ANY REMEDY WHEN CONDO BOARD REFUSES TO APPROVE SALE?

Tumayeva v. Ocean Condo. No. Two, NYLJ March 18, 2021, Date filed: 2021-02-05, Court: Supreme Court, Kings, Judge: Justice Debra Silber, Case Number: 515695/2020:

"In this action, commenced by a prospective purchaser of a condominium unit who was not able to purchase, defendants (the condominium association’s board of managers and the individuals who are board members) move, pre-answer, to dismiss the complaint for lack of standing, failing to state a cause of action, and founded on documentary evidence (CPLR 3211 [a] [1], [3], [7]). The four causes of action in the complaint are tortious interference with contract, breach of contract, breach of the By-Laws and/or breach of plaintiff’s third-party beneficiary status under the By-Laws, and breach of fiduciary duty.

....

Here, the court finds that the plaintiff lacks standing to raise the claims in her third cause of action, breach of the condominium’s by-laws, because the by-laws did not apply to her directly or as a third-party beneficiary, as she was solely a prospective unit purchaser. The fourth cause of action, breach of fiduciary duty, fails to state a viable cause of action for the same reason. Plaintiff alleges no facts that would establish a fiduciary relationship between her and any of the defendants.

Plaintiff’s second cause of action, for breach of contract — alleging a “contractual relationship” between herself and the defendants on the basis of a processing fee she paid to the condominium to review her request to purchase the unit — also fails to state a viable cause of action. Looking at it in the light most favorable to plaintiff, there are insufficient facts to demonstrate that she and the condominium board entered any contract. There was no offer, no acceptance, and no privity. The selling unit owner was the party who asked the board to review the application, and instead of paying the fee, asked the buyer to pay it. That does not create a contract between the board of managers and the prospective purchaser.

Thus, the second, third, and fourth causes of action are dismissed.

The only claim that plaintiff does have standing to maintain, in this court’s opinion, is plaintiff’s cause of action for tortious interference with her contract. She claims, perhaps not artfully enough, that the President of the Board of Managers owns and lives in the unit directly below the subject unit, that he did not want children living above him and plaintiff has young children, and he did not want a sale for the price plaintiff had negotiated with the seller. The contract was subject to short sale approval by the bank holding the first lien on the unit, a short sale which had been approved by the seller’s bank. Plaintiff claims the board was troubled that it would appear in the public record and lower the value of the units in the development, so the condominium’s Board interfered with her contract with the selling unit owner, so she was not able to purchase the unit. The condo board did not choose to exercise their right of first refusal, plaintiff alleges, but they would not provide the document which this development ordinarily provides, stating that they were not exercising their right of first refusal. Apparently, without this document, Chase Bank, which had provided a mortgage commitment to plaintiff, refused to close. While this document is not required by the Bylaws of the condominium, it is apparently the custom and practice in this development, which has hundreds of units in different “phases” of the development, each with a different board of managers. As a result of the delay, the holder of the second lien on the unit foreclosed on it, preventing plaintiff from closing. The auction was held about two months after plaintiff was supposed to close, and the unit was sold to an investor subject to the lien of the first mortgage.

Additionally, plaintiff’s claims against the individual defendants must be dismissed. Each of the individual defendants is named a party in their individual capacity, not in their capacity as officers or directors of the Board of Managers. An action against an unincorporated association (which is what a condominium is in New York) must be maintained against its president or treasurer (see NY Gen Assn Law §13; Safe Haven Props. LLC v. Madison Green Condominium, 183 AD3d 460 [1st Dept 2020]; Caines v. Prudential Ins. Co., 8 Misc 2d 789, 168 NYS2d 813 [Sup Ct, NY County 1957]). This error is amendable, however, and is not fatal to the action. Therefore, the entire complaint is dismissed as asserted against the individual defendants."

UNPAID CONDO CHARGES TO BOARD LEADS TO FORECLOSURE

BOARD OF MGRS. OF 4260 BROADWAY CONDOMINIUM v. Veloz, 2020 NY Slip Op 32361 - NY: Supreme Court July 20, 2020:

"In this condominium common charges lien foreclosure action, plaintiff Board of Managers of the 4260 Broadway Condominium (4260 Broadway) moves in motion sequence 001 for an order directing: (1) entry of default judgment against defendants Ramon N. Veloz and "John Doe" 1 through 10 pursuant to CPLR 3215^[1]; and (2) the appointment of a referee to compute and report the amount due to plaintiff pursuant to Real Property Actions and Proceedings Law (RPAPL) § 1321, or alternatively, pursuant to CPLR § 4311. Plaintiff's motion is unopposed. The Decision and Order is as follows:

BACKGROUND AND PROCEDURAL FACTS

Plaintiff claims that Veloz purchased the premises known as 4260 Broadway, Unit 604 in the city, county, and state of New York by deed dated February 20, 1998 (NYSCEF #15 — Deed). The deed contained a recitation that Veloz's title was subject to the Declaration and By-Laws of 4260 Broadway (id.). Plaintiff claims that pursuant to the governing documents of 4260 Broadway, all unit owners are obligated to pay common charges and special assessments assessed by the Board of Managers (NYSCEF #16 — 4260 Broadway By-Laws at Art 6, § 6.2). Plaintiff also claims that if common charges are not paid on the date due, then such assessment shall become delinquent and, together with late fees and interest, shall constitute a lien on the unit owner, and the Board of Managers shall be entitled to collect legal fees (id. at Art 6, §§ 6.2, 6.4).

Due to Veloz's sporadic and insufficient common charges payments, plaintiff filed a lien on February 1, 2019, at the City Register of the City of New York in the amount of $19,559.61 for unpaid payments through January 15, 2019 pursuant to RPAPL § 339-z (NYSCEF #17 — Lien). The lien is a continuing lien and encompasses the aggregate of unpaid common charges and special assessments that have accrued since the filing of the lien (id.). Plaintiff claims that as of November 20, 2019, Veloz was indebted to it in the amount of $23,252.46 for unpaid assessments and fees (NYSCEF #21 — Ledger). The 4260 Broadway By-Laws permit plaintiff to foreclose on a lien for unpaid common charges or to recover a money judgment for unpaid common charges (NYSCEF #16 at Art 6, § 6.4).

Plaintiff's first cause of action is for breach of contract, and plaintiff seeks monetary damages including interest and costs incurred (NYSCEF #18 at 8). Plaintiff's second cause of action is for attorneys' fees pursuant to Article 6 of the 4260 Broadway By-Laws (id.). Plaintiff's third cause of action is for a judgment of foreclosure and sale on Veloz's apartment unit, and that all persons claimed under defendants or all persons or parties making claims subsequent to the filing of the notice of lien shall be barred and foreclosed from all estate, right, title, interest, claim lien and equity of redemption of the premises (id. at 8-9). Defendants "John Does" 1 through 10 are possible holders of interest in the subject premises (id., ¶ 9).

Plaintiff filed its summons and verified complaint on May 3, 2019 (NYSCEF #18). Plaintiff served Veloz by substituted service at 4260 Broadway, Unit 604. Plaintiff personally delivered and left a copy of the documents with Cemio Ergun, a person of suitable age and discretion, who stated that he lived at the premises, on May 13, 2019 (NYSCEF #19 — Affidavits of Service). Plaintiff also mailed. a copy of the documents by first-class mail on May 14, 2019 (id.). Subsequently, plaintiff filed an affidavit of service on May 21, 2019 (id.). In compliance with CPLR § 3215(g), plaintiff also served Veloz with a copy of the summons by first-class mail on November 20, 2019, and submitted an affidavit of additional service (NYSCEF #22).

Veloz did not appear or answer in this action by filing an answer to the complaint or by submitting an opposition to plaintiff's motion. Plaintiff's instant motion was timely filed within a year of Veloz's default. Veloz's time to answer or appear was not extended.

DISCUSSION

The branch of plaintiff's motion for default judgment against defendant Veloz is granted. Plaintiff has demonstrated compliance with CPLR 3215. CPLR 3215(f) states that on any default judgment application, "the applicant shall file proof of service of the summons and the complaint... proof of the facts constituting the claim, the default and the amount due by affidavit." Plaintiff's submitted proof demonstrates its entitlement to entry of default judgment against Veloz.

Plaintiff properly served Veloz with the summons and complaint by substituted service in compliance with CPLR § 308. CPLR § 308 requires the documents to be delivered to "a person of suitable age and discretion at the dwelling place of the person to be served" and to be mailed "to the person to be served at his last known residence by first-class mail." Plaintiff personally delivered the documents to Veloz's apartment unit and left them with a person over the age of eighteen who lived there. On the next day, plaintiff also mailed the documents to Veloz's apartment unit by first-class mail. Thus, service in this matter was proper.

Further, plaintiff shows proper proof of the default. Veloz never appeared or answered in this matter (NYSCEF #12, ¶ 16). Additionally, plaintiff complied with CPLR 3215(g), which states that "an affidavit shall be submitted that additional notice has been given by or on behalf of plaintiff ... by mailing a copy of the summons by first-class mail to defendant at his place of residence." Plaintiff submitted proof of service of additional notice in compliance with CPLR 3215(g), by mailing a copy of the summons by first-class mail to Veloz at his apartment unit.

Next, plaintiff produces proper proof to demonstrate its entitlement to foreclose on Veloz's premises and sell it to recover on the unpaid common charges as permitted by statute and the governing documents of 4260 Broadway. Real Property Law (RPL) § 339-aa reads in pertinent part as follows:

The lien ... shall be effective from and after the filing in the office of the recording officer in which the declaration is filed a verified notice of lien stating the name (if any) and address of the property, the liber and page of record of the declaration, the name of the record owner of the unit, the unit designation, the amount and purpose for which due, and the date when due; and shall continue in effect until all sums secured thereby, with the interest thereon, shall have been fully paid or until expiration six years from the date of filing, whichever occurs sooner. In the event that unpaid common charges are due, any member of the board of managers may file a notice of lien as described herein if no notice of lien has been filed within sixty days after the unpaid charges are due... Such lien may be foreclosed by suit authorized by and brought in the name of the board of managers, acting on behalf of the unit owners... In any such foreclosure the unit owner shall be required to pay a reasonable rental for the unit for any period prior to sale pursuant to judgment of foreclosure and sale, if so provided in the bylaws, and the plaintiff in such foreclosure shall be entitled to the appointment of a receiver to collect the same. The board of managers, acting on behalf of the unit owners, shall have power, unless prohibited by the by-laws, to bid in the unit at foreclosure sale, and to acquire and hold, lease, mortgage and convey the same. Suit to recover a money judgment for unpaid common charges shall be maintainable without foreclosing or waiving the lien securing the same, and foreclosure shall be maintainable notwithstanding the pendency of suit to recover a money judgment.

(RPL § 339-a).

Plaintiff filed a valid lien on February 1, 2019 that listed the pertinent information and was properly and timely recorded (NYSCEF #17). As this is a continuing lien, Veloz's common charges continued to accrue following the recording of the lien. Plaintiff's submitted evidence demonstrates that Veloz has unpaid common charges and special assessments due and owing in the amount of $23,252.46 as of November 20, 2019. As permitted by statute, plaintiff is entitled to foreclose on Veloz's premises due to his failure to pay the common charges or clear the lien prior to this suit. As such, plaintiff has fully complied with all CPLR 3215 requirements and is entitled to entry of default judgment.

The branch of plaintiff's motion to appoint a referee is also granted. As Veloz failed to answer within the time allowed, an appointment of a referee pursuant to RPAPL § 1321 is appropriate here to determine the amount of charges outstanding and the amount on the prior incumbrances, and to examine and report whether Veloz's premises can be sold in parcels. All defendants who have or claim to have some interest in or lien upon Veloz's premises are subordinate to plaintiff's lien."

LICENSE TO ENTER ADJOINING PROPERTY GRANTED

RPAPL 881 provides:

When an owner or lessee seeks to make improvements or repairs to real property so situated that such improvements or repairs cannot be made by the owner or lessee without entering the premises of an adjoining owner or his lessee, and permission so to enter has been refused, the owner or lessee seeking to make such improvements or repairs may commence a special proceeding for a license so to enter pursuant to article four of the civil practice law and rules.  The petition and affidavits, if any, shall state the facts making such entry necessary and the date or dates on which entry is sought.  Such license shall be granted by the court in an appropriate case upon such terms as justice requires.  The licensee shall be liable to the adjoining owner or his lessee for actual damages occurring as a result of the entry.

Does this apply to adjoining condominium units? That was the issue in Voron v Board of Mgrs. of the Newswalk Condominium, 2019 NY Slip Op 2913,2 Decided on April 26, 2019, Supreme Court, Kings County, Rothenberg, J.:

"RPAPL 881 is "a codification of well-settled principles of jurisprudence expounded by courts . . . dealing with conflicting interests of adjacent property owners" (Chase Manhattan Bank v Broadway, Whitney Co., 57 Misc 2d 1091, 1096 [Sup Ct, Queens County 1968], affd 24 NY2d 927 [1969]).
"A proceeding pursuant to RPAPL 881 is addressed to the sound discretion of the court . . .which must apply a reasonableness standard in balancing the potential hardship to the applicant if the petition is not granted against the inconvenience to the adjoining owner if it is granted" (Queens Coll. Special Projects Fund, Inc. v Newman, 154 AD3d 943, 943-944 [2017] [internal citations omitted]), lv denied, 31 NY3d 901 [2018]; see also Bd. of Managers of Artisan Lofts Condo. v Moskowitz, 114 AD3d 491, 492 [2014]). "Courts are required to balance the interests of the parties and should issue a license 'when necessary, under reasonable conditions, and where the inconvenience to the adjacent property owner is relatively slight compared to the hardship of his neighbor if the license is refused'" (Bd. of Managers of Artisan Lofts Condo, 114 AD3d at 492 [quoting Chase Manhattan Bank, 57 Misc 2d at 1095]).

Here, the court finds that Petitioners have satisfied the statutory prerequisites of showing necessity and that neither the period of time requested nor the size of the area involved appears unreasonable. While the Unit 415 Owners assert that granting Petitioners access "is not simply an inconvenience, [but] it is extreme" because they have rented unit 415 to a family with an infant, Petitioners have established that those tenants have already vacated unit 415. The parties confirmed during oral argument that unit 415 is now vacant. Thus, granting Petitioners a limited license to access and perform work in the bathroom of unit 415 would not inconvenience any existing tenants.

Notably, licenses pursuant to RPAPL 881 have been granted to enter upon the adjoining neighbor's property even in situations where the proposed work is intrusive (see, e.g., N. 7-8 Inv'rs, LLC v Newgarden, 43 Misc 3d 623, 634 [Sup Ct, Kings County 2014] [license granted pursuant to RPAPL 881 where "the activities pursuant to the license will be more intrusive then a sidewalk shed or scaffold [because] Respondent will have a cantilevered balcony protrude 6 feet into his airspace, approximately 6 feet above his roof deck, for a year"]; Rosma Development, LLC v South, 5 Misc 3d 1014 [A] [Sup Ct, Kings County 2004] [license granted to developer of eight-story building, pursuant to RPAPL 881, to erect sidewalk bridging that would abut 10 feet onto the sidewalk of adjoining owner's property, as well as roof protection, for a period of twelve months]).

Importantly, RPAPL 881 affords the adjoining property owners adequate legal rights and remedies by subjecting the licensee to full liability "for actual damages occurring as a result of the entry." For such actual damages occurring as a result of the entry, the Unit 415 Owners have a cause of action against Petitioners under the statute, and, to insure payment of such damages, the court will require the maintenance of adequate insurance by Petitioners (see Sunrise Jewish Ctr. of Valley Stream v Lipko, 61 Misc 2d 673, 676-677 [Sup Ct, Nassau County 1969]). Additionally, the Unit 415 Owners will receive compensation for Petitioners' utilization of unit 415 during the time period of the license in a fair and equitable sum as set forth below. …"

MAKING ALTERATIONS TO CONDO UNIT

Not all issues are resolved by summary judgment and a trial may be required. That is the lesson in
Forestal Condominium v Davydov, 2018 NY Slip Op 00410, Decided on January 24, 2018, Appellate Division, Second Department:

"The plaintiff, the owner of a condominium building located in Forest Hills, commenced this action against the defendant, an owner of one of the units in the building (hereinafter the subject apartment), for a judgment declaring that the defendant violated the plaintiff's by-laws by performing alterations to the subject apartment without the plaintiff's permission, to enjoin the defendant from conducting any further construction on the subject apartment in violation of the by-laws, and for costs and attorneys' fees incurred in commencing this action.

The plaintiff moved for summary judgment on the complaint, and the defendant cross-moved for summary judgment dismissing the complaint. The Supreme Court denied the motion and the cross motion. The plaintiff appeals from so much of the order as denied its motion.

"Condominium ownership is a hybrid form of real property ownership, created by statute" (Board of Mgrs. of Vil. View Condominium v Forman, 78 AD3d 627, 629; see Real Property Law art 9-B; Caprer v Nussbaum, 36 AD3d 176, 183). The administration of the condominium's affairs is governed principally by its by-laws, "which are, in essence, an agreement among all of the individual unit owners as to the manner in which the condominium will operate, and which set forth the respective rights and obligations of unit owners, both with respect to their own units and the condominium's common elements" (Schoninger v Yardarm Beach Homeowners' Assn., 134 AD2d 1, 6; see Real Property Law § 339-v; Board of Mgrs. of Vil. View Condominium v Forman, 78 AD3d at 629; Murphy v State of New York, 14 AD3d 127, 133).

Here, the plaintiff failed to establish its prima facie entitlement to judgment as a matter of law (see Village at Corbin Hill Condominium II v Ungaro, 74 AD3d 958; Board of Mgrs. [*2]of Stewart Place Condominium v Bragato, 15 AD3d 601, 602). While article VI, section 12, of the plaintiff's by-laws specified that a unit owner could not make any structural addition, alteration, or improvement to his or her unit without the prior written consent of the plaintiff's board of managers, it also provided that the plaintiff's board of managers had 30 days to answer any written request after receipt of such request, and that the failure to respond within that time frame would constitute consent to the proposed addition, alteration, or improvement. The plaintiff's submissions failed to eliminate all triable issues of fact as to what requests the defendant made of the plaintiff, and what responses, if any, were provided by the plaintiff (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853)."

OLD OFFERING PLANS

Here is the situation: client is selling/buying an "old" co-op and no one has a copy of the original offering plan. The attorney general's office has no record for the co-op in their electronic database or file.

This site may help: http://offeringplanet.com/

THERE ARE OTHER TYPES OF FORECLOSURES

As noted in the following article:

"Homeowner associations typically have the right to place liens against wayward residents. Either through a court or state-regulated process, they can then foreclose on houses worth hundreds of thousands of dollars even for a few hundred dollars of unpaid debt, much like a municipality can for unpaid property taxes or a bank for a few missed mortgage payments."

See: MSN: $288 in unpaid fees, homeowner association took her home

AT A CLOSING TODAY

And this is a good time to alert all to a wonderful website for NY counsel.

The closing I have today is for a senior housing co-op which is managed by the residents. No one had the original offering plan for review (something an attorney is recommended to do for every co-op sale/purchase).

Offering Planet (www.offeringplanet.com) is a collection of copies of condominium and cooperative offering plans collected over the years. And it was there I was able to get a copy of the plan.