Adam Leitman Bailey, P.C. Winter 2017-18 Newsletter

ADAM LEITMAN BAILEY, P.C.
new yor k r eal estate attor neys
www.alblawfirm.com PAGE 1212-825-0365
Sheltering the Homeless in Rent-
Stabilized Units
How to Navigate HPD’s Alternative
Enforcement Program
NEWSLETTER WINTER 2017
by Adam Leitman Bailey and Dov Treiman
As the city of New York seeks to phase out its use
of rent-stabilized apartments as shelters for homeless
people,1
the organizations that administer this program
struggle for funding, and the courts struggle to find the
correct theoretical framework to determine if the units
are still rent stabilized and, once the homeless persons
are replaced with conventional tenants, into which legal
category to place the new occupants. The race is on.
With homeless populations continuing to swell2
and
charitable organizations looking to help house them, a
thorough understanding of the applicable principles of
rent stabilization is becoming increasingly essential. The recent decision of the
Appellate Term, First Department in 2363 ACP Pineapple v. Iris House3
highlights
practitioners’ misunderstanding of the theoretical issues.
Pineapple
In Pineapple, in under 1,000 words, the Appellate Term for the First Depart-
ment ruled in a case where, at the behest of the city, a private landlord rented
premises to a city-funded program for the temporary housing of homeless per-
sons. Assured that such units were exempt from rent regulation, at the conclusion
of the lease, the landlord sought to evict the occupants, using one of the charita-
ble-use exceptions to rent stabilization. The court refused to allow it.
Basic Principles
The basic principle of rent stabilization in New York City,4
is, with certain
exceptions, that it applies to all apartments “except (certain classes of) housing
accommodations for so long as they maintain the status” that gives them the
exemption.5
These categories of exemption are (a) rent control, (b) government
ownership, (c) Mitchell-Lama and similar programs, (d) small buildings, (e&o)
substantially rehabilitated buildings, (f) apartments held by affiliates of charities,
(g) certain hotels, (h) motels and trailers, (i) boarding houses, (j) charitable accom-
modations, (k) nonprimary residences, (l) cooperatives and condominiums, (m)
employee occupied apartments, (n) nonresidential apartments, (p) expired 421-a
in small buildings, (q) exempt lofts, (r&s) luxury decontrolled units, (t) units
specifically deregulated by other laws.6
Theories of Shelter Exemption
For private landlords, this presents three conceivable categories for deregulation
of these apartments, each with its own problems.7
Fully stated, the categories are as follows:
(f) housing accommodations owned, operated or leased or rented pursuant to
governmental funding by a hospital, convent, monastery, asylum, public insti-
tution or college or school dormitory or any institution operated exclusively for
charitable or educational purposes on a nonprofit basis and occupied by a tenant
whose initial occupancy is contingent upon an affiliation with such institution;
however a housing accommodation occupied by a nonaffiliated tenant shall be
subject to the RSL and this Code;
(j) housing accommodations in buildings operated exclusively for charitable
purposes on a nonprofit basis; (k) housing accommodations which are not occu-
pied by the tenant not including subtenants or occupants as his or her primary
residence as determined by a court of competent jurisdiction.
Affiliation Exemption
The first of these, §2520.11(f), is the so-called “affiliation exemption,” most
fleshed out in cases involving Columbia University and New York University. This
grants an exemption to apartments that are owned by certain kinds of educational
institutions and charities for apartments rented to these organizations’ affiliates.
That case law does little to reflect what “affiliation” is, but typically it means...
by Massimo F. D'Angelo
The New York City Department of
Housing Preservation and Development
(“HPD”) touts its Alternative Enforce-
ment Program (“AEP”), which was es-
tablished in 2007, as one of the City’s
“most effective enforcement tools for
addressing distressed properties.”
In theory, AEP’s fundamental pur-
pose is to combat the City’s urban blight
by forcing building owners to take swift corrective rehabilitation action to remedi-
ate Housing Maintenance Code (the “Code”) violations under threat of stiff civil
penalties which, if unpaid, may result in foreclosure.
Thus, with the possibility of losing their valuable investment, owners are
strongly incentivized to take immediate remedial measures to repair their build-
ings in order to get out of the Program’s clutches and save their buildings from...
REAL ESTATE LITIGATION
LANDLORD-TENANT / DUE DILIGENCE
Continue reading at alblawfirm.com/navigate-hpd-aepContinue reading at alblawfirm.com/sheltering-the-homeless
The Appellate Divisions for the First and Second Department are split on their
interpretations of a common clause in proprietary leases for cooperative apart-
ments. The clause speaks to the issue of whether a proprietary lessee must live in
the apartment simultaneously with a close family member for the family mem-
ber’s occupancy to be legal under the proprietary lease. The First Department
says the clause means that cohabitation is required for the family member to be
present; the Second Department holds that no cohabitation is necessary.
The Clause
A representative example of the kind of clause the Departments are disagreeing
over reads as follows:
the Lessee shall not, without the written consent of the Lessor on such con-
ditions as Lessor may prescribe, occupy or use the apartment or permit the
same or any part hereof to be occupied or used for any purpose other than as
a private dwelling for the Lessee and Lessee’s spouse, their children, grandchildren,
parents, grandparents, brother and sisters and domestic employees…
Mastering Two Ideas
The legal question raised here stands at the intersection of two distinct but
distinctly related concepts, illegal subletting and unauthorized occupancy. Sloppy
analysis conflates the two, fails to perceive the highly significant differences, and
lumps it all together under the title “illegal subletting.” Two statutes highlight the
differences between the two ideas: Real Property Law §226-b regulating a tenant’s
right to sublet and Real Property Law §235-f regulating a tenant’s right to over-
ride occupancy restrictions in leases. §226-b recognizes that money flowing to the
tenant from a subtenant is the essence of the landlord/tenant or sublandlord/sub-
tenant relationship those parties are establishing. §235-f, on the other hand, looks
entirely at the number of persons who are to be occupying the rented premises
and what relationships they bear to the tenant of record.
The law, however, takes a pragmatic look at human behavior. It understands
that a landlord can, with any kind of diligence, readily observe who is living in
a particular apartment. However, seeing cash change hands is far more difficult
to achieve. While in the overwhelming bulk of cases, an illegal sublet is also an...
Continue reading at alblawfirm.com/departmental-divide
The Departmental Divide on
Shareholder Family Occupancy
by Adam Leitman Bailey and Dov Treiman
CONDOMINIUM-COOPERATIVE

“I don’t think I’d ever received a
letter like it,” said New York County
District Attorney Cyrus Vance of the
memo written by Adam Leitman Bai-
ley that tripped up a criminal inves-
tigation, “calling it 'a signficant and
important' communication.”
According to The Real Deal on October 4, 2017,
“the Trump Soho saga has become a 'watershed case'
in the world of condo litigation. As part of an in-
vestigation by TRD last year, condo attorneys said
that developers are now far more reluctant to dis-
close sales information to buyers’ attorneys, for fear
of legal repercussions if they turn out to be wrong.”
The investigation also found that “developers of-
ten provided misleading numbers when it came to
condo sales, creating a false sense of robust business
at their projects. That impression can hurt the mar-
ket, experts said, by making buyers feel they need to
act fast, and hurt competing projects.”
www.alblawfirm.com INFO@ALBLAWFIRM.COMPAGE 2
practice areas
Adam Leitman Bailey,
P.C.’s “Watershed Case”
Changes Condominium
Development
After Board of Managers of the
Palm Trees Condominium v. Shebar, et
al., Adam Leitman Bailey, P.C. suc-
cessfully negotiated payoffs for liens
that survived a foreclosure sale due
to the Board’s prior counsel botching the common
charge lien foreclosure proceeding, resulting in a
payday for the Board of $215K after the sale of the
affected unit.
The Board’s common charge lien foreclosure
proceeding was riddled with errors like a late filed
notice of pendency and junior lienholders that were
erroneously not named in the foreclosure proceeding
by the Board’s prior counsel. After foreclosure, there-
fore, while the Board was the high bidder and took
back the unit, there were approximately $650K in
open liens and judgments still secured by the prem-
ises.
Instead of advising the Board to take the loss and
move on, however, ALBPC continued the fight to
get a profit for its client. With paying tenants now
in the unit generating monthly funds for the Board,
ALBPC had time to stall the first position foreclosure
proceeding and procure reduced payoffs for all open
liens and judgments. Combining its vast library...
P.C. Gets $215K for Board
after a Botched Common
Charge Lien Foreclosure
Adam Leitman Bailey, P.C. is a full service real estate and business law firm.
For more information about the firm or for a complete copy of any of the decisions and articles mentioned,
please contact Adam Leitman Bailey at 212-825-0365 or email him at info@alblawfirm.com.
by Hiten Samtani and Will Parker
APPEALS
COMMERCIAL LEASING SERVICES
CONDOMINIUM & COOPERATIVE REPRESENTATION
FORECLOSURE LITIGATION
HOMEOWNER ASSOCIATIONS
CONDOMINIUM/ BOARD OF DIRECTORS
CONSTRUCTION DEFECTS
INSURANCE DEFENSE LITIGATION
LANDLORD REPRESENTATION
MORTGAGE FINANCE PRACTICE
PURCHASE & SALE OF HOMES
SHAREHOLDER REPRESENTATION
REAL ESTATE ADMINISTRATIVE PROCEEDINGS
PURCHASE & SALE OF MULTI-FAMILY DWELLINGS / BUILDINGS
TENANT REPRESENTATION
TITLE INSURANCE CLAIMS
BANKRUPTCY & CREDITOR’S RIGHTS
DUE DILIGENCE AND TRANSACTIONAL RISK
ASSESSMENT OF MULTI-FAMILY DWELLINGS
BUYOUTS & SALE OF APARTMENT LEASE
Read more at alblawfirm.com/watershed-caseRead more at alblawfirm.com/lien-foreclosure
FORECLOSURE
TITLE INSURANCE
TOP 100TOP 100

we get r esults
Adam Leitman Bailey, P.C. Twice Saves Tenant’s
Business from Certain Death
Adam Leitman Bailey, P.C. Protects Theater
Sublease from Termination by Bankrupt Prime
Tenant
BANKRUPTCY / TENANT REPRESENTATION
A high end restaurant’s new land-
lord was alleging multiple defaults
in the restaurant’s obligations as a
tenant, and multiple legal proceed-
ings were brought so as to process
each of these alleged defaults. Var-
ious law firms were handling these
various suits, but the client soon
sought ALBPC to handle the entire
galaxy of cases.
At the time that Adam Leitman
Bailey, P.C. was retained, the restaurant had only a
few hours within which to move for an injunction
before its expensive leasehold terminated. ALBPC
immediately obtained additional time for the restau-
rant and instructed the restaurant’s insurance brokers
to obtain the necessary insurance policies and limits
required by the restaurant’s lease, and most impor-
tantly, to have its then expired commercial general
liability policy deemed retroactive by the carrier. This
alone was an extraordinary accomplishment on the
restaurant’s behalf, as insurance companies rarely, if
ever, apply insurance coverage retroactively. Indeed,
this is why, usually, if there is a lapse in a commercial
tenant’s insurance coverage, the lease is dead beyond
hope. Based on getting the retroactive coverage, how-
ever, ALBPC drafted emergency papers for a Yellow-
stone injunction, along with a Temporary Restraining
Order seeking to enjoin the landlord from terminat-
ing the restaurant’s lease. ALBPC then appeared in
court and successfully argued and obtained the TRO
saving the restaurant, against all odds, from the for-
feiture of its valuable lease.
With only minutes remaining prior to its lease
being terminated for failure to timely remove a Me-
chanic’s Lien that one of the restaurant’s unpaid con-
tractors filed against the landlord’s property, ALBPC
performed its second miracle. The firm’s attorneys
arranged an emergency conference call with the court
and opposing counsel and persuaded the court to is-
sue an order discharging the lien of record in time
even though the Court lacked the formal paperwork
in front of it.
In a decision demonstrating how
Adam Leitman Bailey, P.C. applies its
real estate law expertise in the bank-
ruptcy context, the Manhattan Bank-
ruptcy Court held that a prime tenant
in Chapter 11 could not evict its sub-
tenant or collect use and occupancy
because the sublease did not include
an early termination right.
Subtenant is a performing arts ven-
ue at 45 Bleecker Street in Manhattan
which hosts a broad range of artistic programming and
private events. Based on the strength of its sublease
with [prime tenant], under which it shared expenses
but paid only a nominal rent, subtenant spent more
than $1.5 million to redevelop what had been a de-
crepit and disused basement space, to an intimate and
inviting theater with top-quality sound and lighting
technology.
After prime tenant went into bankruptcy due to its
rent arrears, it claimed in Bankruptcy Court that it
had terminated the subtenant’s sublease and was enti-
tled to full market rental use and occupancy payments,
rather than the nominal rent payment under the sub-
lease.
In analyzing the sublease for subtenant, Adam
Leitman Bailey, P.C. found that it gave prime tenant
“all rights and remedies available at law or in equity,”
but did not specifically provide for termination in the
event of default. Tracing the history of lease termina-
tion law back to the 17th Century, the firm argued be-
fore a skeptical Bankruptcy Judge Michael Wiles that
the sublease could not be terminated early absent an
express clause allowing such early termination.
In a 20-page written decision, Judge Wiles accepted
the firm’s arguments in full, dismissing [prime ten-
ant]’s lease termination, use and occupancy, fraud,
and lease rejection claims, without needing to reach
the firm’s alternate arguments that the purported lease
termination, even if permissible, was ineffective. Most
significantly for subtenant by avoiding the termina-
tion of the sublease, Adam Leitman Bailey, P.C. pre-
served subtenant's right to take over occupancy of the
full leased premises under a sublease consent executed
by the landlord.
Read online at alblawfirm.com/saves-tenants-business
Read more at alblawfirm.com/board-mgrs-repairsRead online at alblawfirm.com/protects-subtenant
CONDOMINIUM & COOPERATIVE
P.C. Prevails: Court
Rules That Board of
Managers Has No Duty
to Repair Owner’s Unit
Condominiums—Construction Defects—Suit
Against Sponsor, Board and Manager—Alteration
Agreements—Res Judicata
A DEFENDANT CONDOMINIUM board of
managers (board), individual board members and a
defendant management company (manager), moved
to dismiss a complaint pursuant to CPLR 3211(a)(1);
(5) and (7). The board and individual board member
defendants also sought costs, sanctions and attorney
fees. The plaintiff opposed the motions and cross-
moved for sanctions against the defendants and their
counsel and for attorney fees.
This action is “the latest in a dispute between the
parties over alleged structural defects in the concrete
substrate slab beneath the floor” of the plaintiff’s
condominium unit. The complaint alleged that the
plaintiff and her husband purchased the unit from
the sponsor for $3,075,000 in 2005. “They received
property tax exemptions under the City of New York’s
421-a tax exemption program….” The plaintiff as-
serted that the parties’ relationship deteriorated after
she had rejected a request “to pay a portion of the
property tax abatement for the benefit of other unit
owners.” The plaintiff further alleged that the defen-
dants had “ignored repeated requests to repair and
maintain” the cracked slab. The plaintiff also alleged
that she and her husband had “been barred” from liv-
ing in their unit for approximately seven years, “while
continuing to pay millions of dollars for the unit.”
The plaintiff and her husband had commenced
an action in 2007 against the board defendants over
“construction defects in the floor of the…unit.” The
plaintiffs had claimed in that action, that the slab had
not been “properly leveled and flattened, resulting in
numerous loose floorboards and warping in some ar-
eas….”Thesponsordefendantshadallegedlyacknowl-
edged that the floors in the unit had been “improp-
erly installed” and “undertook to replace the floors...”
by Scott E. Mollen

we get r esults
Non-Disclosure Agreements Defend
Against Fishing Expeditions
Adam Leitman Bailey, P.C. Obtains Injunction to Prevent Renovations That
Violated Adjacent Townhouse Owners’ Right to Due Process REAL ESTATE LITIGATION
When the owners of a townhouse
sought Adam Leitman Bailey, P.C.’s
help after the owner of the adjacent
townhouse notified them that they
intended to perform an extensive ren-
ovation to substantially expand the
footprint and height of their town-
house, Adam Leitman Bailey, P.C.
successfully obtained an injunction
preventing the adjacent owner from
performing any demolition and/or
construction activities on the town-
house for over a six month period by arguing that the
New York City Landmarks Preservation Commission
had violated the owners’ right to due process, and had
acted outside of its jurisdictional authority when it
approved the adjacent construction.
By way of background, the adjacent owner had
submitted plans to substantially renovate and expand
the size of the townhouse to the Commission. A pub-
lic hearing was held before the Commission, at which
the owner and members of the community were per-
mitted to testify. The attorneys at Adam Leitman Bai-
ley, P.C. also testified at the hearing, and demonstrat-
ed to the Commission that the adjacent owner had
misrepresented the visibility of the proposed rooftop
and rear extension from the street, a key concern in
the Landmarks district. The attorneys also empha-
sized to the Commission that the public had inade-
quate notice of the proposed renovations to the town-
house, and the impact such renovations would have
on the community. The attorneys concluded their tes-
timony by requesting the Commission to leave the re-
cord open to provide the public with an opportunity
to more fully analyze the proposed construction, and
submit additional information and testimony to the
Commission regarding the impact such construction
would have on the community.
The Commission agreed with Adam Leitman
Bailey, P.C., and mandated that the adjacent owner
make substantial revisions to the proposal, including
completely eliminating the rooftop addition, scaling
back the rear yard extensions, and redesigning the
rear façade of the townhouse. The Commission also
granted the attorneys' request that the record con-
cerning the proposal be left open to permit additional
submissions by the public.
Using a grass-roots approach, the attorneys at
Adam Leitman Bailey, P.C. organized over two dozen
community owners, activists, and architects to testify
at a local Community Board hearing against the re-
vised proposal submitted by the adjacent owner. The
Community Board agreed with the testimony, and
unanimously voted against the proposal by the adja-
cent owner, and urged that the Commission deny the
revised application.
Next, the public meeting was held before the
Commission. However, unlike the public hearing,
the attorneys and the public were not permitted to
testify, a clear violation of the right to due process.
The Commission approved the second proposal, not-
withstanding the substantial changes between the first
and revised proposals, and the unanimous vote by the
local Community Board against the revised proposal.
The attorneys at Adam Leitman Bailey, P.C. then
acted quickly to stop the adjacent construction.
Researching the Landmarks Preservations Commis-
sion’s rules, and relevant New York State statutes
and case law, the attorneys concluded that not only
had their clients’ right to due process been violated
by the Commission’s intentional failure to permit...
CONDOMINIUM & COOPERATIVE
Read more at alblawfirm.com/non-disclosure-agreements
Continue reading at alblawfirm.com/renovations-due-process
by Frank Lovece
In 2011, [attorney] at [firm] at [address], began
a lawsuit to gain access to board documents. [Attor-
ney], who suspected the board of serious mismanage-
ment, said she wanted to get the contact information
of all unit-owners in the building and also extensive
access to condo records, including monthly financial
statements.
Three years later, after suing the board over a reno-
vation dispute at his co-op at [address], [unit owner]
discovered what seemed to be financial irregularities.
“The building took on a very large facade renova-
tion project [that] went 90 percent over budget with
no coherent explanation,” says [unit owner], whose
apartment was once the home of the late [celebrity
restaurateur]. [Unit owner] began seeking access to
pertinent co-op documents.
For boards in such situations, what are the risks
and protections when granting access? “Many times,
there are troublemakers who just want to get docu-
ments…to fuel a lawsuit,” observes Adam Leitman
Bailey, an attorney at his eponymous firm. “On the
other hand, it can be a good thing. After all, it’s a de-
mocracy. In that sense, who are [boards] to withhold
documents?”
In the aftermath of the [attorney] and [unit own-
er] rulings, boards face the question of how they can
allow increased access while still protecting the prop-
erties and residents through such devices as non-dis-
closure agreements (NDAs). “The rights of an owner
to review books and records must be balanced with
maintaining the integrity of confidential informa-
tion,” says [attorney], a principal at [firm] and board
counsel for [residence].
The [attorney] case reiterated that condo unit-own-
ers have the right to see financial reports, invoices,
minutes of board meetings, and redacted legal in-
voices “so long as [it is] in good faith and for a val-
id purpose … at the managing agent’s office, during
convenient weekday hours.” But now – citing prece-
dent that said case law already allowed condo owners
the right to make paper copies – the court affirmed a
lower court’s ruling that said they also have the right
to make “electronic copies.”
In addition, the ruling declared that condo
unit-owners have the right to see lists of owners and
their contact information, a right co-op sharehold-
ers already have. The court also said unit-owners
could be required to sign a confidentiality agreement.
While that ruling concerned only condos, the [unit
owner] decision a few months later cited [attorney] as
precedent to determine that co-op shareholders also...
P.C. Is Only New York
Real Estate Law Firm of
Its Size to Receive “Best
Law Firms” Honors and
Have Over Half of Its
Attorneys Named by
Super Lawyers
Adam Leitman Bailey, P.C. is ranked in the 2018
edition of U.S. News – Best Lawyers® “Best Law
Firms” for its work in Real Estate Law. It is one of
less than 13 per cent of firms in New York to receive
this honor.
Fifteen ALBPC attorneys have also been named to
the New York Metro Super Lawyers and Rising Stars
lists for 2017. Over half the firm received this honor,
an achievement that no other New York real estate
firm with under 30 attorneys can claim.
Read online at alblawfirm.com/super-lawyers-2017 and
alblawfirm.com/best-law-firms-2018

A Day in the Life of the Cooperative Transfer
Agent: Saving the Closing Against Money
Judgments
we get r esults
An adult daughter had stopped living
with her seriously ill mother many years
ago. The mother, however, did not feel
secure being the only signatory on her
lease and kept insisting that her daugh-
ter sign the lease as well. The mother
was living in the apartment with her
rent paying roommates and her health
aides, but was not paying the rent.
The daughter had no idea how bad
things had gotten until a court appoint-
ed guardian for her mother informed her that there were
eviction proceedings pending, eviction was soon, and
there was a judgment not only against the mother, but
against the daughter as well for unpaid rent.
The daughter contacted Adam Leitman Bailey, P.C.
with whom she had previously dealt. The firm’s research
showed that the City wanted the mother to stay in place,
but the mother and daughter were not going to come up
with the rent money to make that happen and the land-
lord had no interest in letting the daughter off the hook
for the judgment and the rest of the lease.
ALBPC then brought an Order to Show Cause to
have the entire case thrown out both as to the mother...
Adam Leitman Bailey, P.C. Saves the Collateral
Security of a Mortgage Loan from Total Loss
TITLE INSURANCE
TENANT REPRESENTATION
P.C. Releases Daughter
from Lease, Allows Her
to Avoid Nonpayment
Proceeding
In Federal National Mortgage Associ-
ation v. Dennis Papa, Jr., et al., a de-
fendant and predecessor in title to the
borrower moved to vacate judgment of
foreclosure, claiming he owned fee title
to the collateral property. Our client
had given a mortgage loan to a differ-
ent defendant, the claimant’s mother.
The claimant had not executed the
mortgage and alleged he had not con-
sented or ratified it, either. The claim-
ant alleged that his mother owned only a life estate in
the collateral and he sought to set aside the judgment
so that when the property was sold at foreclosure auc-
tion, only a life estate with a negligible value could be
sold to satisfy the debt.
The claimant became owner of the collateral prop-
erty by deed from his mother in 1985. On the same
day, the claimant alleged he conveyed back a life es-
tate to his mother. The deed from the claimant to his
mother recited that title was transferred:
For the term of the natural life of [Mother] and for
the natural life of [Mother’s husband] so long as he
shall remain married to [Mother].
TO HAVE AND TO HOLD to the parties of the
second part for and during their natural lives …
Since the claimant alleged that his mother had
only a life estate in the property and he did not exe-
cute the mortgage, he alleged that the mortgage did
not encumber his reversionary interest as the fee own-
er. Therefore, according to the claimant, the mort-
gage was secured by only a life estate and upon the
death of his mother any title to the property sold at
the foreclosure auction would revert to him, leaving
the mortgage as an unsecured debt.
The Adam Leitman Bailey, P.C. team parsed the
terms of the deed and dug into old New York real
property law. The team explained to the court that the
“habendum clause” in the deed, reciting “to have and
to hold” is the usual form of conveying fee title to the
property. Under New York law, the habendum clause
for a deed conveying a life estate generally conveys the
property “to use and occupy.” In addition, the team
explained that under New York law a life estate can-
not be conveyed on a condition. Therefore, the team
concluded that the condition that the mother and her
husband remain married negated a life estate.
The Court agreed, finding that the deed, despite
purporting to convey the property for the “natural
life of” the mother, actually conveyed the fee title...
Continue reading at alblawfirm.com/collateral-security
P.C. Writes Chapter
on the Default Clause
for Latest Edition of
Commercial Leasing
by Adam Leitman Bailey and John Desiderio
Read more at alblawfirm.com/default-clause
COMMERCIAL LEASING
Commercial leases require an effective default
clause that allows the landlord to force a tenant to
comply with all lease obligations. The default clause
commonly provides the procedure for obtaining an
eviction or the threat of an eviction for a commercial
tenant’s violation of the lease.
Adam Leitman Bailey, P.C. recent-
ly represented a New York City co-
op board as the transfer agent for a
cooperative unit. The owner was de-
ceased and the estate was selling the
unit. A lien search revealed a money
judgment against the deceased seller, raising concerns
among the attorneys at Adam Leitman Bailey, P.C. as
well as the buyer, buyer’s counsel, and buyer’s lender.
Adam Leitman Bailey, P.C. turned to Article 52 of
the CPLR for guidance. We found that a sharehold-
er’s interest in a cooperative unit is an interest in per-
sonal property rather then real property. To enforce
a money judgment against real property, such as a
house or a condominium, the creditor only needs to
take one step; according to CPLR 5203, the creditor
must docket the judgment in the county in which
the property is located and the lien will be secured
by the property.
However, securing a money judgment against per-
sonal property – in this case, the seller’s stock certif-
icate and proprietary lease to the coop – involves a
second step after docketing. An execution must be
delivered to the proper sheriff and only at that time
will the lien be secured on the personal property. At
this point the sheriff is required to seize the personal
property, sell it and apply the proceeds to the money
judgment. A creditor can execute at any time during
the life of a judgment.
There are two different ways a sheriff can execute
on a judgment and levy the personal property. If the
personal property (stock and lease) is in the share-
holder’s possession, levy by seizure will take place
(CPLR 5232(b)). The sheriff will serve a copy of the
execution to the shareholder and take the property
into custody. Then, the sheriff will sell the personal
property within 60 days of the execution unless the
creditor gives a 60 day extension (CPLR 5233).
If the personal property (stock and lease) is not
in the shareholder’s possession and is instead with
one who has the superior right to possess it – for...
Continue reading at alblawfirm.com/cooperative-transfer-agent
Continue reading at alblawfirm.com/albpc-releases-daughter

we get r esults
Adam Leitman Bailey, P.C. Wins $1.2 Million on Behalf of Small Brokerage
Firm, Gets Judgment Paid in Months
Adam Leitman Bailey, P.C. Maximizes and Collects
Surplus Money Funds for Condominium Board
after Bank Foreclosure Sale of Condominium Unit
“You can do everything
right in this business … and
if someone wants to f*ck
you, they will f*ck you.”
A pair of brokers who
were cheated out of com-
mission on a $28 mil-
lion contract got paid off
— with interest — after a six-year battle.
Herb Hirsch, who now leads the commercial
team at Berkshire Hathaway NYC, and Bloom Real
Estate Group’s Michael Burak received a $1.2 mil-
lion commission after interest accrued for years on
a 2009 contract, according to the brokers’ attorney.
The two were originally owed a $750,000 commis-
sion for a contract on a Murray Hill property that
investors flipped to hotel kingpin Richard Born.
“Too many times the smaller brokerages are
bullied out of money and do not have the cour-
age to fight the giants,” said attorney Adam Leit-
man Bailey, who represented Hirsch and Burak.
“This case should serve as an example of why
the smaller brokers should never ever give up.”
The case stretches back to 2009, when Hirsch
and Burak, then at the firm CitySites Commercial
Group, were representing Salvation Army in its sale
of 145 East 39th Street, court records show. The
team provided Born with information on the prop-
erty, but the hotelier’s offer for the site was rejected.
A few months later, investor Michael Yanko entered
into an agreement with the brokers to view the prop-
erty. Hirsch and Burak claimed that Yanko and his
girlfriend, Kerry Wellington — both of whom work
at real estate development firm WY Management —
created a new LLC designed to go around the bro-
kers and submitted a winning bid for the property.
Yanko and Wellington, who could not be
reached for comment, then flipped the contract
to Born, who purchased the site for $27.8 million
in 2010 and converted it into his POD 39 hotel.
A representative for Born declined to comment
on the suit, except to point out that the hotelier
had been indemnified from the other defendants.
Hirsch and Burak filed a lawsuit in 2011 seeking
their commission on the sale. During the discovery
phase of the case, Yanko claimed that the records Bai-
ley’s firm was seeking had been stored on computers
that were destroyed in a flood. But attorney David
Smith found an unrelated criminal case in which
authorities seized those computers from Yanko.
Upon learning this, the judge oversee-
ing the commission dispute ruled in fa-
vor of Hirsch and Burak in November 2015.
“I consider the behavior of the defendants
in this case … to be frankly a snub in this court’s
eye and I consider that behavior to be total-
ly, totally wrong,” Supreme Court Justice Eileen
Bransten said, according to a court transcript.
Yanko and Wellington appealed the case, and
earlier this month an appellate court ruled against
them. But Bailey said they still refused to pay up,
and it was only when the attorneys got the sheriff’s
department to schedule an auction for the proper-
ty that they finally decided to pay the commission.
“You can do everything right in this...
Read more at alblawfirm.com/brokers-win-commission-battle
P.C. Helps Co-op
Secure Long-term
Capital Projects by
Refinancing Mortgage
After a years-long battle, including
a bank’s foreclosure proceeding against
a condominium unit and several bank-
ruptcy filings by the unit owners, a
frustrated board of managers of a New
York City condominium turned to
Adam Leitman Bailey, P.C., for help.
We then enforced the condomini-
um’s lien for unpaid common charges
against the unit and obtained 100% of
the post-foreclosure sale surplus mon-
ies for the condominium.
Following years of delays, the condominium
board—which was owed hundreds of thousands of
dollars in unpaid common charges, assessment fees,
late fees and interest, which accrued prior to our re-
tention—retained Adam Leitman Bailey, P.C.
As is often the case, when the unit owners default-
ed on their mortgage payments to their bank, they
also stopped paying their condominium common
charges and related fees. The bank, which is protected
by a first priority lien against the condominium unit,
commenced a foreclosure action to force a sale of the
unit to enforce its lien. The board filed a lien for com-
mon charges against the unit, but became embroiled
in the bank’s foreclosure action, forced to wait until
the bank enforced its lien.
Under New York Real Property Law, the condo-
minium’s lien for unpaid common charges is general-
ly second in line in priority after the bank’s mortgage.
However, as other lienholders and judgment creditors
battle for lien position, as the fees and default interest
owed to the bank continually grow throughout the
foreclosure action and as there often is insufficient
equity in the property to cover the sums owed to all
lienholders, the condominium’s lien may be wiped
out by the bank’s foreclosure.
Making matters worse, the three unit owners in
this case each successively filed various bankruptcy
proceedings, delaying the foreclosure case for years.
As the unit owners’ personal debt obligations were
discharged in the bankruptcies, the condominium's...
FORECLOSURE
Continue reading at alblawfirm.com/surplus-money
by Rich Bockman
Brokers Win $1.2M in Six-Year-Long Commission Battle
Every eight to ten years, most coop-
erative housing corporations in New
York City refinance their underlying
mortgages. That is because many co-
ops, rather than taking 15/30 year
self-amortizing mortgages which are
paid in full at the expiration of the loan term, take
out 10-year loans that are often interest-only or “bal-
loon” mortgages where the entire amount borrowed is
due and payable at the expiration of the 10-year term.
The “balloon” payment must be fully paid at the end
of the loan term, which is why co-ops frequently find
themselves contemplating a mortgage refinance.
Adam Leitman Bailey, P.C. recently represented a
luxury co-op on the Upper East Side of Manhattan in
connection with the refinancing of their underlying
mortgage. The co-op refinanced the prior underlying
mortgage of $3,000,000 with an interest-only mort-
gage in the amount $4,000,000 at an astonishing
interest rate of only 3.666%. The co-op realized net
proceeds of more than $835,000 as a result of the refi-
nance which will be used to fund long-term capital...
Continue reading at alblawfirm.com/capital-projects
MORTGAGE FINANCE

we get r esults
Adam Leitman Bailey, P.C.
One Battery Park Plaza
Eighteenth Floor
New York, New York 10004
Tel: 212-825-0365
Email: info@alblawfirm.com
Adam Leitman Bailey Lectures for New York State Bar Association on
Easements, Adverse Possession, and Arcane Laws and Presents Advanced
Real Estate Topics: “Advice from a Litigator”
MEDIA | COMMUNITY | EVENTS
Adam Leitman Bailey recently gave two talks for
New York State Bar Association Continuing Legal Ed-
ucation courses.
At the first event, which took place at the New York
Society of Security Analysts on November 2, 2017,
Mr. Bailey used the facts from the most prominent ap-
pellate cases to teach the complicated rules on adverse
possession. Mr. Bailey then entered a discussion about
terminating easements, noting various unknown laws
that can be used as a shield or sword.
Using the most recent case law and newest statutes,
Mr. Bailey discussed how the courts are using the
2008 and former adverse possession statutes and how
the courts are applying the laws.
Mr. Bailey again joined a panel of esteemed practi-
tioners on December 5, 2017 to discuss how transac-
tional attorneys can improve their lease writing skills.
Using his experience as a commercial leasing litiga-
tor, Mr. Bailey applied practical experience and tricks
of the trade to demonstrate ways to improve default
clauses, motivate tenants to comply with their leases,
and allow tenants to have a fair lease.
Mr. Bailey also provided insight into controversial
lease provisions, various lease clauses, damage issues,
and more.
Continue reading at alblawfirm.com/access-agreement
Jeffrey R. Metz and
Supreme Court Judge
Gerald Lebovits Author
New York Residential
Landlord-Tenant
Law and Procedure
Read online at alblawfirm.com/nsyba-overcoming-obstacles Read online at alblawfirm.com/nysba-lease-litigation
Adam Leitman Bailey, P.C. was re-
tained by a building owner of prime
commercial retail space in the heart
of Greenwich Village to negotiate
an access agreement with the tenant
of ground floor tenant space in the
building to perform structural work to the columns
in the space necessary to permit the construction of
residential units on the roof of the building. Because
the work would shutter the tenant’s operation for at
least thirty days, the tenant tried to hold up the own-
er by requesting a large payoff upfront to permit such
access. The firm then devised a strategy to move the
tenant off its demands. The tenant had several pieces
of mechanical equipment on the roof and its lease...
P.C. Negotiates
Favorable Access
Agreement with Tenant
Adam Leitman Bailey
Shares the City’s
History with Harlem
Academy Students on
Tour of Downtown
Manhattan
Read more at alblawfirm.com/harlem-academy-studentsRead more at alblawfirm.com/landlord-tenant-book
Jeffrey R. Metz, Chief
of ALBPC's Appellate
Bureau, teamed up with
the Hon. Gerald Lebovits
to author the 2016-2017
New York Residential
Landlord-Tenant Law and
Procedure Publication,
a practical guide on the
fundamentals of residen-
tial landlord-tenant law.
LANDLORD-TENANT

One Battery Park Plaza, Eighteenth Floor
New York, NY 10004
Tel: 212-825-0365
Email: info@alblawfirm.com
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Adam Leitman Bailey, P.C. Winter 2017-18 Newsletter

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Adam Leitman Bailey, P.C. Winter 2017-18 Newsletter