SPRING 2026 NEWSLETTER
MENU
Whether Co-op Boards Can Reject Purchasers for a ‘Too Low’ Sales Price
By: Adam Leitman Bailey and John Desiderio
Adam Leitman Bailey and John Desiderio discuss ‘Stromberg v. East River’ which provides new guidance on when co-op boards may consider sale price in rejecting a purchaser without losing protection under the business judgment rule.
.png?v=02262024130809){kind=logo}
.png?v=04072026211728)
In 2022, in a prior article, the authors concluded: “Until there is a clear holding by an appellate court that outlines the parameters within which a co-op board may or may not reject a sale for a ‘too low’ sale price, it [would remain] an open question whether or not board rejection of ‘too low’ share transfers can be said to violate the business judgment rule.” See Bailey and Desiderio, “Whether Co-op Boards Can Reject a Sale Because the Purchase Price is ‘Too Low’” (NYLJ, June 28, 2022). In its recent decision, in Stromberg v. East River Housing Corporation, 241 AD3d 445 (1st Dept. 2025), the First Department dismissed East River’s counterclaim “for a declaratory judgment that its “board of directors may properly consider an apartment’s sales price when deciding whether to grant or withhold consent to a sale.” (Emphasis added).
Ironically, in dismissing East River’s counterclaim, the court noted that plaintiffs “[did] not dispute that defendant may consider the purchase price;” but, “rather, they contend[ed] that the price may not be the sole criterion considered in approving or denying an application” (Emphasis added, italics in original), and, therefore, the court concluded, The only question, as recognized by the motion court, is whether the particular manner in which defendant considered the apartment’s sales price was legally permissible, and defendant is not seeking a declaratory judgment on that issue. Therefore, no justiciable controversy exists (see CPLR
3001), and the declaratory judgment counterclaim was properly dismissed. (Emphasis added, italics in original). Thus, while not squarely holding for or against the issue raised in East River’s counterclaim, the court’s ruling suggests, for the first time in an appellate court decision, that consideration of the sale price, in any board sale rejection, will not automatically remove the
protections afforded to board action by the Business Judgment Rule, if sale price is “not…the sole criterion considered in approving or denying an application.”
Accordingly, on East River’s motion for summary judgment, the First Department noted that the “parties sharply dispute whether a minimum sale price floor was implemented by defendant” and held that “[t]he motion court properly found that issues of fact exist as to whether the business judgment rule applies to defendant’s rejection of the sale application.”
Significantly, regarding said fact issues, the First Department here cited Singh v. Turtle Bay Towers Corp., 74 AD3d 568 (1st Dept. 2010) to be compared with Oakley v. Longview Owners, 165 Misc2d 192 (Sup Ct, Westchester County, 1995).
The Cases Cited in Stromberg on Issues of Fact Related to ‘Price’ Consideration
In Singh, the First Department had affirmed denial of purchaser plaintiffs’ application “for an injunction
prohibiting defendants from issuing or transferring the share of stock and proprietary lease to the subject apartment to anyone other than plaintiffs and to stay all proceedings by defendant to issue, transfer, and affect the stock shares and proprietary lease of said unit." The court held: Defendant exercised its right of first refusal to deny [plaintiff’s] purchase application, and there is no question that plaintiffs were aware of the valid, enforceable right of first refusal and that they agreed to be bound by it. In so holding, the Singh court cited to Anderson v. 50 East 72nd Street Condominium, 119 AD2d 73 (1st Dept. 1986), which had held that “the preemptive right of first refusal granted to defendant condominium board to purchase, at the same price terms, a unit offered for sale by an owner, does not constitute an unreasonable restraint on alienation of such unit and is not subject to invalidation by the statutory ‘Rule Against Perpetuities’ for remote vesting.” (Emphasis added).
Singh also noted, in dicta, that “the decision to deny the purchaser application was based upon a determination that the purchase price for the subject unit was significantly below market value,” (Emphasis added). Nevertheless, Singh’s dicta was not related to the court’s consideration and approval of the Board’s rejection.
Adam Leitman Bailey, P.C. Secures Tenant Victory Against Landlord at Trial in New York Civil Court, Involving Residential Use of Commercial Property: Landlord Can Not Rent Commercial Property for Residential Purposes and Use Commercial Landlord Tenant Court to Try to Evict Tenants
Ben Rose
Adam Leitman Bailey, P.C. delivered a resounding blow for its clients against their landlord in the New York Civil Court, Commercial Part.
The petitioner-landlord, owning a Manhattan building with a commercial certificate of occupancy (“CO”) with limited commercial marketability, decided to renovate the space and lease it as a “live/work” space. Respondent-tenants – two university students – signed a commercial lease for the property and engaged in a months-long process of custom-tailored renovations handled by, or with the acquiescence of, the landlord.
Prior to moving in, the landlord worked with tenants and their parents to build out the premises to include a full kitchen, bathroom, laundry, and two bedrooms. The tenants lived in the space for two years without issue until, at the end of the lease, the landlord sought an exorbitant rent increase and specific lease language expressly prohibiting any residential occupancy, even though the landlord knew all along that was the entire basis of the tenants’ use.
When renewal discussions inevitably failed, the landlord sued in the Commercial Part for eviction and possession because of the tenants’ residential use of the space.
By that time, approximately $500,000 in post-lease rent had accrued.
Under the New York Civil Court Act, the civil Housing Part – and not the Commercial Part – maintains exclusive jurisdiction over all proceedings to recover possession of residential premises to remove tenants, and to render judgment for rent due. Moreover, despite the commercial nature of a lease, if a landlord knows of or acquiesces to a tenant’s use of the premises for residential purposes prior to commencing eviction proceedings, the action must be brought in the Housing Part. Pursuing possession of premises used for residential purposes constitutes a subject matter jurisdictional defect that is not waivable.
The landlord implausibly claimed that he had only recently learned of the tenants’ residential use, and that he always intended the space for strictly commercial use, but post-COVID-19, he planned to accommodate tenants who might wish to occasionally stay overnight, as their supposed business needs required. Despite pretrial filings making clear that the action should be barred from the Commercial Part, the matter proceeded to trial to determine, among other things, exactly what and when the landlord knew about the tenants’ occupancy.
Over multiple trial days with five witnesses, Adam Leitman Bailey, P.C. adduced ample evidence demonstrating that the landlord was well aware that the tenants were residing in the premises.
On direct examination, the landlord testified he had only learned of the tenants’ residential use recently, and that he made this supposed discovery by seeing tenants and their guests coming in and out of the space at all hours on his CCTV system.
In a critical exchange on cross-examination, the landlord admitted that he had consistently seen the tenants’ residential use of the space on CCTV, and was further forced to admit that he had installed the system over two years prior. That was the nail in the landlord’s coffin, leading the Court to find that he had “testified on rebuttal that he was aware, through the security cameras he had installed, that [the tenants] had been living in the premises for at least the past two years. Thus, this proceeding must be commenced in Housing Court.”
Adam Leitman Bailey, P.C. Achieves Out of Court Settlement in First of its Kind Adverse Possession Action
Danny Ramrattan
Adam Leitman Bailey, P.C., was retained by a condominium board (“Board”) to investigate a potential adverse claim against its neighboring building, owned by an extremely prominent developer, on an ultra-exclusive part of 5th Avenue. Upon information and belief, this was the first adverse possession action related to these types of buildings on 5th Avenue.
Adam Leitman Bailey, P.C. visited the property and saw the low area parcel in the backyard of the Board’s property that was called the Pit. After visiting the Pit and conducting interviews with the board members and employees of the building, Adam Leitman Bailey, P.C. began developing the case.
While the property was technically part of the prominent developer’s property, it was located in a unique space that made it seem like it was the Board’s property. Specifically, the developer’s property was more elevated than the Board’s property, and the Pit was even further down. So, it looked like the Pit was a depressed part of the Board’s backyard.
Adam Leitman Bailey, P.C. learned that the Board maintained the Pit by cleaning and repairing it. The Board also stored materials in the Pit, including building materials such as bricks.
The developer did not utilize the Pit. In fact, the developer built a bike shed right by the edge of their backyard, which essentially blocked access to the Pit. It appeared that the developer did not even know that the Pit was part of its property, as there was no explanation why they would build a bike shed to block access to the Pit.
Based upon these facts, Adam Leitman Bailey, P.C. commenced a lawsuit against the developer seeking adverse possession of the Pit. Upon information and belief, the developer intended to knock down his building and rebuild as the Pit needed for setback purposes.
Therefore, the developer had every incentive to fight the lawsuit, and did so. A daunting discovery battle ensued that resulted in multiple depositions and motion practice.
As the case progressed, the developer understood the strengths of the case that Adam Leitman Bailey, P.C. built and entered into a settlement agreement with the Board. The out-of-court settlement was a complete victory for the Board.
Adam Leitman Bailey, P.C. Obtains Rare Preliminary Injunction Against "Private Social Club" for Excessive Noise and Disregard of Neighbors and Shareholders' Rights
Nurie Metodieva
No one who lives in New York City can expect the same peace and quiet that they would get in a different setting. However, that doesn't meant that city dwellers give up their rights to the peaceful enjoyment of their homes. Adam Leitman Bailey, P.C. client, a small, seven-unit coop, includes a commercial space on the ground floor that had always been occupied by restaurants. Most recently, however, the space was rented by a “private social club” that promised to be open only to members and guests, and to be a place for intimate conversation, not a dance club or event venue. When it became clear that the tenant was ignoring its promises and operating as an event venue, with loud parties going well into the night, Adam Leitman Bailey, P.C's lawyers got to work to try to convince the judge that the club’s operations constituted a nuisance and the noise and the disruptive crowds that the club subjected the coop shareholders to was in violation of both their sublease and the proprietary lease for the space. Adam Leitman Bailey, P.C.'s retained the services of a sound engineer and submitted a number of documents, including information from the tenant’s own social media, which convinced the court to issue a preliminary injunction, which remains in effect while the case is being litigated, ordering the club not to play any music that could be heard outside of the venue, including in the dwelling units at the coop, from 11 p.m. until 8 a.m. the following day, a significant victory that limits the club’s ability to book the sort of events that had been so disruptive. The coop also complained that the club had been issued violations and stop orders by the FDNY for using an inadequate and potentially hazardous cooking exhaust system. The court also ordered the club to stop using its cooking facilities until it repaired the system, cleared up the violations and got approval from the Fire Department.
This injunction allows the coop’s residents a significant measure of relief from the club’s intrusion into their lives.
Adam Leitman Bailey, P.C. Attorneys Secures Settlement in Contentious Partition Actions
Adam Leitman Bailey
Caleb J. Brown
Understanding that our client was being pressured into an onerous and unfair matrimonial settlement, Adam Leitman Bailey, P.C. knew that this was a matter of showing force. In expedient fashion, Adam Leitman Bailey crafted an Answer with Counterclaims in both actions, showing (a) not only was our client entitled to her rightful share of the property, but also (b) that she was ready to fight for judicial recognition of her thirty-years’ time, effort, and mother/”wife” devotion to the care and wellbeing of her family — as the ground for obtaining her fair share.
Adam Leitman Bailey, P.C. Steps in as Last-Minute Counsel and Achieves a Quick and Lucrative Resolution for Landlord Facing Potential Decades-Long Losses on Commercial Lease
Dov A Treiman
Nurie Metodieva
The New York commercial real estate world is filled with cautionary fables, none more legendary than the tenant who sleeps on its rights and loses a sweetheart lease. That is the situation where, whether you are the tenant or landlord, having deeply experienced real estate counsel makes all the difference; and in this very situation, ALBPC was able to secure for our landlord client a multi-year rent increase that would likely, with lesser counsel, never have occurred.
ALBPC’s client is a small real-estate company that owns an extraordinarily well-situated commercial restaurant storefront in New York’s legendary Greenwich Village, with high foot traffic and consistently high sales for every occupant of the small space. The present occupant, a well-reviewed and trendy take out hamburger restaurant, had been in the space for nearly three years under an incredibly favorable five-year lease it assumed from a prior tenant. The lease, which was set to expire in December 2025, set rent for the premises at nearly 50% less than the going rate for similar spaces in 2025 and contained a strong option to renew for another 5 years at a mere 3% increase per year. Tenant requested a lease renewal, and, under normal circumstances, and with lesser counsel, this would be the end of the discussion and the landlord would need to face five years of lost income. However, after initially working with other counsel, the landlord engaged ALBPC to aggressively seek a means to avoid what seemed like an airtight renewal clause; and ALBPC quickly realized that the tenant’s past inactions and certain violations provided just such an out, which eventually cost the tenant its favorable lease.
Specifically, under the terms of the lease renewal clause, tenants were only entitled to a mandatory lease renewal if there were no uncured material defaults at the time tenant requested renewal. However, at the time it requested renewal, the tenant was a named defendant in a lawsuit concerning numerous violations at its storefront of the Americans with Disabilities Act (“ADA”), and the landlord – before engaging ALBPC – cited this as a basis for non-renewal. Tenant responded by filing a complaint declaring it had the right to renew the lease until 2030; and it then moved by expedited Order to Show Cause for what is called a Yellowstone Injunction, asking the New York County Supreme Court to enjoin the landlord from doing anything to eject the tenant – and ordinarily, such a motion can delay eviction for months or even years. With this new wrinkle, the landlord realized it needed more experienced counsel and engaged ALBPC to pursue an aggressive and novel litigation strategy. ALBPC took a two-pronged approach to decimating tenant’s position: As is the practice in this Court, before the judge even signed the Order to Show Clause – which originally contained a temporary restraining order (“TRO”) clause that would have barred landlord from taking any action against tenant during the entire time the motion was pending – ALBPC was permitted to briefly outline landlord’s position before any formal papers were due to be filed. ALBPC used this opportunity to explain to the Court, first, that tenant’s motion was facially improper, because a Yellowstone Injunction exists solely to preserve a commercial tenant’s opportunity to cure an alleged default when there is a threat that the landlord will terminate the lease before its natural expiration date; and here, there was neither threat nor termination because the Lease was set to expire on its own, without any action by tenant, which was not seeking any extra time to cure any defaults. Second, ALBPC’s attorneys pointed out to the Court that tenants had been cited with multiple uncured Department of Building violations, some of which were at least two-years old, for among other things, improper electrical work, and failure to maintain the premises in a clean and orderly condition, all of which were material violations of the tenant’s lease and – along with the ADA violations – voided the lease renewal clause under its own terms.
Adam Leitman Bailey, P.C., Defeats Motion to Dismiss and Wins Summary Determination in Post-Foreclosure Holdover Proceeding Without Trial
Vladimir Mironenko
Danny Ramrattan
Representing the property owner, following a successful foreclosure action (which we also handled) Adam Leitman Bailey, P.C., successfully opposed a motion to dismiss in a post-foreclosure summary holdover proceeding in Nassau County. We also secured judgment of possession by summary determination under CPLR 409(b) without the need to cross-move or proceed to trial. The Court awarded our client judgment of possession of the property and issued a warrant of eviction.
Following the foreclosure sale of the property, we commenced a post-foreclosure summary eviction proceeding. Before initiating the proceeding, we served the required 10-day and 90-day post-foreclosure notices upon any potential occupants of the property. The occupants were also provided with a copy of the certified referee’s deed, evidencing the petitioner’s ownership of the property following the foreclosure sale.
Two respondents, through counsel, appeared and moved to dismiss the proceeding on two separate grounds.
First, respondents argued that the petitioner was required to commence separate proceedings against other named respondents listed in the petition and against the two movants.
Second, respondents alleged that the petitioner failed to comply with RPAPL § 1303 and 1305, statutes governing notices in foreclosure-related proceedings.
Adam Leitman Bailey, P.C., aggressively opposed the motion to dismiss, arguing that the proceeding had been properly commenced and that respondents’ arguments lacked merit. With respect to the first argument, we demonstrated that summary proceedings are routinely commenced against multiple occupants of the same premises. The respondents named in the petition were the individuals alleged to occupy the apartment; the movants did not argue that they occupied different units within the property, and there was no legal requirement to file separate proceedings.
As to the respondents’ second argument, we established that RPAPL § 1303 applies only to mortgage foreclosure actions, not to post-foreclosure summary holdover proceedings. Accordingly, the statute was inapplicable. We further demonstrated compliance with RPAPL § 1305, and respondents’ own submissions acknowledged receipt of proper notice and awareness of the foreclosure judgment and sale. Finally, we argued that the respondents-movants lacked any valid tenancy or continued possessory interest in the premises following the foreclosure because they admitted to taking occupancy through the prior owner following the filing of the notice of pendency and judgment of foreclosure and sale.
The Court adopted our arguments and denied the respondents’ motion to dismiss.
Moreover, without the need for a cross-motion, based on our request in our opposition papers, and based on the record before the Court, the Court awarded our client summary determination pursuant to CPLR 409(b) and granted our client judgment of possession and directed the issuance and execution of a warrant of eviction without a stay.
Adam Leitman Bailey, P.C. Obtains Summary Judgment for Shareholder as to Cooperative Liability for Breach of Warranty of Habitability and Breach of Proprietary Lease, Negligence and Nuisance
Bonnie Reid Berkow
Adam Leitman Bailey P.C. represents a shareholder in a Manhattan coop. The shareholder’s Apartment sustained mold and water damage as a result of leaks from the roof and façade. The Coop compelled the shareholder to leave the Apartment in February of 2020 and proceeded to gut the entire apartment, down to the studs, purportedly in furtherance of its efforts at mold remediation. When the Coop failed to restore the Apartment more than two years later, and after all the repairs to the roof and façade had been completed, the shareholder commenced a lawsuit to compel the Coop to restore the Apartment to its original condition, for damages in the form of rent abatement, including assessments, for the Coop’s breach of the statutory warranty of habitability and breach of the proprietary lease and for damages in the form of lost market rental value on her claims for negligence and nuisance.
While the case was pending, in or about April of 2024 the Coop retained a contractor to restore the apartment and the apartment was finally restored to habitable condition in or about August 2025.
The Court granted Plaintiff’s motion for summary judgment as to liability on her claims for breach of warranty of habitability, breach of the proprietary lease, negligence and nuisance and held that she would be entitled to recover attorneys’ fees.
The Court held the warranty of habitability and the Coop’s obligations to restore the Apartment under the Proprietary Lease were clearly breached as there was no doubt the Apartment was not habitable for at least five years.
The Court also granted summary judgment to Plaintiff on her causes of action for negligence and private nuisance, holding that the Coop breached its statutory duties under the Multiple Dwelling Law to keep the Apartment in good repair and there was prolonged and unreasonable interference with the use of the Apartment.
The Court held further that Plaintiff would be entitled to an abatement of rent including all maintenance charges and assessments imposed during the period when the Apartment was uninhabitable. The Coop had argued in opposition to Plaintiff’s motion that assessments were not maintenance and that Plaintiff should not be entitled to an abatement of assessments imposed during the period of uninhabitability. The Court held that there is no distinction in the law between rent and assessments.
The Court referred the issue of the amount of rent abatement, loss of use damages and attorneys fees to be determined at trial.
Adam Leitman Bailey, P.C., Wins Discharge and Cancellation of Mechanic’s Lien
Vladimir Mironenko
The shareholders of a Manhattan cooperative apartment hired a contractor to renovate their unit. To their dismay, despite disputes over work quality, charges, and payments, the contractor filed a mechanic’s lien for $159,000. Further complicating matters, the cooperative served upon the shareholders a notice to cure, which alleged that the filing of the lien violated the proprietary lease and threatened their tenancy and apartment ownership. The shareholders turned to Adam Leitman Bailey, P.C., for help.
Under New York Lien Law § 10, when work or materials relate to a single-family dwelling, a mechanic’s lien must be filed within four months after the completion of the contract, the final performance of work, or the furnishing of materials. New York Lien Law § 19(b) provides for the discharge of an untimely lien. Our research confirmed that New York courts hold that a cooperative apartment is treated as a single-family dwelling for the purposes of establishing the time limits for filing a mechanic’s lien.
Here, the contractor performed work solely concerning the shareholders’ cooperative apartment, which did not involve work to the building’s common areas or improvements for the common benefit of the building. As a result, the cooperative apartment qualified as a single-family dwelling under the statute.
The contractor filed the lien more than four months after the completion of the work.
LANDLORD REPRESENTATION
Adam Leitman Bailey, P.C. Secures Unprecedented 30-Day Vacate Date of Commercial Premises
Adam Leitman Bailey, P.C. secures a settlement like no other. In a commercial holdover proceeding, Adam Leitman Bailey, P.C. was tasked with evicting a commercial tenant after they failed to vacate the premises. In its normal aggressive fashion, Adam Leitman Bailey, P.C. quickly prepared its predicate notices and commenced a holdover proceeding.
The commercial tenant filed an answer riddled with affirmative defenses that were meritless. The defenses showed that the commercial tenant knew their time in the premises was set to be short lived. Adam Leitman Bailey, P.C. moved for summary judgment and dismissal of the commercial tenant’s claims. In the summary judgment motion, Adam Leitman Bailey, P.C., demonstrated that the tenant’s key defense, a warranty of habitability claim, was baseless. In a commercial holdover proceeding, a warranty of habitability defense is unavailable. Using key legal precedent, including direct citation to Real Property Law 235-b, which clearly limits claims for repairs to residential premises, our firm picked apart the tenant’s defense.
Furthermore, the tenant alleged that our client was seeking payment of rent. This argument fell short based on a simple reading of the petition. The carefully crafted petition made it clear that our client was seeking to evict the tenant for reasons other than non-payment of rent.
To add greater pressure on the tenant, Adam Leitman Bailey, P.C., included claims for use and occupancy and attorneys’ fees in the motion, both of which are either statutorily available or directly permitted under the terms of the lease agreement. The threat of not only being evicted, but also having to pay substantial monies, achieved the result our client needed.
LANDLORD REPRESENTATION
Adam Leitman Bailey, P.C. Defends Landlord Against Improper Mold Based Lease Termination
The landlord of a well-maintained building on the Upper East Side retained Adam Leitman Bailey, P.C. to commence a non-payment proceeding against a rent-stabilized tenant who failed to pay rent for several months claiming the rent in arrears was not due and owing because the presence of mold rendered the apartment uninhabitable. In connection therewith, the tenant vacated the apartment prior to the expiration of the term of the lease. The tenant retained counsel who filed an answer to the non-payment petition asserting multiple affirmative defenses, including breach of the warranty of habitability under Real Property Law Section 235-b and constructive eviction. The parties tried to settle the non-payment proceeding but settlement discussions proved to be unfruitful.
Prior to trial, the landlord made a motion pursuant to CPLR 3120 (1) (ii) for an order directing the tenant to provide the landlord access to the subject apartment so that the landlord could inspect and photograph the conditions in the tenant’s apartment. Said motion was granted because the tenant refused to provide access to the landlord to inspect the apartment on several occasions. Upon inspection of the apartment, the landlord and a licensed environmental contractor retained by the landlord found that the mold conditions were confined to a bathroom ceiling area caused by the tenants’ ventilation practices. The landlord also took photographs of the conditions during the court-ordered inspection of the apartment. In light of the inspection and photographs, the landlord no longer wanted to settle and requested a trial date. At trial, the tenant testified that the outstanding rent and all future rent were not due and that the tenant’s vacatur from the apartment prior to the expiration of the tenant’s lease was justified in light of the mold conditions.
After the tenant concluded his case and testimony, the landlord presented his case, which included expert testimony by the environmental contractor, the photographs taken during the inspection of the apartment, an inspection report showing mold levels within acceptable indoor environmental standards and email correspondence between the landlord and the tenant evidencing the landlord’s repeated efforts to obtain access to the apartment.
After the conclusion of the trial, the court found and determined that the landlord did not breach the warranty of habitability as the mold conditions were minor and not pervasive and that the tenant’s unilateral Vacatur from the apartment and attempt to break the lease prior to its expiration was not warranted and not legally justified.
Accordingly, the court found in favor of the landlord and awarded the landlord a final judgment of possession and a monetary judgment for all of the outstanding rent arrears and further held that the tenant would be liable for all future rent under the tenant’s lease as well as the landlord’s legal fees as the prevailing party pursuant to the legal fees clause in the tenant’s lease.
Adam Leitman Bailey, P.C. Secures a Judgment of Possession and all Rent Arears Owed to a Client Landlord in a Commercial Holdover Proceeding
Adam Leitman Bailey, P.C. represents a new landlord of a mixed residential and commercial building in the heart of Park Slope, Brooklyn. After a legacy commercial tenant failed to vacate upon lease expiration and request by the new landlord, a commercial eviction proceeding was commenced to enforce the right to return of possession. The tenant immediately ceased all rent payments after notice by the landlord and request for return of possession, a right given up by the commercial tenant when their lease expired with the previous landlord. After several trial delays by the commercial tenant, attorneys for Adam Leitman Bailey PC were able to secure a judgment of possession and monetary judgement for all outstanding rent, use and occupancy.
Alert for Buildings with Gas Service – Local Law 157
Under Local Law 157, all buildings in NYC with natural gas service or gas-burning appliances (like a stove, oven, water heater, or heater) are required to have natural gas detectors — similar to smoke and carbon monoxide alarms — to help protect you from dangerous odourless gas leaks. These detectors are designed to sound an alarm if they sense gas in the air, giving you crucial time to get to safety.
Here’s what you need to know and do:
• Detectors must be installed in every dwelling that has natural gas service — usually in kitchens or the room with gas appliances — and must meet city safety standards.
• Installation should follow the manufacturer’s instructions and relevant building code guidelines so the alarm works correctly. Some battery- or plug-in models can be installed by owners, maintenance staff, or tenants; hard-wired alarms usually require a licensed electrician.
• These devices must be kept in good working order and replaced when they expire, are missing, or stop working.
• The law’s compliance deadline has shifted over time — though originally tied to May 1, 2025, the final enforcement date is now no earlier than January 1, 2027, to give owners and managers more time to install compliant detectors.
In short: make sure your building has natural gas detectors installed and functioning where required, and check with your building management if you do not see them — it is about your safety and meeting NYC’s legal requirements.
Building owners who fail to install the required natural gas detectors by the compliance deadline can be cited by the NYC Department of Buildings (DOB) for violations. These typically lead to civil penalties (fines).
While specific dollar amounts are not yet fully spelt out in publicly available DOB rules, failure to meet the deadline historically results in DOB issuing violations and fines under city code enforcement processes.
Criminal Implications of Trashing a Landlord’s Property
It’s every landlord’s worst nightmare – the tenant you hoped to be a secure source of revenue just trashed the place, damaging your valuable property and upending the landlord-tenant relationship. Faced with significant costs, aggravation and uncertainty, you ask, “Now what?” The specialized, highly experienced real estate attorneys of Adam Leitman Bailey, P.C. are here to guide you through the turmoil, from damages recovery to eviction. But a less understood and often overlooked are the potential criminal aspects in play. Whether you can (or should) pursue penal action is a decision rife with business, relationship and strategic implications that are best navigated with the guidance of experienced counsel such as at ALBPC. And that conversation begins with a broad understanding the basic legal framework.
A tenant’s destruction of property typically falls under two sections of Penal Law Article 145: (1) Criminal Mischief; and (2) Reckless Endangerment of Property. These sections include both felonies and their less-serious misdemeanor counterparts, carrying potential periods of incarceration and a criminal record. Penal code sections use offense levels for variations of the same type of misconduct – “degrees” – such as 4th degree (less severe) to 1st degree (most severe). Severity is generally based on property value, intent, special circumstances, or frequently, some combination of these factors. Penalties for both felony and misdemeanor charges descend alphabetically, with class A being most severe to class E, the least severe. Misdemeanors may be punished by city jail time (i.e., Rikers) of less than a year (364 days max), and fines and restitution may be part of the resolution. Felony convictions, on the other hand, carry mandatory periods of incarceration in the state prison system (i.e., Attica) for indeterminate ranges of time set by the statutory framework. For example, a first-time offender convicted of a non-violent E felony must be sentenced to a minimum term of incarceration of 1-3 years and could receive a maximum of up to 11/3-4 years. A D felony in the same circumstances would carry a minimum of 1-3 and maximum of 21/3-7 years. Unlike misdemeanors, felony sentences cannot be set for a definite amount of time.
The most likely property destruction charges in a landlord-tenant relationship are:
1. PL 145.00 Criminal Mischief in the 4th Degree (A misdemeanor) – committed by intentionally damaging property regardless of value, or recklessly damaging property where the value exceeds $250;
2. PL 145.05 Criminal Mischief in the 3rd Degree (E felony) – committed by intentionally damaging property where the value exceeds $250;
3. PL 145.10 Criminal Mischief in the 2nd Degree (D felony) – committed by intentionally damaging property where the value exceeds $1,500; and
4. PL 145.25 Reckless Endangerment of Property (B misdemeanor) – recklessly engages in conduct that creates a substantial risk of damage to property where the value exceeds $250.
A key distinction in these charges is intent. Reckless behavior occurs when the offender is aware of, and consciously disregards, a substantial and unjustifiable risk (voluntarily intoxication is not a defense) (PL 15.05(3)). Intentional conduct occurs when the offender’s conscious objective is to cause the result (PL 15.05(1)). If a tenant recklessly damages, or even just endangers, property valued over $250, he could be charged with the misdemeanors of Criminal Mischief in the 4th and/or Reckless Endangerment. If there are indicia that the tenant intentionally caused the damage, however, he could be charged with E- or D-level felony Criminal Mischief, depending on the damage amount. Intent can be very difficult to prove, especially in situations involving property damage by a bona fide resident. Prosecutors exercise wide discretion over which charges to pursue, which will include their assessment of whether they can prove the charge beyond a reasonable doubt. Therefore, recklessness is far more likely to be charged, absent compelling evidence that the damage was done on purpose.
DUE DILIGENCE/TRANSACTIONAL RISK ASSESSMENT OF MULTI-FAMILY DWELLINGS
Federal District Court Decision Halts the Financial Crimes Enforcement Network’s (“FinCEN”) Expansion Into Residential Real Estate Oversight
On March 19, 2026, Judge Jeremy D. Kernodle of the U.S. District Court of the Eastern District of Texas held that FinCEN’s implementation of the Residential Real Estate Rule (“Rule”) exceeded FinCEN’s statutory authority under the Bank Secrecy Act. As a result, the Court vacated the Rule. See Flower Title Companies, LLC v. Bessent, 6:25-CV-127-JDK, 2026 WL 782283 (E.D. Tex. 2026) (challenging the Rule as unlawful under the Administrative Procedure Act because the Rule exceeds FinCEN’s statutory authority provided by the Bank Secrecy Act). The Rule, which only became effective on March 1, 2026, was implemented to increase transparency in residential real estate transactions. Specifically, the Rule implemented reporting requirements for non-financed residential real estate transactions where ownership is transferred to entities or trusts, subject to a few exceptions.
In Flower Title Companies, LLC v. Bessent, the Court noted that the Bank Secrecy Act does permit FinCEN to require reports of “any suspicious transaction,” however, FinCEN failed to explain or prove that non-financed residential real estate transactions are generally deemed as suspicious. The Court determined FinCEN’s explanations for the Rule to be “vague, conclusory, and unpersuasive,” stating that the fact that some bad actors have engaged in non-financed real estate transactions does not render such transactions inherently suspicious. FinCEN relied on a statistic showing that about 42% of non-financed real estate transfers identified through geographic targeting orders involved individuals or entities subject to a suspicious activity report. The Court, however, found this statistic unpersuasive because it was drawn from a narrow subset of transactions—limited by price thresholds and confined to selected geographic areas under monitoring. Furthermore, the Court indicated that while the Bank Secrecy Act gives FinCEN authority to require financial institutions to maintain procedures to comply with the Bank Secrecy Act, it does not give FinCEN the authority to require the reports under the Rule.
FinCEN’s Response
As a result of the District Court’s decision vacating the Rule, FinCEN issued the following statement on its website: “In light of a federal court decision, reporting persons are not currently required to file real estate reports with FinCEN and are not subject to liability if they fail to do so while the order remains in force.”
Adam Leitman Bailey, P.C.’s Recommendation
Despite the recent District Court decision and the resulting uncertainty surrounding the Rule, Adam Leitman Bailey, P.C. strongly advises all real estate professionals who qualify as “Reporting Persons” to proceed with the compliance measures. Specifically, such professionals should continue to collect all information required for a Real Estate Report, and should prepare and retain these reports in their files. Taking these proactive steps will ensure that, if the Rule is reinstated, reporting obligations can be met immediately and without disruption or delay.
Adam Leitman Bailey, P.C. will continue to closely monitor developments and will promptly notify clients of any material updates or changes.
Appellate Division Finds New York State’s Law Prohibiting Housing Discrimination Based on Lawful Source of Income Unconstitutional, to the Extent it Requires Rental of Housing Accommodations to Recipients of Section 8 Housing Vouchers
The Appellate Division, Third Department has found that a New York state statute prohibiting housing discrimination on the basis of a would-be tenant’s lawful source of income is unconstitutional to the extent that it requires landlords to accept tenants whose source of income includes Section 8 vouchers. It found as such because both federal statutes and regulations, and the housing assistance payment (“HAP”) contract into which a landlord with a tenant receiving Section 8 benefits is required to enter, require the landlord to make its property and records available for searches without a judicial warrant, violating the Fourth Amendment to the United States Constitution.
As observed by the Third Department in People v. Commons West, LLC, Section 8 housing vouchers, named as such because they are provided pursuant to Section 8 of the United States Housing Act of 1937, represent the largely rental assistance program in the nation. New York’s Executive Law § 296, otherwise known as the New York State Human Rights Law (“NYSHRL”), prohibits discrimination in, among other areas, housing accommodations, based on, among other characteristics, a would-be tenant’s lawful source of income. Based on this prohibition, the New York state attorney general’s office commenced a proceeding in Supreme Court, Tompkins County, against multiple landlords who allegedly had refused to rent to individuals receiving Section 8 vouchers.
Supreme Court, on motion by the landlord respondents, dismissed the petition on the ground that the source-of-income discrimination law was unconstitutional, because it required landlords to take part in the Section 8 program, and landlords participating in that program, in turn, were required to consent to searches of their properties and records without search warrants, thus infringing upon those landlords’ Fourth Amendment rights.
What you Must Know About the Financial Crimes Enforcement Network Residential Real Estate Rule
As of March 1, 2026, the Financial Crimes Enforcement Network (“FinCEN”) is now requiring federal reporting for certain residential real estate transactions. The Residential Real Estate Rule is expanding FinCEN’s anti-money laundering surveillance to residential real estate transactions. The rule is expected to create an increase in transparency with respect to the acquisitions of residential real property by entities and trusts.
The Rule and the Real Estate Report
Under FinCEN’s Residential Real Estate Rule, reporting is required for certain non-financed transfers of residential real property located in the United States, including all-cash transactions, where the purchaser is a legal entity or trust. The purpose of the rule is to create more transparency into transactions that appear to conceal beneficial ownership through entity and trust structures.
The Real Estate Report is a form issued by FinCEN to report certain residential real estate transfers that present a heightened risk of illicit finance. The information collected through these reports is intended to combat and deter money laundering by increasing transparency in the U.S. residential real estate market. Individuals who allegedly launder funds through residential property often use legal entities and trusts to conceal their identities and obscure the source of criminal proceeds. In addition, such actors frequently favor non-financed transactions to avoid scrutiny from financial institutions, which are subject to anti-money laundering programs and Suspicious Activity Report (“SAR”) filing requirements under the Bank Secrecy Act.
The rule applies to the following forms of residential real property: one to four family homes, condominiums, cooperatives, and certain unimproved land on which a transferee desires to build a one to four family residential structure.
CONDOMINIUM & COOPERATIVE LITIGATION
New Law Imposes Strict Time Limits Requiring Co-Op Boards to Promptly Respond to Purchase Application
On January 29, 2026, the NY City Council passed into law INT-1120-B, the “timings” bill, setting strict and short limits on the time in which co-op boards have to act on a prospective purchaser’s application. The new law goes into effect on July 28, 2026, and establishes several new requirements in connection with prospective sales:
First, a coop must have a standard application form, which is to be furnished to a prospective purchaser “promptly upon request;”
THE INITIAL APPLICATION SUBMISSION
- Within 15 days of a purchaser’s initial submission of the completed application to the board, the board must provide a written notice to the purchaser or purchaser’s agent:
- Acknowledging receipt of the application;
- Advising the purchaser whether the application is complete and, if deemed incomplete, the purchaser must be provided with an itemized list of what is lacking, with a citation to the section of the original application setting forth the requirement;
-Requesting any additional materials the board feels it requires for “clarification or completion of previously submitted materials.”
If no acknowledgement is sent, the application will be deemed complete as of the 15th day after the initial submission.
-f0888fa862da91837c53b557ade7fbe5b1cfc031.png?v=04212026202755)
The High Cost of Ignoring Habitability
WHAT HAPPENED
In 2014, two leaks within seven months damaged Robin Siegal’s co-op apartment and its contents. One leak was from a sprinkler head that froze and burst in Siegal’s apartment while she was away. The second leak, which lasted eight months, was from the bathroom plumbing in the apartment directly above Siegal’s apartment. Siegal claimed she was unable to use her apartment for 16 months due to the two leaks and the time it took to repair her apartment.
The board of 77 Bleecker Street Corp. took the position that it was only responsible for repairing parts of the apartment that were “original” to the building. It also maintained that it had not caused the leaks and therefore had not violated either the proprietary lease or the Warranty of Habitability.
Siegal submitted a claim to her own insurance carrier, and 77 Bleeker did likewise to its carrier. Both carriers hired adjusters to negotiate a settlement. The co-op offered two options: it would either handle the repairs itself or allow the shareholder to use her own contractor – but with a catch. If she used her own contractor the co-op wanted her to pay a portion of the co-op’s deductible and the adjuster’s fee. Concerned about delays and work quality, Siegal rejected those terms and hired her own contractor.
It cost Siegal $234,568.70 to repair her apartment. Her insurance covered $75,390.74 and the co-op contributed a bit under $20,000 through a prior Housing Court settlement after the shareholder stopped paying maintenance.
Before the dispute was resolved, the shareholder died. Her estate continued the case, suing the co-op, its managing agent, board members, and others.
IN COURT
On the key legal issues, the court ruled in favor of the estate. It ruled that the co-op failed to meet its legal responsibilities under both the Warranty of Habitability and the lease. Because the facts were clear, the court ruled in favor of the estate without a trial and said the co-op must also pay the estate’s legal fees (the exact amount will be decided later). The court also penalized the co-op for losing important evidence—the valve and pipe that caused the sprinkler leak.
The decision emphasized that under New York law, apartments must be fit for human habitation and safe for their intended use. The court found that the conditions shown in photographs—extensive water damage and related issues—were enough to establish a breach because they interfered with the apartment’s basic residential function. The court also rejected the co-op’s reliance on an expert report that downplayed the seriousness of mold conditions, noting inconsistencies within the report itself.
Adam Leitman Bailey and the Family of Michael Berey were Honored and Presented with the Outstanding Contributions to Real Estate Publications Award
At the 150th Anniversary of the New York State Bar Association’s Annual Meeting on January 14, 2026, Adam Leitman Bailey and the family of Michael Berey were honored with the Outstanding Contributions to Real Estate Publications Award for their work on Real Estate Titles: The Practice of Real Estate Law in New York.
It may be little known, but Adam and Mike poured an inordinate amount of time on this publication that has become the second-highest-selling book published by the New York State Bar Association in its 150-year history.
A note from Adam Leitman Bailey:
The Reason Stephanie Rivas Became a Lawyer Turned Court Attorney: Adam Leitman Bailey
.jpg?v=04212026210339)
Adam Leitman Bailey Recognized with Two 2026 AV Preeminent Awards from Martindale-Hubbell
.png?v=04222026135611)
Adam Leitman Bailey Receives America’s Top 100 Bet-the-Company Litigators® Ranking for 2026
Adam Leitman Bailey, P.C. Celebrates Courtney Lerias Making Partner
CLIENT TESTIMONIAL
“Most importantly, they helped us win the election, and now we have a new board.” – Inna Vernikov, Client and Councilwoman
“They get things done, I mean it’s really that simple” – Mark DeRugeriis, Client and Former Board President
“Everybody is very focused on doing exceptionally high-quality work.” Chase Newman, Spring Legal Extern
“The firm culture just really instills greatness in everybody.” – Max Richardson, Spring Legal Extern
“It’s really an open-door policy; they take it to the next level.” – Eli Uziel, Spring Legal Extern
“You gain so much hands-on experience here, it’s invaluable.” – Alex Constantis, Spring Legal Extern