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New Home Construction Issues: 26 Years After ‘Fumarelli’
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This article covers developments regarding important questions New York courts have been asked to address, respecting three significant legal issues, affecting the rights and obligations of builder-vendors vis à vis purchaser-vendees of “new home” condominium and co-op residential construction.
In this article, the authors, whose first jointly written article on new home construction was published 22 years ago, will cover developments, which have occurred over that span of time, regarding important questions New York courts have been asked to address, respecting three significant legal issues, affecting the rights and obligations of builder-vendors vis à vis purchaser-vendees of “new home” condominium and co-op residential construction.
The ‘New Home’ Warranty
In Caceci v. Di Canio Construction, 72 NY2d 52 (1988), the rule of “Caveat Emptor” (buyer beware) was declared dead in New York consumer real estate transactions involving “new home” construction. In doing so, the Court of Appeals “recognize[d] the ‘Housing Merchant’ warranty, imposing by legal implication a contractual liability on a homebuilder for skillful performance and quality of a newly constructed home the defendant builder contracted for and sold to plaintiffs” (emphasis added).
The court, noting that “[o]ver 25 states [then] recognized some form of an implied warranty of habitability or skillful construction in connection with the sale of homes,” explained that the “post-World War II boom in housing [had] produced a building industry revolution and a growing awareness of the relative helplessness of would-be homeowners in the face of poor or deficient quality.”
The new “home” at issue in Caceci was a single-family house which the plaintiff alleged had been constructed with a defective foundation, for which the plaintiff was suing to recover the cost of repairing.
In this context, the court observed:
With respect to homes contracted for sale prior to construction, the two parties involved generally do not bargain as equals in relation to potential latent defects from faulty performance. The purchaser has no meaningful choice but to rely on the builder-vendor to deliver what was bargained for – a house reasonably fit for the purpose for which it was intended. The builder-vendor, on the other hand, maintains a superior position and is the only one who can prevent the occurrence of major defects. Responsibility and liability in cases such as the instant one should, as a matter of sound contract principles, policy, and fairness, be placed on the party best able to prevent and bear the loss.
Adam Leitman Bailey, P.C. Defeats A Borrower’s Brazen Attempt To Dismiss A Foreclosure Action On The Grounds That, Due To Her Own Delays, The Lender Failed To Hold A Foreclosure Sale In Accordance With RPAPL § 1351(1)
Adam Leitman Bailey, P.C. Defeats Motion to Dismiss Clients’ Claims for Unpaid Commissions and Civil Rights Violations in Federal Court
Permissive Encroachments Under Post-2008 Adverse Possession Law
Adam Leitman Bailey and John Desiderio discuss how New York Courts are interpreting the way in which RPAPL §543 (Adverse possession; how affected by acts across a boundary line), enacted in 2008 as a new addition to RPAPL Article 5 (Adverse Possession), has changed the law of adverse possession from what it was pre-2008.
In 2008, the New York State Legislature enacted sweeping changes to Article 5 of the Real Property Actions and Proceedings Law (RPAPL) which governs the circumstances under which title to real property may be acquired by adverse possession. We have fully discussed the broad historic changes to the law in previous articles. See Bailey and Desiderio, “Adverse Possession Changes Make Result Less Certain,” NYLJ Feb. 11, 2009, “Adverse Possession After the 2008 RPAPL Amendments” NYLJ Oct. 13, 2010, “Adverse Possession in a Post-‘Walling’ World,” NYLJ 10/12/2011, and “Application of the Adverse Possession Amendments,” NYLJ 6/10/2015.
This article will focus on how New York Courts are interpreting the way in which RPAPL §543 (Adverse possession; how affected by acts across a boundary line), enacted in 2008 as a new addition to RPAPL Article 5 (Adverse Possession), has changed the law of adverse possession from what it was pre-2008.
Adverse possession occurs, under RPAPL §501(1), when the “adverse possessor,” a person or entity who “occupies real property of another person or entity with or without knowledge of the other’s superior ownership rights, in a manner that would give the owner a cause of action for ejectment.”
Adam Leitman Bailey, P.C. Defeats a Yellowstone Application and Obtains Sanction Against Recalcitrant Commercial Condominium Unit Owner
Jeffrey R. Metz
Although the owner of a unit in a commercial condominium was aware of the prohibition against parking on the premises, and her proprietary lease did not permit same, she parked four cars on her premises for many years. When the Board of Directors enacted new house rules reaffirming that no unit owner had parking rights, the owner brought an Article 78 proceeding against the Board of Managers alleging that she had the right to park by virtue of her proprietary lease, or alternatively by way of adverse possession or prescriptive easement. She also challenged several of the newly enacted house rules claiming they were ultra vires.
Adam Leitman Bailey, P.C. moved on behalf of the Board of Managers to dismiss the petition and demonstrated to the Supreme Court how the owner’s arguments that she was entitled to park and that the house rules were ultra vires were meritless. The court agreed and dismissed the Article 78 proceeding with prejudice and without leave to replead.
Notwithstanding the total repudiation of her claims, the owner continued to defiantly park cars in her space. The Board attempted to resolve the matter without further litigation by first sending the owner a Cease and Desist letter. The owner ignored it. The Board was thus forced to serve a Notice to Cure upon the owner notifying her that if she did not cure her breach of her proprietary lease, the Board would move to terminate her tenancy.
Often times, commercial tenants, when served with a Notice of Cure will move before the Supreme Court for a Yellowstone injunction. If granted, the Notice to Cure is tolled until the Court determines whether the tenant is in breach and, if so, the tenant still retains the time to cure the breach and preserve the tenancy. A key element in obtaining such relief is a showing that, if found in breach, the tenant is ready, willing and able to cure the breach.
The declaratory judgment action which accompanied the Yellowstone application went to the same judge who had decided the Article 78 proceeding adversely to the owner. Nonetheless, the owner's papers did not address the prior Article 78 holding and continued to argue that the owner had the right to park cars in her demise.
Adam Leitman Bailey, P.C. opposed the Yellowstone request and moved to both dismiss the complaint and sanctions due to the frivolous nature of the case. The Court agreed with our position and found that the owner was contemptuous and that her application was frivolous. In particular, the Court adopted our argument that the owner’s statement that she was ready, willing and able to cure was not made in good faith, as she had continued to flaunt the Article 78 order and had the audacity to continue to claim entitlement to the spaces. Thus, the Court not only denied the motion and dismissed the action, but additionally granted sanctions against the owner, requiring her to pay the attorneys' fees incurred in opposing the Yellowstone and through the motion to dismiss.
John Desiderio and Jeffrey R. Metz represented the Board in the Article 78 proceeding and Jeffrey R. Metz represented the Board in the Yellowstone action.
Adam Leitman Bailey, P.C. Obtains $830,000 in Capital Grant Money for Mitchell-Lama Co-op
Rachel Sigmund McGinley
Adam Leitman Bailey, P.C. serves as general counsel to many condos and co-ops throughout the city, including Mitchell-Lama co-ops. The Mitchell-Lama program provides affordable rental and cooperative housing to moderate and middle-income families.
Our co-op client had been interested in adding additional green space throughout the complex, including an outdoor garden area, outdoor fitness equipment, a gazebo area, benches, and checkers and chess tables. The problem was coming up with the funds needed to implement the project.
Jumping into action, Adam Leitman Bailey, P.C. explored available “free” funding options for the co-op, including capital grants from the Borough Commissioner’s office and City Council’s office. The applications for each respective office are arduous and required hours and hours of preparation and strategy to make the project stand out in a sea of other applicants. Adam Leitman Bailey, P.C. even invited the governmental representatives to visit the building and attend a town hall meeting (see image).
In the early spring of 2024, Adam Leitman Bailey, P.C. learned its client’s project had been chosen for funding by not just one office, but two, for a total of $830,000, which is enough to cover the projected costs of the green space project plus a cushion.
Adam Leitman Bailey, P.C. will now guide the client through the next phases of the project, including contractor bidding, selection, and contract drafting and negotiation.
Adam Leitman Bailey and Rachel Sigmund McGinley represented the co-op in this matter.
Swift Resolution for a Wronged Client in Brooklyn Condo Sale
In a complex real estate market like Brooklyn, the sale of a condominium often involves substantial sums of money and requires careful legal oversight. Unfortunately, our client faced an unexpected and distressing situation when their attorney failed to remit their proceeds from the sale of their condo. Despite numerous calls and emails, the client did not receive the funds for over a year.
The client’s original attorney, entrusted with the closing of the condo sale, withheld the proceeds and proffered excuses. This prolonged delay caused significant financial strain and anxiety for the client, who was left in a precarious position with no clear resolution in sight.
When the client approached Adam Leitman Bailey, P.C., we immediately recognized the gravity of the situation and the necessity for a comprehensive and aggressive approach. We embarked on a multi-pronged strategy to recover the owed funds.
In a Shareholder Derivative Action, Adam Leitman Bailey, P.C. Preserves Lender’s $2.9 Million Dollar Mortgage
Adam Leitman Bailey, P.C. was retained by a title company to represent a lender in a shareholder derivative action which was commenced by a limited partner, individually and on behalf of the partnership, alleging that the general partners were using the partnership as their own personal piggy bank taking out millions of dollar in unauthorized loans to enrich themselves in breach of the partnership agreement and their fiduciary obligations.
Specifically, Plaintiff sought to discharge Adam Leitman Bailey, P.C.’s client’s $2.9 million mortgage arguing that the lender should have known that the mortgage was in violation of the partnership agreement. After assessing the action, Adam Leitman Bailey, P.C. saw that this action was nothing more than a partnership dispute. The general partners were protected under the business judgment rule in making the decision to take out the subject mortgage.
Adam Leitman Bailey, P.C. Wins Money Judgments in Supreme Court in Two Cases Defeating Commercial Tenants and Guarantors’ Efforts to File Late Answers
Representing two Manhattan commercial landlords, Adam Leitman Bailey, P.C. prevailed in two Supreme Court plenary actions, winning money judgments against commercial tenants and guarantors.
In each case, the client entered into a commercial lease to rent a retail store in Manhattan. The lease was guaranteed by a personal good guy guaranty. Each tenant defaulted and stopped paying rent.
Adam Leitman Bailey, P.C., commenced non-payment eviction cases. In the first case, we won summary judgment, obtained a judgment of possession, a money judgment, a supplementary money judgment for attorneys’ fees, and evicted the tenant. In the second case, the tenant agreed to surrender the premises and all parties reserved their claims and defenses regarding the rent.
Immediately upon regaining possession of each premises, we commenced Supreme Court plenary actions against the tenant and guarantor for their breaches of the respective agreements. In the first case, we further sued the tenant for additional damages accruing following the entry of the money judgment in the eviction case.
In each case, all parties were timely and properly served with the summons and complaint; all parties defaulted in answering.
We moved for default judgment against each tenant and guarantor.
In each case, the opposing parties then hired counsel to prevent the entry of default judgment. They opposed our motions for default judgment and cross-moved for permission to file late answers.
We opposed both cross-motions. We argued that, while courts prefer to resolve disputes on the merits, the defendants in both cases lacked the required reasonable excuse for their default and any meritorious defense to the claims.
In the first case we also argued that the tenant was barred by claim preclusion from rearguing the issues decided in our client’s favor on summary judgment in the commercial eviction case and that the guarantor is similarly barred due to his privity with the tenant.
The Court held:
Defendants do not make out the necessary showing under CPLR 3012 (d). Most fundamentally, they lack any potentially meritorious defenses. Plaintiff previously prevailed in a nonpayment eviction proceeding brought in Part 52 of Civil Court against defendant-tenant and obtained a judgment of eviction in April 2023. Tenant is therefore barred by claim preclusion from raising defenses it might have raised in the nonpayment proceeding. Defendant-guarantor stands in privity with tenant for claim-preclusion purposes and is thus precluded from raising those defenses here. And defendants do not identify any potential defense to plaintiff’s claims for liquidated damages under the lease and guarantee that accrued after the Civil Court granted plaintiff judgment for possession of the premises and unpaid rent. Absent any potentially meritorious defense, no purpose would be served in requiring plaintiff to accept defendants’ untimely answer.
In the second case we demonstrated the lack of any merit to the guarantor’s excuses for failing to answer the complaint, which included incredible claims that (i) he cannot read English, and (ii) he believed that neither he nor the tenant would be subject to further litigation following resolution of the summary eviction proceeding and the vacatur of the premises, despite the settlement agreement (negotiated by counsel for all parties) stating the opposite.
The Supreme Court similarly found for our client in the second case. In both cases, our clients were awarded the money judgments sought.
Partner Vladimir Mironenko of Adam Leitman Bailey, P.C. represented Adam Leitman Bailey, P.C.
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Adam Leitman Bailey, P.C. Has Been Featured in the ‘Best Lawyers in America’ Edition for the Eleventh Year in a Row
For over 40 years, Best Lawyers has been esteemed by both legal professionals and the public as a premier benchmark for legal integrity and distinction in the United States. Consequently, being recognized by Best Lawyers is a testament to exceptional practice.
The edition upholds the tradition of recognizing outstanding legal talent through a rigorous peer-review process, ensuring that the awarded lawyers meet the highest standards of professional excellence. In a saturated market, clients need confidence that the very best in the industry are handling their most critical matters. Those who receive high peer reviews undergo a thorough verification process to ensure they are currently still in private practice. Only then can these top lawyers be recognized by Best Lawyers, and for eleven years now, Mr. Bailey has.
As a reputable resource for both clients and legal professionals, this edition not only highlights individual achievements but also reflects the evolving nature of the legal industry, emphasizing the importance of integrity, skill and dedication in legal practice.
From Best Lawyers:
“Inclusion in The Best Lawyers in America® is determined through a comprehensive peer-review survey. The 31ˢᵗ edition reached a historic milestone with over 250,000 voters having participated in our voting process since we began asking the very best: “If you are unable to take a case, how likely would you be to refer your client to this lawyer?” To create the awards over 23 million evaluations were analyzed including a record breaking 3 million responses from this year alone. Our commitment to our industry-driven, purely peer-based review process is central to our philosophy, as we believe that the top lawyers are best suited to identify their peers at the highest level.”
Adam Leitman Bailey has been named as a Leading Global Real Estate Lawyer by Lawdragon for 2024
Best Lawyers Ranks Adam Leitman Bailey, P.C. as a Top 10 New York Real Estate Law Firm With Less Than 30 Attorneys for 2024
Adam Leitman Bailey, P.C. has been ranked in the 2024 Best Lawyers® “Best Law Firms” list nationally in 1 practice areas and regionally in 1 practice areas. Best Law Firms rankings provide comprehensive information about thousands of top law firms nationwide including data on areas of expertise, lawyers, awards, office locations and more. A ranking from Best Law Firms signifies both a high-quality practice and a breadth of legal expertise.
Firms included in the 2024 “Best Law Firms” list are recognized for professional excellence with persistently impressive ratings from clients and peers. Achieving a tiered ranking signals a unique combination of quality law practice and breadth of legal expertise.
Ranked firms, presented in tiers, are listed on a national and/ or regional scale. Receiving a tier designation reflects the high level of respect a firm has earned among other leading lawyers and clients in the same communities and the same practice areas for their abilities, their professionalism and their integrity.
Adam Leitman Bailey, P.C. Ranked as an Outstanding Law Firm by The Lawyers Global 2024
Adam Leitman Bailey, P.C. is thrilled to share its achievement of an outstanding law firm for The Lawyers Global 2024 awards. The firm’s results-driven mindset, augmented by aggressive litigation and client-centric practices, has led to great success in the New York State real estate law environment. The Lawyers Global awards tout the firm’s latest examples of success.
From Lawyer's Global:
"By uniting many of the best real estate attorneys of its generation, Adam Leitman Bailey, P.C. has become one of New York’s most prominent real estate law firms. The firm excels by solely practicing real estate law and only taking on projects and cases where it is among the best in the field. Adam Leitman Bailey, P.C. has achieved groundbreaking results in the courtroom, in the board room, at the closing table, in the lobbies of legislative bodies, and in every other venue where talented legal advocacy is key to its clients’ interests.
The firm has participated and prevailed in many of the most important New York real estate cases of the new millennium, as reflected in numerous published and unpublished decisions on novel legal issues. Some of these notable victories have changed the landscape of New York law. The firm has invented new ways to practice law and new theories to solve its clients’ problems. Its successes have resulted in producing new laws and new precedents, creating new leases to become the industry standards, devising new faster, less expensive procedures to obtain foreclosures and evictions, using “Perry Mason” moments to win trials, creating out-of-the-box ways to collect on judgments, and creating new theories of law to obtain justice for clients.
A New York State Judge wrote that Adam Leitman Bailey “was the best trial lawyer I saw in my nine years as a judge in New York City.” A New York State Judge, Kings County, stated that he had known Adam Leitman Bailey, P.C. for fifteen years and “that [it] is a brilliant law [firm] and innovative who always worked zealously on behalf of his clients.”
When Adam Leitman Bailey, P.C. used a forgotten statute to prevail in a landmark case, The Wall Street Journal quoted a prominent New York developer’s attorney who called the holding a “game-changer” affecting real estate nationwide.
The New York Times referred to his legal strategy and legislation, proposed in one case, as “novel.” In addition, The New York Times remarked on another case in which “Adam Leitman Bailey fought on…grinding through excruciating detail and obscure Perry Mason moments.” A different case was described as “the city’s largest condo refund ever” (Curbed NY). In another transaction, Adam Leitman Bailey obtained the largest government grant ($21 million) for a cooperative in New York history. More recently, Adam Leitman Bailey secured the largest settlement in New York City history for a property-casualty lawsuit. The Commercial Observer ranked one of the firm's victories among their “15 Most Fascinating New York Real Estate Cases of the 21st Century.”
The collective experience of this team has been responsible for winning several landmark decisions in real estate law. These attorneys have had more appellate victories at the Court of Appeals and its subsidiary appellate courts than most real estate firms have had cases of any kind, won or lost. Its trial attorneys have won hundreds of cases, both with and without juries. The attorneys at Adam Leitman Bailey, P.C. have won over a thousand cases in state, federal, and housing court, including over 400 appellate court cases, many at New York’s highest court, the Court of Appeals.
Proud of its past, Adam Leitman Bailey, P.C. aggressively pursues its future so it may continue to bring to its clients the best that any law firm can offer, both in advocating on behalf of the client and in working with the client."
“Good mix of individuals in the office, and together we make a very effective team” – Brandon M. Zlotnick
“Everyone is very collaborative – it is a very friendly environment” – Kathy, Paralegal
“When I was offered the Summer Associateship, I was thrilled because I knew these were some of the best attorneys in New York who are experienced and seasoned in commercial real estate” – Nurie, Summer Associate
SUMMER MARKETING INTERN
“I am happy every day that I come here because every day is something new, there is something different happening in the office – it is a bustling work environment” – Asli, Summer Marketing Intern
“My favorite day here was definitely the second time I went to court…it is a lot of fun, I definitely had a great time this summer – everyone is really nice and really inviting…it is good firm culture and the work is really interesting” – Ashley, High School Intern
“Everyone here at Adam Leitman Bailey, P.C. is really just like a big family. There is so much working together and comradery. It is just a great atmosphere at the office” – Maya, High School Intern
"We have worked closely with Rosemary Liuzzo Mohamed and her team for upwards of 5 years, maybe longer. Rosemary and her team are extremely responsive and highly professional. When they are the bank attorney on one of my files I know things will be done correctly and in a timely manner. If you are looking for the best firm to work I highly recommend Adam Leitman Bailey PC."
“I have worked with Rosemary Liuzzo Mohamed and her team at Adam Leitman Bailey’s office for 16 years. They are wonderful to work with. Rosemary and her staff are knowledgeable, professional, pro-active, patient and responsive. I know that when I see Rosemary and her team on a file, that it will be a terrific experience.
Having them of your team would truly be an asset to your organization.”
"I am sure you’ve heard of the successful conclusion to my drama, that Apryl sent my money late last Tuesday, too late for my bank to update its records before the July 4th holiday. I only learned about it on Friday when I read a text notice the bank sent of the money transfer to my account. (I immediately confirmed it had arrived, yea!)
Colin and his assistant, Kerstein, were both wonderful, very professional, efficient and patient with me and my case. Thank you for listening to me and providing such excellent support”
“The ALB team was very professional and effective. I don’t know what we would have done without them.”
“I just wanted to thank you for all of your firm’s help during the closing. Rosemary was fabulous! Rosemary and Sophia were responsive, patient, informative and prepared throughout the entire process. Thanks again for a great experience!! Hope all is well!!”
Adam Leitman Bailey, P.C. Celebrates Our Summer Associate Accepting a Full Time Position at Our Firm
Adam Leitman Bailey, P.C.'s Summer Boat Party
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