Real Estate Update

Ezra Dyckman and Daniel W. Stahl

IRS Ruling Limits Exclusion to COD Income

By Ezra Dyckman and Daniel Stahl |

In their Taxation column, Ezra Dyckman and Daniel Stahl write: While cancellation of indebtedness generally results in ordinary income for the debtor (COD income), the Internal Revenue Code provides for several exceptions under which COD income can be excluded. Of particular importance for owners of real estate is Section 108(c), under which a taxpayer can elect to exclude COD income that results from the discharge of "qualified real property business indebtedness" under certain circumstances. The IRS recently interpreted one of the requirements for debt to constitute QRPBI in a manner that will cause debt secured by condominium units held for sale to fail to qualify.

Scott E. Mollen

Realty Law Digest

By Scott E. Mollen |

Scott E. Mollen, a partner at Herrick, Feinstein and an adjunct professor at St. John's University School of Law reviews 'Horrigan Development v. Drozd', 'Jit v. Johnson' and '21-25 Convent Avenue Realty v. Semper'.

Jason Bergman

Cash and the Residential Property Purchase: a New Paradigm

By Jason C. Bergman |

Jason Bergman of Kensington Vanguard National Land Services discusses the new disclosure requirements for certain high-end residential real estate purchases in New York City made with cash. Title companies will be bound to gather this information, and purchasers’ counsel will need to be very careful in the advice given about using cash in light of this change in the arena.

Scott E. Mollen

Realty Law Digest

By Scott E. Mollen |

Scott E. Mollen, a partner at Herrick, Feinstein and an adjunct professor at St. John's University School of Law reviews three landlord-tenant cases: "H.W. Hinkley Realty v. Romulus," "121 Irving MGM v. Perez," and "Roc-Jane Street v. Riffon."

Adam Leitman Bailey and Dov Treiman

A Practitioner's Guide to Understanding Interest

By Adam Leitman Bailey and Dov Treiman |

In their Mortgage Litigation column, Adam Leitman Bailey and Dov Treiman write: While on its surface, the concept of "interest" appears to be a simple matter of calculating a percentage of what someone owes, the legal development of interest in New York law shows far greater complexity beneath the surface and far greater importance in understanding the amount of money that can be charged and collected.

Scott E. Mollen

Realty Law Digest

By Scott E. Mollen |

Scott E. Mollen, a partner at Herrick, Feinstein and an adjunct professor at St. John's University School of Law reviews '204 Columbia Heights v. Manheim,' where a lease combining apartments was held to be valid.

Warren A. Estis and Michael E. Feinstein

Tendering of Renewal Lease Vitiates the Right to Evict

By Warren A. Estis and Michael E. Feinstein |

In their Landlord-Tenant column, noting a split of authority, Warren A. Estis and Michael E. Feinstein discuss '757 Miller Owners v. Smith,' which held that the tendering of a renewal lease under Rent Stabilization Code vitiates a previously issued notice of termination.

Scott E. Mollen

Realty Law Digest

By Scott E. Mollen |

Scott E. Mollen, a partner at Herrick, Feinstein and an adjunct professor at St. John's University School of Law reviews '149 St. LLC v. Siciliano,' 'Boreland v. Blackwood,' and '5510 345 Lefferts Blvd v. Jean-Baptiste.'

Todd Soloway and Bryan Mohler

CPLR 6312(b)'s Bond Requirement: A Shield for Hotel Owners?

By Todd Soloway and Bryan Mohler |

In their Hospitality Law column, Todd Soloway and Bryan Mohler write: Aside from questions regarding the enforceability of such an injunction provision, an independent issue arises concerning the appropriate quantum of injunction bond that, pursuant to CPLR 6312(b), a hotel operator should be directed to post in order to secure an injunction depriving a hotel owner of its power to terminate an HMA. This article explores this issue, including whether the undertaking requirement is a potential additional barrier to hotel operators effectively enforcing "contractual injunction" provisions in HMAs.

Scott E. Mollen

Realty Law Digest

By Scott E. Mollen |

Scott E. Mollen, a partner at Herrick, Feinstein and an adjunct professor at St. John's University School of Law reviews 'Kwai & Wong v. Hodges,' where a single fire incident by a tenant in the premises did not constitute a nuisance, and 'Bartis v. Harbor Tech,' where it was held that housing accommodations that are in a building converted from a commercial to a residential building after Jan. 1, 1974, are exempt from rent stabilization.

Anthony S. Guardino

Eligibility of Residential Developments for IDA Benefits

By Anthony S. Guardino |

In his Zoning and Land Use Planning column, Anthony Guardino discusses 'Matter of Ryan,' which upheld what has long been understood to be the rule: Residential developments are eligible to receive industrial development agency benefits.

Scott E. Mollen

Realty Law Digest

By Scott E. Mollen |

Scott E. Mollen, a partner at Herrick, Feinstein and an adjunct professor at St. John's University School of Law reviews 'Miller v. Falco,' where an unlicensed home improvement contractor was held not able to recover on claims for breach of contract, quantum meruit or unjust enrichment, and 'Estrada v. Browand,' where a tenant was restored possession of the subject apartment after the landlord's actions where held to constitute an illegal lockout.

Steiner-Goldstein

Local Considerations in Jury Trial Waiver Enforcement

By Jeffrey B. Steiner and Jason R. Goldstein |

In their Financing column, Jeffrey B. Steiner and Jason R. Goldstein discuss the inclusion of pre-dispute jury waiver provisions in loan documents as a means to circumvent a trial by jury in commercial cases. They use a recent California case, 'Rincon v. CP III Rincon Towers,' to highlight the issue.

Scott E. Mollen

Realty Law Digest

By Scott E. Mollen |

Scott E. Mollen, a partner at Herrick, Feinstein and an adjunct professor at St. John's University School of Law discusses 'Rehabilitation Support Services v. Town of Esopus,' where a zoning board's finding was held not to constitute a final decision on the proposed residence at issue.

Scott E. Mollen

Realty Law Digest

By Scott E. Mollen |

Scott E. Mollen, a partner at Herrick, Feinstein and an adjunct professor at St. John's University School of Law reviews “11-01 36 Avenue v. Quamar,” dealing with time-of-essence letters, and “Roger Morris Apt. v. Varela,” where a factual dispute barred summary judgment.

Kenneth M. Block and Joshua M. Levy

Recurring Issues With Contract Indemnities

By Kenneth M. Block and Joshua M. Levy |

In their Construction Law column, Kenneth M. Block and Joshua M. Levy discuss two common misconceptions with regard to construction contract indemnities.

Warren A. Estis and Jeffrey Turkel

Commercial to Residential Substantial Rehabilitation

By Warren A. Estis and Jeffrey Turkel |

In their Rent Regulation column, Warren A. Estis and Jeffrey Turkel discuss the topic of "substantial rehabilitation" and look at whether units converted from commercial to residential use are exempt from "stabilization per se."

Scott E. Mollen

Realty Law Digest

By Scott E. Mollen |

Scott E. Mollen, a partner at Herrick, Feinstein and an adjunct professor at St. John's University School of Law discusses 'Klyczek v. Shannon', a civil rights case dealing with discrimination and the definition of "single-family house" under the Fair Housing Act.

Ezra Dyckman and Daniel W. Stahl

Regulations Address Partner Reimbursements

By Ezra Dyckman and Daniel W. Stahl |

In their Taxation column, Ezra Dyckman and Daniel W. Stahl discuss new treasury regulations that were issued on Oct. 5, 2016 which provide that the amount that can be distributed to a partner as a tax-free reimbursement of capital expenditures is limited to the partner's share of the qualified liability.

Scott E. Mollen

Realty Law Digest

By Scott E. Mollen |

Scott E. Mollen, a partner at Herrick, Feinstein and an adjunct professor at St. John's University School of Law reviews 'WDF v. The Trustees of Columbia Univ.', where the court held that "no damage for delay" clauses are generally enforceable, while also discussing the exceptions to this rule.

Investing in U.S. Real Estate Using Domestically-Controlled REITs

By Mitchell Berg and Scott Sontag |

In their Transactional Real Estate column, Mitchell Berg and Scott Sontag discuss the advantages to foreign investors of investing through a domestically controlled REIT which include the ability to sell the stock of the domestically controlled REIT without incurring U.S. federal income tax under FIRPTA.

Scott E. Mollen

Realty Law Digest

By Scott E. Mollen |

Scott E. Mollen, a partner at Herrick, Feinstein and an adjunct professor at St. John's University School of Law reviews 'Matter of Peralta v. N.Y. State Division of Housing and Community Renewal', where a deputy commissioner's determination was held to be an abuse of discretion, and 'Hildred Temple v. Hudson View Owners', where the court dismissed disabled plaintiffs' complaint alleging entitlement to two parking spaces.

Acceleration Clauses in Foreclosure Actions: New Rules

By Adam Leitman Bailey and Adam M. Swanson |

In their Foreclosure Law column, Adam Leitman Bailey and Adam M. Swanson review recent case law and discuss some of the benefits and pitfalls when using an acceleration clause and how to overcome these obstacles.

Scott E. Mollen

Realty Law Digest

By Scott E. Mollen |

Scott E. Mollen, a partner at Herrick, Feinstein and an adjunct professor at St. John's University School of Law reviews 'Schroder & Strom v. Vazouras', where the court found that the mere filing and settling of tax assessment claims was not the practice of law, and 'Rios v. Rosado', where tenants were granted disclosure beyond the four-year look back period in a nonpayment suit.

Warren A. Estis and Michael E. Feinstein

Court Finds Powerful Remedy Against Defaulting Condo Owners

By Warren A. Estis and Michael E. Feinstein |

In their Landlord-Tenant column, Warren Estis and Michael Feinstein discuss "Heywood Condominium v. Wozencraft," where the Appellate Division, First Department, affirmed the eviction of a condominium unit owner for non-payment of common charges.

Scott E. Mollen

Realty Law Digest

By Scott E. Mollen |

Scott E. Mollen, a partner at Herrick, Feinstein and an adjunct professor at St. John's University School of Law reviews 'Pureform v. 2374 Concourse Assoc.,' where a commercial tenant who was able to show an ability to cure its defaults was granted a Yellowstone injunction, and 'Matter of Brown, HP,' where the court denied a motion to appoint an Article 7A administrator.

Anthony S. Guardino

Can Zoning Stop Property Owners From Renting?

By Anthony S. Guardino |

In his Zoning and Land Use Planning column, Anthony Guardino explores a number of the significant New York court decisions that help to establish a framework for analyzing the validity of zoning restrictions and the conditions imposed by local governments on permits and variances when rental units are involved.

Scott E. Mollen

Realty Law Digest

By Scott E. Mollen |

Scott E. Mollen, a partner at Herrick, Feinstein and an adjunct professor at St. John's University School of Law reviews 'Waterview Towers v. 2610 Cropsey Development,' where a cooperative housing corporation was held to have established the required elements of adverse possession.

Steiner-Goldstein

Condominium Loans and Lien Priority

By Jeffrey B. Steiner and Jason R. Goldstein |

In their Financing column, Jeffrey B. Steiner and Jason R. Goldstein address some unique aspects of condominium structures which require closer examination on a case-by-case basis.

Scott E. Mollen

Realty Law Digest

By Scott E. Mollen |

Scott E. Mollen, a partner at Herrick, Feinstein and an adjunct professor at St. John's University School of Law reviews 'Goldman v. Bracker,' where a tenant was granted additional time to view video surveillance tapes in a non-primary residence case, and 'St. Joseph Immigrant Home v. Bulong,' where the duration of the tenants' efforts to relocate was held to be not unreasonable.

Scott E. Mollen

Realty Law Digest

By Scott E. Mollen |

Scott E. Mollen, a partner at Herrick, Feinstein and an adjunct professor at St. John's University School of Law reviews “Garson v. Tarmy,” where an easement reserved to owners of dominant lots was held not to have created an express easement , and “Westbeth v. Gross,” where it was held that the respondent in the case could not occupy the subject premises in an individual capacity.

Warren A. Estis and Jeffrey Turkel

The 'Altman' Conundrum (Continued)

By Warren A. Estis and Jeffrey Turkel |

In their Rent Regulation column, Warren A. Estis and Jeffrey Turkel examine how the Appellate Division in 'Altman v. 285 W. Fourth, LLC' and the Appellate Term in 'Aimco 322 E. 61st Street v. Brosius' have arrived at differing interpretations of the same statutory deregulation threshold scheme.

Scott E. Mollen

Realty Law Digest

By Scott E. Mollen |

Scott E. Mollen, a partner at Herrick, Feinstein and an adjunct professor at St. John's University School of Law reviews 'Skanska USA Building v. Atlantic Yards B2 Owner, LLC,' where a "guarantee" posted by a high-rise's builder was found to meet Lien Law §5's "undertaking" requirement.

Scott E. Mollen

Realty Law Digest

By Scott E. Mollen |

Scott E. Mollen, a partner at Herrick, Feinstein and an adjunct professor at St. John's University School of Law reviews “Metro Sixteen Hotel v. Davis,” where a tenant was permanently enjoined from filing further lawsuits without court approval, and “Partita Partners v. USA,” where a $4 million deduction based on a preservation easement was held not authorized under §170(h)(4)(B).

Ezra Dyckman and Daniel W. Stahl

New Regulations on Debt Share for 'Disguised Sales'

By Ezra Dyckman and Daniel Stahl |

In their Taxation column, Ezra Dyckman and Daniel Stahl discuss the new regulations issued by the Treasury Department October 2016 that modify a number of the partnership debt allocation rules and write how the new regulations have taken a "drastic approach, with respect to determining a partner's share of partnership liabilities for purposes of the "disguised sale" rules—and in a surprising twist cause some partnership liabilities to not be included in any partner's share."

Scott E. Mollen

Realty Law Digest

By Scott E. Mollen |

Scott E. Mollen, a partner at Herrick, Feinstein and an adjunct professor at St. John's University School of Law reviews 'Hamilton 65th Partners v. Smallbone', where a landlord was judicially estopped from seeking holdover rent, and '700 Bklyn Realty v. Forsythe', where a tenant who established a colorable claim of fraud and was granted discovery beyond the usual four-year look-back period.

Adam Leitman Bailey and John M. Desiderio

Court Clarifies Condo Owners' Right to Inspect

By Adam Leitman Bailey and John M. Desiderio |

In their Condominium Law column, Adam Leitman Bailey and John Desiderio discuss the recent First Department case 'Pomerance v. McGrath,' in which the court has clarified the rights of condominium owners to inspect management books and records.

Todd Soloway and Bryan Mohler

Efforts by Agents to Disclaim Their Fiduciary Duties

By Todd E. Soloway and Bryan T. Mohler |

In thier Hospitality Law column, Todd E. Soloway and Bryan T. Mohler explore whether the effort by hotel operators to curtail their fiduciary obligations to hotel ownership is compatible with long-settled principles of New York law governing agency relationships. Simply put: Can they do it?

Scott E. Mollen

Realty Law Digest

By Scott E. Mollen |

Scott E. Mollen, a partner at Herrick, Feinstein and an adjunct professor at St. John's University School of Law reviews 'Matter of Village of South Blooming Grove v. Village of Kiryas Joel Board of Trustees,' where the court upheld Kiryas Joel's annexation of 164 acres from the town of Monroe.

Warren A. Estis and Michael E. Feinstein

'Hamilton': Enforcement of Holdover Rent Provisions

By Warren A. Estis and Michael E. Feinstein |

In their Landlord-Tenant column, Warren A. Estis and Michael E. Feinstein discuss 'Hamilton 65th Partners, LLC v. Smallbone Inc.', which illustrates how a landlord's conduct may preclude enforcement of a holdover rent provision.

Scott E. Mollen

Realty Law Digest

By Scott E. Mollen |

Scott E. Mollen, a partner at Herrick, Feinstein and an adjunct professor at St. John's University School of Law reviews 'Aponte v. N.Y. City Housing Authority,' where tenants were granted a directed verdict on NYCHA's liability in failing to eradicate a bedbug issue.

Bruce J. Bergman

The New Foreclosure Statutes: A Review of the Perils

By Bruce J. Bergman |

In his Foreclosure Litigation column, Bruce Bergman discusses the new omnibus foreclosure law and he addresses the numerous issues created by changes to certain aspects of the law such as judgment and sale, conveyance impositions, settlement conferences, maintenance obligations and the expedited procedure for vacant and abandoned properties.

Scott E. Mollen

Realty Law Digest

By Scott E. Mollen |

Scott E. Mollen, a partner at Herrick, Feinstein and an adjunct professor at St. John's University School of Law reviews 'Pfeffer v. N.Y. City Depart. of Finance', where class certification granted in ADA suit over rent freeze program's administration by agency; and 'Houdek Real Estate Co. v. Bayport Postal Realty’, where a landowner's adverse possession claim failed, but its prescriptive easement assertion was allowed to proceed.

Anthony S. Guardino

Exhaustion of Remedies is Often Key to Seeking Relief

By Anthony S. Guardino |

The well-known doctrine of exhaustion of administrative remedies applies in land use and zoning matters. In his Zoning and Land Use Planning column, Anthony Guardino discusses this doctrine and also the important exceptions to it.

Scott E. Mollen

Realty Law Digest

By Scott E. Mollen |

Scott E. Mollen, a partner at Herrick, Feinstein and an adjunct professor at St. John's University School of Law reviews 'Dolomite Products v. Town of Ballston,' where a challenge to a zoning decision was held not 'ripe' because the final decision on the underlying project was never issued.

Jeffrey B. Steiner and Jason R. Goldstein

Pitfalls of Relying on General Indemnities

By Jeffery B. Steiner and Jason R. Goldstein |

In their Financing column, Jeffery B. Steiner and Jason R. Goldstein write: Lenders cannot rely exclusively on generic catch-all indemnification provisions to recover all of their loan expenses from their borrowers. To the extent that lenders expect to enter into hedging transactions when extending credit, the loan documents should delineate the circumstances when the borrower will be liable for losses arising from unwinding any such transactions, including upon an early prepayment.

Scott E. Mollen

Realty Law Digest

By Scott E. Mollen |

Scott E. Mollen, a partner at Herrick, Feinstein and an adjunct professor at St. John's University School of Law reviews 'Old Country Road Realty v. Zisholtz & Zisholtz', where the court rejected a tenant's claim of five percent late fee as usurious, granting the landlord summary judgment; and 'Women in Need, Inc. v. Allen', where the respondent was granted vacatur of judgment in a non-payment proceeding.

Kenneth M. Block and Joshua M. Levy

Ensuring Additional Insured Status in Construction Agreements

By Kenneth M. Block and Joshua M. Levy |

In their Construction Law column, Kenneth M. Block and Joshua M. Levy discuss how the ruling in 'Gilbane Building v. St. Paul Insurance Co.' has heightened uncertainty among those who believe they are protected by their status as an additional insured under a policy, and advise that owners and their counsel should either review the language of the blanket additional insured endorsements carefully or require that any necessary entities be clearly named in specific additional insured endorsements.

Scott E. Mollen

Realty Law Digest

By Scott E. Mollen |

Scott E. Mollen, a partner at Herrick, Feinstein and an adjunct professor at St. John's University School of Law reviews 'East Village Re Holdings v. McGowan,' 'City Club v. Park Trust,' and 'NSA 2015 Owner v. Frederick.'

Warren A. Estis and Jeffrey Turkel

Conditional Rentals Can Lead to Default Rent Formula

By Warren A. Estis and Jeffrey Turkel |

In their Rent Regulation column, Warren A. Estis and Jeffrey Turkel discuss how some landlords have been known to insert clauses into leases where the incoming tenant represents that they will not be a primary resident of the apartment. This is usually part of a scam to "deregulate" an apartment that was otherwise subject to rent stabilization. They explain that such clauses are illegal and discuss how these clauses have resulted in adverse consequences to both individual landlords and the real estate industry as a whole.

Scott E. Mollen

Realty Law Digest

By Scott E. Mollen |

Scott E. Mollen, a partner at Herrick, Feinstein and an adjunct professor at St. John's University School of Law reviews 'Thurston v. Sisca,' 'Morgan Stanley Mtge. Loan Trust v. Morgan Stanley Mtge. Capital Holdings,' and 'Cushman & Wakefield of Connecticut v. Access Private Duty Services.'