worked with government officials to work on restoring not only our clients' homes but their beaches.
Although many challenges remain, this City with millions of people within limited space rose to the challenge to overcome the loss of life as they knew it and to embrace the new post-Sandy world. Adam Leitman Bailey, P.C. is proud to be one of the law firms at the center of the rebuilding process.
Real estate
Makes New Law by Holding Developer Personally Liable for Construction Defects in Newly Constructed Building
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OUTCOME:
A recent decision from the Kings County Commercial Division has upheld contract, warranty, and veil-piercing claims alleged against a condominium sponsor and its principal for construction defects. In... this action, the Board of Managers, represented by Adam Leitman Bailey, PC seeks to recover damages from the condominium sponsor and its principals for various construction defects, including lack of fire stopping and defects in the window wall system that have allowed significant water infiltration into the building and units. The Sponsor and its principals moved to dismiss pursuant to CPLR 3211(a)(1), (3), and (7), CPLR 3013, CPLR 3014 and CPLR 3016(b). The decision upheld the plaintiff's claims for breach of contract and breach of warranty. Significantly, the Court upheld the claims against the Sponsor as well as its principals.
The decision is notable in several respects. First, the Court summarily dismissed the Sponsor's argument that the plaintiff lacked standing to bring this action against the Sponsor. The Court referenced Real Property Law 339-dd, which permits the Board to maintain an action on behalf of the condominium unit owners with respect to any cause of action relating to common elements or to two or more units, and plaintiff's affidavit showing unanimous consent of the Board members to commence this action, and therefore dismissed the Sponsor's lack of standing argument as "unsubstantiated."
Even more significantly, the Court also permitted plaintiff to pursue its claim to pierce the limited liability status of the Sponsor and seek damages for breach of contract and breach of warranty from the principals of the Sponsor personally. Specifically, the Court found that the certification contained in the Offering Plan, which was signed by the individual principals of the Sponsors and incorporated into each purchase agreement, was sufficient to establish a relationship of privity between the individual principals and the unit owners. In finding a relationship of privity between the unit owners and the principals of the Sponsor, the Court permitted the unit owners' claims against the individual defendants to stand.
The Court further upheld plaintiff's claim for breach of express warranty despite the Sponsor's argument that the terms of the Offering Plan prohibited the plaintiffs from suing the Sponsor for money damages as a result of the Sponsor's breach of warranty. The Court noted plaintiff had adequately pled that the Sponsor subsequently agreed to remediate defects covered under the express warranty and then abandoned its duty to do so. As such, plaintiff's claims for breach of express warranty were upheld.
Jeffrey R. Metz, William J. Geller, Leni Morrison Cummins and Courtney J. Lerias represented Adam Leitman Bailey P.C. on the motion.
Real estate
Adam Leitman Bailey, P.C. Successfully Obtains Judgment in Three Common Charges Foreclosure Actions
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OUTCOME:
Our clients, the Boards of Managers of condominiums, often find themselves in the precarious situation of having a unit owner that is failing to pay common charges despite numerous notifications of the... default and are therefore forced to file liens on the units and bring a foreclosure action against the unit. And, because of the reticent status of the judiciary in foreclosure actions and the detailed technical requirements of the foreclosure laws that can be used as ammunition not only by the unit owners but by the court itself to defeat such an action, obtaining judgment can be a difficult and time consuming task. However, given Adam Leitman Bailey's extensive experience with both bank and common charge foreclosures, this problem is not as daunting as it seems. In fact, our firm successfully obtained default judgment in three common charges cases just this month.
In each case, the attorneys at Adam Leitman Bailey, PC began with filing a Notice of Lien that complied with the dictates of New York Real Property Law §339-aa. Upon filing of the Notice of Lien, our office sent a copy of the lien to the respective unit owner with a notice that an action would be brought against him or her should the default in payment of common charges not be cured within thirty days. After the passage of thirty days, the attorneys drafted a Summons and Complaint that complied with all of the requirements of the New York Real Property Actions and Proceedings Law, including the notice requirements of New York Real Property Actions and Proceedings Law §1303. Specifically, §1303 requires that a notice (in bold, 14 point type and the title in 20 point type, and printed on colored paper), accompany the summons and complaint and contain the statutorily required details about sources of information and assistance for the unit owner.
After each unit owner's time to answer the foreclosure complaint or otherwise appear in the action had expired, Adam Leitman Bailey, PC promptly moved for default. Aware of the difficulty in obtaining a default judgment in a foreclosure action, the attorneys at Adam Leitman Bailey, PC, included several additional documents in their motions to safeguard against a denial of the motion on procedural grounds. First, an attorney affirmation was included stating that the requirements of New York Real Property Actions and Proceedings Law §1303 were met by including the notice, in the requisite font and on the colored paper, in each and every copy of the summons and complaint provided to the process server. Second, an additional attorney affirmation was included that stated the action complied with all of the additional requirements of the New York Real Property Actions and Proceedings Law and Civil Practice Laws and Rules applicable to foreclosure actions on liens for unpaid common charges. And lastly, a client affidavit accompanied the default motion, detailing the amounts owed and all the failed previous attempts to collect the outstanding amount.
Even in the face of the judicial system's reluctance to grant default judgment in these types of cases, due to attention to detail and compliance with the very specific requirements of the New York Real Property Actions and Proceedings Law, as well as the New York Real Property Law in foreclosure actions, Adam Leitman Bailey, PC has been successful in obtaining judgment for its clients.
Dov Treiman, Leni Morrison Cummins, Courtney J. Lerias and Vladimir Mironenko represented Adam Leitman Bailey P.C. on the motion.
Real estate
Adam Leitman Bailey, P.C. Successfully Secures a Judgment of Eviction Against a Condominium Unit Owner
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OUTCOME:
On behalf of a Queens County Condominium, Adam Leitman Bailey, PC brought a Supreme Court action for ejectment and nuisance against the owner of a particular condominium unit and the owner’s son who ac...tually occupied the unit. Over a period in excess of 2 years, the owner’s son engaged in a pattern of behavior designed to shock, humiliate, intimidate and terrorize the other residents of the Condominium. Specifically, the occupant had, on more than one occasion, exposed himself to other residents and their children, used the Condominium’s fire extinguishers to damage the other residents’ property, defaced Condominium property, yelled vile and racist epithets at other residents, threatened other residents with bodily harm, caused stenches to emanate from the unit, stole electricity from the Condominium, stole personal property from the other residents, and allowed his dog to roam free in the common areas of the Condominium. The owner’s son also invited several of his cohorts to reside with him in the condominium unit at various times. Although the occupant’s conduct caused the police to respond to the Condominium on several occasions, no criminal charges were preferred against him. Despite his offensive and intimidating conduct, his relationship to the unit owner prevented his removal from the Condominium by the police. His reign of terror continued until Adam Leitman Bailey, P.C. became involved.
Invoking extremely rarely used and nearly unheard of procedures, Adam Leitman Bailey, P.C. cited the Condominium’s Declaration and By-Laws. These prohibit any unit owner or occupant from engaging in any immoral, improper, offensive or unlawful use of the property and allow the Condominium Board to evict any unit owner in violation of the Declaration or By-Laws. At the firm’s urging, the Supreme Court of the State of New York, County of Queens, granted the Plaintiff-Board a judgment of possession and issued a writ of assistance which directed the Queens County Sheriff to evict all occupants of the unit. The Court did not grant the owner’s son a period to cure his misbehavior.
The Queens County Sheriff was tasked to enforce the judgment of possession, because the judgment issued from the Supreme Court. Although the Queens County Sheriff does not perform evictions with the frequency of the City Marshals, Adam Leitman Bailey, P.C. worked with the Queens County Sheriff’s office to ensure prompt execution of the judgment.
The occupant of the unit in question brought, by Order to Show Cause, a motion for a stay of eviction proceedings which the Court treated as a motion to vacate the default judgment. After vigorous opposition from Adam Leitman Bailey, P.C., the Court ruled in favor of the Board. The Court held that 1) the occupant had presented no evidence whatsoever to support any kind of contention that he did not engage in the unlawful, disturbing and offensive behavior described in the Board’s complaint or 2) that he has ceased the above described behavior and will not continue to engage in such behavior in the future. In its decision, the Court lifted the stay of eviction and permitted the eviction to proceed. Once again the Court did not grant the owner’s son a period to cure his misconduct.
Dov Treiman, James M. Marino, Courtney J. Lerias, and, Leni Morrison Cummins represented Adam Leitman Bailey PC on the motion.
Real estate
Adam Leitman Bailey, P.C.’s Tough Advocacy Results In Pre-Answer Settlement For Condominium Sponso
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OUTCOME:
Adam Leitman Bailey, P.C., represented a prominent real estate investment fund known for developing and redeveloping real estate in densely populated, ethnically-diverse urban communities. In this cas...e, the firm was engaged by the fund to represent the sponsor and principals of a mixed-use, 47-unit residential/2-unit commercial condominium in the Park Slope neighborhood of Brooklyn. In 2011, the condominium's Board of Managers commenced a lawsuit against the sponsor and principals, alleging construction and design deficiencies in the condominium building's window-wall system that resulted in water infiltration. The Board alleged damages in excess of $2.5 million.
At the earliest stage of the litigation, Adam Leitman Bailey, P.C.'s aggressive defense tactics compelled the plaintiff Board to withdraw portions of its original complaint and, ultimately, to settle the matter before the defendants were required to answer the Board's allegations. Applying its expertise in condominium law, Adam Leitman Bailey, P.C., moved to dismiss the Board's claims for fraud, negligent misrepresentation, negligence, breach of warranty, and all claims asserted against the individual defendants. Instead of opposing the motion, the plaintiff Board voluntarily dropped its negligence, negligent misrepresentation, and implied warranty claims, and served an amended complaint. Adam Leitman Bailey, P.C., promptly filed a second motion to dismiss the amended complaint. Before the motion was decided, the plaintiff Board initiated settlement discussions. In the end, the defendants were able to settle the matter for a small fraction of the alleged damages prior to answering the amended complaint and before a single deposition was taken.
Adam Leitman Bailey argued the case in court and handled the settlement negotiations with the judge while Adam Leitman Bailey, P.C., attorneys John M. Desiderio, Leni Morrison Cummins and Scott J. Pashman drafted the papers.
Real estate
Adam Leitman Bailey, P.C. Gets Building Sponsor to Fix Building, Obtain Cash Settlement and Force it to Pay its Bills
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OUTCOME:
Sloppy band aid repairs by the sponsor's construction company were the standard response to numerous calls by unit owners complaining of serious leaks in this 32 unit new construction condominium in Br...ooklyn. Each time a unit owner or the board called the sponsor to get a leak fixed, the sponsor was agreeable and told the unit owner or the board to call the subsidiary construction company. Each time, weeks would pass, but finally a single worker would arrive at the building with tar, tarp, caulk, and even duct tape to try to stop the water incursion. Since the condominium was less than five stories tall, the sponsor was obligated to make repairs under the statutory new home warranty. The sponsor, knowing this, did not refuse to make repairs, but rather did so in a manner so as to dissuade the unit owners and the board from making warranty claims/calls. After all, black tar applied to the ceiling of an apartment to stop a leak is not only ineffective, but also aesthetically abhorrent.
Finally, after some terrible rains that led to continued leaks to all of the units and a literal flood in the basement, the board turned to Adam Leitman Bailey, P.C. for help. At first, the sponsor did not respond to our demands, but once the lines of communication were opened between Adam Leitman Bailey, P.C. and sponsor's counsel, the story changed.
At first we came to an agreement for a sponsor work protocol by which the sponsor's construction company would be permitted to perform work to stop the leaks. The detailed sponsor work protocol was designed to protect the condominium, and included a comprehensive scope of work, engineering oversight and approval, insurance, and warranties. Once this work was underway, Adam Leitman Bailey, P.C. was able to step back from the project and wait for the work to be completed - saving the board from spending unnecessary legal fees.
9 months later, after the work was completed to the board's satisfaction, the board came back to us and asked us to pursue the remaining construction defect claims. Despite the fast approaching expiration of the statute of limitations, we were able to negotiate a cash settlement with the sponsor to cover the additional construction defects, and expenses, including our legal fees. The final cash settlement figure was 600% higher than the sponsor's initial offer.
In addition to the foregoing, sponsor stopped paying its common charges and assessments for the two units it still owned and rented out. We were able to collect all of the unpaid fees directly from sponsor's tenants by sending RPL 339-kk rent demand letters.
Adam Leitman Bailey, John M. Desiderio, and Leni Morrison Cummins represented the board in this matter and continue to be the corporate counsel for the building.
Real estate
Newly Constructed Condominium Receives 900k Including Donation of Apartment
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OUTCOME:
The board of a 66 unit luxury new construction condominium in Queens hired Adam Leitman Bailey, P.C. after the board's numerous attempts at trying to compel the condominium's sponsor to remediate the s...erious facade, plumbing, and leaking conditions failed. Adding insult to injury, the condominium's sponsor was trying to force the board to purchase the residential unit designated as the resident managers unit for an inflated price financed by the sponsor, forcing the board to pay an unconscionable interest rate on the mortgage to the sponsor. Under the terms of the condominium's offering plan, the board did have the obligation to purchase the unit, but Adam Leitman Bailey, P.C. was able to forestall the closing in order to use the asset as a bargaining chip during settlement discussions pertaining to the construction defects.
Without ever having to turn to court or utilize intervention of the Office of the Attorney General, we negotiated a settlement with the once stonewalling sponsor. The board gained the following in the final settlement: transfer of the $650,000 resident manager's unit free and clear, all facade remediation work, $150,000 cash to compensate the board for plumbing remediation, and $100,000 to cover expenses incurred by the board to pursue the sponsor, which covered all attorneys' and engineering fees.
Adam Leitman Bailey, John M. Desiderio, and Leni Morrison Cummins were the legal team who represented the board.
Real estate
Adam Leitman Bailey, P.C. Achieves Large Financial Settlement
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OUTCOME:
Units were marketed as modern luxury condominium units in the heart of Williamsburg. Purchasers began closing on 15 of the 16 units in the two adjoining buildings beginning at the end of 2007. Shortl...y after closings began, unit owners began to realize that despite the fancy marketing, the building was rampant with construction defects.
Unlike many other condominium sponsors facing this situation, this sponsor did return phone calls and did agree to repair the work. However, the board quickly learned that all of the sponsor repairs were just as shoddy, no more than a band-aid on the original work. Sponsor was merely caulking and even using duct tape to keep the rain from pouring into the units. Sponsor was using these tactics to prevent the board and unit owners from realizing how bad the construction truly was – in order to delay any law suit beyond the statute of limitations. When the board became wise to sponsor's tricks, the board turned to Adam Leitman Bailey, P.C. for help.
Our first order of business was to hire a team of engineers and architects to find out what was really wrong with the buildings and units. Unfortunately, there was a lot wrong – serious health and safety issues and leaks galore.
We contacted local politicians and submitted a complaint on behalf of the board to the New York State Office of the Attorney General.
Finally, after months of negotiation and mediation before the Office of the Attorney General, we reached a large all-cash settlement. No more band-aid repairs for this condominium. The board is now using the settlement proceeds to make the repairs in order to put the buildings and units in the condition promised in the offering plan and marketing materials.
Adam Leitman Bailey, John M. Desiderio, and Leni Morrison Cummins were on the legal team at Adam Leitman Bailey, P.C. representing the board.
Real estate
Board Collects Common Charges Without Judicial Intervention
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OUTCOME:
With the recent economic downturn, condominium boards have been plagued by unit owner common charge defaults. With fewer unit owners paying their common charges, Boards are faced with the prospect of i...ncreasing common charges in order to collect the deficit from those unit owners in good standing -- unless they can collect the unpaid common charges from the delinquent unit owners.
Most Boards who attempt to collect common charges from delinquent unit owners are faced with essentially three choices – enter into a payment plan with the defaulting unit owner, sue for money damages, or foreclose. The problem with the payment plan option is that when a unit owner misses a payment, the Board must start an action, which takes time and money. This is really just delaying the inevitable. If a Board decides to go straight to court (small claims or otherwise), the Board may succeed in getting a judgment on the outstanding common charges, but would have to commence consecutive actions in order to keep collecting the common charges as they continue to accrue. Also, collection on the judgment(s) may be impossible. This starts a cycle of continuous legal bills and unpaid common charges. The third option, foreclosure, is the clear choice of these three options because, theoretically, a Board will be made whole by the sale of the unit. However, especially with the recent regulations creating more red tape for foreclosure proceedings, this can be a long process.
Our office has created a fourth option, which blends the benefits of the three standard options.
Two years ago, the Board of Managers of a three-tower 250-unit condominium retained our firm and advised that a large percentage of the unit owners were delinquent in common charge payments. The Board further advised that prior counsel had employed a collection plan involving payment plans and suits for money judgment. Many unit owners already had numerous judgments against them, but no money had actually been collected.
We realized that we needed a new collection method that would keep us out of court, incentivize unit owners to make payments, and rid the condominium of those unit owners who had no way of keeping up with their common charge obligations going into the future.
The result was an agreement that included a payment plan secured by a deed in lieu of foreclosure ("DILF"). The DILF is executed simultaneously with the agreement and held in escrow by our firm during the term of the payment plan. The DILF is released to the Board for recording if a payment is missed and not cured within 10 days. Also included in the agreement is a Notice to Quit, which, as part of the agreement, is deemed to have been duly and properly served upon the defaulting unit owner on the 15th day succeeding the date of the recording of the DILF, and which further obligates the unit owner to vacate the unit on the 27th day after recording. Therefore, if a unit owner defaults on its obligations under the payment plan (and does not timely cure), not only will the Board become the record owner of the unit, but will gain possession via the Notice to Quit as soon as 27 days later.
Essentially, the agreement tests a delinquent unit owner to determine whether he or she can catch up on their unpaid common charges under the payment plan and become a unit owner in good standing. If they can – the common charges are paid in full and the unit owner keeps his or her unit. If the unit owner cannot – the release of the DILF shortcuts the entire foreclosure process and rids the condominium of a unit owner who cannot keep up with his or her payment obligations.
The Board was able to collect most of the unpaid common charges without incurring significant legal expense or spending years in court, and the rate of common charge delinquency has dropped substantially. By utilizing this method, the Board avoided raising common charges for all unit owners.
