NYSBA FALL 2010 | VOL. 38 | NO. 4 N.Y. Real Property Law Journal A publication of the Real Property Law Section of the New York State Bar Association

Inside • Newly-Enacted CPLR 3408 for Easing • Accommodations and Modifi cations in the the Mortgage Foreclosure Crisis NYC Housing Court for the Disabled

• May a Lawyer Refer a Client to the • “Standing” (or Lack Thereof) and the Lawyer’s Own Title Agency? Impact on Commercial Foreclosures • Navigating Buyers and Developers of • Can the Mortgagee Take a Check After New Construction Through the Real Acceleration? Estate Crisis From the NYSBA Book Store New York Residential Landlord-Tenant Law and Procedure*

Section Members get 20% discount** with coupon code PUB00863N AUTHORS Hon. Gerald Lebovits, New York City Civil Court, Housing Part, New York,kNY NY

Damon P. Howard, Esq., Finkelstein Newman Ferrara LLP, New York, NY

Victor S. Faleck, Esq., Appellate Term, Second Department, NY

New York residential landlord-tenant law is daunting to newcomers and the experienced alike, given its patchwork statutory framework, discordant case PRODUCT INFO AND PRICES law, and emotion-laden disputes involving homes, money, and the charged 2009-2010 / 366 pp., softbound landlord-tenant relationship. This greatly expanded monograph introduces PN: 41699 the fundamentals of residential landlord-tenant law and offers a guide to the NYSBA Members $72 procedural mechanics practitioners face in landlord-tenant disputes. Non-members $80 The 2009-2010 release is current through the 2009 New York State **Discount good until November 15, 2010 legislative session. Order multiple titles to take advantage of our low fl at rate shipping charge of $5.95 per order, regardless of the number of items shipped. $5.95 shipping and handling offer applies to orders * The titles included in the NEW YORK PRACTICE MONOGRAPH SERIEs are also available as segments of the New York Lawyer’s shipped within the continental U.S. Shipping and Deskbook and Formbook, a five-volume set that covers 27 areas of practice. The list price for all seven volumes of the handling charges for orders shipped outside the Deskbook and Formbook is $750. continental U.S. will be based on destination and added to your total. Get the Information Edge NEW YORK STATE BAR ASSOCIATION 1.800.582.2452 www.nysba.org/pubs Mention Code: PUB0863N Table of Contents

Message from the Section Chair...... 4 (Anne Reynolds Copps)

The Newly-Enacted CPLR 3408 for Easing the Mortgage Foreclosure Crisis: Very Good Steps, but not Legislatively Perfect ...... 5 (Hon. Mark C. Dillon)

Because Rule 5.7(c) Was Not Adopted, It Is Not Consentable for a Lawyer to Refer a Client to the Lawyer’s Title Abstract Company ...... 23 (Kenneth F. Jurist)

Navigating Buyers and Developers of Newly Constructed Buildings Through an Unprecedented Real Estate Crisis ...... 27 (Adam Leitman Bailey and John M. Desiderio)

Accommodations and Modifications in the New York City Housing Court for Litigants with Disabilities ...... 30 (Kevin M. Cremin and Gerald Lebovits)

Will the Issue of “Standing” (or Lack Thereof) Impact Commercial Foreclosures? ...... 49 (Marvin N. Bagwell)

BERGMAN ON MORTGAGE FORECLOSURES: Can the Mortgagee Take a Check After Acceleration? ...... 54 (Bruce J. Bergman)

Scenes from the Real Property Law Section Summer Meeting ...... 55

NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 3 Message from the Section Chair

The sum- When I fi rst joined the Executive torney passed through both houses of mer meeting Committee there were four towering the Legislature and has been signed this year was giants in the fi eld on the Committee, by the Governor. There may be more held at the his- Jim Pedowitz, Gene Morris, Bernie work to do but this was an excellent toric Seaview Rifkin, and Bernie Goldstein. With start. Inn in Gal- the passing of Gene Morris, we have The Legislation Committee pro- loway, New only Jim Pedowitz. As a baby at- duced another very successful lobby Jersey, near At- torney it was so fascinating to watch day. Both the Governor’s offi ce and lantic City and them debate issues or summarily Assembly Member Weinstein’s offi ce Smithville. The dismiss a question with a single case asked for our input on bills being Inn has a golf name—such as Buffalo Academy. Gene considered. Through the efforts of course which has been a part of the was a prolifi c writer. I had the plea- Karl Holtzschue and his Committee, PGA and LPGA tours. We ate our fi ll sure of assisting him with updates on the RPLS is now seen as a resource to of lobster. We had outstanding CLE. one of his Matthew Bender publica- government on diffi cult real property Our fi rst Vice Chair, Ed Baer, did a tions several years ago. He treated issue. Mel Mitzner is working with great job coordinating the CLE and his works as if they were his chil- the Governor’s offi ce on electronic the many social events. The weather dren. They were very special to him. recording issues. was very hot and sunny. It was a real His son, Dick Morris, wrote a very pleasure to see so many families in touching tribute to Gene on his blog: attendance. It was, by all accounts, a http://www.dickmorris.com/blog/ All the best for a healthy and smashing success. eugene-j-morris-1910-2010. prosperous fall, Shortly after our return, we Thanks to the efforts of Ben Anne learned of the death of longtime Weinstock and his Task Force, the Committee Member, Gene Morris. corrective legislation on powers of at-

As this edition of the Journal was going to the printer, we learned of the untimely death of our dear friend and fi rst Vice Chair, Edward Baer, on September 20, 2010. Ed is survived by his best friend and wife, Donna Baer, his daughter Lindsay, and son, Ben, as well as his parents, Ralph and Terry Baer, and his sister, Randye. Our Winter edition of the Journal will contain a memorial to Ed.

Request for Articles

If you have written an article and would like to have it considered for publication in the N.Y. Real Property Law Journal, please send it to one of the Co-Editors listed on page 62 of this Journal. Articles should be submitted in electronic document format (pdfs are NOT acceptable) and include biographical information.

www.nysba.org/RealPropertyJournal

4 NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 The Newly-Enacted CPLR 3408 for Easing the Mortgage Foreclosure Crisis: Very Good Steps, but not Legislatively Perfect Hon. Mark C. Dillon

Introduction foreclosure actions fi led in the State of four of the real property There was only one mortgage New York. As will be shown below, actions and proceedings foreclosure action fi led in Putnam CPLR 3408 fulfi lls a worthwhile law, in which the defen- County, New York, in 2005.1 Three purpose of requiring early settlement dant is a resident of the years later, in 2008, there were fi fty- conferences with the trial courts, in property subject to foreclo- three mortgage foreclosure actions the hope of preserving family home sure, the court shall hold fi led in the same county,2 represent- ownership, particularly for minori- a mandatory conference ing a 5,200% increase in foreclosures ties and the poor, who are, statisti- within sixty days after in three years. In Orange County, cally, most affected by the crisis the date when proof of 10 New York, eight mortgage foreclosure in subprime mortgages. As will service is fi led with the actions were fi led in 2005.3 In 2008, also be shown below, however, the country clerk, or on such the number of new mortgage foreclo- language of the legislation presents adjourned date as has been sure actions rose to an even 1,200,4 minor procedural fl aws that can be agreed to by the parties, representing a 14,200% increase in rectifi ed by judges who are sensitive for the purpose of hold- such fi lings. In Westchester County to the overriding purpose and intent ing settlement discussions during the same time frame, the of the statute. This Article is written pertaining to the relative number of foreclosures rose from 565 with the hope and expectation that its rights and obligations to 1,676,5 which is not as stunning as subject matter is legally, economically, of the parties under the the increases that occurred in Putnam and socially timely. mortgage loan documents, and Orange Counties, but still more including, but not limited I. The Particulars of CPLR than a threefold increase. The crisis to determining whether in subprime lending that developed 3408 as Originally Enacted the parties can reach a in 2007, 2008, and 2009 prompted a An appropriate starting point mutually agreeable resolu- signifi cant increase in foreclosures in is the language of CPLR 3408. The tion to help the defendant many counties in the State of New statute, which does not have a avoid losing his or her York. Nationally, 860,000 homes were predecessor,11 became effective on home, and evaluating the sold in foreclosure in 2008.6 In the August 5, 2008.12 Because the statute potential for a resolution third quarter of 2009 alone, foreclo- is relatively new, as of this writing, in which payment sched- sures reached a record national high only a limited body of case law has ules or amounts may be of 937,840 homes that received a de- been generated at the trial level. Few modifi ed or other workout fault notice, an auction notice, or that issues involving CPLR 3408 have had options may be agreed to, were repossessed by a bank.7 suffi cient time to percolate to any and for whatever other of the state’s four Appellate Divi- purposes the court deems The New York State Legislature sions for statutory interpretation and appropriate. endeavored to cope with the dramatic application. increase in mortgage foreclosures There are several words and by enacting a variety of statutes The original language of CPLR phrases in CPLR 3408(a) that are that are known, in omnibus form, 3408 reads, in pertinent part, noteworthy. These include the stated as the Subprime Residential Loan purpose of the statute, the types of (a) In any residential and Foreclosure Laws.8 The statutes mortgages and defendants within foreclosure action involv- included in the omnibus legislation its scope, and its chronological and ing a high-cost home loan are RPL 265-b, RPAPL 1302, 1303 and procedural requirements. Each is consummated between 1304, Banking Law 6-l, 6-m, 590-b and discussed below. January fi rst, two thou- 595-599, GOL 5-301(3), and, as central sand three and September A. The Stated Purpose and to this Article, CPLR 3408.9 CPLR fi rst, two thousand eight, 3408 is, therefore, a piece of a broader Intent of CPLR 3408 or a subprime or nontradi- statutory mosaic. It is striking that within the origi- tional home loan, as those nal single paragraph of CPLR 3408(a), This Article examines the newly- terms are defi ned under the terms “settlement,” “resolution,” enacted CPLR 3408 as it pertains to section thirteen hundred

NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 5 and “agreed to” appear a total of plicable mortgages were specifi ed.21 rate after the end of such period, the fi ve times. The terms underscore the One was the “subprime” loan as de- threshold is determined by using the purpose and legislative intent of the fi ned by RPAPL 1304.22 A second was rate that becomes applicable after the statute. CPLR 3408 was enacted to the “nontraditional home loan” as initial or introductory period.30 foster the early settlement of foreclo- defi ned by RPAPL 1304.23 The third A “nontraditional home loan” is sure actions as a means of preserving was the “high-cost home loan” as de- defi ned as a payment option adjust- home ownership and to mitigate the fi ned by Banking Law 6-l.24 The statu- able rate mortgage, or an interest subprime credit crisis, through the tory language suggests that care was only mortgage, consummated be- mandated auspices of the courts.13 taken in isolating the mortgages that tween January 1, 2003 and September The law requires that a conference are within the scope of the statute. 1, 2008.31 be conducted in foreclosure actions These three types of mortgages are between the parties and the court, for more susceptible to default during A “high-cost home loan” is de- the purpose of, inter alia, determining times of declining housing values, as fi ned in Banking Law 6-l. Its defi ni- whether the parties can resolve the they represent the greatest expense to tion is more complicated than the litigation and keep families in their the riskiest of borrowers. The settle- defi nitions of subprime and nontradi- homes by adjusting payment sched- ment conference mandated by the tional home loans. A high-cost home ules or the amounts due.14 Previously, original version of CPLR 3408 did not loan is a separately-defi ned “home there had been no such settlement apply to actions involving a mortgage loan”32 that presents the additional conference requirement in New York. other than one of the types specifi ed component of being “high-cost.” A Professor David Siegel notes that in the statute.25 Accordingly, “tradi- “home loan” is defi ned in Banking since the state is unable to alter, ex tional” home loans were not within Law 6-l(1)(e) as a debt incurred by a post facto, the laws that were in effect the defi ned scope of the statute. natural person for personal, family, when mortgage transactions were or household purposes, secured by a The three mortgages identifi ed undertaken, a settlement conference mortgage or deed of trust upon New in CPLR 3408 have different mean- between the parties under the auspic- York State real estate that is used as ings. A “subprime” loan is defi ned as es of the court may be the next best a principal dwelling for one to four a home loan consummated between alternative to minimize the number families.33 A “home loan” must also January 1, 2003 and September 1, of home foreclosures.15 refl ect a principal amount that does 2008 secured by a mortgage or deed not exceed the conforming size limit Any adjustments that could of trust on real estate upon which for a comparable dwelling, estab- be made in payment schedules or there is located, or is to be located, lished periodically by the federal amounts due as a result of the confer- one or more structures intended to national mortgage association.34 ence benefi t, in the fi rst instance, the be used principally for occupation Home loans do not include “reverse defendants being foreclosed upon. A by one to four families, including the mortgage” transactions.35 A home 2009 report of the Brennan Center for borrower, and for which the terms of loan becomes “high-cost” when the Justice at New York University School the loan exceed a “threshold” de- terms of the loan exceed a threshold of Law has identifi ed the secondary fi ned in RPAPL 1304(5)(d).26 For fi rst defi ned by Banking Law 6-l(1)(g).36 benefi ts arising out of foreclosure set- lien mortgage loans, the threshold is This threshold is met for fi rst lien tlements, beyond the obvious benefi t exceeded when the annual percent- mortgage loans when the annual of preserving families in their homes age rate of the home loan, at the time percentage rate of the home loan at and communities.16 These secondary of consummation, is three or more the time of consummation exceeds benefi ts are to neighborhoods whose percentage points over the yield on “eight percentage points over the property values decline as a result of treasury securities with comparable yield on treasury securities having foreclosures,17 municipalities that lose periods of maturity, measured as comparable periods of maturity to a portion of their local tax revenue,18 of the fi fteenth day of the month in the loan maturity measured as of the higher crime rates that have been which the loan was consummated.27 fi fteenth day of the month immedi- linked to foreclosure rates,19 and For subordinate mortgage liens, the ately preceding the month in which lenders that often lose money from threshold is fi ve or more percent- the application for the extension of the foreclosures.20 age points over the treasury security credit is received by the lender.”37 yields.28 Subprime home loans do For subordinate mortgage liens, the B. The Mortgages to Which CPLR not include transactions to fi nance threshold is nine percentage points 3408 Originally Applied the initial construction of a dwelling, above the treasury security yields.38 A second noteworthy aspect of temporary or “bridge” loans with As with subprime loans, if any home CPLR 3408(a) is the statute’s built-in a term of twelve months or less, or loan offers percentage terms that are defi nition of the types of mortgage home equity lines of credit.29 If any lower during an initial or introduc- foreclosure actions for which the home loan offers percentage terms tory period, with a higher rate after mandatory settlement conferences that are lower during an initial or the end of such period, the threshold originally applied. Three types of ap- introductory period, with a higher

6 NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 is determined by using the rate ap- Cannistra.46 In Butler Capital Corp., the implication, had the plaintiff present- plicable after the initial or introduc- Supreme Court denied the plaintiff’s ed the court with stronger evidence tory period.39 As an alternative to the motion for a judgment on default, as that the defendant’s residence had threshold, a home loan will become the plaintiff’s moving papers failed to in fact been relocated to Florida, the “high-cost” if total points and fees establish that the loan at issue was a court may have reached a different exceed 5% of the total amount of the subprime, nontraditional, or high- conclusion as to whether the defen- loan for loans of $50,000 or more; or cost home loan within the mandates dant qualifi ed for a mandatory settle- 6% of the total loan amount of $50,000 of CPLR 3408.47 ment conference. or more and the loan is a purchase It is predicted here that before One issue that was missed in money loan guaranteed by either the long, courts will be asked to resolve Indymac is that under New York law, Federal Housing Administration or disputes between parties in fore- a party may simultaneously have the Veterans Administration; or the closure actions on the question of more than one residence. A party may greater of 6% or $1,500, if the total whether a particular loan, subject to have only one “domicile,” which is loan amount is less than $50,000.40 the 2008 version of CPLR 3408, falls physical presence in one state loca- The three types of mortgages within or without the scope of CPLR tion with the intention that the state underlying the 2008 version of CPLR 3408 and its mandatory settlement be an actual and permanent home, 3408(a) had one additional signifi cant conference requirement. but may have multiple “residences,” element in common: namely, that which is a looser term dependant The statute’s remedies have been they apply to residential mortgages upon a person’s signifi cant connec- held to be unavailable to defendants only.41 Commercial mortgages are no- tions with states.54 CPLR 3408 does who are actually engaged in duplici- ticeably absent from the language of not refer to a defendant’s domicile, tous mortgage schemes.48 CPLR 3408, RPAPL 1304, and Bank- or even to a defendant’s “principal” ing Law 6-l. The language of CPLR C. The Necessity of Defendants residence, but instead requires that 3408 suggests that the legislature’s in- Residing at the Mortgaged the defendant merely be “a resident tent of curbing mortgage foreclosures Premises of the property subject to foreclo- is directed only at residential home sure.” Accordingly, in a case such as ownership, and does not extend to A third noteworthy aspect of Indymac, the defendant could be a businesses.42 CPLR 3408 is its residency require- “resident” of the New York property ment. CPLR 3408 specifi cally applies subject to foreclosure even if that No cases have yet been reported to actions where “the defendant is same defendant also owned a home where parties have conclusively liti- a resident of the property subject to in another state (such as Florida), 49 gated whether the mortgage at issue foreclosure.” On the face of the stat- and was found there for service of was within, or without, the scope of ute, a borrower who is not a resident process. CPLR 3408. One case that came close of the property being foreclosed upon was Accredited Home Lenders, Inc. v. is not entitled to the settlement con- According to one court, the Hughes, in which the plaintiff and the ference mandated by CPLR 3408. The language of CPLR 3408 does not defendant differed on the question issue of the borrower’s residence was expressly address whether a fore- of how the mortgage between them important in Indymac Federal Bank FSB closure defendant must reside at the should be classifi ed for purposes of v. Black.50 In Indymac, the defendant property when the mortgage con- CPLR 3408.43 The defendant argued entered into a subprime home loan, tract is executed, or, rather, when the that the mortgage was a nontradi- defaulted in her payment obliga- foreclosure action is commenced.55 tional home mortgage, whereas the tions, and was served with process This difference is potentially signifi - plaintiff contended that the mortgage in the plaintiff’s foreclosure action in cant. In Accredited Home Lenders, Inc. could instead qualify as a subprime Florida.51 The plaintiff argued that v. Hughes, the defendants entered into home loan.44 The Supreme Court, the defendant was not entitled to a a subprime home loan for property in Essex County, did not need to reach settlement conference under CPLR Essex County, New York and default- this issue, as both types of mortgages 3408 as she had been located in ed on their payment obligations.56 qualifi ed under CPLR 3408, and as Florida when process was served and The defendants were residing in New the dispositive issue between the was not, therefore, a current resident Jersey, either permanently or tempo- parties was whether the defendant of the property being foreclosed rarily, when the foreclosure action resided in the subject property as upon.52 The Supreme Court, Rens- was later commenced.57 The plaintiff to trigger the settlement conference selaer County, disagreed, noting that argued that CPLR 3408 was inappli- requirement of the statute.45 the mere service of process in Florida cable, as the defendants’ residency in was insuffi cient evidence, in and of New Jersey meant that they were not Another case that touched upon itself, to demonstrate that the subject residents of the New York property the issue of whether a residential premises in New York was not the that was subject to foreclosure.58 The mortgage fell within the scope of defendant’s principal residence.53 By Supreme Court disagreed, focusing CPLR 3408 is Butler Capital Corp. v.

NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 7 on the language of RPAPL 1304 that is the present tense, when a property ences are held and determined to be incorporated into CPLR 3408, which is in default and when a foreclosure unsuccessful, which is an approach defi nes subprime and nontraditional action is pending. Reference by the more consistent with the purpose and home loans.59 The court noted that court in Accredited Home Lenders to intent of the statute.70 under RPAPL 1304, a default notice the residence language of RPAPL must be transmitted to the borrower 1304 is misplaced, as RPAPL 1304 is D. Internal Chronological by registered or certifi ed mail and by only incorporated by reference into Limitations regular mail at least ninety days prior CPLR 3408 for the limited purpose of A fourth noteworthy aspect of to the commencement of any foreclo- defi ning the meaning of “subprime” CPLR 3408(a) is its chronological sure action, and that such notice must and “nontraditional” home loans.68 limitations. CPLR 3408 originally be- be sent to the address of the mort- The language of CPLR 3408 that came effective as of August 5, 2008.71 gaged premises or to the borrower’s entitles the borrower to a settlement It applies only to foreclosure actions last known address, if different.60 The conference, where “the defendant is a commenced on or after that date,72 as court, therefore, viewed RPAPL 1304 resident of the property subject to foreclo- distinguished from actions already as acknowledging that borrowers of sure,”69 is explicit and unambiguous. pending by that date.73 subprime and nontraditional home The present-tense language of the res- loans might not live at the mortgaged idency requirement of CPLR 3408(a) The 2008 version of the statute property at the time foreclosure trumps any seemingly inconsistent also provides that the mandatory actions are commenced, which is language in RPAPL 1304, as only settlement conference applies only to ambiguous when juxtaposed against CPLR 3408 defi nes the circumstances foreclosure actions involving “high- the language of CPLR 3408 that under which the defendant is entitled cost” mortgages executed between requires, in present-tense language, to the statute’s mandated settlement January 1, 2003 and September 1, 74 that borrowers reside at the mort- conference. Consequently, an argu- 2008. These dates presumably ap- gaged property.61 Finding the statute ment can be made that, contrary to ply to the time period during which ambiguous, the court stated that the the conclusion reached in Accredited there were lax mortgage underwrit- legislative intent of CPLR 3408 was to Home Lenders, the better construction ing standards. A close reading of the expansively benefi t borrowers subject of CPLR 3408 is to apply its residency original language of CPLR 3408(a) re- to subprime and nontraditional home requirement to defendants as of the veals that the time limitations are ap- loans, other than owners of second time the action is commenced to fore- plied to foreclosure actions involving homes or investment properties.62 close upon the property, remove the “high-cost home loan[s],” and that The court held that CPLR 3408 was borrower occupants, and pass title no corresponding time limitation is not intended to require borrowers to through a court-appointed referee. expressly applied to actions involving remain at their mortgaged premises subprime mortgages or nontradition- In a signifi cant portion of foreclo- 75 while foreclosure actions were being al home loans. The time limitations sure actions, the plaintiffs eventually prepared or were pending.63 The for applicable mortgages are set-off in fi le summary judgment motions un- court, therefore, concluded that even CPLR 3408(a) by commas in connec- der CPLR 3212. CPLR 3408 contains if the defendants had relocated their tion with high-cost home loans, but no language prohibiting the fi ling residence to New Jersey, they were are not similarly set-off with respect and service of summary judgment entitled to the mandatory settlement to either subprime or nontraditional motions prior to the required settle- 76 conference conferred by CPLR 3408.64 home loans. This may merely be ment conferences mandated by CPLR inartful draftsmanship, or the Leg- The reasoning used by the court 3408. Presumably, if a summary judg- islature might have intended that in Accredited Home Lenders is arguably ment motion is fi led before the parties no chronological limitation apply to incorrect. Courts must interpret the have had an opportunity to conduct subprime or nontraditional mortgag- meaning of statutes by looking at the the settlement conference, the court es. As of this writing, no case has yet plain language used by the Legisla- will need to hold the motion in abey- addressed the applicability of CPLR ture, as it is the clearest indicator of ance until the conference is complet- 3408 to subprime or nontraditional statutory intent.65 Only when a stat- ed, since granting any such motion home mortgages executed outside of ute is ambiguous will courts examine earlier would defeat the purpose of the time frame between January 1, the legislative history underlying the statute. Some plaintiffs might 2003 and September 1, 2008. the statute for evidence of the Legis- nevertheless fi le their summary judg- lature’s intent.66 Here, the language ment motions early in foreclosure E. The Statute’s of CPLR 3408(a) speaks purely in litigations, as a means of increasing Non-Retroactivity the present tense; the statute applies their leverage over defendants during Statutes in New York are gener- to a defendant who “is a resident the settlement discussions that will ally presumed to have prospective of the property subject to foreclo- occur while the motions are pending. application, unless their language sure.”67 The terms “is” and “subject Other plaintiffs might delay sum- expressly or impliedly requires a to foreclosure” necessarily pertain to mary judgment motions until confer- retroactive construction.77 CPLR 3408

8 NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 contains no language indicating that issue falls within the scope of the new the plaintiff’s attorney; otherwise, it may be applied to actions pending statute, and, if it does, the court must the Legislature could have simply re- prior to its effective date.78 then notify the defendant of the right ferred to the individual as the plain- to demand a settlement conference.88 tiff’s counsel, as it did elsewhere. The One case confi rms the absence Curiously, the language of Section 3-a Bill Jacket for CPLR 3408 sheds no of retroactivity, LaSalle Bank Na- 79 expressly applies to subprime and particular light on the identity of this tional Ass’n v. Novetti. LaSalle Bank high-cost home loans as defi ned by “representative.” However, the term involved a foreclosure action com- RPAPL 1304 and Banking Law 6-l, but likely refers to a representative of the menced on February 13, 2008, prior to 80 does not expressly apply to nontra- bank or mortgage company, such as a the effective date of CPLR 3408. The ditional home loans, unlike CPLR corporate offi cer, litigation manager, defendant initially defaulted in ap- 3408.89 A settlement conference under or accountant involved in settlement- pearing and answering the plaintiff’s 81 Section 3-a is not a mandated right. related decision-making or the com- complaint. An order of reference Section 3-a further provides that, to putation of proposed compromised was rendered on September 16, 2008, be eligible for a settlement confer- payment schedules. after the effective date of CPLR 3408, ence, the defendant must reside at the It remains to be seen how fre- and was followed by a judgment of property subject to foreclosure and quently the statute’s electronic foreclosure and sale executed by the the action must not yet have proceed- 82 participation option will be used. On court on January 26, 2009. Thereaf- ed to judgment.90 ter, on February 5, 2009, counsel for the one hand, loan specialists’ par- the defendant, who had belatedly F. Telephonic and ticipation in settlement conferences appeared in the action, demanded a Video-Conferencing from remote locations may recognize settlement conference and moved to a manpower reality: that the volume The last sentence of CPLR 3408 stay the foreclosure sale pending the of mortgage foreclosure conferences refers to a telephonic and video- conduct of the conference.83 The Su- necessitates this accommodation to conference option.91 Participation in a preme Court, Suffolk County, denied party plaintiffs. On the other hand, foreclosure settlement conference by the defendant the settlement confer- courts might fi nd that settlements are electronic means is a matter left to the ence contemplated by CPLR 3408 less likely to be achieved absent the discretion of the court.92 Video-con- on the ground that the foreclosure face-to-face participation of all indi- ferencing, whatever its merits given action had been commenced prior to viduals necessary to the successful current technology, is not a concept the effective date of the statute.84 The resolution of a foreclosure action. that is otherwise recognized in either court’s ruling appears to be correct. the CPLR or in the Uniform Rules If CPLR 3408 is viewed as a remedial II. The Expansion of for the New York State Trial Courts.93 statute, intended to stem the rash of CPLR 3408 Effective Notably, the option under CPLR 3408 home foreclosures within the state December 15, 2009 is expressly limited to “a representative by providing defendant homeown- of the plaintiff to attend the settle- The ink was dry on the original ers with a new right to a settlement ment conference telephonically or by version of CPLR 3408 for less than a conference, then the statute—as with video-conference.”94 The electronic year before bills were introduced in all statutes that create new rights—is option is not extended, by the word- the New York State Legislature to ex- to be applied prospectively.85 If CPLR ing of the statute, to defendants or pand its scope. The bills that emerged 3408 is instead viewed as merely their attorneys. from the State’s Senate and Assembly, procedural in nature, then it is to be S66007 and A40007, mandated the applied in pending actions only as The statute’s provision that a conduct of settlement conferences in to procedural steps to be undertaken “representative of the plaintiff” may 86 all residential mortgage foreclosure after the statute’s enactment. In be permitted to electronically partici- actions, not just those involving sub- LaSalle Bank, the 60-day settlement pate in the conference does not ap- prime, nontraditional, or high-cost conference period had presumably al- pear to refer to the plaintiff’s attorney. mortgages.95 The expanded legisla- ready passed by the time CPLR 3408 CPLR 3408 refers frequently to “the tion was signed into law by Governor became effective. plaintiff,” “the defendant,” “parties,” David Paterson on December 15, and “counsel.” The term “representa- 96 Separate from CPLR 3408, the 2009. tive of the plaintiff” appears only one state also enacted, at the same time, time in the statute, when referring to The amendment of CPLR 3408 an Unconsolidated Law that provides the electronic participation option. adds, inter alia, subdivisions (d) certain retroactive relief to defendant The Legislature’s use of the term through (h) to the statute.97 The homeowners. Section 3-a of the en- “representative” rather than “coun- amended statute keeps intact all acted bill87 provides that, for residen- sel” suggests that the individual who aspects of the original version of tial foreclosure actions commenced may participate in the conference the statute, except for the applica- before September 1, 2008, courts must electronically is someone other than tion of its terms in subdivision (a) to ask the plaintiff whether the loan at

NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 9 all “home loans.”98 The meaning of 3408(f) does not set forth any spe- A. Measurement of the Sixty-Day “home loans” is set forth in RPAPL cifi c remedy for a party’s failure to Conference Requirement 1304, and includes all loans for one- negotiate in good faith. However, in CPLR 3408(a) provides a time to four-family dwellings secured one reported decision dealing with frame within which the settlement by a mortgage or deed of trust. The this subject prior to the effective date conference mandated by the statute is amended statute therefore abolishes of the amended statute, a court held to be held. It provides that the confer- the need for qualifying residential that the failure of the plaintiff bank ence be conducted “within sixty days mortgage foreclosure defendants to to negotiate in good faith during the after the date when proof of service is be parties to subprime, nontraditional mandated conference warranted, as fi led with the county clerk, or on such or high-cost loans. Inferentially, the a remedy under the circumstances adjourned date as has been agreed expanded statute recognizes a current of that action, the cancellation of the to by the parties…”108 The statute’s 103 economic reality that the foreclosure mortgage altogether. The court measurement of the conference problem in New York extends beyond cancelled the mortgage by asserting period—from the fi ling of proof of subprime, nontraditional and high- equitable powers, in response to the service with the clerk of the court—is cost residential mortgages, to conven- plaintiff bank’s “inequitable, uncon- an oddity, and it is unwise because, tional residential mortgages as well. scionable, vexatious and opprobri- while certain methods of service of 104 ous” behavior. Professor Siegel process in New York require the fi ling Predictably, the 2009 amend- hints that the drastic remedy that ments to CPLR 3408 will place an im- of proof of service, other methods do was imposed may reach an appellate not. mediate added burden on the court court for review.105 system, which shall now be required More specifi cally, CPLR 308(2) to conduct a signifi cantly increased CPLR 3408(g), as now enacted, permits service of process to be ac- number of foreclosure settlement requires plaintiffs in residential fore- complished at a defendant’s “actual conferences without any earmarked closure actions to fi le notices of dis- place of business, dwelling place, or 99 funding to meet the need. The New continuances and to vacate lis pendens usual place of abode” by delivery of York State Offi ce of Court Adminis- within 150 days from the execution the summons to a person of suitable tration estimates that the new state- of any settlement agreement or loan age and discretion, followed within 106 wide foreclosure fi lings for 2009 will modifi cation. twenty days by either a mailing to the approximate 46,000,100 which sug- CPLR 3408(h), as now enacted, defendant at his or her last known gests the magnitude of the challenge prohibits any party to a foreclosure residence, or a fi rst-class mailing to facing the conferencing courts in 2010 action from charging the other party the defendant at his or her actual and beyond. legal fees incurred in connection with place of business in an unmarked The expansion of CPLR 3408 to the settlement conference itself.107 envelope marked “personal and 109 all residential home loans is subject This amendment appears to be confi dential.” When the “suitable to an intriguing “sunset” provision. directed at provisions of mortgages age and discretion” method is used, It provides that the expansion of the that impose legal fees upon mort- the plaintiff is required to fi le proof statute to all “home loans” be ef- gagors for various costs associated of service with the clerk of the court fective for only fi ve years from the with defaults and the enforcement of within twenty days from the latter of effective date of the 2009 version of mortgagees’ rights. such delivery or mailing, and service CPLR 3408(a), at which time the stat- is deemed to be complete ten days 110 ute reverts to its original 2008 form III. Perceived Pitfalls of after the fi ling. that limits the mandatory foreclosure CPLR 3408 Likewise, if service cannot be settlement conferences to subprime, While CPLR 3408 is a welcome accomplished with due diligence by nontraditional, and high-cost resi- addition to the family of New York’s either personal service or upon a per- 101 dential mortgages. Inferentially, procedural statutes, one that per- son of suitable age and discretion, the the presence of a sunset provision forms a worthwhile social purpose, plaintiff may utilize the colloquially- suggests legislative optimism that the the statute’s construction and word- known “nail and mail” method set current residential mortgage foreclo- ing raises certain discrete shortcom- forth in CPLR 308(4), which also has sure diffi culties will lessen with time. ings. These shortcomings involve a proof of service requirement.111 This CPLR 3408(f), as now enacted, re- inconsistencies regarding how the method requires that the summons be quires that plaintiffs and defendants sixty-day conference requirement is affi xed to the door of the defendant’s negotiate with each other in good to be measured, the effect of proofs actual place of business, dwelling faith during their mandated settle- of service fi led in connection with place, or usual place of abode, fol- ment conferences.102 The statutory default motions, and the absence lowed by a mailing to the defendant purpose of the settlement conferences of mechanisms that might render at his or her last known residence, will not be achieved absent the good the settlement conferences more or by a fi rst-class mailing to the faith of the parties involved. CPLR productive. defendant’s actual place of business

10 NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 in an unmarked envelope marked 202.16(f), therefore, in effect, estab- by RPAPL 1304 and Banking Law 6-l, “personal and confi dential.”112 Like lishes an outside date within which entered into between January 1, 2003 service under CPLR 308(2), the “nail preliminary conferences must be and September 1, 2008. Thus, the rule and mail” method requires the fi ling conducted by the court. The purpose is similar in scope to the Subprime of proof of service with the clerk of of Uniform Rule 202.16(f) is to assure Residential Loan and Foreclosure the court within twenty days of either that matrimonial actions, which often Laws of 2008 including, specifi cally, the affi xing or mailing, whichever is raise diffi cult and important issues CPLR 3408.124 Uniform Rule 202.12a later, and service is deemed complete such as child custody, visitation, requires that foreclosure plaintiffs ten days after such fi ling.113 pendente lite child support and main- covered by the rule fi le a specialized tenance, and the ultimate equitable RJI “[a]t the time that proof of service However, many actions are distribution of marital assets, receive of the summons and complaint commenced in New York by means reasonably prompt attention from the is fi led with the county clerk.”125 of personal service upon individual courts.119 Prompt preliminary con- Uniform Rule 202.12a implements defendants as authorized by CPLR 114 ferences ensure that parties have an the procedure by which the manda- 308(1) and by service upon a opportunity, early in their litigations, tory settlement conferences are then properly-designated agent as autho- 115 to stipulate to non-contested issues scheduled, noticed, and conducted, rized by CPLR 308(3). Neither of and to obtain court-ordered discovery in a manner consistent with and in these methods require, in CPLR 308 schedules that shepherd the progress furtherance of CPLR 3408.126 or elsewhere, that the plaintiff fi le any of the litigations. The scheduling of 116 The one problem with Uniform proof of service with the court. preliminary conferences in matrimo- Rule 202.12a, however, is that the nial actions, triggered by the fi ling of Accordingly, in residential specialized foreclosure RJI need not a deadlined RJI, is implemented in foreclosure actions where process be fi led by the plaintiff until the fi ling courts throughout the state without is served upon the defendant and of the plaintiff’s proof of service and, apparent problems or diffi culties. where proof of service need not be as noted, the fi ling of proof of service Similarly, in actions for medical, den- fi led with the clerk of the court, CPLR is not always required.127 The reason tal and podiatric malpractice, CPLR 3408 contains no statutory trigger that Uniform Rule 202.12a mitigates 3406(a) requires the fi ling of a notice date for the scheduling of the manda- the problem is that plaintiffs cannot with the court within sixty days from tory settlement conference. Conceiv- seek or obtain relief from the courts, the joinder of issue.120 The purpose of ably, in the absence of a statutory such as by the fi ling of motions for the notice is to trigger an early confer- trigger mechanism, the settlement summary judgment, except by fi rst ence with the court to discuss settle- conference need not necessarily be fi ling their RJIs. In the end, therefore, ment, simplify issues, and schedule scheduled at all. This fl aw in legisla- the Uniform Rule will accomplish its discovery.121 There is no reason that tive draftsmanship was probably not practical purpose of triggering the the New York Legislature, in enact- intended by the New York Legis- mandated settlement conference in ing CPLR 3408, could not also have lature, as it potentially thwarts the all covered actions, either sooner or required that settlement conferences purpose and intent of CPLR 3408 in later in each covered action. Uniform be scheduled within a certain time instances where defendants in resi- Rule 202.12a is not as effective as its period after a fi xed date applicable to dential foreclosure actions are served matrimonial counterpart, Uniform all foreclosure actions, such as from personally or through a designated Rule 202.16(d), as the mortgage fore- the fi ling of the plaintiff’s summons agent. closure rule places no fi xed outside and complaint or the joinder of issue. time limit on when the plaintiff’s RJI This fl awed draftsmanship could Instead, by measuring the schedul- must be fi led in all cases, whereas the have been avoided. In matrimonial ing period from the fi ling of proof of matrimonial rule requires the fi ling actions, Uniform Rule 202.16(f) pro- service, which may not even occur in of an RJI within forty-fi ve days from vides for an analogous requirement certain cases, CPLR 3408 introduces the service of the summons upon the that a preliminary conference be held an element of statutory uncertainty defendant in every case.128 In other between the parties and the court and potential confusion that could words, Uniform Rule 202.16(d) will “within 45 days after the action has have been easily avoided. been assigned.”117 The assignment prove to be more effective in assuring of an action to a judge, by means of This defect in legislative drafts- the scheduling of prompt prelimi- a Request for Judicial Intervention manship is partially mitigated by the nary conferences for all matrimonial (“RJI”), must occur in matrimonial ac- Chief Administrative Judge’s promul- litigants than Uniform Rule 202.12a tions within forty-fi ve days from the gation of Uniform Rule 202.12a122 for will be in assuring prompt settlement date of service upon the defendant of residential mortgage foreclosure ac- conferences for covered residential the summons with notice or sum- tions commenced on or after Septem- foreclosure litigants. The delay in mons and complaint.118 The manda- ber 1, 2008.123 Uniform Rule 202.12a scheduling and conducting settle- tory preliminary conference for matri- applies to subprime, nontraditional, ment conferences in certain covered monial actions under Uniform Rule and high-cost home loans, as defi ned foreclosure actions will occur in

NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 11 circumstances when plaintiffs are the CPLR does not impose upon under CPLR 3408(a) is to schedule under no statutory obligation to fi le plaintiffs any obligation to fi le proof the contemplated settlement confer- proofs of service under CPLR 308(1) of service with the clerks of the ence, and to conduct the conference and 308(3), and where no RJIs are courts.130 As also noted, the proce- when the parties appear for it. Doing fi led until such times that plaintiffs dures of CPLR 3408 are written so so fulfi lls the court’s statutory obliga- are motivated to seek some form of that the statute’s mandatory settle- tions whether the defendant appears affi rmative relief from the courts. ment conference is not triggered or defaults. until the fi ling of proofs of service,131 If, arguendo, evidence of proof of Plaintiffs who might wish to though courts have authority to service attached to a default mo- avoid participation in conferences, schedule such conferences in any tion doubles as a “fi ling” of proof of calculating that their fi nancial in- event. terests are furthered by foreclosures service with the clerk of the court so rather than settlements, can take no If proof of service need not be as to mandate the scheduling of a solace from the draftsmanship of fi led with the clerk of the court, and settlement conference, then, necessar- CPLR 3408 or Uniform Rule 202.12a. if a defendant defaults by failing to ily, courts should hold such default At fi rst blush, the wording of CPLR appear in the action or answer the motions in abeyance pending the 3408 and Uniform Rule 202.12-a plaintiff’s complaint, the remedy that scheduling of a conference at which might provide such foreclosure is routinely undertaken by fore- the defendant may, or may not, ap- plaintiffs with an incentive to serve closure plaintiffs is to fi le a motion pear. CPLR 3408 sets forth no mini- process upon residential defendants seeking judgment on default.132 One mum notice period; it only imposes a only by methods that do not require of the elements that must be proven sixty-day maximum deadline mea- the fi ling of proofs of service with in support of default judgments is sured from the fi ling of proof of ser- the court, as a calculated means of proof of service of process upon the vice. Notice of a scheduled settlement circumventing the trigger event of defendant.133 Indeed, CPLR 3215(f) conference while a default motion is the settlement conferences altogether. requires that all motions for default held in abeyance, as with notice of all However, if such plaintiffs desire judgments contain evidence134 prov- conferences generally, should be rea- judgments of foreclosure and auc- ing that service of process has, in fact, sonable and transmitted by the court tions of the foreclosed properties, as been effected upon the defendant.135 to an address calculated to advise the they ultimately do in commencing An issue that arises from such default defendant of the date, time, and place their actions, they must all eventu- motions, unique to foreclosure ac- of the conference. Any delays occa- ally fi le RJIs. In turn, these fi lings will tions subject to CPLR 3408, is wheth- sioned by the conference procedure trigger the very mandated settlement er the inclusion of proof of service in to the prompt disposition of pending conferences that the plaintiffs were the supporting papers constitutes a default motions would be expected trying to avoid. “fi ling of proof of service” with the in most instances to be reasonable clerk so as to trigger, under these and minor and would be outweighed Judges can further the letter and circumstances, the mandatory settle- by the intended benefi t to the par- spirit of CPLR 3408 by assuring that if ment conference. ties of potentially settling foreclosure the RJI is fi led by plaintiffs in con- actions in a restructured manner that junction with motions for affi rmative As of this writing, no reported may keep families in their homes. relief, such as for summary judgment, decision has been rendered by any the motions should be held in abey- court that addresses this issue. There C. Does the Absence of ance pending the completion of the does not appear to be any persuasive a Conference Warrant mandated settlement conference. reason on the face of the statute why the Vacatur of a Default Such a rule would be consistent with proof of service contained in a default Judgment? the discretion that is afforded to trial motion would not qualify as a fi ling Conceivably, a court could, judges to control their calendars.129 of proof of service for purposes of through ministerial error, fail to Courts should not permit foreclosure CPLR 3408. While it is true that a de- schedule a settlement conference as plaintiffs to use summary judgment fendant who is truly in default might mandated by CPLR 3408. In such motions to circumvent the settlement not appear at any settlement confer- a scenario, if a borrower does not conference procedures of CPLR 3408. ence that the court would schedule, appear and answer in a foreclosure CPLR 3408 is not designed to compel action and a judgment of foreclosure B. Whether Proof of Service such an appearance; rather, it merely is rendered on default, may the bor- Filed in Support of a Default requires that these conferences be rower obtain a vacatur of the judg- Motion Triggers a Mandatory scheduled so that defendants have ment on the ground that the settle- Settlement Conference Under the opportunity to appear and partici- ment conference opportunity was not the Statute pate in them. Apropos to the statute provided? The short answer is no. As noted, when service of process is the maxim that “you can lead a is accomplished by either personal horse to water but you can’t make In New York, defendants who service or upon a designated agent, him drink.” The court’s obligation seek to vacate default judgments are

12 NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 generally required under CPLR 5015 D. Whether the Settlement itself, assuring that any meaning- to meet a two-pronged test, the fi rst Conferences are Meaningful ful accomplishments will arise from being a reasonable excuse for the and Successful the effort. As noted, by the time of 136 default, and the second being the In its proper context, CPLR 3408 the conference, earlier settlement existence of a meritorious claim or is, for defendants, actually a second opportunities have, by defi nition, 137 defense. bite at the settlement apple. One of already failed. It cannot be reason- the provisions of the Subprime Resi- ably expected that all or even most The failure of a court to sched- of the conferences will lead to a ule a settlement conference required dential Loan and Foreclosure Laws of 2008 is RPAPL 1304, which provides resolution of foreclosure litigations. by CPLR 3408 does not speak to the However, CPLR 3408 provides that reasons underlying the defendant’s that, as a condition precedent to the commencement of a residential fore- any counsel appearing for the man- failure to appear in an action and datory settlement conference “shall answer the plaintiff’s complaint. In- closure action involving subprime, nontraditional, or high-cost mortgag- be fully authorized to dispose of the deed, a defendant’s failure to appear case,”141 likely written to help assure and answer after being served with es, the lender must send the borrower a default notice, at least ninety days the seriousness and desired produc- process, and the failure to participate tivity of the conferences. The recent in a settlement conference with the before the commencement of the ac- tion.138 Such notices must advise the amendments to CPLR 3408 include court, are two very different things. A the statute’s new subdivision (f) that defendant seeking to vacate a default borrower that he or she is in danger of losing the home for non-payment, requires parties to negotiate in good must establish a reasonable excuse for faith at the settlement conferences,142 failing to appear and answer, which state the sum owed to cure the default, and list approved mortgage which may be of marginal practical speaks to procedural obligations solace. Without doubt, the required under the CPLR that are wholly in- counseling agencies that are available in the area.139 The obvious purpose residential foreclosure settlement dependent of mandatory foreclosure conferences add to the workload of settlement conferences. of encouraging borrowers to consult with mortgage counseling services is an already-overburdened judiciary. In any event, even if a defendant for those service providers to assist Each judge throughout the state may in a foreclosure action establishes in exploring potential re-fi nance op- handle the conferences differently: a reasonable excuse for failing to tions that seek to avoid the necessity either in chambers or in open court, appear that somehow relates to of foreclosure actions. Foreclosure on motion days or in special session, the court’s failure to schedule a actions are commenced only against personally or through a law secretary, settlement conference, the absence borrowers who fail to cure their with or without meaningful negotia- 143 of the conference says nothing of the defaults within the ninety-day notice tion. The value of the conference meritorious defense that must also be period, with or without the assistance will depend in any given instance established for vacatur of the default. of a mortgage counselor. The manda- upon a variety of factors including Defenses, meritorious or otherwise, tory settlement conference contem- the facts of the case, the goals and may be discussed at settlement plated by CPLR 3408 is, therefore, the reasonableness of the parties, and the conferences. However, the absence second settlement opportunity pro- negotiating experience and quality of of a conference itself is irrelevant to vided to borrowers by the Subprime the assigned judge and counsel. whether the defendant independently Residential Loan and Foreclosure While the New York State Offi ce possesses a meritorious defense to a Laws. Any settlement that is reached of Court Administration (“OCA”) foreclosure action. at the conference should be memori- does not compile statewide foreclo- alized in a clear, enforceable, written Accordingly, it is unlikely that sure settlement conference statistics, or transcribed agreement.140 the inadvertent failure of a court to it does capture statistical information offer a settlement conference un- A perceived pitfall of CPLR 3408 for the larger counties in the greater 144 der CPLR 3408 affords a defaulted is that, while the statute mandates New York City area. Statistics for defendant any practical relief. In the a settlement conference in residen- the period between approximately event that future defendants seek tial foreclosure actions, there is no January 1, 2009 and September 30, 145 146 to vacate default judgments on the mechanism, beyond the conference 2009 reveal the following: ground that they were not provided their mandatory settlement confer- Conferences Conferences Defaults in Settlements ence opportunity under the statute, Scheduled Held Appearance Reached it is predicted here that the vacatur Queens 1,871 1,130 768 83 Kings of default judgments will be denied, 1852 1300 552 82 Richmond unless such defendants can establish 476 295 181 47 Bronx 1173 762 411 109 an entitlement to vacatur on other Nassau 2621 1390 1231 101 independent grounds. Suffolk 2181 622 1559 84 Westchester 1075 861 214 46

NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 13 The statistics establish that for on two or three occasions before any IV. The Appointment of the settlement conferences that were settlement can be fi nalized. The need Counsel for Those in Need scheduled, defendants failed to ap- for multiple conferences means that The intended importance of the pear at scheduled settlement confer- the statistics for settlements will often foreclosure settlement conference ences between 19.9% (Westchester lag behind the statistics of the confer- is underscored by CPLR 3408(b), County) and 47% (Nassau County) of ences that are shown to have been which provides that any defendant the time, with one aberrational excep- scheduled. Statistics maintained by appearing for the conference pro se is tion where the default rate was 71.5% certain counties reveal that the rate “deemed” to have made an applica- (Suffolk County). The mandatory of adjournments is 73% in Nassau tion for the appointment of counsel settlement conference concept, there- County, 66.3% in Westchester County, as a poor person.159 In other words, fore, provides no practical benefi t to a and 60% in Queens County.147 The the statute contains a legal presump- signifi cant portion of residential fore- settlement success rate should be tion that an unrepresented defendant closure cases, where the defendants expected to ultimately exceed the is a poor person seeking the appoint- fail to appear and participate. current reported statistics, as these ment of counsel. The application for statistics do not refl ect the signifi cant counsel invokes CPLR 1101.160 CPLR The statistics also establish that, number of cases for which scheduled 1101(a) requires, as a matter of pro- for the conferences attended by the settlement conferences have been ad- cedure, that the pro se parties seeking parties, the settlement rate was 16% journed or for continuing conferences assigned counsel fi le an affi davit set- in Richmond County, 14% in Bronx that have not yet run their course. County, 13.5% in Suffolk County, ting forth their amount and sources 7.5% in Queens County, 7.3% in Nas- Two authors on the subject of income, a listing of property sau County, 6.3% in Kings County, suggest that CPLR 3408 could be owned and its value(s), their inability and 5.3% in Westchester County. rendered more meaningful if the to pay the expenses of the litigation, When defaults are taken into account, settlement conference included a the facts and nature of the action, and the settlement rates for all cases mediation component,148 akin to that whether any other person who has scheduled for conferences drops to required under New Jersey’s state- a benefi cial interest in the action is 10% in Richmond County, 9.3% in wide Mortgage Stabilization and Re- also unable to assist with litigation Bronx County, 4.4% in Queens and lief Act149 and the Housing Assistance expenses.161 The counsel provisions Kings Counties, 4.3% in Westchester and Recovery Program150 that became of CPLR 3408(b) and 1101(a) have the County, and 3.9% in Nassau and Suf- effective on January 9, 2009.151 In practical effect of requiring the court folk Counties. The success rate might New Jersey, lenders that have com- to make available in the courtroom appear modest in terms of overall menced residential mortgage foreclo- the necessary forms that must be percentages, but it is signifi cant to the sure actions are subject to a six-month fi lled out for the pro se applicant to several hundreds of families whose forbearance period that prohibits potentially meet the requirements for homes were spared as a result of the efforts to remove the borrower from the appointment of counsel. settlement efforts overseen by the the property, during which time the The court has discretion to grant courts. lender and borrower are to partici- or deny applications for appointed pate in a non-binding court-spon- counsel.162 Presumably, foreclosure As a practical matter, settlements sored mediation program.152 will not occur unless both parties are defendants who receive appointed truly interested in reaching an ar- Another neighboring state, Con- counsel would be entitled to the rangement that saves the borrower’s necticut, offers foreclosure litigants related benefi ts of CPLR 1102 that home while meeting the legitimate a mediation option as well.153 Com- attach upon the appointment of coun- fi nancial interests of the lender. plaints in residential foreclosure sel, such as the county’s payment of Settlements will also prove impos- actions must attach a notice form by stenographic transcript expenses and sible when a borrower’s fi nancial which the borrower may request me- the waiver of court costs.163 circumstances have declined to where diation.154 The Connecticut court has When a defendant’s application a proposed restructured payment three days from receipt of the request for assigned counsel is granted at the schedule is not viable for the borrow- to notify the parties of the media- mandatory settlement conference, er. Typically, settlements will not be tion,155 which is to be held within fi f- CPLR 3408(b) directs that the confer- reached during the initial conference teen days of its noticed scheduling156 ence be continued on a later date between the court and the parties, as and completed within sixty days of for the appearance and participa- the borrower must often provide fur- the “return date” of the foreclosure tion of the assigned attorney.164 The ther information to assist the lender action.157 The State of Connecticut availability of a mechanism for the in calculating an offer that restruc- appropriated $2 million to fund its appointment of counsel to eligible tures mortgage payments. The parties mediation program.158 defendants is signifi cant. Defendants must, therefore, appear at the court

14 NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 subject to foreclosure upon the sub- are actually conducted. Recent OCA The benefi ts of having counsel at prime, high-cost, and nontraditional fi gures for Queens County (current to foreclosure settlement conferences are mortgages contemplated by CPLR October 1, 2009) demonstrate that at- also easy to imagine. Attorneys may 3408 are likely to disproportion- torneys appeared on behalf of defen- advise defendants of potential legal ally represent poor and minority dants in 570 of the 1,103 conferences defenses specifi cally related to, inter households.165 that were conducted, representing alia, the federal Truth in Lending Act 51.7% of those conferences.170 Never- (“TILA”),176 the Real Estate Settle- However, while CPLR 3408(b) theless, the percentages suggest that ment Procedures Act (“RESPA”)177 created a statutory right to assigned CPLR 3408(b) may not be suffi ciently and bankruptcy laws, the New York counsel in covered mortgage fore- meeting its stated overall mission State Home Equity Theft Protection closure actions, the statute did not of providing legal representation to Act178 and Deceptive Practices Act,179 provide any underlying funding of as- defendants facing the loss of their and statutory protections against signed counsel. The statutory amend- homes as a result of subprime, high- high-cost home loans,180 and may ments enacted in 2009 likewise con- cost, and nontraditional mortgage help renegotiate payment terms and tain no funding for assigned counsel, foreclosures. assure that relevant legal procedures and in fact declared the amendments are followed.181 to be revenue-neutral.166 Courts that The counsel provision in CPLR fi nd defendants eligible for assigned 3408 is important, considering that The availability of appointed counsel, therefore, refer defendants to the vast majority of foreclosure counsel, of course, implicates federal legal service organizations, bar asso- plaintiffs are institutions that com- and state funding for assigned legal ciations, and lists of available pro bono mence the litigations through coun- services. An editorial published in attorneys, but there is no guarantee sel. One responsibility of all attorneys the New York Times on October 9, that such referrals will actually result is to assure a good faith basis for the 2009, lamented that funding for as- in attorney-client representation. The actions they commence.171 More- signed counsel in home foreclosure Brennan Center for Justice at New over, once foreclosure actions are litigations is not adequate and urged York University School of Law found commenced, the lenders’ attorneys higher state and federal funding of that in Queens County between often fast-track the litigations with programs earmarked for that pur- November 2008 and May 2009, 84% motions for summary judgment pose.182 A bill has been introduced of defendants in foreclosure ac- under CPLR 3212. Appellate cases in the New York State Assembly— tions involving subprime, high-cost, are legion that lenders establish their A00464—which, if enacted, will and nontraditional mortgages were prima facie entitlement to summary expand defendants’ rights to assigned without full legal representation.167 judgment merely by evidencing to counsel.183 A corresponding bill has The fi gures for Richmond and Nas- the court the mortgage, the unpaid yet to be sponsored in the New York sau Counties were estimated by the note, and the borrower’s default.172 State Senate, and, given New York’s OCA as 91% and 92%, respectively.168 Since it is not uncommon for fi nancial well-publicized budget diffi culties, These fi gures are not fully representa- institutions to sell and assign mort- the future funding of assigned coun- tive of reality, as they do not include gages and notes, a plaintiff that is an sel in mortgage foreclosure actions instances of legal representation for assignee must also tender evidence may prove problematic. “incidental” or “additional” defen- that it received the mortgage and Pro bono legal services are neces- dants, nor do they account for the note by a proper prior assignment.173 sary to the success of CPLR 3408 in its many defendants who default by fail- The plaintiff’s initial burden is not current form. The New York City Bar ing to answer plaintiffs’ complaints particularly diffi cult for institutional Association (“NYCBA”) and the Fed- or who fail to attend the settlement lenders to meet since it relies on eral Reserve Bank have co-sponsored conferences,169 thereby skewing the readily-accessible documentation. the Lawyers’ Foreclosure Intervention percentages higher. The fi gures may Once the plaintiff’s prima facie burden Network (“LFIN”), which provides also include pro se defendants who is met, the burden shifts to the bor- pro bono legal services for low-income requested assigned counsel but were rower defendant to establish, through homeowners facing foreclosure.184 found to be ineligible for it. admissible evidence, the existence of The program, administered by the a triable issue of fact as a defense to NYCBA, trains volunteer attorneys The more accurate method of the action,174 such as, but not limited to assist homeowners in (1) assessing gauging the level of attorney repre- to, waiver, estoppel, bad faith, fraud, their options, (2) negotiating their re- sentation at mandated residential or oppressive or unconscionable fi nance arrangements, and (3) defend- foreclosure settlement conferences conduct on the part of the plaintiff.175 ing their cases.185 A similar program, is to examine the number of cases Counsel can be of crucial importance the Mortgage Foreclosure Pro Bono where attorneys appear on behalf to defendants in navigating the sum- Project, has been established in Nas- of defendants at conferences that mary judgment process.

NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 15 sau County through the collaboration Endnotes which was to be purchased at the time proof of service was fi led with of the County, the Attorney General’s 1. Statistics provided by the New York State the clerk of the court. The purpose Unifi ed Court System, Foreclosure Cases offi ce, and Nassau/Suffolk Legal of the conference was to streamline Filed, by county (2005-2008). Services.186 This program provides pro foreclosure litigations for lenders and bono consultation services for hom- 2. Id. to encourage settlements between the eowners in need.187 Pro bono services 3. Id. parties. N.Y. STATE UNIFIED COURT SYS., RESIDENTIAL MORTGAGE FORECLOSURES: will become less necessary only to the 4. Id. PROMOTING EARLY COURT INTERVENTION, extent that the state fi nds funding for 5. Id. at 2-4 [hereinafter N.Y. STATE UNIFIED COURT SYS. Report], available at http:// the increased demand for assigned 6. Foreclosures More than Doubled in 2008, counsel generated by the enactment www.nycourts.gov/whatsnew/pdf/ MSNBC, Jan. 15, 2009, http://www. ResidentialForeclosure6-08.pdf. The of CPLR 3408. msnbc.msn.com/id/28663624/. enactment of CPLR 3408 two months 7. Les Christie, Foreclosures: Worst Three later, however, caused the pilot program Months of All Time, CNN, Oct. 15, 2009, to be subsumed by the procedures Conclusion http://money.cnn.com/2009/10/15/ required by the state statute. The latter part of 2008, along with real_estate/foreclosure_crisis_ deepen 12. 2008 N.Y. Laws ch. 472, § 3; Wells Fargo s/?postversion=2009101507. Care must Bank, NA, 2009 WL 175029, at *4. 2009 and 2010, represent uncertain be taken when examining foreclosure economic times. The burst of the statistics, as some reported statistics 13. See Sponsor’s Mem., Bill Jacket, “housing bubble” has been acknowl- focus upon only the number of homes L.2008, ch. 472, available at http:// actually sold at foreclosure auctions, image.iarchives.nysed.gov/images/ edged as a signifi cant factor in the images/142344.pdf. See also LaSalle Bank 188 whereas others—including those at issue downturn of the national economy. here—include homeowners who merely Nat’l Ass’n, 2009 WL 1810511, at *2; David The increase in mortgage foreclosures receive default notices and auction D. Siegel, Legislature Mandates Settlement is a sign of the distressed housing notices, which precede foreclosure sales. Conference in Residential Foreclosure Actions in Effort to Ease Subprime Mortgage market, and it impedes any recovery 8. 2008 N.Y. Laws ch. 472. See also LaSalle Crisis, SIEGEL’S PRAC. REV., Sept. 2008, at of that market specifi cally and the Bank Nat’l Ass’n v. Novetti, 889 N.Y.S.2d 3, available at 201 SIEGELPR 3 (WestLaw); economy generally. Statutes that help 506, No. 6535-08, 2009 WL 1810511, at Abby Tolchinsky & Ellie Wertheim, *2 (Sup. Ct. June 15, 2009) (unreported reduce the number of foreclosure Bringing Borrowers and Lenders Together disposition); Wells Fargo Bank, NA v. Under Foreclosure Law, N.Y. L.J., May 8, auctions and keep families in their Edsall, 880 N.Y.S.2d 877, No. 3523-07, 2009, at 3. homes can, theoretically, if not in fact, 2009 WL 175029, at *3 (Sup. Ct. Jan. 22, 2009) (unreported disposition). 14. N.Y. C.P.L.R. 3408(a) (McKinney 2009). help stabilize the housing market and See also Siegel, Practice Commentaries, help families and communities. 9. 2008 N.Y. Laws ch. 472. See also Wells McKinney’s Cons. Laws of N.Y., Book 7B, Fargo Bank, NA, 2009 WL 175029, at *3. CPLR C3408. CPLR 3408 provides a settle- 10. See Michael Powell & Janet Roberts, 15. Siegel, supra note 13. ment conference mechanism to help Minorities Hit Hardest as New York achieve a laudable goal. It is the Foreclosures Rise, N.Y. TIMES, May 16, 16. MELANCA CLARK & MAGGIE BARRON, 2009, at A1. See also Manny Fernandez, BRENNAN CTR. FOR JUSTICE, FORECLOSURES: responsibility of the courts to prop- In Confronting the Foreclosure Crisis, A Bill A CRISIS IN LEGAL REPRESENTATION 7-8 erly navigate any procedural pitfalls Strikes a Balance, N.Y. TIMES, June 22, 2008, (2009), available at http://brennan.3cdn. presented by the statute’s draftsman- at A25. net/a5bf8a685cd0885f72_s8m6bevkx.pdf. ship, such as issues involving the 11. While there is no statutory predecessor 17. Id. at 7-8 (citing Jenny Schuetz, Vicki Been fi ling of proofs of service and RJIs, to CPLR 3408, the New York State & Ingrid Gould Ellen, Neighborhood Effects of Concentrated Mortgage Foreclosures 17 and to implement the purpose and Judiciary was ahead of the Legislature in recognizing the potential value (N.Y.U. Center for Law & Econ., Law & intent of CPLR 3408 to the best extent of early settlement conferences in Econ. Research Paper Series, Working possible. The availability and funding residential foreclosure actions. A Paper No. 08-41, Sept. 18, 2008)). The of assigned attorneys for fi nancially- report entitled RESIDENTIAL MORTGAGE paper correlates the proximity of foreclosures to reductions in home sales strapped defendants remains, as of FORECLOSURES: PROMOTING EARLY COURT INTERVENTION was issued in June 2008 prices in the same areas. this writing, a continuing problem. by then-Chief Judge Judith Kaye and by 18. Id. at 8 (citing generally WILLIAM C. The courts’ greatest contributions Chief Administrative Judge Ann Pfau. APGAR & MARK DUDA, COLLATERAL with regard to CPLR 3408 will be The report recognized the signifi cant DAMAGE: THE MUNICIPAL IMPACT OF the expected investment of serious, spike in residential foreclosure actions TODAY’S MORTGAGE FORECLOSURE BOOM fi led in the State of New York and the (May 11, 2005)). proactive time and effort in the settle- effect of foreclosures upon families, ment conferences themselves, to re- neighborhoods, banks, and the economy. 19. Id. (citing Dan Immergluck & Geoff It summarized the creation of a pilot Smith, The Impact of Single-Family structure payment terms in a manner Mortgage Foreclosures on Neighborhood that is acceptable to all parties and Early Foreclosure Conference Part in Queens County where, under local rules, Crime, 21 HOUSING STUD. 851, 862 (2006)). that keeps families in their homes. homeowner defendants could request, 20. Id. (citing PEW CHARITABLE TRUSTS, This is true even if the rate of settle- pursuant to written notice served with DEFAULTING ON THE DREAM: STATES ments arising out of the mandated the summons and complaint, a court RESPOND TO AMERICA’S FORECLOSURE conferences remains in the modest conference. The conference was to be CRISIS 2, 11 (2008); Homeownership held within sixty days from the fi ling Preservation Foundation, About 5.3% to 16% range. of a Request for Judicial Intervention, Foreclosure, Common Myths, http://

16 NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 www.995hope.org/about-foreclosure/ the borrower’s loan proceeds, id. § 6-l(2) 50. 880 N.Y.S.2d 224, No. 226806, 2009 common-myths/ (last visited Feb. 14, (e), fees for certain loan modifi cations, WL 211787 (Sup. Ct. Jan. 23, 2009) 2010)). renewals, extensions or amendments, (unreported disposition). id. § 6-l(2)(f), oppressive mandatory 21. See N.Y. C.P.L.R. 3408(a) (McKinney 51. Id. at *1-2. arbitration clauses, id. § 6-l(2)(g), the 2009). fi nancing of insurance or other defi ned 52. Id. at *2. 22. Id. products, id. § 6-l(2)(h), loan “fl ipping,” 53. Id. 23. Id. id. § 6-l(2)(i), the refi nancing of special mortgages, id. § 6-l(2)(j), lending without 54. See, e.g., Antone v. Gen. Motors Corp., 64 24. Id.; N.Y. BANKING LAW § 6-l(1)(d). verifi cation of the borrower’s ability to N.Y.2d 20, 28 (1984). 25. See Emigrant Mortgage Co., Inc. v. repay, id. § 6-l(2)(k), lending without 55. Accredited Home Lenders, Inc. v. Turk, 895 N.Y.S.2d 722 (App. Div. 2010); counseling disclosure, id. § 6-l(2)(l), the Hughes, 866 N.Y.S.2d 860, 863 (Sup. Ct. Trustco Bank v. Alexander, 886 N.Y.S.2d fi nancing of points and fees, id. § 6-l(2) 2008). (m), the payment of home improvement 69, No. 2008-3351, 2009 WL 1425247, at 56. Id. at 862. *1 (Sup. Ct. May 12, 2009) (unreported contractors from loan proceeds, id. § disposition). 6-l(2)(n), the encouragement of the 57. Id. borrower’s default, id. § 6-l(2)(o), 26. N.Y. REAL PROP. ACTS. LAW § 1304(5)(c). 58. Id. payments to mortgage brokers other 27. Id. § 1304(5)(d). than for goods and facilities actually 59. Id. at 863. 28. Id. See also Accredited Home Lenders, Inc. furnished or services actually performed, 60. Id. See also N.Y. REAL PROP. ACTS. LAW § v. Hughes, 866 N.Y.S.2d 860, 862-63 (Sup. id. § 6-l(2)(p), points and fees for 1304(1), (2) (McKinney 2009). refi nancing a high-cost home loan to Ct. 2008). 61. Compare N.Y. REAL PROP. ACTS. LAW § a new high-cost home loan, id. § 6-l(2) 1304(2) with N.Y. C.P.L.R. 3408(a). 29. N.Y. REAL PROP. ACTS. LAW § 1304(5)(c). (q), prepayment penalties, id. § 6-l(2) 30. Id. § 1304(5)(d). (r), abusive yield spread premiums, id. § 62. Accredited Home Lenders Inc., 866 N.Y.S.2d 6-l(2)(s), the non-collection by the lender at 863. 31. Id. § 1304(5)(e); Accredited Home Lenders, of tax and insurance escrow for loans 63. Id. Inc., 866 N.Y.S.2d at 862. to be consummated after July 1, 2010, 32. N.Y. BANKING LAW § 6-l(1)(e). id. § 6-l(2)(t), the non-disclosure by the 64. Id. lender of taxes and insurance, id. § 6-l(2) 33. Id. § 6-l(1)(e)(ii)-(v). 65. See, e.g., Jones v. Bill, 890 N.E.2d 884 (N.Y. (u), and “teaser rates” having a duration 2008); Bluebird Partners L.P. v. First Fid. 34. Id. § 6-l(1)(e)(i). of less than six months, id. § 6-l(2)(v). Bank, 767 N.E.2d 672, 674 (N.Y. 2002); 35. Id. § 6-l(1)(e). The statute provides for penalties in the Yong-Myun Rho v. Ambach, 546 N.E.2d form of consequential and incidental 188, 190 (N.Y. 1989); Sutka v. Connors, 36. Id. § 6-l(1)(d). See generally LaSalle Bank, damages, civil penalties, and attorneys’ 538 N.E.2d 1012, 1015 (N.Y. 1989); Janssen N.A. II v. Shearon, 881 N.Y.S.2d 599, 604- fees, as well as equitable and injunctive v. Inc. Vill. of Rockville Ctr., 869 N.Y.S.2d 06 (Sup. Ct. 2009). relief, in the event that violations by 572, 581-82 (App. Div. 2008); Ragucci v. 37. N.Y. BANKING LAW § 6-l(1)(g)(i). lenders are proven by a preponderance Prof’l Constr. Servs., 803 N.Y.S.2d 139, of the evidence. Id. §§ 6-l(7) – (11). See 38. Id. 142 (App. Div. 2005) (quoting Majewski generally LaSalle Bank, N.A. v. Shearon, v. Broadalbin-Perth Cent. Sch. Dist., 696 39. Id. 850 N.Y.S.2d 871 (Sup. Ct. 2008). N.E.2d 978, 980 (N.Y. 1998)).

40. Id. § 6-l(1)(g)(ii). The statute provides 41. See Governor’s Program Bill Mem., 66. See, e.g., N.Y. STAT. LAW §§ 76, 94; Action for a deduction of up to two bona fi de Summary of Provisions, Bill Jacket, Elec. Contractors, Inc. v. Goldin, 474 loan discount points payable by the L.2008, ch. 472. N.E.2d 601, 604 (N.Y. 1984). See also Ferres borrower, if the interest rate from which 42. See Siegel, supra note 13; Governor’s v. City of New Rochelle, 502 N.E.2d 972, the loan interest rate is discounted does Program Bill Mem., Summary of 975 (N.Y. 1986); Uniformed Firefi ghters not exceed by more than one percentage Provisions, Bill Jacket, L.2008, ch. 472; Ass’n, Local 94 v. Beekman, 420 N.E.2d point the yield on U.S. treasury securities Press Release, Governor David A. 938, 941 (N.Y. 1981); Tutunjian v. Conroy, having comparable maturity measured Paterson, Governor Paterson Signs 865 N.Y.S.2d 768, 770 (App. Div. 2008); from the fi fteenth day of the month Comprehensive Reforms to Address Kearns v. Piatt, 716 N.Y.S.2d 418, 419 immediately preceding the month in Foreclosure Crisis (Aug. 5, 2008), available (App. Div. 2000). which the application was received, at http://www.ny.gov/governor/press/ id. § 6-l(1)(g)(ii)(1), and all bona fi de 67. N.Y. C.P.L.R. 3408(a) (emphasis added). press_0805081.html. loan discount points funded directly or 68. Id. indirectly through grants from federal, 43. Accredited Home Lenders, Inc. v. 69. Id. (emphasis added). state, or local agencies or tax exempt Hughes, 866 N.Y.S.2d 860, 862-63 (Sup. organizations, id. § 6-l(1)(g)(ii)(2). Ct. 2008). 70. On occasion, plaintiffs in foreclosure Certain high-cost home loan practices 44. Id. actions fi le and serve motions for are expressly prohibited by the BANKING summary judgment in lieu of a complaint LAW, including acceleration provisions 45. Id. at 863. under CPLR 3213. See, e.g., Dyck-O’Neal, absent default by the borrower, id. § 6-l(2) 46. 891 N.Y.S.2d 238 (Sup. Ct. 2009). Inc. v. Thomson, 868 N.Y.S.2d 838 (App. (a)), balloon payments that are more Div. 2008); Lakeville Manor, Inc. v. KBK 47. Id. at 243. than twice as large as the average of Enters., LLC, 772 N.Y.S.2d 591 (App. earlier scheduled payments, id. § 6-l(2) 48. See, e.g., Wells Fargo Bank, NA v. Edsall, Div. 2003); Gregorio v. Gregorio, 651 (b), negative amortization by which 880 N.Y.S.2d 877, No. 3523-07, 2009 WL N.Y.S.2d 599 (App. Div. 1996); F.D.I.C. regular periodic payments cause an 175029, at *4 (Sup. Ct. Jan. 22, 2009) v. De Cresenzo, 616 N.Y.S.2d 638 (App. increase in the principal balance, id. § (unreported disposition). Div. 1994); Norton Co. v. C-TC 9th Ave. P’ship, 603 N.Y.S.2d 364 (App. Div. 1993); 6-l(2)(c), interest rate increases as a result 49. N.Y. C.P.L.R. 3408(a) (McKinney 2009) Joswick v. Rossi, 593 N.Y.S.2d 257 (App. of the borrower’s default, id. § 6-l(2) (emphasis added); U.S. Bank, N.A. v. Div. 1993); Stern v. Chemical Bank, 372 (d), the application of more than two Flynn, No. 2010-20093, 2010 WL 936224, N.Y.S.2d 913, 916 (Civ. Ct. 1975). Such periodic payments paid in advance from at *4 (Sup. Ct. Mar. 12, 2010).

NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 17 motions may only be fi led when the 1982); Linda I.V. v. Gil R.C., 673 N.Y.S.2d the NYS housing trust fund corporation, action is based upon an instrument for 290 (Fam. Ct. 1998); Ponterio v. Regan, http://open.nysenate.gov/openleg/ the payment of money—like a note—and 521 N.Y.S.2d 965, 966-67 (Sup. Ct. 1987). api/1.0/html/bill/S66007 (last visited cannot be used for equitable relief such Feb. 15, 2010); New York State Assembly, 86. See N.Y. STAT. LAW § 55 (McKinney 2009); Summary – A40007, http://assembly. as the court-ordered sale of the property Simonson v. Int’l Bank, 200 N.E.2d 427, state.ny.us/leg/?bn=A40007 (last visited and the eviction of the defendant. In 431-32 (N.Y. 1964); Chapman v. State, 690 Feb. 15, 2010). foreclosure actions where the defendant N.Y.S.2d 328, 328 (App. Div. 1999); Wade is not subject to sale and eviction, the v. Byung Yang Kim, 681 N.Y.S.2d 355, 96. 2009 N.Y. Sess. Laws ch. 507, § 9 defendant would ordinarily not be a 357 (App. Div. 1998); Auger v. State, 666 (McKinney); Press Release, Governor resident of the property. Accordingly, N.Y.S.2d 760 (App. Div. 1997). David A. Paterson, Governor Paterson it would appear that in actions where Signs Comprehensive Foreclosure 87. 2008 N.Y. Laws ch. 472, § 3-a. plaintiffs seek summary judgment in Legislation into Law (Dec. 15, 2009), lieu of a complaint under CPLR 3213, the 88. Id.; LaSalle Bank Nat’l Ass’n v. Novetti, available at http://www.state.ny.us/ absence of the defendant’s residence in 889 N.Y.S.2d 506, No. 6535-08, 2009 WL governor/press/press_12150901.html. the property would render the settlement 1810511, at *1 (Sup. Ct. June 15, 2009) 97. 2009 N.Y. Sess. Laws ch. 507, § 9(d) – (h) conference of CPLR 3408 inapplicable. (unreported disposition); Siegel, supra (McKinney). 71. 2008 N.Y. Laws ch. 472, § 3. note 13. 98. Id. § 9(a). 72. See Siegel, Practice Commentaries, 89. 2008 N.Y. Laws ch. 472, § 3-a. 99. Vesselin Mitey, Strained Courts Brace for McKinney’s Cons. Laws of N.Y., Book 7B, 90. Id. See also LaSalle Bank Nat’l Ass’n, 2009 Infl ux of Foreclosure Conferences Under Law CPLR C3408. See also LaSalle Bank Nat’l WL 1810511, at *1. Ass’n v. Novetti, 889 N.Y.S.2d 506, No. That Broadens Eligibility, N.Y. L.J., Nov. 18, 6535-08, 2009 WL 1810511, at *2 (Sup. Ct. 91. N.Y. C.P.L.R. 3408(c). 2009, at 1. June 15, 2009) (unreported disposition). 92. Specifi cally, CPLR 3408(c) provides that 100. Id. “[w]here appropriate, the court may” 73. LaSalle Bank Nat’l Ass’n, 2009 WL 1810511, 101. 2009 N.Y. Sess. Laws ch. 507, § 25(e) allow telephonic or video participation, at *2. (McKinney). which is language of discretion. Id. 74. N.Y. C.P.L.R. 3408(a). (emphasis added). See N.Y. STAT. LAW § 102. Id. § 9(f). 75. Id. 3408. 177(a) cmt. 103. IndyMac Bank F.S.B. v. Yano-Horoski, 890 76. Id. 93. At most, section 202.15 of the Uniform N.Y.S.2d 313, 319-20 (Sup. Ct. 2009). Rules for the New York State Trial Courts 104. Id. at 319. 77. See N.Y. STAT. LAW § 51(b), (c). E.g., Duell provides for audio-visual recording of ex rel. Estate of Duell v. Condon, 647 witness depositions, pursuant to specifi c 105. David D. Siegel, Invoking Equitable N.E.2d 96, 100 (N.Y. 1995); Dorfman v. procedures set forth in the rule. N.Y. Powers, Court Cancels Mortgage and Note Leidner, 565 N.E.2d 472, 474 (N.Y. 1990); COMP. CODES R. & REGS. tit. 22, § 202.15 of Foreclosing Plaintiff for “Duplicity” Thomas v. Bethlehem Steel Corp., 470 (2010). See also Duncan v. 605 3rd Ave., and “Opprobrious Demeanor” in Failing N.E.2d 831, 833 (N.Y. 1984); Beary v. City LLC, 853 N.Y.S.2d 592 (App. Div. 2008); to Cooperate at Conference, SIEGEL’S PRAC. of Rye, 377 N.E.2d 453, 459 (N.Y. 1978); R.M. v. Dr. R., 59 N.Y.S.2d 906, No. REV., Dec. 2009, at 1, available at 216 Deutsch v. Catherwood, 294 N.E.2d 193, 50364(U), 2008 WL 509092 (Sup. Ct. Feb. SIEGELPR 1 (WestLaw). 194 (N.Y. 1973); County of Herkimer 26, 2008) (unreported disposition); In re v. Daines, 876 N.Y.S.2d 303 (App. Div. 106. 2009 N.Y. Sess. Laws ch. 507, § 9(g) Sawyer, 823 N.Y.S.2d 641, 645 (Sup. Ct. (McKinney). 2009), leave to appeal denied, 876 N.Y.S.2d 2006); Parker v. Parker, 773 N.Y.S.2d 518, 804 (App. Div. 2009); State ex rel. Spitzer 523 (Sup. Ct. 2003); Fajardo v. St. Joseph’s 107. Id. § 9(h). v. Daicel Chem. Indus., 840 N.Y.S.2d 8, Med. Ctr., 746 N.Y.S.2d 779, 780 (Sup. Ct. 108. N.Y. C.P.L.R. 3408(a) (McKinney 2009). 10-11 (App. Div. 2007); Chapman v. State, 2002); Roche v. Udell, 588 N.Y.S.2d 76, 79- 109. Id. 308(2). See generally, Charnin v. Cogan, 690 N.Y.S.2d 328 (App. Div. 1999); Wade 81 (Sup. Ct. 1992); Velasquez v. Columbia 673 N.Y.S.2d 134, 135-36 (App. Div. v. Byung Yang Kim, 681 N.Y.S.2d 355, Presbyterian Med. Ctr., 522 N.Y.S.2d 1998); Fed. Home Loan Mortgage Corp. 356-57 (App. Div. 1998); Auger v. State, 416, 418 (Sup. Ct. 1987). Nevertheless, v. Venticinque, 658 N.Y.S.2d 689 (App. 666 N.Y.S.2d 760, 762 (App. Div. 1997), video-conference technology has also Div. 1997); Melton v. Brotman Foot Care after remand 693 N.Y.S.2d 343 (App. Div. been utilized for witnesses at certain Group, 604 N.Y.S.2d 203 (App. Div. 1993); 1999); Morales v. Gross, 657 N.Y.S.2d hearings and trials. See, e.g., Dates v. Donohue v. Schwartz, 570 N.Y.S.2d 542 (App. Div. 1997). Mundt, 771 N.Y.S.2d 740 (App. Div. (App. Div. 1991); Borges v. Entra Am., 78. N.Y. C.P.L.R. 3408. 2004); Perez v. Hynes, 880 N.Y.S.2d 875, Inc., 801 N.Y.S.2d 230, No. 50845(U), 2005 No. 50196(U), 2009 WL 305520 (Sup. Ct. 79. 889 N.Y.S.2d 506, No. 6535-08, 2009 WL WL 1355144, at *2 (N.Y. City Civ. Ct. May Feb. 04, 2009) (unreported disposition); 1810511, at *1 (Sup. Ct. June 15, 2009) 9, 2005) (unreported disposition); Star State v. Pedraza, 853 N.Y.S.2d 476, (unreported disposition). Brite Painting, Inc. v. Dubie’s Hot Spot 478 (Sup. Ct. 2007); People v. Chase, Inc., 784 N.Y.S.2d 924, No. 50136(U), 2004 80. Id. 803 N.Y.S.2d 20, No. 51125(U), 2005 WL 503488, at *2 (N.Y. City Civ. Ct. Mar. WL 1692330 (N.Y. County Ct. May 19, 81. Id. at *1-2. 1, 2004) (unreported disposition). 2005) (unreported disposition), but in 82. Id. at *2. criminal trials the concept appears to 110. N.Y. C.P.L.R. 308(2). See generally 83. Id. confl ict with the defendant’s rights Weininger v. Sassower, 612 N.Y.S.2d 249 under the Confrontation Clause of the (App. Div. 1994); Bartlett v. Gage, 633 84. Id. Sixth Amendment. See United States v. N.Y.S.2d 246, 248 (Sup. Ct. 1995). The 85. See, e.g., Simonson v. Int’l Bank, 200 Yates, 438 F.3d 1307, 1314 (11th Cir. 2006); failure of a party to fi le a timely proof of N.E.2d 427, 431-32 (N.Y. 1964); Jacobus People v. Wrotten, 871 N.Y.S.2d 28, 37 claim is not a jurisdictional defect, but is v. Colgate, 111 N.E. 837, 838-39 (N.Y. (App. Div. 2008). instead a mere irregularity that is curable 1916); State ex rel. Spitzer v. Daicel Chem. by motion to the court. See N.Y. C.P.L.R. 94. N.Y. C.P.L.R. 3408(c) (emphasis added). Indus., 840 N.Y.S.2d 8, 11 (App. Div. 2004; Zareef v. Lin Wong, 877 N.Y.S.2d 2007); Mealing v. Hills, 517 N.Y.S.2d 321, 95. New York State Senate, S66007: Relates 182 (App. Div. 2009); County of Nassau 322 (App. Div. 1987); Cady v. County to home mortgage loans, the crime of v. Gallagher, 828 N.Y.S.2d 445 (App. Div. of Broome, 451 N.Y.S.2d 206 (App. Div. mortgage fraud, and appropriations to 2006); Penachio v. Penachio, 812 N.Y.S.2d

18 NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 592, 594 (App. Div. 2006); Koslowski v. or summons and complaint. Leader v. (unreported disposition); Tucker Family Koslowski, 672 N.Y.S.2d 808 (App. Div. Maroney, Ponzini & Spencer, 97 N.Y.2d Trust v. Taylor, 836 N.Y.S.2d 490, No. 1998); Hausknecht v. Ackerman, 662 95, 100-01 (2001). If a matrimonial 50087(U), 2007 WL 137112 (Sup. Ct. N.Y.S.2d 567, 569-70 (App. Div. 1997); plaintiff takes the full 120 days for Jan. 18, 2007) (unreported disposition); Bank of N.Y. v. Schwab, 467 N.Y.S.2d 415 service, followed by the full forty-fi ve Einheber v. Bodenheimer, 820 N.Y.S.2d (App. Div. 1983); Marazita v. Nelbach, days for purchasing an RJI, and if the 842, No. 51264(U), 2006 WL 1835019, at 456 N.Y.S.2d 423 (App. Div. 1982). court conducts a preliminary conference *3 (Sup. Ct. May, 5, 2006) (unreported forty-fi ve days thereafter, the time frame disposition); Adkins v. Lipner, Gordon 111. N.Y. C.P.L.R. 308(4). for conducting the initial matrimonial & Co., 814 N.Y.S.2d 559, No. 52073(U), 112. Id. See generally Feinstein v. Bergner, 48 conference is capped at 210 days from the 2005 WL 3487789, at *3 (Sup. Ct. Dec. 20, N.Y.2d 234, 239 (1979); Comm’rs of State action’s commencement. As a practical 2005) (unreported disposition); Jann v. Ins. Fund v. Khondoker, 865 N.Y.S.2d 287, matter, preliminary conferences in Cassidy, 696 N.Y.S.2d 337 (Sup. Ct. 1999); 288 (App. Div. 2008); Gantman v. Cohen, matrimonial actions are conducted well Matthew v. Mosier, 832 N.Y.S.2d 408 (City 618 N.Y.S.2d 100, 100-01 (App. Div. 1994); in advance of the mathematical calendar Ct. 2007). Schwartzman v. Musso, 607 N.Y.S.2d 953 maximum. 136. N.Y. C.P.L.R. 5015(a)(1). E.g., Jones v. 414 (App. Div. 1994); Woods v. Balick, 603 119. Cf. Qi v. Ng, 632 N.Y.S.2d 757, 757 (Sup. Equities LLC, 866 N.Y.S.2d 165, 178 (App. N.Y.S.2d 1 (App. Div. 1993); Serrano v. Ct. 1995). Div. 2008); Apple Bank for Sav. v. Fort Pape, 591 N.Y.S.2d 516 (App. Div. 1992); Tyron Apartments Corp., 843 N.Y.S.2d Magalios v. Benjamin, 554 N.Y.S.2d 61, 61 120. See also N.Y. COMP. CODES R. & REGS. tit. 307 (App. Div. 2007); State v. Williams, (App. Div. 1990); Tymkin v. Edwards, 551 22, § 202.56(a)(1), (b); Sturleti v. Stigliano, 843 N.Y.S.2d 722, 724 (App. Div. 2007); N.Y.S.2d 126 (App. Div. 1990); Citibank, 511 N.Y.S.2d 770, 770 (Sup. Ct. 1986). Knupfer v. Hertz Corp., 827 N.Y.S.2d N.A. v. Keller, 518 N.Y.S.2d 409, 410 (App. 121. See N.Y. C.P.L.R. 3406(a). 394,394 (App. Div. 2006); Nilt, Inc. v. Div. 1987); Ladell v. Field, 495 N.Y.S.2d N.Y. State Dep’t of Motor Vehicles, 826 449, 450 (App. Div. 1985); Agin v. Krest 122. N.Y. COMP. CODES R. & REGS. tit. 22, § N.Y.S.2d 471 (App. Div 2006); Wilson v. Assocs., 599 N.Y.S.2d 367, 369 n.2 (Sup. 202.12a (2008). Sherman Terrace Co-op, Inc., 787 N.Y.S.2d Ct. 1992). 123. Id. § 202.12a(a). 318 (App. Div. 2005); Heskel’s West 38th 113. N.Y. C.P.L.R. 308(4). See generally Rosato 124. The one noticeable difference between St. Corp. v. Gotham Constr. Co., 787 v. Ricciardi, 571 N.Y.S.2d 633 (App. Div. CPLR 3408 and Uniform Rule 202.12a N.Y.S.2d 285 (App. Div. 2005); Smolinski 1991). is that the statute applies to covered v. Smolinski, 786 N.Y.S.2d 881 (App. Div. 114. N.Y. C.P.L.R. 308(1). See generally Espy v. actions commenced as of its effective 2004); Taylor v. Saal, 771 N.Y.S.2d 671 Giorlando, 436 N.E.2d 193 (N.Y. 1982); date, August 5, 2008, whereas the (App. Div. 2004); Dominguez v. Carioscia, McGreevy v. Simon, 633 N.Y.S.2d 177, Uniform Rule applies to covered actions 766 N.Y.S.2d 685, 686 (App. Div. 2003); 178 (App. Div. 1995); Coyne v. Besser, 546 commenced as of September 1, 2008. The Sanford v. 27-29 W. 181st St. Ass’n, 753 N.Y.S.2d 129 (App. Div. 1989); Velez v. chronological difference is marginal. N.Y.S.2d 49 (App. Div. 2002). Smith, 540 N.Y.S.2d 339 (App. Div. 1989); 125. N.Y. COMP. CODES R. & REGS. tit. 22, § 137. N.Y. C.P.L.R. 5015(a)(2). See, e.g., Maines Jones v. Nossoughi, 537 N.Y.S.2d 565 202.12a(b). Paper & Food Serv., Inc. v. Boulevard (App. Div. 1989); Prof’l Billing Res., Inc. v. Burgers Corp., 861 N.Y.S.2d 808, 810 126. Compare id. § 202.12a(c) with N.Y. C.P.L.R. Haddad, 705 N.Y.S.2d 204, 207 (N.Y. City (App. Div. 2008); Fladell v. Am. Red 3408. Civ. Ct. 2000); Bertha G. v. Paul T., 509 Magen David for Israel, 844 N.Y.S.2d N.Y.S.2d 995, 996-97 (Fam. Ct. 1986). 127. N.Y. C.P.L.R. 308(1), (3). 136 (App. Div. 2007); Vargas v. Ahmed, 837 N.Y.S.2d 654 (App. Div. 2007); ORT 115. N.Y. C.P.L.R. 308(3). See generally Jackson 128. Compare N.Y. COMP. CODES R. & REGS. tit. Assocs. v. Mouzouris, 836 N.Y.S.2d v. County of Nassau, 339 F. Supp. 2d 22, § 202.12a(c) with N.Y. COMP. CODES R. 62 (App. Div. 2007); Bollino v. Hitzig, 473, 477 (E.D.N.Y. 2004); Espy, 436 & REGS. tit. 22, § 202.16(d). N.E.2d at 193; Donaldson v. Melville, 825 N.Y.S.2d 511 (App. Div. 2006); 129. See, e.g., Schreiber-Cross v. State, 870 507 N.Y.S.2d 301, 302 (App. Div. 1986); Rubenbauer v. Mekelburg, 803 N.Y.S.2d N.Y.S.2d 438, 442 (App. Div. 2008). Hall v. Bickweat, 584 N.Y.S.2d 690 (App. 183 (App. Div. 2005); Alaska Seaboard Div. 1992); In re Estate of Gottesman, 511 130. N.Y. C.P.L.R. 308(1), (3). Partners v. Grant, 799 N.Y.S.2d 117 N.Y.S.2d 643, 644, (App. Div. 1989). (App. Div. 2005); Compass Group, USA, 131. Id. 3408(a). Inc. v. Mazula, 795 N.Y.S.2d 395 (App. 116. Compare N.Y. C.P.L.R. 308(1) & (3) with 132. See id. 3215(a). Div. 2005); Dodge v. Commander, 794 N.Y. C.P.L.R. 308(2) & (4). N.Y.S.2d 482 (App. Div. 2005); Wilson v. 133. See, e.g., Oparaji v. Duran, 795 N.Y.S.2d Sherman Terrace Co-op, Inc., 787 N.Y.S.2d 117. N.Y. COMP. CODES R. & REGS. tit. 22, § 341 (App. Div. 2005). Accord N.Y. Mut. 318 (App. Div. 2005); Merrill/N.Y. Co. v. 202.16(f) (2004). Uniform Rule 202.12(b), Underwriters v. Baumgartner, 797 Celerity Sys., Inc., 752 N.Y.S.2d 301 (App. which applies to other civil actions, has a N.Y.S.2d 210, 214 (App. Div. 2005); Ocuto Div. 2002); Barton v. Executive Health similar forty-fi ve day requirement for the Blacktop & Paving Co. v. Trataros Constr., Exam’rs, 716 N.Y.S.2d 3 (App. Div. 2000). scheduling of preliminary conferences 715 N.Y.S.2d 565 (App. Div. 2000); Green measured from the purchase and fi ling v. Dolphy Constr. Co., 590 N.Y.S.2d 238, 138. N.Y. REAL PROP. ACTS. LAW § 1304(1). of a Request for Judicial Intervention 239 (App. Div. 1992). The notice is to be sent by the lender via (“RJI”). N.Y. COMP. CODES R. & REGS. tit. registered or certifi ed mail. N.Y. C.P.L.R. 134. The evidence typically contained in the 22, § 202.12(b) (2009). In non-matrimonial 1304(2). Compliance with this and other moving papers is an affi davit of service. actions, however, there is no deadline for laws must be affi rmatively pleaded in Conceivably, it could also include a the fi ling of an RJI. N.Y. COMP. CODES R. the plaintiff’s complaint. N.Y. REAL PROP. written acknowledgment of service by & REGS. tit. 22, § 202.6(a) (2000). ACTS. LAW § 1302(1). the person served. 118. N.Y. COMP. CODES R. & REGS. tit. 22, 139. N.Y. REAL PROP. ACTS. LAW § 1304(1). 135. N.Y. C.P.L.R. 3215(f). See generally § 202.16(d) (2004). The RJI must be When foreclosure actions are Mullins v. DiLorenzo, 606 N.Y.S.2d purchased for a fee of $95.00. N.Y. commenced, further warnings and advice 161 (App. Div. 1993); Shapiro v. Rose, C.P.L.R. 8020(a). CPLR 306-b requires must be provided to the borrower with 600 N.Y.S.2d 819 (App. Div. 1993); Ice that absent a court-approved extension, the summons and complaint, as set forth Sculpture Designs, Inc. v. Icebreakers, process must be made upon the in RPAPL 1303. See Countrywide Home 836 N.Y.S.2d 493, No. 50194(U), 2007 defendant within 120 days from the fi ling Loans, Inc. v. Taylor, 843 N.Y.S.2d 495, 498 of the plaintiff’s summons with notice WL340293, at *2 (Sup. Ct. Feb. 5, 2007)

NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 19 (Sup. Ct. 2007) (regarding a predecessor 156. Id. § 49-31n(b)(2). (App. Div. 2009); Aurora Loan Servs., LLC v. Thomas, 862 N.Y.S.2d 89 (App. version of CPLR 1303). 157. Id. § 49-31n(c)(1). Div. 2008); Rose v. Levine, 861 N.Y.S.2d 140. N.Y. C.P.L.R. 2104. Accord Bruce J. 158. See N.Y. STATE UNIFIED COURT SYS. Report, 374 (App. Div. 2008); Popular Fin. Servs., Bergman, Entertainment of Settlement supra note 11, at 9-10. LLC v. Williams, 855 N.Y.S.2d 581 (App. Could Backfi re on Lender, N.Y. L.J., Dec. 31, Div. 2008); U.S. Bank Nat’l Ass’n Tr. U/S 2008, at 5. 159. N.Y. C.P.L.R. 3408(b) (McKinney 2009). 6/01/08 (Home Equity Home Trust 141. N.Y. C.P.L.R. 3408(c). 160. Id. 1998-2) v. Alvarez, 854 N.Y.S.2d 171 (App. 142. 2009 N.Y. Sess. Laws ch. 507, § 9(f) 161. See generally Teeter v. Reed, 395 N.Y.S.2d Div. 2008); Charter One Bank, FSB v. (McKinney). 282 (App. Div. 1977); In re S. Tier Legal Leone, 845 N.Y.S.2d 513 (App. Div. 2007); Servs., 420 N.Y.S.2d 591 (Sup. Ct. 1979). Aames Funding Corp. v. Houston, 843 143. See Tolchinsky & Wertheim, supra note 13, N.Y.S.2d 660 (App. Div. 2007); Red Tulip, 162. N.Y. C.P.L.R. 1101(a). See also Smith v. at 3. LLC v. Neiva, 842 N.Y.S.2d 1, 5 (App. Smith, 2 N.Y.2d 120 (1956); Abbott v. Div. 2007); Wells Fargo Bank Minn., N.A. 144. E-mail from Paul Lewis, Esq., Offi ce of Conway, 539 N.Y.S.2d 538 (App. Div. v. Mastropaolo, 837 N.Y.S.2d 247, 251-52 Court Administration, to author (Oct. 20, 1989); Bridges v. Univ. of Rochester, 468 (App. Div. 2007); Daniel Perla Assocs. 2009). N.Y.S.2d 732 (App. Div. 1983); Howell v. 101 Kent Assocs., 836 N.Y.S.2d 630 145. According to the OCA, different counties v. Francesco, 738 N.Y.S.2d 168 (Civ. Ct. (App. Div. 2007); Witelson v. Jamaica began keeping records and implementing 2001). Estates Holding Corp. I, 835 N.Y.S.2d procedures at different times, and the 163. N.Y. C.P.L.R. 1102(b), (d). Conceivably, 179 (App. Div. 2007); Cochran Inv. sixty-day conference period meant foreclosure actions within the Co. v. Jackson, 834 N.Y.S.2d 198 (App. that the earliest conferences were not jurisdictional limits of the Civil Courts Div. 2007); Marculescu v. Ovanez, 815 conducted until approximately January could be brought in such courts, N.Y.S.2d 598 (App. Div. 2006); Campaign of 2009. see Siegel, Practice Commentaries, v. Barba, 805 N.Y.S.2d 86 (App. Div. 146. The statistics for Queens, Kings, McKinney’s Cons. Laws of N.Y., Book 7B, 2005); NC Venture I, L.P. v. Complete Richmond, Bronx, Nassau, and Suffolk CPLR C3408; N.Y. City Civ. Ct. Act 203, Analysis, Inc., 803 N.Y.S.2d 95, 98 (App. Counties were provided by the OCA via in which case the city would presumably Div. 2005); Household Fin. Realty Corp. e-mail on October 20, 2009. The statistics assume expenses for stenographic of N.Y. v. Winn, 796 N.Y.S.2d 533 (App. for Westchester County were separately transcripts. See N.Y. C.P.L.R. 1102(a). Div. 2005); LPP Mortgage, Ltd. v. Card provided via e-mail by Nancy Barry, Esq., 164. N.Y. C.P.L.R. 3408(b). Corp., 793 N.Y.S.2d 346 (App. Div. 2005); dated October 26, 2009. Fleet Nat’l Bank v. Olasov, 793 N.Y.S.2d 165. Powell & Roberts, supra note 10; 52 (App. Div. 2005); U.S. Bank Trust 147. Statistics provided by the OCA via Fernandez, supra note 10. e-mail on October 20, 2009 for Queens, N.A. v. Butti, 792 N.Y.S.2d 505 (App. Kings, Richmond, Bronx, Nassau, and 166. New York State Senate, S66007: Relates Div. 2005); Larkville Manor, Inc. v. KBK Suffolk Counties. Westchester statistics to home mortgage loans, the crime of Enters., LLC, 772 N.Y.S.2d 591 (App. Div. separately provided via e-mail by Nancy mortgage fraud, and appropriations 2004); Coppa v. Fabozzi, 773 N.Y.S.2d 604 Barry, Esq., dated October 26, 2009. to the NYS housing trust fund (App. Div. 2004); Republic Nat’l Bank of corporation, http://open.nysenate.gov/ N.Y. v. O’Kane, 764 N.Y.S.2d 635 (App. 148. Tolchinsky & Wertheim, supra note 13. openleg/api/1.0/html/bill/S66007 Div. 2003); Marshall v. Alaliewie, 757 149. 2008 N.J. Sess. Law Serv. ch. 127 (West) (last visited Feb. 15, 2010) (“BUDGET N.Y.S.2d 162, 163 (App. Div. 2003); Tower (codifi ed at N.J. STAT. ANN. § 55:14K-1 to IMPLICATIONS: This bill will not Funding, Ltd. v. David Berry Realty, Inc., -82 (West 2009)). have an impact on State fi nances.”); 755 N.Y.S.2d 413 (App. Div. 2003); M&T New York State Assembly, Summary – Mortgage Corp. v. Ethridge, 751 N.Y.S.2d 150. 2008 N.J. Sess. Law Serv. ch. 127, §§ 9-14 A40007, http://assembly.state.ny.us/ 741 (App. Div. 2002); Credit-Based (West) (codifi ed at N.J. STAT. ANN. § leg/?bn=A40007 (last visited Feb. 15, Asset Servicing & Securitization, LLC v. 55:14K-88 to -93). 2010) (“BUDGET IMPLICATIONS: This Grimmer, 750 N.Y.S.2d 673 (App. Div. 151. 2008 N.J. Sess. Law Serv. ch. 127 (West). bill will not have an impact on State 2002); EMC Mortgage Corp. v. Riverdale Assocs., 737 N.Y.S.2d 114 (App. Div. 152. See Assembly Appropriations Committee fi nances.”). 2002); Fleet Bank v. Pine Knoll Corp., 736 Statement, N.J. STAT. ANN. § 55:14K-82 167. CLARK & BARRON, supra note 16, at 14. N.Y.S.2d 737, 739 (App. Div. 2002); IMC (West 2009). The concept of a forbearance 168. Id. Mortgage Co. v. Griggs, 733 N.Y.S.2d 918 period is being considered in the (App. Div. 2001); Schantz v. O’Sullivan, New York State Legislature. As of this 169. Id. at 14 n.66. 731 N.Y.S.2d 808 (App. Div. 2001); writing, a bill is pending in the New 170. Statistics provided by the OCA by e-mail Paterson v. Rodney, 727 N.Y.S.2d 333 York Assembly—A06756—which will, if on October 20, 2009 for Queens County, (App. Div. 2001); Sansone v. Cavallaro, enacted, amend RPAPL 1304 to impose compiled from the Foreclosure Settlement 727 N.Y.S.2d 516 (App. Div. 2001); United a one-year foreclosure moratorium Conference Part from October 2, 2008 to Companies Lending Corp. v. Hingos, between the time the lender proves October 1, 2009. 724 N.Y.S.2d 134, 135 (App. Div. 2001); entitlement to a judgment and the court Republic Nat’l Bank of N.Y. v. Zito, 721 order that transfers title. The proposed 171. See N.Y. COMP. CODES R. & REGS. tit. 22, § N.Y.S.2d 244 (App. Div. 2001); Simoni v. legislation is expressly subject to a three- 130-1.1a (2007). Time-Line, Ltd., 708 N.Y.S.2d 142 (App. year sunset provision. No corresponding 172. See, e.g., Emigrant Mortgage Co., Inc. v. Div. 2000); Delta Funding Corp. v. Yaede, bill yet appears to be pending in the Turk, 895 N.Y.S.2d 722 (App. Div. 2010); 702 N.Y.S.2d 854 (App. Div. 2000); Sinardi New York State Senate. See generally Cassara v. Wynn, 864 N.Y.S.2d 362 (App. v. Rivera, 689 N.Y.S.2d 236 (App. Div. New York State Assembly, A06756 Div. 2008), leave to appeal dismissed, 874 1999); First Union Nat’l Bank v. Weston, Summary, http://assembly.state.ny.us/ N.Y.S.2d 1 (2009); Countrywide Home 689 N.Y.S.2d 543, 545 (App. Div. 1999); leg/?bn=A06756 (last visited Feb. 15, Loans, Inc. v. Delphonse, 883 N.Y.S.2d 135 Hoffman v. Kraus, 688 N.Y.S.2d 575, 576 2010). (App. Div. 2009); Wash. Mut. Bank, F.A. (App. Div. 1999); Mahopac Nat’l Bank 153. CONN. GEN. STAT. § 49-31l; 49-31m (2008). v. O’Connor, 880 N.Y.S.2d 696 (App. Div. v. Baisley, 664 N.Y.S.2d 345 (App. Div. 2009); Wells Fargo Bank, N.A. v. Webster, 154. Id. § 49-31l(c)(1). 1997); Bercy Investors, Inc. v. Sun, 657 877 N.Y.S.2d 200 (App. Div. 2009); Yildiz N.Y.S.2d 47 (App. Div. 1997); Fed. Home 155. Id. §§ 49-31l(c)(2); 49-31n(b)(1). v. Vural Mgmt. Corp., 877 N.Y.S.2d 466

20 NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 Loan Mortgage Corp. v. Karastathis, 655 Bercy Investors, Inc., 657 N.Y.S.2d at 47; WL 1585773 (Sup. Ct. Apr. 14, 2009) N.Y.S.2d 631 (App. Div. 1997); Chem. Karastathis, 655 N.Y.S.2d at 630; DiNardo, (unreported disposition); LaSalle Bank, Bank v. Bowers, 643 N.Y.S.2d 653 (App. 644 N.Y.S.2d at 779; N. Fork Bank, 639 NA v. Shearon, 881 N.Y.S.2d 599, 602 Div.1996); DiNardo v. Patcam Serv. N.Y.S.2d at 452; Naugatuck Sav. Bank v. (Sup. Ct. 2009); Sutherland v. Remax Station, Inc., 644 N.Y.S.2d 779 (App. Div. Gross, 625 N.Y.S.2d 572 (App. Div. 1995); 2000, 20 Misc.3d 1131(A), No. 51701(U), 1996); N. Fork Bank v. Hamptons Mist Zitel, 619 N.Y.S.2d at 964; Vill. Bank, 601 2008 WL 3307201 (N.Y. Sup. Ct. Aug. 7, Mgmt. Corp., 639 N.Y.S.2d 452 (App. N.Y.S.2d at 940; DiLascio, 574 N.Y.S.2d at 2008) (unreported disposition); Fremont Div.1996); Home Sav. Bank v. Schorr 755; Vitale, 568 N.Y.S.2d at 120. Inv. & Loan v. Edwardsen, 867 N.Y.S.2d 374, No. 51349(U), 2008 WL 2653287 (Sup. Bros. Dev. Corp., 624 N.Y.S.2d 53 (App. 175. See, e.g., Nassau Trust Co., 56 N.Y.2d at Ct. June 18, 2008); Collier v. Home Plus Div. 1995); Governor & Co. of the Bank 183; State Bank of Albany v. Fioravanti, Assocs., 856 N.Y.S.2d 497, No. 52526(U), of Ireland v. Dromoland Castle Ltd., 417 N.E.2d 60, 64 (N.Y. 1980); Ferlazzo v. 2007 WL 4793201 (Sup. Ct. Dec. 21, 2007) 624 N.Y.S.2d 855 (App. Div. 1995); Zitel Riley, 16 N.E.2d 286 (N.Y. 1938); Kitain (unreported disposition); Aurora Loan Corp. v. Fonar Corp., 619 N.Y.S.2d 964 v. Windley, 724 N.Y.S.2d 641 (App. Servs. v. Grant, 851 N.Y.S.2d 56, No. (App. Div. 1994); Vill. Bank v. Wild Oaks Div. 2001); Aurora Loan Servs., LLC v. 51793(U), 2007 WL 2768915 (Sup. Ct. Holding, Inc., 601 N.Y.S.2d 940 (App. Div. Thomas, 862 N.Y.S.2d 89 (App. Div. 2008); Aug. 29, 2007) (unreported disposition); 1993); Silber v. Muschel, 593 N.Y.S.2d 306 U.S. Bank Nat’l Ass’n Tr. U/S 6/01/08 Benefi cial Homeowner Serv. Corp. v. (App. Div. 1993); Metro. Distrib. Servs. (Home Equity Loan Trust 1998-2) v. Butler, 836 N.Y.S.2d 491, No. 50278(U), v. DiLascio, 574 N.Y.S.2d 755 (App. Div. Alvarez, 854 N.Y.S.2d 171 (App. Div. 2007 WL 5192276 (Sup. Ct. Feb. 16, 2007) 1991); Marton Asss. v. Vitale, 568 N.Y.S.2d 2008); Cochran Inv. Co. v. Jackson, 834 (unreported disposition); Bank of N.Y. v. 119, 121 (App. Div. 1991); Gateway State N.Y.S.2d 198 (App. Div. 2007); Sansone Walden, 751 N.Y.S.2d 341 (Sup. Ct. 2002); Bank v. Shangri-La Private Club for v. Cavallaro, 727 N.Y.S.2d 516, 517 (App. Bankers Trust v. McFarland, 743 N.Y.S.2d Women, 493 N.Y.S.2d 226 (App. Div. Div. 2001); First Union Nat’l Bank v. 804 (Sup. Ct. 2002); Bankers Trust Co. of 1985), aff’d, 67 N.Y.2d 627 (1986). Weston, 689 N.Y.S.2d 543, 545 (App. Div. Cal. v. Payne, 730 N.Y.S.2d 200 (Sup. Ct. 173. See, e.g., N.Y. GEN. OBLIG. LAW § 13-105 1999); Sinardi v. Rivera, 689 N.Y.S.2d 236 2001); Gender Servs., Inc. v. Johnson, 439 (McKinney 2009). See also Wells Fargo (App. Div. 1999); Hoffman v. Kraus, 688 N.Y.S.2d 794 (Sup. Ct. 1981). Bank, N.A. v. Marchione, 887 N.Y.S.2d N.Y.S.2d 575 (App. Div. 1999); EBC Amro 615 (App. Div. 2009); LaSalle Bank Nat’l Asset Mgmt. Ltd. v. Kaiser, 681 N.Y.S.2d 177. Real Estate Settlement Procedures Act Ass’n v. Ahearn, 875 N.Y.S.2d 595, 597 539 (App. Div. 1998); 192 Sheridan Corp. of 1974, Pub. L. No. 93-533, 88 Stat. 1724 (App. Div. 2009); Bankers Trust Co. v. v. O’Brien, 676 N.Y.S.2d 351 (App. Div. (codifi ed as amended at 12 U.S.C. §§ Hoovis, 694 N.Y.S.2d 245, 247 (App. 1998); Mahopac Nat’l Bank v. Baisley, 2601-17 (2006)). RESPA requires mortgage Div. 1999); 20 East 17th St. LLC v. 4 M 664 N.Y.S.2d 345 (App. Div. 1997); N. lenders and mortgage brokers, to the Dev. Co., 666 N.Y.S.2d 912 (App. Div. Fork Bank v. Hamptons Mist Mgmt. extent they are not the lender’s exclusive 1998); Kluge v. Fugazy, 536 N.Y.S.2d Corp., 639 N.Y.S.2d 452 (App. Div. 1996); agent, to disclose costs associated with 92 (App. Div. 1988); Bercy Investors, River Bank Am. v. Daniel Equities Corp., federally-related mortgage loans at real Inc. v. Sun, 657 N.Y.S.2d 47 (App. Div. 624 N.Y.S.2d 287, 289 (App. Div. 1995); estate closings, typically through the use 1997); RCR Servs. Inc. v. Herbil Holding Mass. Mut. Life Ins. Co. v. Transgrow of a standard “HUD-1” form. 12 U.S.C Co., 645 N.Y.S.2d 76 (App. Div. 1996); Realty Corp., 475 N.Y.S.2d 418 (App. §§ 2603, 2604(c) (2006). See also 24 C.F.R. Countrywide Home Loans, Inc. v. Taylor, Div. 1984); Fremont Inv. & Loan v. Haley, § 3500.7 (2009). See generally Fremont 843 N.Y.S.2d 495, 497 (Sup. Ct. 2007). 889 N.Y.S.2d 505, No. 51186(U), 2009 WL Inv. & Loan v. Haley, 889 N.Y.S.2d 1636915, at *1 (Sup. Ct. June 11, 2009) 505, No. 135592007, 2009 WL 1636915 174. See Nassau Trust Co. v. Montrose (unreported disposition). (Sup. Ct. June 11, 2009) (unreported Concrete Prods. Corp., 436 N.E.2d 1265 disposition); Cruz v. HSBC Bank, N.A., (N.Y. 1982); State Bank of Albany v. 176. Truth in Lending Act, Pub. L. No. 90- 21 Misc.3d 1143(A), No. 100629/2008, Fioravanti, 417 N.E.2d 60 (N.Y. 1980); 321, tit. I, 82 Stat. 146 (1968) (codifi ed as 2008 WL 5191428 (Sup. Ct. Nov. 12, 2008) HSBC Bank USA v. Merrill, 830 N.Y.S.2d amended at 15 U.S.C. §§ 1601 to 1667f (unreported disposition); Sutherland v. 598, 599 (App. Div. 2007); Wilmington (2006)). TILA was enacted to “assure a Remax 2000, 20 Misc.3d 1131(A), No. Trust Co. v. Ajuda, 730 N.Y.S.2d 871 meaningful disclosure of credit terms 22405/2007, 2008 WL 3307201 (Sup. Ct. (App. Div. 2000); Rose, 861 N.Y.S.2d at so that [consumers] will be able to Aug. 7, 2008) (unreported disposition); 374; Alvarez, 854 N.Y.S.2d at 171; Leone, compare more readily the various credit Bankers Trust v. McFarland, 743 N.Y.S.2d 845 N.Y.S.2d at 513; Neiva, 842 N.Y.S.2d terms available to [them] and avoid the 804 (Sup. Ct. 2002). at 6; Houston, 843 N.Y.S.2d at 660; Jackson, uninformed use of credit.” Deutsche 833 N.Y.S.2d at 542; LaSalle Bank N.A. v. Bank Nat’l Trust v. West, 22 Misc.3d 178. Home Equity Theft Protection Act, 2006 Kosarovich, 820 N.Y.S.2d 144, 145 (App. 1132(A), No. 38830/07, 2009 WL 606661, N.Y. Sess. Laws ch. 308 (codifi ed as Div. 2006); Household Fin. Realty Corp. at *1 (N.Y. Sup. Ct. Feb. 10, 2009) (citing amended at N.Y. BANKING LAW § 595-a of N.Y. v. Winn, 796 N.Y.S.2d 533 (App. Fiorenza v. Fremont Inv. & Loan, No. (McKinney 2009)); N.Y. REAL PROP. LAW Div. 2005); Olasov, 793 N.Y.S.2d at 52; 08-858, 2008 WL 2517139 (S.D.N.Y. June § 265-a). The law is intended to protect Butti, 792 N.Y.S.2d at 505; Marshall, 757 20, 2008)). See generally Mortgage Elec. homeowners in fi nancial distress— N.Y.S. at 163; Etheridge, 751 N.Y.S.2d at Registration Sys., Inc. v. Maniscalco, 848 particularly those who are poor, elderly, 741-42; EMC Mortgage Corp., 737 N.Y.S.2d N.Y.S.2d 766 (App. Div. 2007); JP Morgan or fi nancially unsophisticated—from at 114; Fleet Bank, 736 N.Y.S.2d at 739; Chase Bank v. Tecl, 808 N.Y.S.2d 432 selling their home equity for a fraction Schantz, 731 N.Y.S.2d 808-09; Paterson, 727 (App. Div. 2005); Delta Funding Corp. v. of its fair market value as a result of N.Y.S.2d at 333; Sansone, 727 N.Y.S.2d at Murdaugh, 774 N.Y.S.2d 797 (App. Div. misrepresentations, deceit, intimidation, 517; Hingos, 724 N.Y.S.2d at 135; Credit 2004); Bankers Trust Co. of Cal., N.A. or other unreasonable commercial Based Asset Servicing & Securitization v. Ward, 703 N.Y.S.2d 504 (App. Div. practices by equity purchasers. N.Y. v. Castelli, 711 N.Y.S.2d 624, 625 (App. 2000); Berkeley Fed. Bank & Trust, FSB REAL PROP. LAW § 265-a(1)(a). The statute Div. 2000); Simoni, 708 N.Y.S.2d at 142; v. Siegel, 669 N.Y.S.2d 334 (App. Div. provides that the terms and conditions Weston, 689 N.Y.S.2d at 544; Green Point 1998); Horowitz v. Griggs, 666 N.Y.S.2d of equity purchases be set forth in Sav. Bank v. Spivey, 676 N.Y.S.2d 228 480 (App. Div. 1997); First Trust Nat’l written agreements that must conform (App. Div. 1998); Trustco Bank, Nat’l Ass’n v. Chiang, 662 N.Y.S.2d 136 (App. with statutory requirements regarding Ass’n v. Labriola, 667 N.Y.S.2d 450 (App. Div. 1997); HSBC Bank USA v. Picarelli, print size, the identity of parties, the Div. 1998); Baisley, 664 N.Y.S.2d at 346; 889 N.Y.S.2d 882, No. 51107(U), 2009 consideration recited, the description

NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 21 of the mortgaged property, terms of No. 2009-50996(U), 2009 WL 1425247 Issacharoff, 728 N.Y.S.2d 861 (Sup. Ct. payment, terms of lease or reconveyance, (N.Y. Sup. Ct. May 9, 2009) (unreported 2000). notice of cancellation, and duration. Id. disposition). 180. N.Y. BANKING LAW § 6-l(1) (McKinney § 265-a(3)-(7). Non-compliance with the 179. N.Y. GEN. BUS. LAW § 349. The statute 2009). provisions of RPL 265-a precludes equity prohibits consumer-orientated acts or purchasers from obtaining or enforcing 181. See CLARK & BARRON, supra note 16, at practices that are misleading in a material 17-25. judgments of foreclosure and sale for the way and which cause injury to the party property. See First Nat’l Bank of Chicago seeking relief, Stutman v. Chemical Bank, 182. Editorial, Another Kind of Foreclosure v. Silver, No. 2010-02511, 2010 WL 95 N.Y.2d 24 (2000); N.Y. Univ. v. Cont’l Crisis, N.Y. TIMES, Oct. 9, 2009, at A30. See 1078805 (N.Y. App. Div. Mar. 23, 2010) Ins. Co., 662 N.E.2d 763 (N.Y. 1995); also CLARK & BARRON, supra note 16, at (holding that a plaintiff mortgagee’s Oswego Laborers’ Local 214 Pension 28-30. service of the statutorily-specifi c HETPA Fund v. Marine Midland Bank, 647 notice upon the defendant mortgagor 183. New York State Assembly, Summary - N.E.2d 741 (N.Y. 1995); Negrin v. Norwest A00464, http://assembly.state.ny.us/ with the summons and complaint is Mortgage, 700 N.Y.S.2d 184 (App. Div. a condition precedent that must be leg/?bn=A00464 (last visited Feb. 15, 1999), and has been raised in mortgage 2010). affi rmatively pleaded and proven, and foreclosure actions wherein the loan is that the mortgagee’s failure to do so alleged to be predatory. See generally 184. N.Y. STATE UNIFIED COURT SYS. Report, requires the dismissal of the foreclosure Delta Funding Corp. v. Murdaugh, 774 supra note 11, at 5. See also Foreclosure proceeding); WMC Mortgage Corp. v. N.Y.S.2d 797 (App. Div. 2004); Schimenti Project: Overview, http://www.nycbar. Thompson, 877 N.Y.S.2d 885, 886 (Sup. v. Whitman & Ransom, 617 N.Y.S.2d 742 org/citybarjusticecenter/projects/ Ct. 2009); Deutsche Bank Trust Co. (App. Div. 1994); Wells Fargo Bank, N.A. economic-justice/foreclosure-project/ Ams. v. Eisenberg, 890 N.Y.S.2d 368, No. v. Robinson, 25 Misc.3d 1211(A), No. overview (last visited Oct. 16, 2009). 51271(U), 2009 WL 1789407 (Sup. Ct. 52029(U), 2009 WL 3210306 (N.Y. Sup. Ct. 185. N.Y. STATE UNIFIED COURT SYS. Report, June 23, 2009) (unreported disposition); Oct. 7, 2009); Cruz v. HSBC Bank, N.A., supra note 11, at 5. HSBC Bank USA, N.A. v. Boucher, No. 21 Misc.3d 1143(A), No. 5191428, 2008 186. Id. at 6. 27200-2008, 2009 WL 2355630 (N.Y. Sup. WL 5191428, at *2 (N.Y. Sup. Ct. Nov. 12, Ct. 2009) (unreported disposition); Wash. 2008) (unreported disposition); Fremont 187. Nassau County Bar Association, Legal Mut. Bank v. Sholomov, 862 N.Y.S.2d Inv. & Loan v. Laroc, Misc.3d 1124(A), Services, Mortgage Foreclosure Legal 890, 893-94 (Sup. Ct. 2008); Countrywide No. 52166(U), 2008 WL 4764809 (Sup. Ct. Consultation Clinics, http://www. Home Loans, Inc. v. Taylor, 843 N.Y.S.2d Oct. 8, 2008) (unreported disposition); nassaubar.org/For%20The%20Public/ 495, 498-99 (Sup. Ct. 2007). But see Trustco Banc of Am. Commercial Fin. Corp. v. Legal_Services.aspx (last visited Mar. 29, Bank v. Alexander, 23 Misc. 3d 1129(A), 2010). 188. See, e.g., Steven Gjerstad & Vernon L. Smith, From Bubble to Depression?, WALL ST. J., Apr. 6, 2009, at A15.

Mark C. Dillon (Colgate Uni- Follow NYSBA on Twitter versity B.A., New York University M.A., Fordham Law School J.D.) is visit www.twitter.com/nysba a Justice of the Appellate Division of the New York State Supreme and click the link to follow us and Court, Second Judicial Department. stay up-to-date on the latest news He is also an Adjunct Professor of from the Association New York Practice at Fordham Law School, where he was voted by the school’s student body as Adjunct Professor of the Year in 2009. The author acknowledges the assistance of the following persons involved in the acquisition of certain statisti- cal information used for this article: Chief Administrative Judge Ann T. Pfau, Paul Lewis, Esq. of the New York State Offi ce of Court Admin- istration, Administrative Judge for the Ninth Judicial District Alan D. Scheinkman, and Nancy Barry, Esq. of his offi ce.

Reprinted with permission from the Pace Law Review, Spring 2010, Vol. 30, No. 3.

22 NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 Because Rule 5.7(c) Was Not Adopted, It Is Not Consentable for a Lawyer to Refer a Client to the Lawyer’s Title Abstract Company By Kenneth F. Jurist

In an article which appeared in The New York State Bar Associa- competent and diligent the Spring 2010 issue of the N.Y. Real tion (hereinafter, the NYSBA or the representation to the Property Law Journal, the argument “Bar Association”) published the client, and (iii) the client is made that the New York Rules of Comments, as well as a Preamble and gives informed consent, Professional Conduct and the Com- Scope to the Rules, to provide guid- confi rmed in writing.7 ments thereto (the “Rules” and the ance to attorneys in complying with “Comments,” respectively) permit the Rules. When adopting the Rules, Formal Opinions 752, 753 and a lawyer representing a party in a the Appellate Division did not enact real estate transaction to also have the Preamble, Scope or the Comments 755 an interest in an abstract company (notwithstanding the Bar Associa- The Reporters’ Notes accompa- providing non-ministerial services in tion’s specifi c request that the Court nying Proposed Rule 5.7, prepared the same transaction, so long as the adopt the Comments). In recogni- by the ethics professor serving as the client is provided with appropriate tion thereof, the Bar Association has Associate Reporter for the COSAC disclosure and advice, and consents advised practitioners that “[w]here a subcommittee considering Rule 5.7, thereto.1 For the reasons described confl ict exists between a Rule and the described Proposed Paragraph (c) below, I respectfully disagree with Preamble, Scope or a Comment, the as constituting a rejection by the that argument and would caution Rule controls.”5 Bar Association of Formal Opinions members of the bar against engaging 752, 753 and 755 previously issued Rule 5.7 is entitled “Responsibili- in such activities. by the Bar Association’s Committee ties Regarding Nonlegal Services.” As on Professional Ethics (the “Ethics The Appellate Division of the adopted by the Appellate Division, Committee”).8 New York State Supreme Court ad- it is substantively identical to DR opted the Rules effective as of April 1-106.6 The initial draft of Rule 5.7, In Opinion 752, issued February 1, 2009.2 The Rules replaced the New however, prepared by the Bar As- 22, 2002, the Ethics Committee re- York Code of Professional Respon- sociation’s Committee on Standards sponded to a question as to whether sibility, which became effective in of Attorney Conduct (COSAC) and its previously issued opinions which New York as of January 1, 1970 (the (with minor changes) subsequently held “that in some transactions— “Code”).3 approved by the Bar Association notably real estate transactions—a (hereinafter, “Proposed Rule 5.7”), lawyer who also operates certain In 1983, the American Bar As- included an additional paragraph not ancillary businesses may not provide sociation introduced the Model Rules adopted by the Appellate Division. both legal and nonlegal services in of Professional Conduct (the “Model That paragraph (hereinafter, “Pro- the same transaction, even with the Rules”). As a result of certain amend- posed Paragraph (c)” or “Proposed informed consent of the client” (em- ments to the Code thereafter adopted, Rule 5.7 (c)”) provided as follows: phasis added) continued to apply many concepts contained within following the then recent adoption of the Model Rules were incorporated A lawyer or law fi rm shall DR 1-106. Those previous opinions into the Code. Though signifi cant not, whether directly included multiple opinions in which differences between the two exist, or through an affi liated it was found that a lawyer could not the Rules embrace the structure and entity, provide both legal represent a party in a transaction in substance of the Model Rules. Ac- and nonlegal services to a which the lawyer or his or her spouse cordingly, many rules and defi nitions client in the same matter acted as a real estate broker. They also found in the Code are repeated in the or in substantially related included (1) N.Y. State 621 (1991), in Rules with little or no change thereto matters unless (i) the law- which the Ethics Committee adhered (each disciplinary rule set forth in the yer or law fi rm complies to its decision in N.Y. State 595 (1988) Code is hereinafter referred to as a with Rule 1.8(a) regarding fi nding that “a prohibited confl ict of “DR” and collectively as the “DRs” the provision of the nonle- interest arises that may not be cured by and each disciplinary rule set forth in gal services, (ii) the lawyer the consent of those concerned” (empha- the Rules is hereinafter referred to as or law fi rm reasonably sis added) where a lawyer proposes a “Rule”).4 believes it can provide

NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 23 to refer clients to an abstract company ests, unless a disinterested included the statement that they were which would provide non-ministerial lawyer would believe that made “in the context of paragraph services in the same transaction, and the representation of the (c).” (2) N.Y. State 738 (2001), in which client will not be adversely Notwithstanding that the Appel- the Ethics Committee concluded that affected thereby and the late Division did not include Pro- “the fact that the title abstract agency to client consents to the posed Paragraph (c) when it adopted which a lawyer refers a real estate client representation after full Rule 5.7, the aforesaid Comments [5], is owned, in whole or in part, by the law- disclosure of the implica- [6] and [7] remained a part of the fi nal yer’s spouse, does not insulate the lawyer tions of the lawyer’s inter- Comments to the fi nal version of Rule from the reach of N.Y. State 595 and N.Y. est (emphasis added).12 5.7. Each of said Comments, though, State 621” (emphasis added).9 Thus, notwithstanding the adop- was modifi ed to delete any reference As indicated above, DR 1-106, tion of DR 1-106 (now Rule 5.7), it to Proposed Paragraph (c).16 entitled “Responsibilities Regarding remained the Ethics Committee’s In the aforementioned article Non-legal Services,” is substantively position, as stated in N.Y. State 595, appearing in the N.Y. Real Property identical to Rule 5.7 as adopted by that, with respect to the activities Law Journal, the argument is made the Appellate Division.10 DR 1-106(A) which were the subject of its prior that based on (1) “Commentary” to (4) provided (and Rule 5.7(a)(4) now opinions, “the type and kind of confl ict Proposed Paragraph (c) provided by provides), that the presumption that a posed is so signifi cant that the provision COSAC when the Rules were fi rst person receiving nonlegal services be- of consent is inadequate to protect the cli- proposed in 2005, (2) certain lan- lieves those services to be the subject ent interests which converge with the law guage in Comment [5B] to the fi nal of a client-lawyer relationship (mak- fi rm’s business as an abstract company” version of Rule 5.7, and (3) certain ing those nonlegal services subject to (emphasis added).13 language in the aforementioned the Code and now the Rules) can be In N.Y. State 753, issued Febru- Scope §§ [13] and [6], an attorney, overcome if “the lawyer or law fi rm ary 26, 2002, the Ethics Committee with proper disclosure and consent, has advised the person receiving the confi rmed its Opinion in N.Y. State is able to provide in the same transac- services in writing that the services 752 and went on to clarify what con- tion those legal and nonlegal services are not legal services and that the stituted ministerial services provided which the aforesaid Opinions 752, protection of an attorney-client rela- by an abstract company.14 753, 755 held could not be so com- tionship does not exist with respect to bined even with client consent. That the non-legal services.”11 In N.Y. State 755, issued April 10, argument is supported by neither the 2002, the Ethics Committee conclud- In determining that the adop- Rules as adopted nor said Commen- ed that the satisfaction of the disclo- tion of DR 1-106 did not overturn its tary. Moreover, it is not shared by the sure, advice and consent elements of previous opinions fi nding that the parties involved in the preparation of DR 1-106 will satisfy the requirements provision of certain legal and nonle- the Comments or the adoption of the of DR 5-104 which are necessary to gal services in the same transaction Rules. result in the referral of business by is non-consentable, the Ethics Com- an attorney to an abstract company Proposed Paragraph (c) sought to mittee concluded that even if the in which that attorney has an interest effectuate a signifi cant change in the steps described in the aforesaid DR not being subject to the prohibitions rules of ethics governing attorneys in 1-106(A)(4) were followed, thereby against business transactions between New York and the opinions inter- overcoming the presumption that a lawyer and a client set forth in DR preting those rules. As the Report- those nonlegal services were subject to 5-104. The Ethics Committee, how- ers’ Notes indicated when the Rules the Code, the attorney still remained ever, reiterated its fi ndings in N.Y. were fi rst proposed, “[t]he effect of subject to those DRs governing the State 752 that such transaction must this provision would be to legislatively provision of legal services. Those not violate DR 5-101 A.15 overrule a series of NYSBA Committee DRs included DR 5-101(A) (on which on Professional Ethics Opinions that those previous opinions were based) have prohibited the provision of legal and which provided that: The Comments nonlegal services by a lawyer in the same A lawyer shall not accept Proposed Rule 5.7 included transaction17 (See N.Y. State 752; 753; or continue employment if proposed Comments thereto which 755)” (emphasis added). the exercise of professional made specifi c reference to Proposed Further emphasizing the signifi - judgment on behalf of the Paragraph (c). Proposed Comment [5] cance of the change that the adoption client will be or reasonably to Proposed Rule 5.7 began with the of Proposed Paragraph (c) would may be affected by the law- phrase “[p]aragraph (c) recognizes have caused, the aforesaid COSAC yer’s own fi nancial, business, that” and both proposed Comments Commentary to Proposed Rule 5.7, property, or personal inter- [6] and [7] to Proposed Rule 5.7

24 NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 published on September 30, 2005, diligent representation to in the fi nal version of Rule 5.7, that stated that: “¶ [c] is new and has no each affected client; and… portion of the Commentary is not counterpart in either the current New each affected client gives germane. York Code or the Model Rules” (em- informed consent, con- Moreover, in addition to the phasis added).18 Without, however, fi rmed in writing.19 absence of any clear statutory basis Proposed Paragraph (c) being in- Thus, as was the case with re- for concluding that Opinions 752, cluded in Rule 5.7 as adopted, there is spect to DR 5-101(A), under Rule 1.7 753 and 755 have been overruled, no substantive difference between the an attorney must assess the potential inquiries to representatives of the Bar Code and the Rules that would lead impact on the representation of a Association, COSAC and the Ap- to the conclusion that Opinions 752, client created by the client’s lawyer pellate Division as to whether they 753 and 755 have been overruled. having a fi nancial or other interest believe such to have occurred were As indicated above, Opinions in the matter. Only if it can fi rst be all answered in the negative. 752, 753 and 755 were based on DR reasonably concluded that the impact Representatives of the Bar Asso- 5-101(A). As also indicated above, will not exceed what is proscribed ciation stated that the Ethics Commit- that DR provided that if it could fi rst may an attorney, following appropri- tee did not consider those Opinions be established that a disinterested ate disclosure and advice to the client, overruled as a result of the adoption lawyer could believe that an interest- obtain the client’s consent thereto. As of the Rules. They also indicated ed lawyer’s representation of a client stated in Comment [5B] to Rule 5.7, that though the Ethics Committee could not be adversely affected by the referring to Rule 1.7(b): has reconsidered some of their prior interested lawyer’s own fi nancial or [i]n certain cases, it will not Opinions in light of the adoption of business interests, then, with proper be possible to provide both the Rules, and is considering whether disclosure to and the consent of the legal and nonlegal services certain other Opinions need to be re- client, the interested lawyer could because the lawyer could not vised or rescinded, Opinions 752, 753 provide both legal and nonlegal ser- reasonably believe that he or and 755 are not among them.22 vices in the same transaction. she can represent the client A senior representatives of This restriction against engaging competently and diligently COSAC was specifi cally asked in matters in which an attorney may while providing both legal whether the fact that the aforesaid have a confl ict of interest, and the and nonlegal services in proposed Comments [5], [6] and [7] use of a multi-pronged test to deter- the same or substantially to Proposed Rule 5.7, referencing Pro- mine whether that restriction may be related matter (emphasis 20 posed Paragraph (c), remained in the overcome, is also included within the added). fi nal Comments to Rule 5.7 as adopt- Rules. Rule 1.7 provides as follows: In the absence of (1) the adop- ed (without such cross-references), re- Except as provided in tion of Proposed Paragraph (c), (2) fl ected a belief on the part of COSAC paragraph (b), a lawyer any modifi cation of Opinions 752, that Opinions 752, 753 and 755 had shall not represent a client 753 and 755, or (3) any other differ- been overturned by the Rules. He if a reasonable lawyer ence between the Rules and the Code answered that those Comments were would conclude that: that would provide to the contrary, retained to provide guidance with those certain cases continue to include …there is a signifi cant risk respect to the interplay between Rule providing, in the same transaction, 5.7 and Rules 1.7 and 1.8. In no sense, that the lawyer’s profes- the legal and nonlegal services de- sional judgment on behalf however, was it COSAC’s conclusion scribed in those Opinions. Otherwise, that, absent the adoption of Proposed of a client will be adverse- it would now be consentable for an ly affected by the lawyer’s Paragraph (c), the aforesaid Opinions attorney to both act as a real estate no longer applied. own fi nancial, business, broker and represent a purchaser in property or other personal the same transaction. A representative of the Appellate interest. Division involved in the adoption of Notwithstanding the As far as the Commentary the Rules stated that the Court did existence of a concurrent provided by COSAC in 2005 with not want to tinker with provisions confl ict of interest under respect to Proposed Paragraph (c) is of the Code that had not been in paragraph (a), a lawyer concerned, said Commentary only effect too long and DR 1-106 (which may represent a client if: stated that “paragraph [c] and the is substantively identical to Rule 5.7 accompanying Comments are meant as adopted) had only been adopted (1) the lawyer reasonably to overrule… Opinions 752, 753 and on November 1, 2001. Further, the believes [emphasis added] 21 755” (emphasis added). Without the Appellate Division was not prepared that the lawyer will be able inclusion of Proposed Paragraph (c) to loosen any standard set forth in to provide competent and

NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 25 the Code dealing with confl icts of Endnotes 10. Id. DR 1-106 was one of a number of new rules on multidisciplinary practice interest. Moreover, I was advised that 1. Karl B. Holtzschue, N.Y. Rules of adopted by the Appellate Division, Professional Conduct Make It Consentable after reading the aforesaid Report- effective Nov. 1, 2001. ers’ Notes with respect to the effect of for a Lawyer to Refer a Client to the Lawyer’s Title Abstract Company, N.Y. REAL PROP. 11. Id. Proposed Paragraph (c), the decision L.J. vol. 38, no. 2, at p. 15 (Spring 2010). 12. Id. was made that said paragraph not be 2. The Rules are published as Part 1200 of 13. Id. included in the fi nal version of Rule The Joint Rules of the Appellate Division 5.7 because the Appellate Division (N.Y. COMP. CODES R. & REGS. tit. 22, § 14. N.Y.S.B.A. Comm. on Prof’l Ethics. Op. was unwilling to negate Opinions 1200 (N.Y.C.R.R.)) (WL 2010). No. 753, available at http://www.nysba. org (last visited August 31, 2010). 752, 753 and 755. 3. See NYSBA, New York Rules of Professional Conduct, available at http://www.nysba. 15. N.Y.S.B.A. Comm. on Prof’l Ethics. Op. Finally, it is also my understand- org/AM/Template.cfm?Section=Ethics_ No. 755, available at http://www.nysba. org (last visited August 31, 2010). ing that in response to a question Opinions&Template=/TaggedPage/ posed at a recent presentation of the TaggedPageDisplaycfm&TPLID=7&Cont 16. MODEL RULES OF PROF’L CONDUCT R. 5.7 entID=21454 (last visited Aug. 31, 2010). (2010); see also 22 N.Y.C.R.R. § 1200 R. 5.7 Bar Association’s program entitled 4. See ABA, Center for Professional (WL 2010). “Real Problems, Real Answers: One Responsibility, available at http://www. 17. Bar Report, supra note 7. Year’s Experience with the New York abanet.org/cpr/mrpc/model_rules.html 18. Id. Rules of Professional Conduct,” as to (last visited Aug. 31, 2010). 19. MODEL RULES OF PROF’L CONDUCT R. 1.7 whether Opinions 752, 753 and 755 5. See NYSBA, Resources on Professional (2010); see also 22 N.Y.C.R.R. § 1200 R. 5.7 Standards for Attorneys in New York State, had been overruled by the adoption (WL 2010). of the Rules, a member of the local available at http://www.nysba.org/ Content/NavigationMenuForAttorneys/ 20. Id. panel replied that they were not.23 ProfessionalStandardsforAttorneys/ 21. Bar Report, supra note 7. No one else on the panel contradicted Professional_Standar.htm (last visited that response. Aug. 31, 2010). 22. The persons refernced in this article did not speak to the author for purposes 6. MODEL RULES OF PROF’L CONDUCT R. 5.7 Based on the foregoing, it is my of attribution and therefore are not (2010); see also N.Y. COMP. CODES R. & identifi ed by name. belief that the Comments to Rule 5.7 REGS. tit. 22, § 1200 R. 5.7 (N.Y.C.R.R.) do not result in N.Y. State Opinions (WL 2010). 23. This presentation was held in New York City on June 9, 2010; see http:// 752, 753 and 755 being overruled. As 7. This paragraph was designated Rule www.nysba.org/AM/Template. described in paragraph [13] of the 5.7(d) in a two-volume report, dated Sept. cfm?Section=Events1&Template=/ 30, 2005, issued by COSAC proposing Scope: “[t]he Comments are intended as Conference/ConferenceDescByRegClass. a set of Rules of Professional Conduct cfm&ConferenceID=4117. guides to interpretation, but the text of for adoption in New York (hereinafter each Rule is authoritative” (emphasis COSAC Report), available at http://www. 24. MODEL RULES OF PROF’L CONDUCT R. 5.7 added).24 There is no substantive dif- nysbar.org (last visited August 31, 2010). (Comment at para. 13) (2010); see also 22 After a lengthy period during which the N.Y.C.R.R. § 1200 R. 5.7 (WL 2010). ference between the text of the Code Rules as set forth in that 2005 report were and the text of the Rules governing discussed and, in some cases, revised, on Kenneth F. Jurist is a partner confl icts of interest that would lead Nov. 3, 2007 the Bar Association adopted with the fi rm of Cuddy & Feder LLP, to the conclusion that those Opinions the proposed Rules of Professional Conduct, which were then published in a report practicing in transactional real estate no longer apply. Accordingly, I would prepared by the Bar Association dated from the fi rm’s White Plains offi ce. strongly recommend that, in the same Feb. 1, 2008. In that report said paragraph or similar transactions, New York was re-designated Rule 5.7(c) (hereinafter The author thanks Eon Nichols, practitioners do not provide, and do Bar Report), available at http://www. an associate with the fi rm, and An- nysba.org (last visited August 31, 2010). not seek their client’s consent to their drew Tran, a summer associate with providing, the legal and nonlegal 8. Bar Report, supra note 7. the fi rm and a third year student at services which those Opinions held 9. N.Y.S.B.A. Comm. on Prof’l Ethics. Op. Brooklyn Law School, for their as- cannot be so combined. No. 752, available at http://www.nysba. sistance with this article. org (last visited August 31, 2010).

26 NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 Navigating Buyers and Developers of Newly Constructed Buildings Through an Unprecedented Real Estate Crisis By Adam Leitman Bailey and John M. Desiderio

In late 2008, the real estate sky had laws and technical arguments from a that may enable the buyer to identify a started to fall and fall quickly. As a re- detailed analysis of legal documents basis for rescinding the deal. sult of the loss of fi nancing and wages, and offering plans—to spur nego- Sponsors uniformly give buyers many purchasers in contract to buy a tiations that would lead to closings, the right to one “offi cial” walk-through unit in a newly constructed building wherever possible, despite the crisis. of the premises before the closing date. were either no longer able or willing to The most adept developers real- Contracts normally require that buyers close on their units. To make matters ized that, even if a discount had to be exercise this right no sooner than one worse, the credit markets had been made to close a deal, a sizable portion week before the scheduled closing. In greatly curtailing the fl ow of money of their loan could be paid off with the many cases, the actual walk-through into the hands of developers from pur- sale of each unit. The majority of de- may take place only one or two days chasers. In March 2008, two of the last velopers came to the negotiating table before the closing. Buyers faced with outposts of lending, Fannie Mae and to make deals, and, in many cases, not such pressure often fi nd their new Freddie Mac, put the brakes on loans because of the merits but due to the “dream” home in hardly “move-in” to newly constructed buildings by re- real necessity of having to put people condition. Condo contracts provide quiring sales of at least 70 percent of a into the newly constructed homes. The that the buyers may compile “punch building’s units in order for its buyers available legal tools became opportu- lists” of items that the sponsor agrees to obtain a loan. Although this policy nities for both sides to negotiate. The to repair or correct after the closing, later changed to 50 percent and “sold” principal tools for obtaining rescission but condo offering plans exclude became “in contract” for most lend- of a contract or agreements providing from the sponsor’s “repair or correct” ers’ purposes, the perfect real estate discounted prices (while ensuring that obligations almost all cosmetic defects storm became a hurricane when many a client’s largest fi nancial investment found during the walk-through, and, developers no longer had the capital to was the home he or she was promised) unless a construction defect is deemed deliver the building as promised in the included: (1) The buyers’ contract “material” and non-reparable after the marketing materials. Engineers found terms; (2) the Martin Act (General closing, the Attorney General will not serious problems with many structures Business Law [“GBL”] §§ 352, et seq.) require a sponsor to refund a buyer’s including in some cases the failure to and the regulations promulgated deposit. build in accordance with fi re preven- under it by the Attorney General (13 tion protocols and materials. Accordingly, buyers are advised to NYCRR §§ 20.1 et seq.); (3) the private seek access to the building and to their This crisis required that all sides common law fraud action; and (4) the unit through one or more “unoffi cial” battle Goliath in several different Interstate Land Sales Full Disclosure walk-through inspections, well before forms, and this time David had neither Act (“ILSA”), 15 USC §§ 1701, et seq. their closing date, with a consult- a sling, nor a stone or a sword. So real ing engineer (or team of engineers) estate attorneys struck with our pens. The Contract Terms capable of inspecting the building’s We became creative, bold and brave. The most obvious tool to reverse common elements, including its roof, The buyers battled the develop- a deal is the buyer’s contract itself. elevators, mechanical, electrical, and ers and the developers fought off their The typical condo purchase agree- plumbing and heating systems. All lenders. Both sides prayed for govern- ment, drafted for the sponsor’s benefi t, condo contracts expressly provide mental assistance of varying kinds: which buyers in almost all cases that, in addition to the individual unit (a) from Congress to open the credit receive on a “take it or leave it” basis, specifi ed in the agreement, the buyer markets, (b) from the Department of is designed to bind buyers to the deal is also purchasing, together with other Buildings to make sure buildings were and force them to close as early as pos- buyers in that condo, an undivided built safe, and (c) from the Attorney sible after the issuance of the Tempo- interest in all of the building’s common General’s offi ce to enforce the prom- rary Certifi cate of Occupancy (“TCO”). elements. ises made in the offering plans. Typically, buyers fi nd themselves forced to close, under threat of losing Demand should always be made Since neither fi nancial hardship their deposit money, when the build- that the offi cial walk-through include nor changed economic circumstances ing and its promised amenities, in their an inspection of the building’s roof provide legal grounds for rescinding view, are still in a construction mode. and other common elements. The valid contracts, real estate lawyers Nevertheless, the condo contract buyers’ engineers will be looking to enmeshed in this unprecedented set of does provide the buyer with one very determine whether the building-wide circumstances, which continue to affect signifi cant right—the right to a pre- systems are in operational condition the current market, utilized the legal closing inspection of the premises— or materially defective in any way. tools available to them—sophisticated They will be looking to see if the spon-

NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 27 sor’s construction exhibits the skillful to the premises to secure fi nancing for plan. For example, if the fi rst year of workmanship required under (a) the the transaction, the First Department condominium operations stated in the Housing Merchant Implied Warranty held that a question of fact existed as offering plan was November 1, 2008 Law (“HMIW”) (GBL §§ 777, et seq.),1 to whether access to the premises had through October 31, 2009, but a fi rst (b) such limited warranty as the law been denied and whether the denial closing did not take place within that may otherwise permit the sponsor to was a material breach of the contract. twelve-month period, the sponsor is provide where the HMIW does not More recently, in Alligory Business Ltd. obliged (a) to offer all then-current apply, or (c) the common law implied v. 86th & 3rd Owner LLC and Related contract vendees the right to rescind, warranty for new home construction.2 86th & 3rd Owner LLC, New York and (b) to amend the offering plan, to In addition, the engineers will be look- County Supreme Court held (a) that include an amended fi rst year of oper- ing for any apparent violations of the the condo buyers’ causes of action for ation and an amended budget projec- Department of Buildings Code and breach of purchase agreement, rescis- tion for that new fi rst year, for all buy- for any material variations from the sion, and refund of their deposits, for ers who subsequently sign purchase building’s plans and specifi cations (to sponsor’s refusal to allow inspection of the agreements for that development. the extent disclosed in the architect’s common elements, could proceed, and To avoid having to offer the right description of the building contained (b) that “if plaintiffs prove an entitlement of rescission for failing to close within in the offering plan). to inspection of the restricted areas, and the projected fi rst year of operations, upon inspection fi nd material noncompli- While sponsors contend that there some sponsors have appeared to speed ance with the plans and specifi cations is no provision in law or in the con- up construction to obtain the requisite of the building, they may seek to recover tract requiring them to permit such an TCO that enables them to implement damages proved.”4 (Emphasis added). inspection, there also are no provi- the fi rst closing within the twelve- sions in a typical purchase agreement The Martin Act month period projected in their plan. that necessarily preclude buyers from Such speeding-up of construction Although buyers may not sue to conducting such an inspection dur- often results in shoddy fi nishing that rescind their contracts due “solely” ing their “walk through.” Indeed, causes great dissatisfaction and cause to omissions from the offering plan such an inspection is nothing less than for complaint even among buyers of any required disclosures,5 buyers the “due diligence” that any buyer is who do not wish to back out of their may nevertheless seek refunds of their obliged to perform before making a contracts. deposits under terms in their contracts lifetime investment in that new home, and offering plans that are mandated In such cases, there is often reason and which, for lack of doing so, a by the Martin Act and the Attorney to suspect that the “fi rst closing” with- buyer may otherwise be held bound to General’s implementing regulations. in the twelve-month period was done his or her purchase “as is.” with an “insider” friend of the spon- Under 13 NYCRR § 20.3, sponsors Sponsors can be expected also to sor and is therefore a sham closing. are required to state in their offering characterize the demand for such an Where such sham fi rst closings can be plans (which are incorporated into the inspection as a “fi shing expedition” documented, rescission of all contracts purchase agreement) the anticipated intended for no other purpose than necessarily follows, and the sponsor’s commencement date for the fi rst year to fi nd an “excuse” for not closing. subsequent development activities of condominium operations (i.e., the However, persons who buy a new receive special scrutiny and oversight date of fi rst closing) together with the automobile at least get to have a “test from the Attorney General. estimated budget for that fi rst year of drive” before driving the car out of the operations. If the actual or anticipated However, unless the connection dealership. Moreover, once the spon- date of commencement of condomini- between the sponsor and the “in- sor relinquishes control of the build- um operation is delayed more than six sider” is undeniable, the sham nature ing’s Board of Managers, it becomes months from the commencement date of the “fi rst closing” must be proven the responsibility of the residential of the projected budget year, the spon- through litigation in a private lawsuit owner-members of the Board to man- sor is required to amend the offering or through the Attorney General’s age and maintain the building for all plan to disclose revised budget projec- dispute resolution process. The rule unit owners. Given that fact, buyers tions. In such cases, if the amended prohibiting a private cause of ac- clearly have a right to inspect the budget projections exceed the origi- tion under the Martin Act does not building systems they will be respon- nal projections by 25% or more, the preclude a private cause of action for sible for maintaining in the future. sponsor must offer all purchasers the common law fraud where it is alleged There currently are no legal right to rescind and a reasonable time that the sponsor has engaged in a de- precedents that either grant or deny (of not less than 15 days) in which to ceptive course of conduct not consist- the right of the buyer to conduct a exercise that right. ing “solely” in having failed to comply pre-closing inspection of the com- with Martin Act disclosure require- In addition, the sponsor is also mon element building-wide systems. ments.6 Fraudulent conduct will also obliged to offer the buyer the right However, in Andesco, Inc. v. Page,3 subject the sponsor to liability under to rescind if the fi rst closing does not where the buyer contended that the New York’s Deceptive Practices Act occur within twelve months after the seller had improperly denied it access (GBL Article 22-B, §§ 349-350).7 anticipated date stated in the offering

28 NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 The Interstate Land Sales Act ing (A) 15% of the purchase price, ers and purchasers in the New York (“ILSA”) excluding any interest owed under the real estate market for many years to contract, or the amount of damages come. In 2009, buyers’ attorneys in New incurred by the seller as a result of the York, for almost the fi rst time in nearly breach, whichever is greater, from (B) forty years, had reason to seek the Endnotes the total amount paid by the buyer, protections and remedies provided to 1. See Fumarelli v. Marsam Development, Inc., excluding interest. 92 NY2d 298 (1998) (for buildings of fi ve their clients by ILSA. stories or less). ILSA had been virtually unknown ILSA is a federal consumer protec- 2. See Caceci v. DiCanio Construction Corp. to most New York real estate attorneys tion statute that is intended to protect 72 NY2d 52 (1988) (for buildings of six or since its initial enactment in 1968. more stories). purchasers of new residential housing While there are many reported deci- that purchasers contract to buy prior 3. 137 AD2d 349, 530 NYS2d 111 (1st Dept. sions (in both federal and State courts) 1988). to the completion of construction. It in cases brought under the act in other 4. Slip Opinion, at 5. Index No. 601824/2009 applies to all condominiums that are States, there are only a handful of New (Sherwood, JSC). (Adam Leitman Bailey, not exempted from the act, and it is a York cases involving ILSA. There is not P.C. represents the buyers in Alligory). “strict liability” statute that (a) man- yet an authoritative body of New York 5. See Kerusa v. W10Z/515 Real Estate Limited dates certain registration, disclosure, federal or State case law interpreting Partnership, 12 NY3d 236 (2009). and contractual requirements, and (b) ILSA’s application to New York real 6. See Board of Managers of Woodpoint Plaza prohibits fraudulent and misleading Condominium v. Woodpoint Plaza LLC, Index estate transactions. Whether newly sales practices. No. 12579/06 (Supreme Court, King’s constructed New York condominiums County, 8/10/09) (Demarest, J.) 24 Misc.3d Where ILSA applies, sponsors who are exempt from ILSA is a question 1233A, 2009 WL 2432346. have violated its provisions are liable that is likely to be much litigated in 7. See, e.g., B.S.L. One Owner Corp. v. Key to refund all of the moneys received New York courts over the next few International Manufacturing, Inc., 225 AD2d from buyers who revoke their con- years.9 643, 640 NYS2d 135 (2d Dept. 1996). tracts within two years of the con- 8. See 15 USC § 1703(d)(1). Given N.Y. tract’s execution date, and buyers may Conclusion Real Property Law § 339-o (requiring all condominium unit conveyances to sue, within three years of the contract New York real estate attorneys include “liber, page and date of recording signing, to recover the moneys paid to have used each of the legal tools noted of the declaration”), it is an open question the sponsor, plus costs and reasonable whether any New York condo contract’s in this article to negotiate substantial attorney’s fees. ILSA provides buy- property description can be deemed a price discounts and partial deposit ers’ attorneys with a powerful new valid legal description acceptable for refunds for their buyer clients. Faced recording before the fi ling of the condo weapon to use against the sponsor. with meeting urgent fi nancial obliga- declaration. The primary ILSA violations tions to construction lenders, and 9. See, e.g., Bodansky v. Fifth on the Park Condo, that provide buyers with the right to needing to complete the most sales LLC, 2010 WL 334985 (S.D.N.Y. 2010). revoke the contract and obtain a full possible, to avoid possible bank- refund of their deposit moneys are: (1) ruptcy and loss of their investments, Adam Leitman Bailey is the failure to give the buyer, in advance many developers have been willing founding partner of Adam Leitman of signing the purchase agreement, a to negotiate contract price reductions. Bailey, P.C., and John M. Desiderio, a Property Report containing informa- They have been less willing to provide partner in the fi rm, is the Chair of the tion required by federal HUD regu- deposit refunds (except for refunds fi rm’s Real Estate Litigation Practice lations, (2) failure to include in the required in the circumstances speci- Group. contract a description of the property fi ed above under the Martin Act or the being purchased that is acceptable partial refunds to defaulting purchas- Reprinted with permission from for recording in the jurisdiction in ers mandated by ILSA). However, the the May 3, 2010 edition of the New which the property is located,8 and most fi nancially sound developers York Law Journal© 2010 ALM Media (3) failure to include a provision in have stood fast and forced purchasers Properties, LLC. All rights reserved. the contract clearly stating that, in the to resort to litigation to obtain redress. Further duplication without permis- event of a buyer’s default, after the Many of these litigations remain pend- sion is prohibited. For information, buyer has paid 15% of the purchase ing. Whatever their ultimate result, the contact 877-257-3382, reprints@alm. price, the seller is obligated to refund outcome in these cases is likely to have com or visit www.almreprints.com. any amount remaining after subtract- great impact on the rights of develop-

Editors’ note: In Bacolitsas et al. v. 86th & 3rd Owner, LLC (USDS SDNY Index No. 09 CIV 7158, decided 9/21/09), a case decid- ed after the submission date of this article, the Court, Judge Castel, held that the condominium sponsors violated ILSA when the sponsors failed to record the Purchase Agreement. The Agreement was not recordable because it was not acknowledged. The Court ordered the sponsors to return the purchasers’ deposit. A prominent New York developer’s attorney referred to the Court’s holding as a “game changer.” (See Josh Barbanel, Buyer’s Remorse Gets Lift, THE WALL STREET JOURNAL, Sept. 23, 2010). The decision could allow hundreds of condo buyers, who have been burned by falling prices, to get their money back. The authors of this article represented the prevailing plaintiffs. The sponsors have indicated they will appeal.

NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 29 Accommodations and Modifi cations in the New York City Housing Court for Litigants with Disabilities By Kevin M. Cremin and Gerald Lebovits

I. Introduction is whether a reasonable accommoda- by Housing Court litigants can be Federal, state, and local statutes, tion or modifi cation will affect the governed by the Americans with outcome of a lawsuit heard in Hous- Disabilities Act (ADA),13 the Reha- rules, and regulations protect the 10 14 rights of people with disabilities.1 ing Court. The second is whether bilitation Act, the Fair Housing Act Housing Court and its policies and (FHA),15 the New York State Human Antidiscrimination laws recognize 16 that disabilities result from the inter- procedures are accessible for litigants Rights Law (NYSHRL), and the with disabilities.11 To ensure that liti- New York City Human Rights Law action of a person’s impairment with 17 the barriers the person faces.2 These gants with disabilities are not being (NYCHRL). barriers can be caused by the “built evicted from their homes because of discriminatory barriers, the answers A. Americans with Disabilities environment,” such as staircases, Act narrow doorways, and inaccessible to both these questions are vital. The ADA prohibits discrimina- bathrooms, or by attitudinal biases, This article discusses the law tion against people with disabilities such as misunderstanding, prejudice, governing the accessibility of hous- 3 in three main contexts: employment, and stigma. Disability-rights laws ing, access to the courts, and attempts public services, and public accom- are designed to eliminate the physical by litigants, attorneys, and judges modations.18 To be eligible for ADA and attitudinal barriers that people in New York to address barriers to protection, a Housing Court litigant with disabilities face when they par- participation by people with disabili- 4 must satisfy the ADA’s defi nition of ticipate in society. ties. Although this article will focus “disability.” Individuals are consid- on the New York City Housing Court, One way disability-rights laws ered “disabled” for ADA purposes much of its content applies to eviction eliminate barriers is by giving people if they (1) have a physical or mental proceedings in every state.12 with disabilities the right to reason- impairment that substantially limits able accommodations and modi- Section II of this article provides one or more major life activity, (2) fi cations of policies, practices, and an introduction to the federal, state, have a record of that impairment, or 5 the built environment. During the and local laws that govern requests (3) are “regarded as” having that im- twenty years since Congress enacted for reasonable accommodations and pairment.19 These three prongs have the Americans with Disabilities modifi cations. The procedure to make been the subject of much litigation, Act, requests for reasonable accom- requests for reasonable accommoda- and, historically, the United States modations have become more and tions and modifi cations is covered Supreme Court has interpreted the more prevalent in various contexts, in Section III, and the challenges ADA’s defi nition of disability nar- including public services and hous- presented by choosing the proper rowly.20 The Supreme Court has held, 6 ing. Finding and keeping adequate forum to challenge denials of requests for example, that the inquiry should housing is often a struggle for people for reasonable accommodations and consider whether medication and 7 with disabilities. This is particularly modifi cations are discussed in Section implements like eyeglasses and hear- true in a city like New York, where IV. Section V discusses examples of ing aids ameliorate the individual’s the housing stock overwhelmingly requests for both substantive and impairment.21 pre-dates the accessible design and procedural accommodations and In 2009, however, Congress unan- construction requirements of the modifi cations made by litigants with 8 imously passed the ADA Amend- Fair Housing Act Amendments and disabilities. Calls for accessibility im- ments Act to overrule the Supreme where the vacancy rate for accessible provements in Housing Court by ad- 9 Court’s narrow interpretation of the and affordable housing is low. Given vocates and lawmakers are detailed defi nition of disability.22 The ADA these factors, it is unsurprising when in Section VI. This article concludes Amendments Act clarifi es that the a person with a disability ends up as with Section VII. a litigant in the Housing Part of the inquiry should not take into account New York City Civil Court, common- II. Statutes Governing the “ameliorative effects of mitigat- 23 ly called the Housing Court. Requests for Reasonable ing measures,” and it incorporates a non-exclusive list of examples of ma- Accommodations and When people with disabilities jor life activities relevant to determine are sued in Housing Court, two Modifi cations whether an individual is disabled.24 questions not generally relevant in Requests for reasonable ac- The ADA Amendments Act also landlord-tenant cases arise. The fi rst commodations and modifi cations lowers the burden facing litigants

30 NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 who plead that they are “regarded requesting the modifi cation is not ity receiving Federal fi nancial assis- as” disabled.25 More generally, the disabled,38 the requested modifi cation tance” and “any program or activity Act provides that “the question of is not “reasonable,”39 or the requested conducted by any [Federal] Executive whether an individual’s impairment modifi cation is not “necessary.”40 The agency or by the United States Postal is a disability under the ADA should covered entity can also prove that the Service.”48 To the extent that the New not demand extensive analysis” and requested modifi cation would con- York State Unifi ed Court System that, instead, “the primary object of stitute an undue burden or a funda- (UCS) and the New York City Hous- attention in cases brought under the mental alteration41 or that the person ing Authority receive federal fund- ADA should be whether entities cov- requesting the modifi cation poses a ing, the Rehabilitation Act applies to ered under the ADA have complied direct threat to the covered entity’s Housing Court and public housing.49 with their obligations.…”26 other users.42 With regard to requests for reason- able accommodations or modifi ca- The ADA has three major titles. The undue burden, fundamental tions, the requirements, defenses, and Title I covers employers of fi fteen or alteration, and direct-threat defenses relief available under the Rehabilita- more people.27 Title II covers public are limited in scope. To prove that a 28 tion Act are essentially the same as services. Title III covers public ac- modifi cation would constitute an un- those under ADA Title II.50 commodations and commercial facili- due burden or a fundamental altera- ties.29 For Housing Court litigants, tion, a public entity must show that The Rehabilitation Act also ap- Titles II and III are the most relevant. the determination was made by “the plies to privately owned housing that head of the public entity or his or her receives federal fi nancial assistance Title II covers public entities, designee,” was “accompanied by a through the HOME Investment Part- which include state and local govern- written statement of the reasons for nerships Program, the Community ments as well as any “department, reaching that conclusion,” and was Development Block Grant Program, agency, special purpose district, or “based on all resources available for or other housing-subsidy programs other instrumentality of a State or 43 30 use in the program.” The covered funded by the Department of Hous- States or local government.” Title entity’s resources are relevant to the ing and Urban Development.51 The II covers Housing Court and its inquiry because the entity generally Rehabilitation Act requires feder- administration. The Supreme Court bears the burden of paying for the ally assisted housing providers to has held that Title II enforces “the 44 31 reasonable modifi cation. If the re- “provid[e] and pay[] for reason- right of access to the courts.” In quested modifi cation would result in able accommodations that involve reaching that decision, the Supreme a fundamental alteration, “the public structural modifi cations to units or Court noted that the ADA’s legisla- entity must take any other action that public and common areas.”52 This is a tive history chronicles a long pattern would not result in such an alteration signifi cant difference between the Re- of discrimination against people with or such burdens but would never- habilitation Act and the FHA because, disabilities by public entities, includ- 32 theless ensure that individuals with as discussed in the following subsec- ing the courts. Title II also covers disabilities receive the benefi ts and tion, the cost of structural modifi ca- housing funded or operated by New services of the program or activity.”45 tions under the FHA is generally York State, New York City, or public- 33 To invoke the direct-threat defense borne by the individual who requests housing authorities. successfully, the covered entity the modifi cation. Title III is potentially relevant for must prove that the person in ques- C. Fair Housing Act individuals who live in private resi- tion poses a “signifi cant risk to the dential units. It covers those portions health or safety of others that cannot The FHA was amended in 1988 to of private housing complexes—such be eliminated by a modifi cation of prohibit discrimination on the basis as rental offi ces and parking, side- policies, practices, or procedures, or of “handicap.”53 The FHA defi nes walks, and restrooms appurtenant to by the provision of auxiliary aids or the term “handicap” in essentially the use of those rental offi ces—that services.”46 Failing to grant a request the same way the ADA defi ned the are open to the general public as pub- for a reasonable modifi cation can term “disability” before the ADA lic accommodations or commercial be costly. A person with a disability Amendments Act.54 Unlike the ADA, facilities.34 Title III does not apply to a whose request for a reasonable modi- the FHA focuses on preventing private residential unit’s interior.35 fi cation is wrongly denied by a public discrimination in buying or renting entity is potentially entitled to injunc- “dwellings.” Entities the ADA covers, such as tive relief, compensatory damages, Housing Court and public housing, and attorney fees.47 Under the FHA, a “dwelling” is are required to provide reasonable “any building, structure, or portion modifi cations for people with dis- B. Rehabilitation Act thereof which is occupied as, or de- 36 signed or intended for occupancy as, abilities. Their failure to do so con- The Rehabilitation Act prohibits 37 a residence by one or more families, stitutes discrimination. A covered discrimination against people with and any vacant land which is offered entity is not obligated to provide a disabilities by “any program or activ- reasonable modifi cation if the person for sale or lease for the construction

NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 31 or location thereon of any such build- ed to provide a reasonable accommo- conditions which prevents the exer- ing, structure, or portion thereof.”55 dation or modifi cation if the person cise of a normal bodily function or is Although there are some exemptions making the request is not disabled, demonstrable by medically accepted from coverage,56 the FHA covers most the requested change is not “reason- clinical or laboratory diagnostic tech- properties involved in New York City able,” or the requested modifi cation niques….”75 The NYSHRL does not Housing Court disputes. is not “necessary.”64 The landlord can contemplate inquiring into whether also prove that the requested accom- the impairment substantially limits a The FHA defi nes discrimina- modation or modifi cation would con- major life activity.76 tion to include refusing to permit stitute an undue burden or a funda- The NYSHRL prohibits discrimi- both reasonable modifi cations and mental alteration65 or that the person 57 nation in selling, renting, or leasing a reasonable accommodations. The requesting the modifi cation poses a housing accommodation.77 The term FHA requires individuals and enti- direct threat to other users of the cov- “housing accommodation” “includes ties owning, managing, selling, or ered entity.66 Additionally, a landlord any building, structure, or portion renting covered dwellings “to per- may condition its grant of a request thereof which is used or occupied or mit, at the expense of the handicapped for a reasonable modifi cation “on the is intended, arranged or designed person, reasonable modifi cations of renter agreeing to restore the inte- to be used or occupied, as the home, existing premises occupied or to rior of the premises to the condition residence or sleeping place of one be occupied by such person if such that existed before the modifi cation, or more human beings.”78 Limited modifi cations may be necessary to reasonable wear and tear excepted.”67 exceptions apply to renting owner- afford such person full enjoyment of A person whose request for a reason- 58 occupied single-family or two-family the premises….” Under the FHA, able accommodation or a reasonable houses.79 The scope of housing the the term “reasonable modifi cation” modifi cation is wrongly denied is NYSHRL covers is slightly broader refers only to a change to a physical potentially entitled under the FHA than what the FHA covers. For or structural element of a covered to injunctive relief,68 compensatory example, although the FHA’s defi ni- dwelling or common area. According damages,69 punitive damages,70 and tion of “dwelling” is limited to “any to the Department of Justice and the attorney fees.71 Department of Housing and Urban building, structure, or portion thereof Development, “[e]xamples of modi- The FHA “does not preempt State which is occupied as, or designed fi cations that typically are reasonable or local law from dealing with the or intended for occupancy as, a include widening doorways to make issue of reasonable accommodations residence,”80 the NYSHRL expands rooms more accessible for persons in for handicapped or disabled persons coverage to include buildings and wheelchairs; installing grab bars in in their residence.”72 The next two structures occupied or intended to be bathrooms; lowering kitchen cabinets subsections will therefore discuss occupied “as [a] home, residence or to a height suitable for persons in the relevant aspects of the New York sleeping place.”81 wheelchairs; adding a ramp to make State Human Rights Law (NYSHRL) Entities the NYSHRL covers, a primary entrance accessible for and the New York City Human such as private and public housing, persons in wheelchairs; or altering a Rights Law (NYCHRL) . are required to provide reasonable walkway to provide access to a public accommodations and modifi cations or common use area.”59 D. New York State Human Rights Law for people with disabilities. The NY- Requests to change rules, poli- SHRL defi nes the term “reasonable The NYSHRL prohibits dis- cies, practices, or services are called accommodation” in a manner specifi c crimination against a wide range of requests for reasonable accommoda- to the realm of employment,82 but it protected classes, including people tions.60 Under the FHA a refusal “to also requires providers of private or with disabilities.73 Under the NY- make reasonable accommodations in public housing “to make reasonable SHRL, like the ADA, the Rehabilita- rules, policies, practices, or services, accommodations in rules, policies, tion Act, and the FHA, people are when such accommodations may be practices, or services, when such disabled if they meet the statutory necessary to afford such person equal accommodations may be necessary criteria for disability, have a record opportunity to use and enjoy a dwell- to afford a person with a disability of having an impairment, or are ing” constitutes discrimination.61 The equal opportunity to use and enjoy regarded as having an impairment.74 landlord is generally responsible for a dwelling.”83 Like the FHA, the The NYSHRL defi nes “disability” paying the costs associated with a NYSHRL requires private or public- more broadly than do the federal reasonable accommodation.62 housing providers to “permit, at the laws discussed earlier in this section. expense of the person with a dis- In particular, the NYSHRL provides The defenses to claims alleg- ability, reasonable modifi cations of that “[t]he term ‘disability’ means (a) ing the wrongful denial of a request existing premises occupied or to be a physical, mental or medical im- for a reasonable accommodation or occupied by the said person, if the pairment resulting from anatomical, modifi cation are similar to the ADA’s modifi cations may be necessary to defenses.63 A landlord is not obligat- physiological, genetic or neurological

32 NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 afford the said person full enjoyment Covered entities have, however, obvious or otherwise known to the of the premises.”84 The defenses to been held under the NYCHRL to covered entity, the covered entity claims alleging a wrongful denial of a be responsible to pay for structural that receives the request may inquire request for a reasonable accommoda- changes.99 The statute specifi es that about the nature and extent of the tion or modifi cation are essentially the covered entity bears the burden of person’s disability before deciding the same as those available under the proving the undue hardship defense whether to grant the request.111 FHA.85 and sets forth factors to evaluate the A request for a reasonable accom- defense.100 Under the NYSHRL, a person modation or modifi cation may be whose request for a reasonable ac- Under the NYSHRL, a person made whenever the person deter- commodation or a reasonable modi- whose request for a reasonable ac- mines that a reasonable accommoda- fi cation is wrongly denied is poten- commodation is wrongly denied tion or modifi cation is necessary.112 tially entitled to injunctive relief,86 is potentially entitled to injunctive Individuals with disabilities may compensatory damages,87 punitive relief,101 compensatory damages,102 request a reasonable accommoda- damages,88 and attorney fees.89 punitive damages,103 and attorney tion or modifi cation when they apply fees.104 for or attempt to purchase housing E. New York City Human Rights or while they reside in the relevant Law III. The Process of housing.113 A request may be made Like the NYSHRL, the NYCHRL Seeking a Reasonable before, during, or after the person prohibits discrimination against Accommodation or with a disability becomes a party to a wide range of protected classes, Modifi cation a Housing Court proceeding or any 90 other lawsuit.114 including people with disabilities. People with disabilities may People are disabled under the NY- themselves request a reasonable ac- With regard to the accessibil- CHRL if they have “any physical, commodation or modifi cation or have ity of Housing Court itself, a person medical, mental or psychological a family member, advocate, or attor- with a disability who is a potential impairment, or a history or record ney ask for one on their behalf.105 If a employee, employee, observer, juror, of such impairment.”91 Because the person with a disability is already a attorney, witness, potential party to defi nition focuses on the existence of party in a Housing Court proceeding a lawsuit, or party to a lawsuit may an impairment alone, the NYCHRL is and has a guardian ad litem (GAL), request that the Housing Court make even broader than the NYSHRL.92 the GAL may also make the request a reasonable accommodation or Like the NYSHRL, the NYCHRL on a person’s behalf.106 modifi cation.115 The UCS has insti- tuted procedures to request reason- prohibits discrimination in selling, A request for a reasonable accom- able accommodations. Requests can renting, or leasing a housing accom- modation or modifi cation may be oral 93 be made to the relevant courthouse’s modation. The NYCHRL defi nes or written, but “it is usually helpful “ADA liaison” in writing, in person, “housing accommodation” the same for both the [person making the re- 94 or by telephone.116 The UCS suggests way the NYSHRL does, and the quest] and the [covered entity] if the that “whenever possible,” requests be NYCHRL also applies to public request is made in writing.”107 Suc- 95 made “well in advance of the court housing. cessful requests include a statement appearance” and include “the type of that (1) the person who is making The NYCHRL requires provid- accommodation needed” as well as the request (or on whose behalf the ers of private and public housing to “relevant information regarding the request is being made) is disabled; provide “reasonable accommoda- court appearance (i.e., court facility 96 (2) the law or laws under which tions” for people with disabilities. address, name of the case, name of the request is made; (3) the specifi c Under the NYCHRL, a “reasonable the judge, part number, date of the nature of the change the person re- accommodation” is an “accommoda- appearance(s), and estimated length quests; and (4) a deadline to respond tion that can be made that shall not of the proceeding).”117 The ADA to the request.108 A covered entity cause undue hardship in the conduct liaison will notify the person with a 97 “has an obligation to provide prompt of the covered entity’s business.” It disability whether the requested ac- responses to reasonable accommoda- therefore encompasses both changes commodation can be granted, wheth- tion requests,” and “[a]n undue delay to policies and procedures as well er the court proposes an alternative in responding to a reasonable accom- as the structural changes to existing accommodation, or whether addi- modation request may be deemed to premises that are called “reason- tional information is necessary.118 If be a failure to provide a reasonable able modifi cations” in the FHA and the court denies the request for a rea- accommodation.”109 NYSHRL. The NYCHRL is less clear sonable accommodation, it will give than the FHA or the NYSHRL about When making the request, the person who made the request a who should pay for these structural individuals with disabilities are not written explanation.119 The decision changes and, if necessary, restore the to deny a request for a reasonable 98 required to provide evidence of their premises to their original condition. disability.110 If the disability is not accommodation handled by an ADA

NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 33 liaison will be made by the chief clerk NYSHRL or NYCHRL may not fi le particular expertise in considering an of the court.120 a claim in a court of record.123 The issue, and ultimate disposition of the FHA, however, allows a complainant summary proceeding may necessarily If a litigant chooses to make a to pursue administrative and civil hinge upon the agency’s fi ndings.”134 request for a reasonable accommoda- court claims until a hearing or trial This is true whether the disability tion directly to a judge, the judge will commences.124 discrimination complaint is being decide whether the request should be 135 121 considered by HUD, the New York granted. The judge may approve If a person with a disability State Division of Human Rights,136 requests for reasonable accommoda- requested a reasonable accommoda- or the New York City Commission tions involving teleconferencing, for tion or modifi cation under Title II of 137 122 on Human Rights. Housing Court example. the ADA or the Rehabilitation Act judges typically require the respon- and the request has been denied, that IV. Where to File a Claim dent to pay use and occupancy dur- person may fi le a complaint with the ing the stay.138 Based on a Denial of a DOJ.125 A complaint must be fi led Request for a Reasonable within 180 days from the date the al- B. Housing Court leged discrimination occurred.126 Accommodation or Individuals may not fi le a Hous- Modifi cation If the claim is based on an FHA ing Court claim based on the denial If the request for a reasonable violation, the complaint must be fi led of a request for a reasonable accom- accommodation or modifi cation is with HUD within one year after the modation or modifi cation unless denied, the person with a disability denial.127 The FHA allows HUD to a summary proceeding is already may fi le an administrative complaint certify state or local public agencies pending against them. A person with or a lawsuit based on that denial. to enforce the FHA if the substantive a disability against whom a summary Depending on the law under which rights protected by the agency, the proceeding has been fi led may assert the request was made, a person with procedures followed by the agency, any applicable claims, defenses, af- a disability may fi le a claim with an the remedies available, and the avail- fi rmative defenses, or counterclaims administrative agency, in state court, ability of judicial review are all sub- based on the ADA, the Rehabilitation or in federal court. A person with a stantially equivalent to those in the Act, the FHA, the NYSHRL, or the disability who is already litigating FHA.128 HUD has certifi ed the New NYCHRL.139 in Housing Court may also assert a York State Division of Human Rights Housing Court “has jurisdiction defense, affi rmative defense, or coun- to receive and handle complaints to entertain any legal or equitable terclaim, or all three, in the Housing about potential FHA violations.129 defense or counterclaim, and can thus Court proceeding based on the al- If the reasonable accommoda- entertain a defense or counterclaim legedly improper denial of a request tion or modifi cation claim is based based on housing discrimination.”140 for a reasonable accommodation or on an alleged NYSHRL violation, Based on the Supremacy Clause, this modifi cation. the person with a disability may is true even of claims based on fed- 141 A. Administrative Agencies fi le a complaint with the New York eral civil-rights statutes. Housing State Division of Human Rights.130 Court, however, often severs these Depending on the relevant law, The complaint must be fi led within claims unless they are intertwined a person with a disability whose one year after the alleged unlawful with the eviction proceeding.142 A request for a reasonable accommoda- discriminatory practice occurred.131 counterclaim that seeks damages tion has been denied may fi le a claim Similarly, if the claim is based on will be denied if it is “found to be with the Department of Justice (DOJ), an alleged NYCHRL violation, the outside the scope of the [summary] the Department of Housing and complaint must be fi led with the New proceeding.”143 Urban Development (HUD), the New York City Commission on Human York State Division of Human Rights, Whether a person decides to as- Rights within one year after the al- or the New York City Commission sert such a claim in Housing Court as leged discrimination.132 on Human Rights. Under all the laws opposed to in state or federal court discussed in Section II, the adminis- If a summary eviction proceed- or with an administrative agency will trative process is optional, and there ing is fi led against a person with a involve a number of considerations. is no exhaustion requirement. The disability who has a pending admin- For example, Housing Court and administrative process is easier, less istrative complaint, Housing Court other state-court judges might be less expensive, and quicker than fi ling or has the discretion to stay the sum- familiar with claims based on federal defending a lawsuit. The downside mary eviction proceeding under Civil civil-rights laws than federal court is that damages awards tend to be Practice Law and Rules (C.P.L.R.) judges.144 A Housing Court litigant smaller for successful administrative 2201 and New York City Civil Court should also consider whether Hous- complaints than those a court might Act § 212.133 Housing Court judges ing Court has the authority to grant award. A person who elects to fi le have stayed summary proceedings the scope of injunctive relief and an administrative claim under the “where an administrative agency has the amount of damages the litigant

34 NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 is seeking.145 That disclosure is not may also assert NYSHRL or NYCHRL enjoin the landlord from initiating an available as of right in Housing Court claims. If the person with a disability eviction proceeding.162 This is so even might also be a relevant consider- is already a Housing Court litigant, if the tenant with a disability has ation.146 A Housing Court litigant the scope of relief a federal court can received a rent demand, termination should also be aware that asserting a grant might be limited based on the notice, or other preliminary, or predi- defense, affi rmative defense, or coun- federal court’s jurisdiction, the Anti- cate notice but the eviction proceed- terclaim based on disability might Injunction Act, the Rooker-Feldman ing has not yet been fi led.163 lead the petitioner to move for dis- doctrine, res judicata, and collateral Federal courts other than the closure to seek information regarding estoppel. United States Supreme Court do the nature and extent of the litigant’s Although Housing Court liti- not have the jurisdiction to review disability.147 gants may fi le a claim in federal court summary-eviction proceedings.164 C. State Court based on the denial of a request The Rooker-Feldman doctrine stands for a reasonable accommodation for the proposition that “federal A claim based on the denial of a or modifi cation, they would likely district courts lack jurisdiction over request for a reasonable accommoda- be unsuccessful if they attempt to suits that are, in substance, appeals tion or modifi cation may also be fi led remove a summary eviction proceed- from state-court judgments.”165 The in a state court other than Housing ing to federal court.155 A number of Second Circuit has explained that the Court. This is true of claims made federal district courts in New York Rooker-Feldman doctrine applies when under the laws discussed in Section have held that “federal courts do not (1) the federal court plaintiff lost in II of this article. Neither Title II of have federal question subject mat- state court; (2) the plaintiff complains the ADA nor the Rehabilitation Act ter jurisdiction over state residential of injuries caused by a state-court specifi es a statute of limitations for landlord-tenant matters.”156 judgment; (3) the plaintiff asks the private actions. A court will there- federal district court to review and fore look to state law and apply the If a tenant with a disability who reject the state-court judgment; and statute of limitations for the most is facing a summary eviction proceed- (4) the state-court judgment was ren- analogous state-law claim.148 In New ing fi les a claim in federal court, the dered before the federal district court York, federal courts have held that tenant may ask the Housing Court to action was commenced.166 Depending the three-year statute of limitations stay the eviction proceeding under on the circumstances of the case and for personal-injury claims applies 157 C.P.L.R. 2201 and 3211(a)(4). The the plaintiff’s claims, federal district to both Title II of the ADA and the tenant may also ask the federal court courts in New York have accepted or Rehabilitation Act.149 The FHA allows to stay the summary eviction pro- rejected the Rooker-Feldman doctrine an aggrieved person to commence a ceeding, but the Anti-Injunction Act when it has been asserted as a juris- civil action in an appropriate federal provides a considerable obstacle: “A dictional defense in FHA actions.167 or state court within two years after court of the United States may not One federal district court in New the alleged discriminatory housing grant an injunction to stay proceed- York has held that the Rooker-Feldman practice.150 The NYSHRL and the ings in a State court except as ex- doctrine does not apply to interlocu- NYCHRL both allow people to assert pressly authorized by Act of Con- tory state-court decisions in summa- claims in state court151 within three gress, or where necessary in aid of its ry-eviction proceedings that do not years after the alleged discriminatory jurisdiction, or to protect or effectuate result in a judgment of possession.168 practice.152 The longer statute-of-lim- its judgments.”158 The ADA, Section itations period is one important way 504 of the Rehabilitation Act, and the Res judicata and collateral estop- in which the NYSHRL and NYCHRL FHA do not contain an express autho- pel might also bar federal actions by differ from the FHA. Individuals with rization to stay state actions, and they Housing Court litigants. For cases in disabilities who are already litigat- are all enforceable in both state and which the Housing Court has entered ing in Housing Court when they fi le federal courts.159 Although a federal a fi nal judgment on the merits, the a claim in a different state court may court might not stay the Housing doctrine of res judicata precludes a request a stay of the summary evic- Court proceeding, it might enjoin the Housing Court litigant “from re-liti- tion proceedings.153 landlord from proceeding with the gating issues that were or could have eviction.160 been raised in that action.”169 On the D. Federal Court other hand, “[c]ollateral estoppel, or The Anti-Injunction Act does A reasonable accommodation or issue preclusion, prevents parties or not apply if a state-court proceed- modifi cation claim may be fi led in their privies from re-litigating in a ing has not been initiated.161 If a federal court if the claim is based on subsequent action an issue of fact or summary proceeding has not yet the ADA, the Rehabilitation Act, or law that was fully and fairly litigated been commenced against a tenant the FHA.154 A person with a disabil- in a prior proceeding.”170 Given the with a disability who has a potential ity who has an independent federal expedited nature and streamlined reasonable-accommodation claim, claim or who is suing an individual procedures of summary proceedings, the tenant may ask a federal court to or entity located in a different state questions have been raised about

NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 35 whether it is fair to apply res judicata dation to use a secondary entrance to tenants or other building occupants, or collateral estoppel when tenants avoid unnecessary anxiety or poten- the landlord might bring a nuisance facing eviction fail to raise viable tial confrontations.181 proceeding against the tenant.190 discrimination claims.171 Perhaps the most common type of People with disabilities may also nuisance proceeding is based on alle- V. Examples of Requests request reasonable modifi cations re- gations of excessive clutter or hoard- for Reasonable garding features of their housing unit, ing.191 Because “hoarding is listed in Accommodations and such as grab bars, freezers, washing DSM-IV as a symptom of obsessive- machines, or air conditioners, or rea- Modifi cations compulsive personality disorder,”192 sonable accommodations about the the connection between these allega- A wide array of potential reason- rules or policies that affect the hous- tions and a tenant’s disability may be able accommodations and modifi ca- 182 ing unit’s features. Project Open strong. tions might be necessary to ensure House, administered by the Mayor’s that litigants with disabilities are not Offi ce for People with Disabilities, Unlike a violation of a substantial being evicted because of discrimina- “removes architectural barriers in obligation of a tenancy, which can be tory barriers in their homes or in the the homes of people with permanent cured, a nuisance generally can be courthouse. Below are examples of mobility impairments.”183 If modifi - cured only if the nuisance conditions substantive and procedural accom- cations to the housing unit will not did not exist for a long time, were modations and modifi cations. suffi ce, a person with a disability may abated if the tenant was given an request a reasonable accommodation opportunity to do so, or are likely to A. Substantive Accommodations to allow that person to be transferred be abated.193 If the alleged behavior and Modifi cations to a more accessible unit.184 results from a disability, tenants can Possibly the most common request a reasonable accommoda- reasonable accommodation request Those with disabilities may also tion.194 Tenants could potentially involves guide dogs,172 hearing request a reasonable accommoda- request that the alleged nuisance be dogs,173 or service dogs.174 A liti- tion to any rule or policy that might excused or that they be given assis- gant generally raises this defense or bar them from having a roommate or tance, the opportunity to cure it, or counterclaim in the context of a a full-time health aide if the room- both.195 Some courts have taken into summary-eviction proceeding for mate’s or aide’s assistance is neces- account a tenant’s disability in stay- sary for the person with a disability a purported violation of a “no pet” 185 ing an eviction under C.P.L.R. 2201 to clause in a lease. These claims will to use and enjoy the housing unit. allow a post-judgment cure period.196 likely be successful if the tenants can If the roommate is necessary only To the extent that the tenant requests prove that they are disabled, that they for fi nancial reasons, the request for a modifi cation of the Housing Court’s a reasonable accommodation will are otherwise qualifi ed to be tenants, 186 general procedures, a request for a that because of their disability it is likely be unsuccessful. The Second stay under Rule 2201 is akin to the necessary for them to keep an animal Circuit has rejected the notion that types of procedural accommodations to use and enjoy the apartment, that the FHA requires housing providers discussed in the next subsection. to grant economic accommodations an accommodation is reasonable, and 187 that the landlord refused to make the to people with disabilities. Often, B. Examples of Procedural requested accommodation.175 Claims requests for economic accommoda- Accommodations tions involve Section 8 vouchers or are often denied if expert testimony Litigants with disabilities some- other public benefi ts.188 Because the or medical documentation does not times ask for reasonable accommoda- NYCHRL was recently amended to support the claimed necessity.176 tions regarding the procedures gener- prohibit discrimination based on ally followed in Housing Court.197 Other requests for reasonable ac- “lawful source of income,” which These requests are sometimes made commodations or modifi cations often includes “income derived from social with regard to testifying, which is focus on the accessibility a building’s security, or any form of federal, state considered to be among the most entrance. People with disabilities or local public assistance or housing stressful aspects of a lawsuit for any may request reasonable accommoda- assistance including section 8 vouch- litigant.198 tions to gain or maintain access to an ers,”189 requests for economic accom- accessible entrance,177 an accessible modations are now likely to become During one trial, a judge granted parking space,178 or an elevator that less necessary for people with dis- a tenant’s request to have a psychia- already exists,179 or they can request abilities in New York City. trist “stand near the witness box to a reasonable modifi cation to create an lend emotional support” because the If a tenant, a member of the accessible entrance by adding a ramp, tenant had a “panic disorder.”199 As tenant’s family, or the tenant’s guest automatic door openers, or other noted in Section III, judges in New engages in a continuous course of architectural features.180 Similarly, York have also, on a case-by-case conduct that threatens the health, tenants with psychiatric disabilities basis, approved telephone conferenc- safety, or comfort of neighboring may request a reasonable accommo- ing “as a way to accommodate people

36 NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 [with disabilities] who cannot leave access to justice and foster a positive ished capacity fi rst”; “[t]elephone or their homes or who will have diffi cul- public perception of the adminis- video appearances and testimony [or] ty accessing the court building.”200 tration of justice in New York.”206 in-home hearings”; “[s]pecial clerks NYCLA convened a conference, The trained to assist litigants with dimin- Accommodations have also New York City Housing Court in the ished capacity to formulate accom- been made with respect to aspects of 21st Century: Can It Better Address modations and to assist in accessing pretrial disclosure. One tenant was the Problems Before It?, “in further- social and legal services”; and “[o]n- allowed to have her therapist pres- ance of that mission.”207 In one of the site support services.”213 ent during a deposition “to provide articles prepared for this conference, 201 Third, they suggest that counsel her with support.” Litigants have Protecting the Rights of Litigants with be provided for all Housing Court lit- successfully requested that, based on Diminished Capacity in New York City igants with disabilities.214 In support their disabilities, they be allowed to Housing Courts,208 Jeanette Zelhof of this proposal, Zelhof et al. argue produce documents and answers to and her co-authors suggest a series of that “[g]overnment-funded counsel interrogatories rather than submit to reforms that could be implemented 202 for litigants with disabilities who an examination before trial. by the Housing Court administration cannot afford an attorney should be a to improve the accessibility of Hous- A number of pro se complaints right under the ADA.”215 There was a ing Court for people with cognitive have been fi led in federal court consensus among Working Group III against the New York City Housing or psychiatric disabilities. 203 of the NYCLA conference that the law Court and Housing Court judges. First, they suggest that litigants supports a general right to counsel Although these claims have been dis- with diminished capacity be identi- for litigants in Housing Court.216 missed, they refl ect frustration with fi ed early in the process.209 To meet Working Group IV recommended the Housing Court procedures and the this goal, they recommend training establishment of “a right to counsel perception that Housing Court is not Housing Court personnel, includ- in Housing Court for parties un- amenable to disability-discrimination ing judges; cross-referencing court able to afford counsel as a means to claims. Some advocates and lawmak- records with those of the New York reduce homelessness in New York ers have suggested potential reforms City Adult Protective Services; requir- City and particularly to protect the or reasonable accommodations that ing landlords and their attorneys to elderly and mentally impaired.”217 In aim to make Housing Court poli- disclose any information they have making this recommendation, they cies and procedures more accessible about a tenant’s disabilities; and emphasized the belief that “represen- for litigants with disabilities. These providing adequate notice to litigants tation by counsel can help to reduce reforms are addressed in the follow- of their right to request a reasonable costs otherwise incurred by society ing section. accommodation.210 During the when pro se litigants and litigants of VI. Calls for Reform by NYCLA conference, one working diminished capacity become home- less.”218 NYCLA’s Board of Directors Advocates and Lawmakers group declined to endorse a new pleading requirement for landlords later “adopted a resolution endorsed Efforts to improve the accessibil- and their attorneys,211 but another by the Justice Center advocating for a ity of courts have focused primar- working group recommended pro- right to counsel for residential tenants ily on removing barriers for people posing and supporting “legislation in Housing Court who are fi nancially with physical disabilities. The United requiring language in the Notice of incapable of retaining counsel.”219 States Access Board, “an independent Petition in a nonpayment or hold- A right-to-counsel program Federal agency devoted to accessibil- over proceeding to alert respondents 204 already exists for elderly litigants in ity for people with disabilities,” of their statutory right to request Housing Court. The New York City formed a Courthouse Access Advi- from the Housing Court reasonable Department for the Aging’s Assigned sory Committee to promote acces- accommodation or assistance to ad- Counsel Project “provides legal repre- sibility in the design of courthouses. dress any physical and/or mental sentation and social work assistance Although the Committee’s fi nal impairments.”212 report is titled “Justice for All,” it to senior citizens [in Manhattan, focuses almost exclusively on provid- Second, Zelhof et al. suggest that Brooklyn, and Queens] at risk of 220 ing access for people with physical a variety of accommodations be made eviction.” In 2006, the Assigned disabilities.205 available to litigants with disabilities. Counsel Project, which began in These reasonable accommodations Manhattan and Brooklyn, “assigned The New York County Lawyers’ would include “[p]rominent sig- lawyers and social workers to more Association (NYCLA) has established nage throughout the Housing Court than 200 clients from 60-90 years of a Justice Center “charged with a informing litigants of their rights to age, double the caseload anticipat- fundamental mission: combine the request an accommodation”; “[a] ed.”221 The Assigned Counsel Project resources and talents of the legal quiet waiting room”; “[a]n afternoon has been “recognized by the National profession with non-lawyer commu- calendar”; “[c]alling the case of a Association of Area Agencies on Ag- nity leaders and groups to promote litigant identifi ed as having dimin- ing for its achievement.”222

NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 37 VII. Conclusion provisions have with federal, state, and that a 2006 survey by the Fair Housing local laws. It is possible, however, that Justice Center (FHJC) of “14 recently True access to justice requires that litigants could still use the CRPD as built apartment buildings in Manhattan” physical and attitudinal barriers be persuasive authority to seek reasonable found that “‘none were in compliance eliminated both inside and outside accommodations or modifi cations. with the Federal Housing Act’”) (quoting Cf. Roper v. Simmons, 543 U.S. 551, Diane Houk, Executive Director of the our courthouses. To ensure that indi- 576–78 (2005) (citing the United Nations FHJC). viduals with disabilities receive a fair Convention on the Rights of the 9. N.Y. CITY RENT GUIDELINES BD., Child, which the United States has not hearing in Housing Court, litigants, 2010 HOUS. SUPPLY REPORT (2010), attorneys, and court personnel must ratifi ed, as “respected and signifi cant available at http://www.housingnyc. confi rmation” of the Court’s holding that com/downloads/research/pdf_ be aware of the reasonable accom- the execution of individuals who were modations and modifi cations to reports/10HSR.pdf (last visited Sept. 4, under the age of eighteen when they 2010) (“The [2008 Housing and Vacancy which they are entitled under federal, committed the relevant crime violates the Survey] indicated that New York City’s state, and local law. We must strive to Constitution). housing market remains tight, fi nding make sure that the Housing Court’s 2. This refl ects the “social model” of a citywide vacancy rate of 2.91% in policies and procedures, as well as its disability. See Mary Crossley, The 2008….”). See also Symposium, The Disability Kaleidoscope, 74 NOTRE DAME L. New York City Housing Court in the 21st physical structure, are accessible for REV. 621, 649–65 (1999) (discussing the Century: Can It Better Address the Problems all litigants, including those with dis- medical model, the social model, and the Before It?, 3 CARDOZO PUB. L. POL’Y & abilities. We must also give litigants minority-group model of disability). ETHICS J. 601, 621–623 (2006) (stating that the New York City housing market has with disabilities the opportunity to 3. Id. at 654–56. “virtually no affordable options in the raise the argument, where appropri- 4. See, e.g., Convention, supra note 1, at 4 private sector and a dwindling stock ate, that a reasonable accommoda- (stating the purpose of the Convention of publicly subsidized housing with tion or modifi cation would affect the is to “protect and ensure the full and enormous waiting lists”). equal enjoyment of all human rights and 10. Dadian v. Vill. of Wilmette, 269 F.3d 831, outcome of their Housing Court pro- fundamental freedoms by all persons 838 (7th Cir. 2001) (“Whether a requested ceeding. In this way, Housing Court with disabilities, and to promote respect accommodation is reasonable is highly for their inherent dignity”). can guarantee that litigants with fact-specifi c, and determined on a disabilities are not being evicted from 5. Id. case-by-case basis by balancing the cost their homes because of their impair- 6. See, e.g., JOINT STATEMENT OF THE DEP’T OF to the defendant and the benefi t to the ments or because of the discrimina- HOUS. AND URBAN DEV. AND THE DEP’T OF plaintiff.”). tory barriers they face. JUSTICE: REASONABLE ACCOMMODATIONS 11. Press Release, Legal Services NYC, Legal UNDER THE FAIR HOUS. ACT (2004), available Services NYC Files Suit Seeking Equal at http://www.hud.gov/offi ces/fheo/ Access to Courts for New Yorkers with Endnotes library/huddojstatement.pdf (last visited Disabilities (Jul. 27, 2010) http://www. Sept. 4, 2010) [hereinafter Joint Statement] cidny.org/content/cidnyweb/Files/ 1. The United States recently became (stating that the U.S. Department of CIDNY_Views/LS-NYC_Friedman_ a signatory to the United Nations Housing and Urban Development (HUD) Press_Release_072710.pdf (last visited Convention on the Rights of Persons and the U.S. Department of Justice (DOJ) Sept. 4, 2010) (describing a lawsuit fi led with Disabilities (CRPD). See UNITED both “frequently respond to complaints on behalf of Julian Friedman, who is NATIONS ENABLE: CONVENTION AND alleging that housing providers have physically incapacitated and facing OPTIONAL PROTOCOL SIGNATURES AND violated the Act by refusing reasonable eviction proceedings and was required to RATIFICATIONS (last updated July 19, accommodations to persons with appear in court risking physical collapse, 2010), http://www.un.org/disabilities/ disabilities”). or accept classifi cation as mentally countries.asp?id=166 (last visited Sept. incompetent though he is not). 4, 2010) (noting that the United States 7. See, e.g., THE URBAN INST., DISCRIMINATION became a signatory to the CRPD on AGAINST PERSONS WITH DISABILITIES: 12. See Sarah Keith-Bolden, Down and Out July 30, 2009). A number of the CRPD’s BARRIERS AT EVERY STEP (2005), available and Now Kicked Out: Residential Lease provisions are relevant to the topics this at www.huduser.org/Publications/ Evictions and the Automatic Stay, 23 article covers. See, e.g., Convention on pdf/DDS_Barriers.pdf (last visited EMORY BANKR. DEV. J. 585, 587 (2007) the Rights of Persons with Disabilities Sept. 4, 2010) (fi nding, based on a 2004 (“The summary eviction process is and Optional Protocol, G.A. Res. 61/106, experiment, that over one-third of rental relatively uniform in every state.”); Mary U.N. Doc. A/RES/61/106 (Jan. 24, properties in Chicago were not accessible B. Spector, Tenants’ Rights, Procedural 2007), available at http://www.un.org/ for wheelchair users, and that the level Wrongs: The Summary Eviction and the disabilities/documents/convention/ of discrimination faced by people Need for Reform, 46 WAYNE L. REV. 135, convoptprot-e.pdf (last visited Sept. 4, with disabilities was extremely high, 137 (2000) (“A summary proceeding for 2010) [hereinafter Convention] (defi ning “substantially greater than the levels of eviction exists in every state.”). housing discrimination experienced by “reasonable accommodation” as 13. See generally Americans with Disabilities African Americans and Hispanics”). “necessary and appropriate modifi cation Act of 1990 (ADA), 42 U.S.C. §§ 12101– and adjustments not imposing a 8. There is also evidence that housing 12213 (Consol. LEXIS 2010). disproportionate or undue burden, where units built after the Fair Housing Act 14. See generally Rehabilitation Act of 1973, 29 needed in a particular case, to ensure to Amendments do not comply with U.S.C. § 794 (Consol. LEXIS 2010). persons with disabilities the enjoyment its dictates. See Charles Bagli, U.S. or exercise on an equal basis with others Says Many Apartments Violate Law on 15. See generally Fair Housing Act, 42 U.S.C. of all human rights and fundamental Disabled, N.Y. TIMES, Aug. 18, 2008, at §§ 3601–31 (Consol. LEXIS 2010). freedoms”). Because the United States B1, available at http://www.nytimes. 16. See generally N.Y. EXEC. LAW § 291 Senate has not yet ratifi ed the CRPD, com/2008/08/19/nyregion/19disabled. (Consol. LEXIS 2010). this article will not address the CRPD html (last visited Sept. 4, 2010) (stating and the similarities and differences its

38 NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 17. See generally NEW YORK, N.Y., ADMIN. to hiring and all terms, conditions, and services, meets the essential eligibility CODE tit. 8, ch. 1, § 8-107 (Consol. LEXIS privileges of employment.…This section requirements for the receipt of services or 2010). in [sic] intended to include the range of the participation in programs or activities employment decisions…includ[ing]… provided by a public entity”); see also 42 18. See 42 U.S.C. § 12101 (Consol. LEXIS fringe benefi ts available by virtue of U.S.C. § 12182(b)(2)(A) (Title III defi nes 2010) (“[D]iscrimination against employment….”). “discrimination” to include “a failure individuals with disabilities persists to make reasonable modifi cations in in such critical areas as employment, 28. See 42 U.S.C. §§ 12131–12165. policies, practices, or procedures, when housing, public accommodations, 29. See id. §§ 12181–12189. such modifi cations are necessary to afford education, transportation, such goods, services, facilities, privileges, communication, recreation, 30. Id. § 12131(1). advantages, or accommodations to institutionalization, health services, 31. Tennessee v. Lane, 541 U.S. 509, 531 individuals with disabilities, unless the voting, and access to public services.”). (2004). The Court found that “[T]itle II’s entity can demonstrate that making such 19. See id. § 12102(1) (defi ning the term requirement of program accessibility, modifi cations would fundamentally “disability”). is congruent and proportional to its alter the nature of such goods, services, object of enforcing the right of access to 20. See, e.g., Toyota Motor Mfg., Ky., Inc. v. facilities, privileges, advantages, or the courts.” Id. at 531. In reaching this accommodations”). The term “reasonable Williams, 534 U.S. 184, 196–98 (2002) conclusion, the Court noted that “[t] (holding that the terms “substantially modifi cation” is used differently in he Due Process Clause also requires the the ADA than in the FHA. Compare id. limit” and “major life activity” need to be States to afford certain civil litigants a interpreted strictly). (describing “reasonable modifi cations” ‘meaningful opportunity to be heard’ as changes to “policies, practices, or 21. See, e.g., Sutton v. United Air Lines, by removing obstacles to their full procedures”) with 42 U.S.C. § 3604(f)(3) Inc., 527 U.S. 471, 482 (1999) (holding participation in judicial proceedings.” Id. (describing “reasonable modifi cations” that “if a person is taking measures to at 523 (citing M.L.B. v. S.L.J., 519 U.S. 102, as changes to “existing premises” and correct for, or mitigate, a physical or 132 (1996); Boddie v. Connecticut, 401 “reasonable accommodations” as changes mental impairment, the effects of those U.S. 371, 379 (1971)). to “rules, policies, practices, or services”). measures…must be taken into account 32. See Lane, 541 U.S. at 524–27. when judging whether that person 37. See 42 U.S.C. § 12132 (Title II provides is…‘disabled’ under the [ADA]”). 33. See 42 U.S.C. § 12132 (2010) (“[N]o that “no qualifi ed individual with qualifi ed individual with a disability a disability shall, by reason of such 22. See ADA Amendments Act of 2008, Pub. shall, by reason of such disability, be disability, be excluded from participation L. No. 110–325, 122 Stat. 3553 (codifi ed as excluded from participation in or be in or be denied the benefi ts of services, amended at 42 U.S.C. § 12102 (2010)). denied the benefi ts of the services, programs, or activities of a public entity, 23. See id. (stating that one of the purposes programs, or activities of a public entity, or be subjected to discrimination by any of the Act is “to reject the requirement or be subjected to discrimination by any such entity”); see also 42 U.S.C. § 12182(b) enunciated by the Supreme Court in such entity.”). (2)(A) (defi ning discrimination under Title III to include denying a request for a Sutton v. United Air Lines, Inc., 527 34. See 28 C.F.R. § 36.207(b) (2010) (noting reasonable modifi cation). U.S. 471 (1999), and its companion that coverage of Title III “extends to cases that whether an impairment those elements used to enter the place 38. A covered entity may also show that substantially limits a major life activity of public accommodation, including the person is disabled under the ADA is to be determined with reference to the homeowner’s front sidewalk, if any, only by virtue of being “regarded as” the ameliorative effects of mitigating the door or entryway, and hallways; disabled, because the ADA Amendments measures ”). and those portions of the residence, Act clarifi es that individuals who are 24. See id. (“[M]ajor life activities include, interior or exterior, available to or used disabled based on the “regarded as” but are not limited to, caring for by customers or clients, including prong are not entitled to reasonable oneself, performing manual tasks, restrooms”); see also U.S. DEP’T OF accommodations or modifi cations. See seeing, hearing, eating, sleeping, JUSTICE, ADA TITLE III TECHNICAL ADA Amendments Act of 2008, Pub. walking, standing, lifting, bending, ASSISTANCE MANUAL COVERING PUBLIC L. No. 110–325, § 6(a)(1), 122 Stat. 3553 speaking, breathing, learning, reading, ACCOMMODATIONS AND COMMERCIAL (codifi ed as amended at 42 U.S.C. § 12102 concentrating, thinking, communicating, FACILITIES, § III-1.2000, available at (2010)) (“A covered entity…need not and working.”). http://www.ada.gov/taman3.html (last provide a reasonable accommodation visited Sept. 4, 2010) [hereinafter Title III or a reasonable modifi cation to policies, 25. See 42 U.S.C. § 12102(3)(A) (“An Technical Assistance Manual] (explaining practices, or procedures to an individual individual meets [this requirement] if the that “[a]lthough [T]itle III does not who meets the defi nition of disability in individual establishes that he or she has apply to strictly residential facilities, it section 3(1) solely under subparagraph been subjected to an action prohibited covers places of public accommodation (C) of such section.”). under this Act because of an actual or a within residential facilities. Thus, perceived physical or mental impairment 39. See, e.g., PGA Tour, Inc. v. Martin, areas within multifamily residential whether or not the impairment limits 532 U.S. 661, 683 (2001) (noting that facilities that qualify as places of public or is perceived to limit a major life Title III’s reasonable modifi cation accommodation are covered by the activity.”). provision “contemplates three inquiries: ADA if use of the areas is not limited whether the requested modifi cation is 26. ADA Amendments Act of 2008, § 2(b)(5) exclusively to owners, residents, and ‘reasonable,’ whether it is ‘necessary’ for (2009). their guests”). the disabled individual, and whether it 27. See 42 U.S.C. § 12111(5)(A). Title I of 35. See 28 C.F.R. § 36.207. would ‘fundamentally alter the nature of’ the ADA is relevant for Housing Court the competition”). 36. See 42 U.S.C. § 12131(2) (Title II defi nes a employees and also, potentially, for “qualifi ed individual with a disability” 40. See 42 U.S.C. § 12182(b)(2)(A) (requiring employees for whom their employer as “an individual with a disability who, that a modifi cation requested under Title provides housing. See H.R. REP. NO. with or without reasonable modifi cations III be “necessary”); see also 28 C.F.R. § 101-485, pt. 2, at 54–55 (1990) (“Title to rules, policies, or practices, the 35.130(b)(7) (requiring that a modifi cation I of the [ADA] sets forth prohibitions removal of architectural, communication, requested pursuant to Title II be against discrimination on the basis of or transportation barriers, or the “necessary”). disability by employers…with respect provision of auxiliary aids and

NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 39 41. See 42 U.S.C. § 12182(b)(2)(A) (noting the application of the Rehabilitation Act are race, color, national origin, sex, that an entity covered by Title III to any court system that receives federal familial status, and religion). does not have to make a reasonable funding). 54. See id. § 3602(h) (defi ning “handicap” to modifi cation if “such modifi cation… 50. See Lauren French LaRochelle, Dollars be “(1) a physical or mental impairment would fundamentally alter the nature of and Sense: Designing a Reasonable which substantially limits one or more [the] goods, services, facilities, privileges, Accommodation under Section 504 of the of [a] person’s major life activities, (2) a advantages, or accommodations” the Rehabilitation Act, 69 OHIO ST. L. J. 525, record of having such an impairment, covered entity offers); see also 28 C.F.R. 533–38 (2008); see also 24 C.F.R. § 8.33 or (3) being regarded as having such an § 35.130(b)(7) (requiring a public entity (“Housing policies that the recipient can impairment”). to make a reasonable modifi cation demonstrate are essential to the housing 55. Id. § 3602(b). “unless the public entity can demonstrate program or activity will not be regarded that making the modifi cation…would as discriminatory within the meaning 56. See 24 U.S.C. § 3603(b)(1)–(2) (explaining fundamentally alter the nature of the of this section if modifi cations to them that, in some circumstances, the FHA service, program, or activity”). would result in a fundamental alteration exempts owner-occupied buildings with 42. See 42 U.S.C. § 12182(b)(3) (noting that in the nature of the program or activity no more than four units, single-family a public accommodation is not required or undue fi nancial and administrative housing sold or rented without the use to permit an individual who “poses a burdens.”). of a broker, and housing operated by direct threat to the health or safety of organizations and private clubs that 51. See 24 C.F.R. § 8.3 (defi ning “recipient” limit occupancy to members). See also 24 others” to participate in the services it of federal fi nancial assistance to mean offers); U.S. DEP’T OF JUSTICE, ADA TITLE II U.S.C. § 3607(a) (“Nothing in this title “any State or its political subdivision, shall prohibit a religious organization, TECHNICAL ASSISTANCE MANUAL COVERING any instrumentality of a State or its STATE AND LOCAL GOVERNMENT PROGRAMS association, or society, or any nonprofi t political subdivision, any public or institution or organization operated, AND SERVICES, § II-2.8000, available at private agency, institution, organization, http://www.ada.gov/taman2.html (last supervised or controlled by or in or other entity, or any person to which conjunction with a religious organization, visited Sept. 4, 2010) [hereinafter Title II Federal fi nancial assistance is extended Technical Assistance Manual] (noting that association, or society, from limiting the for any program or activity directly or sale, rental or occupancy of dwellings an individual “who poses a direct threat through another recipient, including to the health or safety of others” is not which it owns or operates for other than any successor, assignee, or transferee of a commercial purpose to persons of the considered a qualifi ed individual with a a recipient, but excluding the ultimate disability under Title II). same religion, or from giving preference benefi ciary of the assistance”); U.S. DEP’T to such persons, unless membership in 43. Title II Technical Assistance Manual, OF HOUS. AND URBAN DEV., ACCESSIBILITY such religion is restricted on account of supra note 42, at § II-2.8000. With regard NOTICE CPD-05-09, SECTION 504 OF THE race, color or national origin.”). to Title III of the ADA, a fundamental REHABILITATION ACT OF 1973 AND THE FAIR alteration is defi ned as “a modifi cation HOUSING ACT AND THEIR APPLICABILITY TO 57. Although this article focuses on that is so signifi cant that it alters the HOUSING PROGRAMS FUNDED BY THE HOME reasonable accommodations and essential nature of the goods, services, INVESTMENT PARTNERSHIPS PROGRAM AND modifi cations, entities covered by facilities, privileges, advantages, or THE COMMUNITY DEVELOPMENT BLOCK the FHA are also prohibited from (1) accommodations offered.” See Title III GRANT PROGRAM, available at http:// printing or publishing an advertisement Technical Assistance Manual, supra note www.nls.gov/offi ces/adm/hudclips/ regarding the sale or rental of a dwelling 34, at § III-4.3600. notices/cpd/05-09c.doc (last visited Sept. that indicates “any preference, limitation, 4, 2010). or discrimination based on…handicap… 44. Title II Technical Assistance Manual, or an intention to make any such supra note 42, at § II-3.6100. 52. Joint Statement, supra note 6, at n.4. preference, limitation, or discrimination.” See U.S. DEP’T OF HOUS. AND URBAN 45. See id. at § II-5.1000. See 24 U.S.C. § 3604(c)–(f)(3) (defi ning DEV., OFFICE OF PUBLIC AND INDIAN “discrimination in the sale or rental 46. 28 C.F.R. § 36.208(b). See also, id. § HOUS., NOTICE PIH 2002-01(HA) of housing and other prohibited 36.208(c) (explaining that the covered available at http://www.hud.gov/ practices” to include: representing to entity must make “an individualized offi ces/fheo/disabilities/PIH02-01. “any person because of…handicap… assessment, based on reasonable pdf (last visited Sept. 4, 2010) (“[Public that any dwelling is not available judgment that relies on current medical Housing Agencies] and other recipients for inspection, sale, or rental when knowledge or on the best available of Federal fi nancial assistance are such dwelling is in fact so available; objective evidence”). required to make and pay for structural inducing or attempting to induce, “[f] 47. See 42 U.S.C. § 12133 (providing modifi cations to dwelling units and or profi t…any person to sell or rent any that the remedies set forth by the common areas when needed as a dwelling by representations regarding Rehabilitation Act also apply to Title reasonable accommodation for tenants or the entry or prospective entry into the II). Damages are available under Title applicants with disabilities.”); U.S. DEP’T neighborhood of a person or persons of III only if the lawsuit is brought by the OF HOUSING AND URBAN DEV., Section a particular…handicap” (also known Attorney General. See id. § 12188; see 504: Frequently Asked Questions, http:// as “blockbusting”); discriminating “in also, Ruth Colker, ADA Title III: A Fragile www.hud.gov/offi ces/fheo/disabilities/ the sale or rental, or to otherwise make Compromise, 21 BERKELEY J. EMP. & LAB. sect504faq.cfm (last visited Sept. 4, 2010) unavailable or deny, a dwelling to any L. 377, 378 (2000) (“When private parties (“Section 504 requires that in making buyer or renter because of a handicap of” bring suit under ADA Title III, they an accommodation, a federally assisted the buyer or renter or a person residing are only able to obtain injunctive relief housing provider will be required to bear with or otherwise associated with the and are not able to obtain monetary costs which do not amount to an undue buyer or renter; discriminating “against damages.”). fi nancial and administrative burden. any person in the terms, conditions, or In application, this means that such a 48. 29 U.S.C. § 794(a) (2010). privileges of sale or rental of a dwelling, housing provider may be required to or in the provision of services or facilities 49. Nancy Lawler Dickhute, Jury Duty spend money to provide legally required in connection with such dwelling, for the Blind in the Time of Reasonable reasonable accommodations.”). because of a handicap of” that person Accommodations: The ADA’s Interface 53. See 42 U.S.C. § 3604(a) (explaining that, in or a person residing with or otherwise with a Litigant’s Right to a Fair Trial, 32 addition to individuals with disabilities, associated with the person; and failing CREIGHTON L. REV. 849 (1999) (discussing other protected classes under the FHA to design and construct multifamily

40 NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 dwellings built after March 13, 1991, in [the tenant] poses to other residents… and that, “to qualify as a disability, an accessible manner). before they may lawfully evict him.”); the condition may manifest itself in Roe v. Hous. Auth. of City of Boulder, one of two ways: (1) by preventing the 58. Id. § 3604(f)(3)(A) (emphasis added). 909 F. Supp. 814, 822–23 (D. Colo. 1995) exercise of a normal bodily function 59. Joint Statement, supra note 6, at 3. (“[A]ssuming [the tenant] is handicapped or (2) by being ‘demonstrable by 60. See John F. Stanton, The Fair Housing or disabled, before he may lawfully be medically accepted clinical or laboratory Act and Insurance: An Update and the evicted [the landlord] must demonstrate diagnostic techniques’”); see also Dennis Question of Disability Discrimination, 31 that no ‘reasonable accommodation’ A. Lalli, Remarks at the Employment HOFSTRA L. REV. 141, 202 n.322 (2002). will eliminate or acceptably minimize Law Litigation Institute at St. John’s See also Michael Allen, We Are Where We any risk [the tenant] poses to other University School of Law: A Comparison Live: Seniors, Housing, Choice, and the Fair residents….”). But see Evans v. UDR, of the Defi nition of “Disability” in the Housing Act, 31 HUM. RTS. 15, 16 (2004). Inc., 644 F. Supp. 2d 675, 685 (E.D.N.C. Americans With Disabilities Act, The 2009) (granting summary judgment for New York State Human Rights Law, 61. 42 U.S.C. § 3604(f)(3)(B). See Joint the prospective landlord after fi nding and The New York City Human Rights Statement, supra note 6, at 6. that the causal connection between a Law (May 11-12, 2001) (“The lack of 62. Marks v. Bld’g Mgmt. Co., Inc., 2002 WL prospective tenant’s mental disability and adjectival qualifi ers like those contained 764473, *4 (S.D.N.Y. 2002) (noting that his criminal conviction “is insuffi cient in the ADA’s defi nition of ‘disability’ a landlord “may be required to incur for purposes of the FHA” to require suggests that the NYSHRL’s defi nition is ‘reasonable costs’ to accommodate a the prospective landlord to modify its much broader than that of the ADA….”) plaintiff’s handicap, he is not required to general prohibition against renting to available at http://www.kmm.com/ provide any accommodation that poses individuals who have a criminal record). articles-38.html (last visited Sept. 4, 2010). an ‘undue hardship or a substantial 67. 42 U.S.C. § 3604(f)(3)(A). 77. See N.Y. EXEC. LAW § 296(5) (Consol. burden’” (quoting Salute v. Stratford LEXIS 2010). Greens Garden Apts., 136 F.3d 293, 300, 68. See id. §§ 3612(g)(3), 3613(c)(1), 3614(d)(1) 1998 U.S. App. LEXIS 1873, *19 (2d Cir. (A). 78. Id. § 292(10). The NYSHRL also applies to “publicly-assisted housing 1998))). But see Evans v. UDR. Inc. 644 F. 69. See id. §§ 3612(g)(3), 3613(c)(1), 3614(d)(1) accommodations,” which includes Supp. 2d 675, 682, 2009 U.S. Dist. LEXIS (B). 31844, *19 (E.D.N.C. 2009). See Joint “public housing” and “housing operated 70. See id. at § 3613(c)(1). Statement, supra note 6, at 8. by housing companies under the 71. See id. at §§ 3612(p), 3613(c)(2), 3614(d)(2). supervision of the commissioner of 63. Kellyann Everly, Comment, A Reasonable housing.” Id. § 292(11). Burden: The Need for a Uniform Burden of 72. United Veterans Mut. Hous. No. 2 Corp. Proof Scheme in Reasonable Accommodation v. N.Y. City Comm’n on Human Rights, 79. See id. § 296(5)(a). Claims, 29 DAYTON L. REV. 37, 60 (2003). 207 A.D.2d 551, 552, 616 N.Y.S.2d 84, 80. 42 U.S.C. § 3602(b) (2010). 85 (2d Dep’t 1994) (citing 42 U.S.C. §§ 64. See Joint Statement, supra note 6, at 8. 81. N.Y. EXEC. LAW § 292(10). 3604(f)(3), (8)). 65. See id. at 7 (“A housing provider 82. See id. § 292(21-e) (“The term ‘reasonable 73. See, e.g., N.Y. EXEC. LAW § 296(5) (Consol. can deny a request for a reasonable accommodation’ means actions taken LEXIS 2010) (prohibiting housing accommodation if the request was not which permit an employee, prospective discrimination based on “race, creed, made by or on behalf of a person with employee or member with a disability color, national origin, sexual orientation, a disability or if there is no disability- to perform in a reasonable manner military status, sex, age, disability, related need for the accommodation. the activities involved in the job or marital status, or familial status”). In addition, a request for a reasonable occupation sought or held and include, accommodation may be denied if 74. See id. § 292(21). Unlike the ADA but are not limited to, provision of providing the accommodation is not Amendments Act, the New York State an accessible worksite, acquisition or reasonable—i.e., if it would impose an Human Rights Law (NYSHRL) does not modifi cation of equipment, support undue fi nancial and administrative appear to exclude people who are merely services for persons with impaired burden on the housing provider or it regarded as having an impairment hearing or vision, job restructuring and would fundamentally alter the nature of from enjoying the right to reasonable modifi ed work schedules; provided, the provider’s operations.”). accommodations. Id. however, that such actions do not impose 66. See 42 U.S.C. § 3604(f)(9) (noting that the 75. Id. an undue hardship on the business, FHA does not require “that a dwelling program or enterprise of the entity from 76. Compare id. with 42 U.S.C. § 12102(1). which action is requested.”). be made available to an individual See Hazeldine v. Beverage Media, Ltd., whose tenancy would constitute a direct 954 F. Supp. 697, 705–06 (S.D.N.Y. 83. Id. §§ 296(2-a)(d)(2), 296(18)(2). threat to the health or safety of other 1997) (granting summary judgment 84. Id. §§ 296(2-a)(d)(1), 296(18)(1). See 42 individuals or whose tenancy would for the employer with respect to the U.S.C. § 3604(f). result in substantial physical damage to employee’s ADA claim but denying it 85. For example, like the Federal Housing the property of others”). If a landlord with respect to the employee’s NYSHRL Authority (FHA), the NYSHRL allows believes that a tenant poses a direct and New York City Human Rights Law a landlord to “condition permission for threat, “the landlord is obligated to either (NYCHRL) claims after concluding that a modifi cation on the renter’s agreeing reasonably accommodate the tenant’s the defi nitions of disability in the state to restore the interior of the premises handicap or show that no reasonable and local law “are substantially broader to the condition that existed before the accommodation will eliminate or than the defi nition of ‘disability’ under modifi cation, reasonable wear and tear acceptably minimize the risk posed by the ADA”); State Div. of Human Rights excepted.” N.Y. EXEC. LAW §§ 296(2-a)(d) the handicapped tenant.” Arnold Murray ex rel. McDermott v. Xerox Corp., 65 (1), 296(18)(1). Constr., L.L.C. v. Hicks, 621 N.W.2d N.Y.2d 213, 218–20, 480 N.E.2d 695, 698 171, 175 (Sup. Ct. S.D. 2001). Accord (1985) (noting that the NYSHRL defi nes 86. See id. § 297(4)(c)(i)–(ii). Roe v. Sugar River Mills Assocs., 820 the term “disability” “more broadly” 87. See id. § 297(4)(c)(iii). F. Supp. 636, 640 (D.N.H. 1993) (“[T]he than the Rehabilitation Act because it Act requires defendants to demonstrate “provides that disabilities are not limited 88. See id. § 297(4)(c)(iv). that no ‘reasonable accommodation’ will to physical or mental impairments, but 89. See id. § 297(10). eliminate or acceptably minimize the risk may also include ‘medical’ impairments”

NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 41 90. See, e.g., N.Y. ADMIN. CODE tit. 8, ch. 1, Law is any requirement or obligation PROP. L. J. 48 (Winter 2009); Jeanette § 8-107(5)(a)(1) (LEXIS through 2010) upon the person with a disability Zelhof, Andrew Goldberg & Hina (prohibiting housing discrimination to pay for or provide the necessary Shamsi, Protecting the Rights of Litigants based on “actual or perceived race, accommodation.…This omission with Diminished Capacity in the New York creed, color, national origin, gender, age, creates a large distinction between the City Housing Courts, 3 CARDOZO PUB. L. disability, sexual orientation, marital provisions of the NYC Law and those POL’Y & ETHICS J. 733 (2006). status, partnership status, or alienage of the FHA and the State Law, and has 107. Joint Statement, supra note 6, at 10. or citizenship status of such person or raised many questions as to who should persons, or because of any lawful source actually bear the cost of providing the 108. Some organizations provide sample of income of such person, or because accommodation.”). reasonable accommodation letters. See, e.g., Rights of Tenants With Disabilities, children are, may be or would be residing 99. See, e.g., Comm’n on Human Rights SOUTH BROOKLYN LEGAL SERVICES (April with such person or persons”). See also ex rel. Raymond v. 325 Coop. Inc., No. N.Y. EXEC. LAW § 296(5). 1, 2007), http://www.sbls.org/index. 1432/98 (N.Y.C. Commission Human php?id=83 (last visited Sept. 4, 2010). 91. N.Y. ADMIN. CODE tit. 8, ch. 1, § 8-102(16) Rights Jan. 12, 1999), 1999 WL 152526, at (a)-(b) (defi ning the term “physical, *1-2 (Comm’n Hum. Rts. Jan. 12, 1999) 109. Joint Statement, supra note 6, at 11. medical, mental, or psychological (requiring respondents to build a ramp, 110. Id. impairment” as “(1) An impairment of install door openers on the elevator any system of the body; including, but doors and on the lobby door, and pay the 111. See id. at 11–14. not limited to: the neurological system; complainant $15,000 in compensatory 112. Id. at 10. the musculoskeletal system; the special damages); In re T.K. Mgmt., Inc. v. 113. See id. sense organs and respiratory organs, Gatling, Index No. 14255/05, at 11- including, but not limited to, speech 14, N.Y. L.J., Nov. 2, 2005, at 19, col. 3 114. See id. organs; the cardiovascular system; the (Sup. Ct. Queens County Oct. 19, 2005) 115. Americans with Disabilities (ADA): reproductive system; the digestive and (unpublished opinion) (denying request Frequently Asked Questions, NYCOURTS. genito-urinary systems; the hemic and to annul New York City Commission GOV, http://www.nycourts.gov/ lymphatic systems; the immunological on Human Rights’s rejection of undue accessibility/faqs.shtml (last visited Sept. systems; the skin; and the endocrine hardship burden defense in requiring 4, 2010) [hereinafter ADA FAQS]. system; or (2) A mental or psychological petitioners to install a ramp, widen impairment”). doors, and install a lift in the lobby of the 116. See id. For the contact information for subject premises). ADA liaisons, see ADA Liaisons Directory, 92. Compare N.Y. ADMIN. CODE tit. 8, ch. 1, § NYCOURTS.GOV, http://www.nycourts. 8-102(16), with N.Y. EXEC. LAW § 292(21). 100. See N.Y. ADMIN. CODE tit. 8, ch. 1, § gov/accessibility/listbycounty.shtml See generally Hazeldine v. Beverage 8-102(18) (explaining that “in making a (last visited Sept. 4, 2010) [hereinafter Media, Ltd., 954 F. Supp. 697, 706 (fi nding determination of undue hardship, the ADA Liaisons Directory]. Other states have that under the NYCHRL, “an individual’s factors include, but are not limited” adopted similar systems for receiving impairment need not substantially limit to: “(a) the nature and cost of the and processing requests for reasonable a major life activity, prevent a normal accommodation”; “(b) the overall accommodations. See, e.g., CAL. RULES bodily function or even be demonstrable fi nancial resources of the facility or the OF CT. § 1.100(b) (2010), available at by medically accepted techniques. It faculties involved in the provision of the http://www.courtinfo.ca.gov/rules/ is enough that the condition impairs reasonable accommodation; the number index.cfm?title=one&linkid=rule1_100 any body system”) (internal citations of persons employed at such facility; the (last visited Sept. 4, 2010) (specifying omitted). effect on expenses and resources, or the that “[i]t is the policy of the courts of impact otherwise of such accommodation 93. See N.Y. ADMIN. CODE tit. 8, ch. 1, § this state to ensure that persons with upon the operation of the facility”; 8-107(5)(a)(1); see also N.Y. EXEC. LAW disabilities have equal and full access “(c) the overall fi nancial resources of §296(5). to the judicial system” and that “each the covered entity; the overall size of superior and appellate court must 94. Compare N.Y. ADMIN. CODE tit. 8, ch. 1, § the business of a covered entity with delegate at least one person to be the 8-102(10) with N.Y. EXEC. LAW § 292(10). respect to the number of its employees, ADA coordinator…to address requests The NYCHRL’s prohibition against the number, type, and location of its for accommodations”). Witnesses, housing discrimination does not apply facilities”; and “(d) the type of operation jurors, attorneys, litigants, or any other to residents of two-family houses if or operations of the covered entity, person “with an interest in attending the owner or a member of the owner’s including the composition, structure, any proceeding before any court of family resides in one of the housing and functions of the workforce of such [California]” can request a reasonable accommodations and if the available entity; the geographic separateness, accommodation “on a form approved by housing accommodation was not administrative, or fi scal relationship of the Judicial Council, in another written advertised. See NEW YORK, N.Y. ADMIN. the facility or facilities in question to the format, or orally.” Id. § 1.100(a)(2)–(c); see CODE tit. 8, ch. 1, § 8-107(5)(a)(4)(1). In covered entity.”). Request for Accommodations by Persons with addition, the NYCHRL does not cover 101. See id. §§ 8-120(a)(7), 8-402(a), 8-502(a). Disabilities and Response, JUDICIAL COUNCIL those who rent a room or rooms in a OF CALIFORNIA, http://www.courtinfo. private housing accommodation where 102. See id. §§ 8-120(a)(8), 8-402(a), 8-502(a). ca.gov/forms/fi llable/mc410.pdf (last the owner resides. See id. § 8-107(5)(a)(4) 103. See id. §§ 8-402(a), 8-502(a). visited Sept. 4, 2010). (2). 104. See id. § 8-502(f). 117. See ADA FAQS, supra note 115, How Do I 95. See id. § 8-102(11). 105. Joint Statement, supra note 6, at 10. Request An Accommodation? 96. Id. § 8-102(18). 106. For the role of Guardian Ad Litems in 118. See id. 97. Id. Housing Court, see generally Gerald 119. See id.; see also Denial of Accommodation 98. See John P. Herrion, Developments Lebovits & Michael Gervasi, Guardians Requested by Court User, NYCOURTS.GOV, in Housing Law and Reasonable and Guardians Ad Litem in New York, 8 http://www.nycourts.gov/accessibility/ Accommodations for New York City RICHMOND COUNTY B. ASS’N J. 7 (Fall PDFs/denial_of_Accommodation.pdf Residents with Disabilities, 27 FORDHAM 2009). See also Gerald Lebovits, Matthias (last visited Sept. 4, 2010) (explaining URB. L.J. 1295, 1296–97 (2000) W. Li & Shani R. Friedman, Guardians that this form is used to comply with (“Conspicuously missing from the NYC Ad Litem in Housing Court, 37 N.Y. REAL the Department of Justice’s regulations

42 NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 regarding the accessibility of public funding to the public entity that is the (citing Society of the N.Y. Hosp. v. San entities) (citing 28 C.F.R. §§ 35.160, 35.164 subject of the complaint.” Id. Filippo, N.Y. L.J., Aug 19, 1982, at 6, col. 1 (Sup. Ct. App. T. 1st Dep’t 1982)); (2010)). 126. See id. § 35.170(b). Moskowitz v. Archer, N.Y. L.J., Feb. 14, 120. See ADA FAQS, supra note 115, How Will I 127. See 42 U.S.C. § 3610(a)(1)(A)(i) (2010). A 1986, at 12, col. 6 (Sup. Ct. App. T. 1st Know My Request Has Been Denied? complaint can be fi led online or, in New Dep’t) (noting that tenant Dakisk had 121. See id.; see also ADA Liaisons Directory, York, by calling (800) 496-4294. See Filing fi led his complaint with HUD earlier supra note 116 (“[I]f a request for Your Housing Discrimination Complaint in the same day that the petitioner had accommodation is made to the judge Online, HUD.GOV, http://www.hud.gov/ fi led the petition against him in Housing during the proceeding, it is that judge offi ces/fheo/online-complaint.cfm (last Court. Thus, presumably, the respondent who will determine the appropriateness visited Sept. 4, 2010). had already received the requisite of the request.”). 128. See 42 U.S.C. § 3610(f)(3)(A). notice before he fi led a complaint with HUD). See Mozaffari v. Schatz, 12 122. See ADA FAQS, supra note 115, Can 129. See Fair Housing Assistance Program Teleconferencing Be Considered As An Misc. 3d 1162A, 1162A, 819 N.Y.S.2d (FHAP) Agencies, HUD.GOV, http:// Accommodation For A Hearing Or Other 211, 211, 2006 N.Y. Slip Op. 51001(U), www.hud.gov/offi ces/fheo/partners/ *2 (Civ. Ct. N.Y. County 2006) (Gerald Court Proceeding? (“[O]n a case-by-case FHAP/agencies.cfm (last visited Sept. 4, basis, and with approval of the judge, Lebovits, J.) (“When a discrimination 2010). Localities can also be certifi ed as complaint implicates the subject living telephone conferencing has been used substantially equivalent. See Substantial as a way to accommodate people who accommodation, a stay will be granted Equivalence Certifi cation, HUD.GOV, http:// cannot leave their homes or who will unless the Petitioner can establish an www.hud.gov/offi ces/fheo/partners/ independent nondiscriminatory basis have diffi culty accessing the court FHAP/equivalency.cfm (last visited building.”). for seeking possession of the subject Sept. 4, 2010) (“Substantial equivalence apartment.”) (citing Ennismore Apts. v. 123. See N.Y. EXEC. LAW § 297(9); N.Y., certifi cation takes place when a State or Gottlieb, N.Y. L.J., Sept. 24, 1992, at 24, R.C.N.Y. tit. 28, ch. 10, § 8-109(f)(ii) local agency applies for certifi cation and col. 5 (Sup. Ct. App. T. 1st Dep’t 1992)). (LEXIS, NY Library, NYCMUN File). the U.S. Department of Housing and But see Crotona Park W. v. Aponte, N.Y. Similarly, individuals who fi le a civil- Urban Development (HUD) determines L.J., Mar. 20, 2002, at 22, col. 2 (Civ. Ct. court action cannot fi le an administrative that the agency enforces a law that Bronx County 2002) (denying motion claim based on the same allegations. provides substantive rights, procedures, for a stay in a nuisance proceeding See N.Y.C.R.R. tit. 9, ch. VIII, § 8-502(a) remedies and judicial review provisions because “[i]f the petitioner can sustain (allowing an aggrieved person to fi le a that are substantially equivalent to its burden of proof that a nuisance exists, civil action “unless such person has fi led the federal Fair Housing Act.”). The the respondent will have no choice but a complaint with the City Commission Rockland County Commission on to either remove the dog from the subject on Human Rights or with the State Human Rights, Geneva Human Rights premises” whether or not HUD fi nds Division of Human Rights with respect Commission, and Westchester County that “petitioner was, in fact, acting in a to such alleged unlawful discriminatory Human Rights Commission have discriminatory manner”). practice”); Madison Park Owners been certifi ed, but the New York City Corp. v. Andrews, 23 Misc. 3d 1107A, Commission on Human Rights has not. 135. See, e.g., Mozaffari, 12 Misc. 3d at 1162A, 886 N.Y.S.2d 67, 2009 N.Y. Slip Op. 819 N.Y.S.2d at 211, 2006 N.Y. Slip Op. 130. See How to File a Complaint, NEW YORK 50628(U), *1–2 (Dist. Ct. Nassau County 51001(U) at *2. STATE DIVISION OF HUMAN RIGHTS, http:// 2009) (dismissing respondent-tenants’ www.dhr.state.ny.us/how_to_fi le_a_ 136. See, e.g., 90-10 149th St. v. Badillo, N.Y. affi rmative defenses and counterclaims complaint.html (last visited Sept. 4, L.J., Mar. 8, 2000, at 30, col. 5 (Civ. Ct. that were simultaneously asserted in a 2010) (explaining the procedure for fi ling Queens County 2000) (“[W]here an complaint fi led with the New York State a complaint with the New York State administrative agency has particular Division of Human Rights because the Division of Human Rights). expertise in considering an issue, and NYSHRL “undisputably [sic] creates an ultimate disposition of the summary election of remedies that are mutually 131. See N.Y. EXEC. LAW § 297(5) (Consol. proceeding may necessarily hinge upon exclusive”). LEXIS 2010). the agency’s fi ndings, a stay of the 124. See 42 U.S.C. § 3612(f) (2010) (“An 132. See N.Y.C.R.R. tit. 9, ch. VIII, § 8-109(e) summary proceeding pending a factual administrative law judge may not (Consol. LEXIS 2010). determination by the administrative agency is preferable.”). continue administrative proceedings 133. See N.Y. C.P.L.R. 2201 (Consol. LEXIS under this section regarding any alleged 2010) (“Except where otherwise 137. See, e.g., 170 W. 85 St. HDFC v. Jones, 176 discriminatory housing practice after prescribed by law, the court in which Misc. 2d 262, 264–70, 673 N.Y.S.2d 831, the beginning of the trial of a civil action an action is pending may grant a stay of 835 (staying a holdover proceeding based commenced by the aggrieved party proceedings in a proper case, upon such on C.P.L.R. 2201 and Civ. Ct. Act § 212 under an Act of Congress or a State terms as may be just.”); 170 W. 85 St. for the New York City Commission on law, seeking relief with respect to that HDFC v. Jones, 176 Misc. 2d 262, 265, 673 Human Rights to decide respondent’s discriminatory housing practice.”); id. § N.Y.S.2d 830, 832 (Civ. Ct. N.Y. County pending complaint based on alleged 3613(a)(3) (“An aggrieved person may 1998) (fi nding that Civ. Ct. Act § 212 discrimination based on disability, sexual not commence a civil action under this “allows the civil court to exercise ‘all of orientation, and marital status); Mora v. subsection with respect to an alleged the powers that the supreme court would Dibartolo, N.Y. L.J., Feb. 8, 1995, at 27, discriminatory housing practice which have in like actions and proceedings.’ col. 2 (Civ. Ct. N.Y. County 1995) (staying forms the basis of a charge issued by the These powers include the imposition of a a “chronic delinquency” holdover Secretary if an administrative law judge stay”). proceeding because “respondents fi led has commenced a hearing on the record a complaint with the City of New York 134. E. 72nd Realty, LLC v. Dakisk, N.Y. under this subchapter with respect to Commission on Human Rights…prior to L.J., Aug. 26, 1998, at 22, col. 6 (Civ. Ct. such charge.”). the commencement of this proceeding”). N.Y. County 1998) (staying holdover 125. See 28 C.F.R. § 35.170(c) (2010). If the proceeding because “the disposition of 138. See Mora, N.Y. L.J., Feb. 8, 1995, at 27, col. complaint is under the Rehabilitation respondent’s [disability] discrimination 2 (requiring the payment of monthly use Act, the person may also fi le directly complaint fi led with HUD is potentially and occupancy “during the pendency of with “any [federal] agency that provides dispositive of the instant proceeding”) the stay”).

NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 43 139. See N.Y. REAL PROP. LAW § 743; Hudson over Tellock’s federal discrimination 149. See Maccharulo v. Gould, 643 F. Supp. View Props. v. Weiss, 59 N.Y.2d 733, claims. New York case law supports the 2d 587, 592–93 (S.D.N.Y. 2009) (“In New 735, 463 N.Y.S.2d 428, 429 (1983); Elisau proposition that Tellock’s federal racial York, claims brought under…ADA Estates v. Schrager, 136 Misc. 2d 289, discrimination claims cannot be brought Title II, and the Rehabilitation Act are 291–92, 518 N.Y.S.2d 712, 714–15 (Civ. in the Civil Court proceeding.”) (citing governed by the three-year statute of Ct. N.Y. County 1987). This is also true Committed Cmty. Assocs., 171 Misc. 2d at limitations provided by Section 214(5) in most other states. See also Using 343, 659 N.Y.S.2d at 693; Smalkowski, 2001 of the New York Civil Practice Law and Reasonable Accommodations to Prevent N.Y. Slip Op. 40071(U) at *8–9)). Rules.”) (citing Gardner v. Wansart, 2006 AZELON ENTER FOR ENTAL WL 2742043, *3 (S.D.N.Y. 2006)). Eviction, B C M 143. Scherer, supra note 140, at § 3:61 (citing HEALTH LAW, http://www.bazelon. Brussels Leasing LP, N.Y. L.J., June 14, 150. See 42 U.S.C. § 3613(a)(1)(A) (2010). org/issues/housing/infosheets/ 2000, at 34, col. 1). fhinfosheet4.html (last visited Sept. 4, 151. See N.Y. EXEC. LAW § 297(9). 2010) [hereinafter Prevent Eviction] (“It 144. See Handling Fair Housing Act Disability 152. See Murphy v. Am. Home Prods. Corp., is now clearly established in most states Claims in the Context of an Imminent or 58 N.Y.2d 293, 306–07, 448 N.E.2d 86, that courts must consider defenses and Pending Eviction Action, BAZELON CENTER 92–93, 461 N.Y.S.2d 232, 238–39 (1983) counterclaims under the Fair Housing FOR MENTAL HEALTH LAW (last visited (citing N.Y. C.P.L.R. § 214(2)) (superseded Sept. 4, 2010). http://www.bazelon.org/ Act as part and parcel of the eviction by statute); N.Y. ADMIN. LAW § 8-502(d) proceeding itself.”). LinkClick.aspx?fi leticket=HxFJ6uskzp (LEXIS, NY Library, NYADMIN File). s%3D&tabid=245 (last visited Sept. 4, 140. ANDREW SCHERER, RESIDENTIAL LANDLORD- 2010) [hereinafter Handling Fair Housing 153. Cf. Gray v. Hernandez, 22 Misc. 3d 678, TENANT LAW IN NEW YORK § 3.61 (2009- Act Disability Claims] (“[S]tate courts are 679, 683–85, 868 N.Y.S.2d 500, 501, 504–05 2010 ed.) (citing Brussels Leasing LP v. sometimes inhospitable forums for FHA (Sup. Ct. N.Y. County 2008) (denying Young, N.Y. L.J., June 14, 2000, at 34, col. claims because the judges lack expertise tenant’s request for an injunction as 1 (Civ. Ct. Queens County)). See id. at § in civil rights law and view these claims untimely after having granted tenant’s 11:39 (“The tenant can raise unlawful as complicated.”). request for a temporary restraining order discrimination as a defense to the to stay a Housing Court proceeding,). proceeding. He/she can also interpose 145. See Broome Realty Assocs. v. Sek Wing a counterclaim for punitive damages Eng, 182 Misc. 2d 917, 918, 703 N.Y.S.2d 154. See 42 U.S.C. §§ 12133 (ADA Title where it can be shown that the eviction is 360, 361 (Sup. Ct. App. T. 1st Dep’t II),12188(a)(1) (ADA Title III); 29 U.S.C. § motivated by unlawful discrimination.”) 1999) (“Except for proceedings for the 794a; id. § 3613(a)(1)(A). (citing Pleasant E. Assocs. v. Cabrera, 125 enforcement of housing standards and 155. See United Mut. Houses, L.P. v. Anduiar, Misc. 2d 877, 883, 480 N.Y.S.2d 693, 697 applications for certain provisional 230 F. Supp. 2d 349, 354 (S.D.N.Y. 2002) (Civ. Ct. N.Y. County 1984)). remedies, the New York City [Housing (remanding to state court because Court] may not grant injunctive relief.”) the tenant was not entitled to remove 141. U.S. CONST. art. VI, cl. 2. See Rodriguez (internal citations omitted); 170 W. 85 St. Housing Court proceeding to federal v. Westhab, Inc., 833 F. Supp. 425, HDFC, 176 Misc. 2d at 267, 673 N.Y.S.2d 426 (S.D.N.Y. 1993) (“[S]tate trial and court). See also Arslan v. Sunnyside Realty at 833 (noting that Housing Court’s Corp., 2007 WL 1350438, at *2 (E.D.N.Y. appellate courts in which eviction “equitable jurisdiction is limited”). controversies are pending have, May 8, 2007); McAllan v. Malatzky, 1998 pursuant to the Supremacy Clause of 146. See Smalkowski, 2001 N.Y. Slip Op. WL 24369, at *2–3 (S.D.N.Y. 1998), aff’d, the Federal Constitution, the jurisdiction 40071(U) at *8 (“Especially since 173 F.3d 845 (2d Cir. 1999). and authority to rule upon federal possession of the apartment is no 156. Galland v. Margules, 2005 WL 1981568, defenses….”). longer at issue here, the court fi nds that at *1 (S.D.N.Y. 2005). See Rosquist v. St. [the respondent’s disability and race Marks Realty Assocs., LLC, 2008 WL 142. See, e.g., Committed Cmty. Assocs. v. discrimination] claims would be better Croswell, 171 Misc. 2d 340, 343, 659 2965435, *2 (E.D.N.Y. 2008); DiNapoli v. litigated in a plenary proceeding, where DiNapoli, 1995 WL 555740, *1 (S.D.N.Y. N.Y.S.2d 691, 693 (2d Dep’t 1997) (“[T]he discovery is available as of right, rather need for speedy dispositions in landlord- 1995); Chiania v. Broadmoor Assocs., than in the balance of this summary 1994 WL 30412, *1 (S.D.N.Y. 1994). tenant matters ordinarily dictates that proceeding in the housing court….”). counterclaims be severed unless they are See generally Gerald Lebovits, Rosalie 157. N.Y. C.P.L.R. 2201 (“Except where in essence a defense to landlord’s claim Valentino, & Rohit Mallick, Disclosure and otherwise prescribed by law, the court or so intertwined with such a defense Disclosure-Like Devices in the New York City in which an action is pending may as to become part and parcel thereof.”); grant a stay of proceedings in a proper Housing Court, 37 N.Y. REAL PROP. L. J. 34 Smalkowski v. Vernon, 2001 N.Y. Slip Op. (Summer 2009). case, upon such terms as may be just.”); 40071(U), *8–9 (Civ. Ct. Kings County 3211(a)(4) (“A party may move for 2001) (“[T]he court fi nds that [the tenant’s 147. See, e.g., Clinton Ass’n for a Renewed judgment dismissing one or more causes federal race and disability discrimination Env’t, Inc. v. Baines, L&T Index No. of action asserted against him on the counterclaims] would be better litigated 099230/2007, at 2–4 (Civ. Ct. N.Y. ground that:…there is another action in a plenary proceeding…rather than County 2009) (Gerald Lebovits, J.) pending between the same parties for in…this summary proceeding in the (unpublished opinion) (granting leave the same cause of action in a court of any housing court, which was created for the to conduct limited disclosure regarding state or the United States; the court need purpose of enforcing state and local laws the respondent’s disability because not dismiss upon this ground but may for the establishment and maintenance of the respondent asserted an affi rmative make such order as justice requires….”); housing standards.”) (internal quotation defense requesting a reasonable see, e.g., Twenty Seven Naught One marks omitted)). See also Tellock v. Davis, accommodation under the FHA). Assocs. v. Tirado, N.Y. L.J., Nov. 29, 2002 WL 31433589, at *4 (E.D.N.Y. 2002) 148. See Bd. of Regents v. Tomanio, 446 U.S. 1995, at 28, col. 5 (Civ. Ct. Bronx County) (“Defendants concede that Tellock’s 478, 488 (1980) (“[W]hen Congress has (staying Housing Court proceeding federal claims cannot be brought in the provided no statute of limitations for a based on a federal sex-discrimination Civil Court…. Their concession is well substantive claim which is created, this lawsuit the respondent fi led after founded, as the Civil Court has ruled Court has nonetheless ‘borrowed’ what it respondent was sued in Housing Court). that it will take jurisdiction over Tellock’s considered to be the most analogous state 158. 28 U.S.C. § 2283; see also Yagan v. state law retaliatory eviction claim, statute of limitations.”). Dougherty, No. 5:10-CV-528 (NPM/ATB), but has declined to take jurisdiction

44 NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 2010 WL 2594790, at *8 (N.D.N.Y June 164. Atl. Coast Line R.R. Co., 398 U.S. at 296 monetary damages were not available in 9, 2010) (stating that “the law is well- (stating that lower federal courts possess earlier Article 78 proceeding). settled that with rare exceptions, a federal no power to sit in direct review of state 170. Marvel Characters, Inc. v. Simon, 310 F.3d court may not enjoin pending state court court decisions). 280, 288-89 (2d Cir. 2002); see Reyes, 661 F. proceedings”). 165. Hoblock v. Albany County Bd. of Elec., Supp. 2d at 276-77 (holding that collateral 159. See, e.g., O’Neill v. Hernandez, No. 08 422 F.3d 77, 84 (2d Cir. 2005). estoppel bars the plaintiffs’ “unlawful eviction claim” but that it does not bar Civ. 1689 (KMW), 2008 WL 2662981, at 166. Green v. Mattingly, 585 F.3d 97, 101 (2d plaintiffs’ FHA claims); Karamoko, 170 F. *4 (S.D.N.Y. June 24, 2008) (“Plaintiff’s Cir. 2009). Note that this standard was Supp. 2d at 377 (holding that plaintiff’s eviction from his apartment would not set by the U.S. Supreme Court in Exxon claims for damages based on alleged ‘seriously impair [this] court’s fl exibility Mobil Corp. v. Saudi Basic Indus. Corp., disability discrimination were not barred and authority to decide Plaintiff’s claims 544 U.S. 280, 284 (2005) (cautioning by collateral estoppel). raised under the Brooke Amendment, that that the Rooker-Feldman doctrine is the FHAA, Title VII, the ADA, Section meant to occupy ‘narrow ground’ and 171. See, e.g., Kimberly E. O’Leary, The 504, or New York law.”) (citing Atl. Coast noting that the Second Circuit previously Inadvisability of Applying Preclusive Line R.R. Co. v. Bhd. of Locomotive applied the doctrine too expansively). Doctrines to Summary Evictions, 30 U. Eng’rs, 398 U.S. 281, 295 (1970)); Sierra TOL. L. REV. 49, 96 (1998) (“Decisional 167. See, e.g., Reyes v. Fairfi eld Props., 661 v. City of New York, 528 F. Supp. 2d law that requires defendants to raise F. Supp. 2d 249, 258-59, 266-677, 272 465, 468 (S.D.N.Y. 2008) (citing Casa claims against plaintiffs in [summary] (E.D.N.Y 2009) (invoking the Rooker- Marie, Inc. v. Super. Ct., 988 F.2d 252, proceedings or forever lose their right to Feldman doctrine to dismiss the plaintiffs’ 261-62 (1st Cir. 1993)); Rodriguez, 833 do so are fundamentally unfair.”). F. Supp. at 428 (“Should a local court “unlawful eviction claim” but refusing to erroneously decline to entertain federal dismiss portions of plaintiffs’ reasonable 172. See N.Y. EXEC. LAW § 292(31) (“The defenses contrary to the Supremacy accommodations claim under the FHA term ‘guide dog’ means any dog that is Clause, reconsideration on its part or and noting that plaintiffs’ “purported trained to aid a person who is blind by consideration of the defense by whatever concession to being a holdover tenant a recognized guide dog training center state court hears appeals from decisions does not mean that plaintiffs cannot or professional guide dog trainer, and is of the local court would be the proper establish as a matter of law that a actually used for such purpose.”). remedy. Collateral interference by a retaliatory motive played a part in the 173. See id. § 292(32) (“The term ‘hearing dog’ United States district court pursuant to holdover proceeding”); Karamoko v. means any dog that is trained to aid a a separate lawsuit involving whether a N.Y. City Hous. Auth., 170 F. Supp. 2d person with a hearing impairment by a state court order should be implemented 372, 376-78 (S.D.N.Y. 2001) (holding recognized hearing dog training center or would be improper under the Anti- that plaintiff’s claims for injunctive and professional hearing dog trainer, and is Injunction Act (28 U.S.C. § 2283) where declaratory relief were barred by the actually used for such purpose.”). a state proceeding dealing with the Rooker-Feldman doctrine but that her same subject matter has commenced, federal claims for damages based on 174. See id. § 292(33) (“The term ‘service unless such interference was expressly alleged disability discrimination were dog’ means any dog that is trained to authorized by federal statute, where not because monetary damages were work or perform specifi c tasks for the necessary in aid of its jurisdiction or to not available in the relevant state court benefi t of a person with a disability protect or effectuate its judgments.”). proceeding). by a recognized service dog training center or professional service dog 160. See Blalock v. Amityville Senior Dev. 168. See Andujar v. Hewitt, No. 02 CIV. trainer, and is actually used for such Corp., N.Y. L.J., Nov. 12, 1999, at 36, col. 3 2223(SAS), 2002 WL 1792065, at *6 purpose.”). Because services performed (E.D. N.Y. 1999) (granting a preliminary (S.D.N.Y. Aug. 2, 2002) (holding Rooker- by emotional-support animals are injunction under the FHA to enjoin Feldman doctrine inapplicable because generally less tangible than the services a landlord from “from continuing to the “decisions” in question were merely performed by guide or hearing dogs, prosecute its pending state court eviction a denial of a motion to dismiss and a requests for reasonable accommodations against [a person with a disability]”); denial of summary judgment instead of involving emotional-support animals Handling Fair Housing Act Disability an ultimate judgment of possession); see or other service dogs are somewhat Claims, supra note 144, at 8 (“Although also Hoblock, 422 F.3d at 89 (noting that more controversial than those involving federal courts may not be able to enjoin “federal suits challenging interlocutory guide and hearing dogs; see also Rebecca state judgments may present diffi cult state court proceedings, some may be Skloot, Creature Comforts, N.Y. TIMES, able to enjoin the parties themselves questions as to whether ‘the state Dec. 31, 2008, available at http:// from proceeding with the eviction.”). But proceedings have “ended” within the www.nytimes.com/2009/01/04/ see Tampa Phosphate R. Co. v. Seaboard meaning of Rooker-Feldman on the federal magazine/04Creatures-t.html?page Coast Line R. Co., 418 F.2d 387, 392 (5th questions at issue’”). wanted=all (last visited Sept. 4, 2010). Cir. 1969) (noting that the Anti-Injunction 169. King v. Fox, 418 F.3d 121, 131 (2d Cir. Act “applies irrespective of whether 175. See Echeverria v. Krystie Manor, LP, No. 2005); see Rosquist, 2008 WL 2965435, at CV 07-1369(WDW), 2009 WL 857629, at the federal injunction is directed to the *4; Springer v. Lincoln Shore Owners, parties or to the state courts.”). *7-8 (E.D.N.Y. Mar. 30, 2009) (denying Inc., No. 03-CV-4676 (FB)(KAM), 2007 summary judgment regarding a 161. Dombrowski v. Pfi ster, 380 U.S. 479, 485 WL 2403165, at *4-5 (E.D.N.Y. Aug. 16, reasonable accommodation claim under (1965). 2007) (holding that plaintiffs’ federal the FHA and the NYSHRL because issues reasonable accommodation claim is 162. See Handling Fair Housing Act Disability of material fact existed with regard to barred by res judicata because they could whether allowing her to keep a service Claims, supra note 144, at 8 (“The Anti- have raised it as a defense in the Housing Injunction Act does not prevent the court dog was a necessary accommodation); Court proceeding, which resulted in Crossroads Apts. Assocs. v. LeBoo, from issuing injunctions against the the termination of their lease). But see institution of state court proceedings but 152 Misc. 2d 830, 833-35, 578 N.Y.S.2d Karamoko, 170 F. Supp. 2d at 377 (holding 1004, 1006-07 (Rochester City Ct. only bars injunctions against ongoing that plaintiff’s federal claims for damages proceedings.”). 1991) (denying petitioner’s motion for based on alleged disability discrimination summary judgment because respondent 163. Id. was not barred by res judicata because

NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 45 raised genuine issues of material fact Article 78 because “there is no evidence (unpublished opinion) (denying request regarding his request for a reasonable in the record to establish that allowing to annul New York City Commission accommodation under the Rehabilitation an exception to the no-pet rule in this on Human Rights’ rejection of undue Act and the FHA by submitting affi davits instance was necessary to afford [the hardship burden defense in requiring from a treating psychiatrist, a clinical tenant] equal opportunity to use and petitioners to install a ramp, widen social worker, and a certifi ed pet-assisted enjoy the apartment”). doors and install a lift in the lobby of the subject premises). therapist stating that the emotional 177. See United States v. Tanski, No. 1:04-CV- support animal was necessary for the 714, 2007 U.S. Dist. LEXIS 23606, at *73-79 181. See Using Reasonable Accommodations to claimant’s use and enjoyment of his (N.D.N.Y. Mar. 30, 2007) (permitting Prevent Eviction, supra note 139 (“The apartment); Ocean Gate Assocs. Starrett FHA reasonable accommodation claim tenant might also ask that the landlord Sys., Inc. v. Dopico, 109 Misc. 2d 774, 775, to survive summary judgment where, allow him to enter and exit the building 441 N.Y.S.2d 34, 35 (Civ. Ct. Kings County among other things, the alleged failure to through a rear door that is normally 1981) (denying a motion for summary make repairs to an existing ramp could reserved for staff, so that the tenant is judgment because the tenant provided, result in liability). able to avoid a high traffi c entrance area among other things, affi davits from a where other tenants congregate and are 178. See Shapiro v. Cadman Towers, Inc., 51 physician and a veterinarian regarding likely to engage him in conversation that F.3d 328, 330 (2d Cir. 1995) (affi rming the “necessary security function” the could lead to a confrontation.”). service dog serves for the tenant). preliminary injunction under the FHA that required defendants to give 182. See, e.g., Hirschmann v. Hassapoyannes, 176. See In re Kennedy St. Quad, Ltd. v. complainant, who had multiple sclerosis, 52 A.D.3d 221, 221, 859 N.Y.S.2d 150, Nathanson, 62 A.D.3d 879, 880, 879 a parking space on the ground fl oor 151-52 (1st Dep’t 2008) (affi rming grant N.Y.S.2d 197, 198-99 (2d Dep’t 2009) of the building’s parking garage); of summary judgment under FHA, (annulling New York State Division of Reyes, 661 F. Supp. 2d at 262 (denying NYSHRL, and NYCHRL based on Human Rights determination because motion to dismiss plaintiff’s reasonable defendants’ revocation of approval of a the complainants “failed to present any accommodation claims, under the FHA purchaser of a co-op after he requested medical or psychological evidence to and NYSHRL, based on defendants’ permission to install a washer and dryer demonstrate that the dog was actually alleged “practice of keeping the based on his incontinence that resulted necessary in order for them to enjoy driveways and parking lot in a state from bowel surgery); Starret City, Inc. v. the apartment”); In re 105 Northgate of disrepair and…policy regarding Adamson, N.Y. L.J., Apr. 12, 1995, at 30, Co-op. v. Donaldson, 54 A.D.3d 414, 416, [allocating] parking spaces”); Hubbard v. col. 5 (Civ. Ct. Kings County) (refusing 863 N.Y.S.2d 469, 470 (2d Dep’t 2008) Samson Mgmt. Corp., 994 F. Supp. 187, to evict tenant for the installation of a (annulling New York State Division of 188, 191-932 (S.D.N.Y. 1998) (granting freezer after fi nding that the freezer was Human Rights discrimination fi nding summary judgment for plaintiff after a reasonable accommodation because “a because “the complainant failed to concluding that “a free, reserved parking ‘panic disorder’…prevent[ed] her from demonstrate, through either medical space near her apartment is a reasonable shopping for food for her family”). or psychological expert testimony or accommodation required by the Fair 183. Removing Barriers: Project Open House, evidence, that she required a dog in Housing Act”). order to use and enjoy her apartment MAYOR’S OFFICE FOR PEOPLE WITH unit”); In re One Overlook Ave. Corp. v. 179. See DiNapoli v. DPA Wallace Ave II, LLC, DISABILITIES, available at http://www.nyc. N.Y. St. Div. of Human Rights, 8 A.D.3d No. 07 Civ. 1409(PAC), 2009 U.S. Dist. gov/html/rwg/mopd/html/housing_ 286, 287, 777 N.Y.S.2d 696, 696 (2d Dep’t LEXIS 23274, at *12-19 (S.D.N.Y. Mar. 23, rbpho.html (last visited Sept. 4, 2010). 2004) (granting Article 78 petition that 2009) (denying defendant’s motion to 184. See Bentley v. Peace and Quiet Realty the New York State Division of Human dismiss tenant’s request for a reasonable 2 LLC, 367 F. Supp. 2d 341, 343, 347 Right’s determination was not supported accommodation, under the FHA, to grant (E.D.N.Y. 2005) (denying landlord’s by substantial evidence because “the him access to the building’s elevator motion to dismiss the request, under complainant failed to demonstrate from 5:00 p.m. to 8:00 a.m.); Prince the FHA, of a tenant with a disability through either medical or psychological Mgmt. Corp. v. Varela, N.Y. L.J., July 29, who lived on fourth fl oor of rent- expert testimony or evidence that her 1998, at 22, col. 5 (Sup. Ct. New York stabilized walk-up apartment building, son required a dog in order for him to County) (affi rming grant of injunctive to move to vacant fi rst-fl oor apartment use and enjoy the apartment”); In re relief and $70,000 in compensation for for same amount of rent); Liddy v. Durkee v. Staszak, 223 A.D.2d 984, 985, mental anguish based on management Cisneros, 823 F. Supp. 164, 173 (S.D.N.Y. 636 N.Y.S.2d 880, 881-82 (3d Dep’t 1996) company’s refusal to grant tenant’s 1993) (denying defendant’s motion to (affi rming determination that petitioner request for access to the building’s dismiss and for summary judgment as in ADA and Rehabilitation Act case elevator from 5:00 p.m. to 8:00 a.m. in to plaintiffs’ challenge, under the FHA involving the provision of emergency violation of the NYCHRL). and Rehabilitation Act, of an alleged housing had failed to establish that he 180. See United States v. Freer, 864 F. Supp. HUD policy that denied transfers to was emotionally dependent on his dog); 324, 326 (W.D.N.Y. 1994) (granting an handicapped-accessible, federally Landmark Props. v. Olivo, 5 Misc. 3d injunction under the FHA to install a subsidized housing to applicants 18, 21, 783 N.Y.S.2d 745, 748 (Sup. Ct. wheelchair ramp); Comm’n on Human already residing in subsidized units).

App. T. 2d Dep’t 9th & 10th Jud. Dists. Rights ex rel. Raymond v. 325 Coop. Inc., In a recently fi led federal complaint, a 2004) (affi rming denial of a reasonable No. 1432/98 (N.Y.C. Commission Human mother and her adult daughter, who has accommodation claim because the Rights Jan. 12, 1999), 1999 WL 152526, at muscular dystrophy, allege that their tenant “submitted only the ambiguous *1-2 (Comm’n Hum. Rts. Jan. 12, 1999) landlord violated the FHA, NYSHRL, statement of his physician that depressed (requiring respondents to build a ramp, and NYCHRL by failing to grant their people may benefi t from having pets install door openers on the elevator request for a reasonable accommodation and notes from his medical records doors and on the lobby door, and pay the that would have allowed them to relocate that he was anxious about possibly complainant $15,000 in compensatory from their apartment on the fourth fl oor losing his dog”); In re Contello Towers damages); In re T.K. Mgmt., Inc. v. to a vacant apartment on the building’s Corp. v. N.Y. City Dep’t of Hous. Pres. Gatling, Index No. 14255/05, at 11- fi rst fl oor; see also Complaint, Flores & Dev., N.Y. L.J., Nov. 17, 2004, at 19, 14 N.Y. L.J., Nov. 2, 2005, at 19, col. 3 v. 243-249 13th St. Investor, LLC, No. col. 1 (Sup. Ct. Kings County) (granting (Sup. Ct. Queens County Oct. 19, 2005) 1:2009cv05593 (E.D. N.Y. Dec. 22, 2009).

46 NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 185. Cf. King v. Menachem, 113 Misc. 2d 192. Sanjaya Saxena, Editorial, Is Compulsive with him at his development” based on 63, 66, 450 N.Y.S.2d 933, 936 (Sup. Ct. Hoarding a Genetically and Neurobiologically the “affi rmative duty to accommodate App. T. 2d Dep’t 2d & 11th Jud. Dists. Discrete Syndrome? Implications for to the special problems of the mentally 1981) (affi rming dismissal of a holdover Diagnostic Classifi cation, 164 AM. J. disabled so that they may be able to live petition after concluding that the full- PSYCHIATRY 380 (Mar. 2007) (arguing that within the general population” set forth time health-care aide was a service to “the available evidence argues strongly in city, state, and federal statutes that the tenant and not an “occupant” and against this classifi cation”). prohibit housing discrimination based on disability); see also Douglas v. Kriegsfeld therefore did not materially breach the 193. N.Y.C.R.R. tit. 9, ch. VIII, §§ 2204.2(a)(1), Corp., 884 A.2d 1109, 1126-27 (D.C. 2005) tenancy). 2524.3(a). For a recent case, see Cabrini (holding that “the tenant’s request for 186. See Marks, 2002 WL 764473, at *7 Terrace Joint Venture v. O’Brien, 71 a brief stay of the eviction proceeding” (holding that defendant did not violate A.D.3d 485, 486, 896 N.Y.S.2d 339, 339 (1st to allow time for her apartment to be the FHA because “Plaintiff’s request Dep’t 2010) (fi nding that “[a] posttrial cleaned is a reasonable accommodation for a roommate had nothing to do with opportunity to cure was properly denied under the FHA). her sickness and, from all that appears, upon a fi nding, based on the testimony everything to do with her pocketbook”). and the trial court’s own inspection, 197. Similarly, a person with a disability that the nuisance conditions had existed may request that other public entities, 187. See Salute v. Stratford Greens Garden over a substantial period, had not abated such as NYCHA, make reasonable Apts., 136 F.3d 293, 301-02 (2d Cir. although tenant had been given ample accommodations to their general 1998) (affi rming dismissal of plaintiffs’ opportunity to do so, and were unlikely procedures; see Blatch v. Hernandez, No. claim based on their landlord’s refusal to be abated”). 97-Civ-3918, 2008 U.S. Dist. LEXIS 92984, to accept their Section 8 vouchers as a at *4 (S.D. N.Y. Nov. 3, 2008). But see Gray, reasonable accommodation for their 194. See, e.g., RCG-UA Glenwood, LLC v. 22 Misc. 3d at 683-85, 868 N.Y.S.2d at 504- disabilities because “the law addresses Young, 9 Misc. 3d 25, 26, 801 N.Y.S.2d 05 (denying a NYCHA tenant’s request the accommodation of handicaps, not the 481, 481-82 (App. T. 2d Dep’t 9th & 10th that a four-month statute of limitations be alleviation of economic disadvantages Jud. Dists. 2005) (affi rming the dismissal extended based on her mental disability). that may be correlated with having of a nuisance holdover based on “clutter handicaps”). But see Giebeler v. M & conditions in the apartment” because 198. See Bruce Winick, Therapeutic B Assocs., 343 F.3d 1143, 1159 (9th Cir. “[w]hile the FHAA does not require a Jurisprudence and the Role of Counsel in 2003) (reversing district court’s grant of landlord to abide conduct constituting Litigation, 37 CAL. W. L. REV. 105, 110 summary judgment for the defendants a nuisance, it does, in the circumstances (2000) “Surely one of the most stressful because a prospective tenant’s “request presented, require that tenant be emotional aspects of a lawsuit is when that his fi nancially qualifi ed mother be accommodated to the extent of being the client testifi es at trial or has his or allowed to rent an apartment for him to afforded an opportunity to continue to her deposition taken by the adverse live in, affording him the opportunity reside in the apartment” and receive party. The courtroom is a public place, to live in a suitable dwelling despite his assistance from a treatment program). and testimony is taken from the witness stand in the presence of a variety of disability, was a request for a reasonable 195. Id. accommodation within the intendment of strangers and enemies…. Playing such a the FHAA”); Freeland v. Sisao LLC, No. 196. See 506-508 Holding Corp. v. Glatzel, key speaking role on center stage in the CV-07-3741, 2008 U.S. Dist. LEXIS 26184, Index No. 58754/05, at *5-9 (Civ. Ct. courtroom can thus be a nightmare for at *14-16 (E.D. N.Y. Apr. 1, 2008) (denying Queens County 2006) (unpublished many clients. Even depositions, which in part defendants’ motion to dismiss opinion) (citing a recent adjustment typically are taken in a lawyer’s offi ce, because “plaintiff has alleged suffi cient of respondent’s medications and his will nonetheless be taken in front of facts in support of a plausible claim reasonable accommodation request strangers such as the court reporter and that acceptance of the Section 8 voucher under the FHA in granting a stay of also the adversarial parties in the lawsuit was a reasonable accommodation of the warrant of eviction); 301 E. 69th St. and their attorneys.”). Assocs. v. Eskin, N.Y. L.J., Nov. 24, 1993, her disability that prevented her from 199. See Starret City, Inc. v. Adamson, N.Y.L.J., at 24, col. 2 (Civ. Ct. New York County), working and earning an income”). Apr. 12, 1995, at 30, col. 5 (Civ. Ct. Kings WL 11/13/1993 N.Y. L.J. 24, (col.2) County) (“During her testimony the 188. See, e.g., Salute, 136 F.3d at 301-302; (modifying court’s prior judgment to court observed her considerable distress Freeland, 2008 U.S. Dist. LEXIS 26184, at allow a post-judgment cure of a nuisance and granted her request to have her *4-6. based on new evidence that a change psychiatrist stand near the witness box to 189. New York, N.Y., ADMIN CODE tit. 8, ch. 1, in medication had led to a change in lend emotional support.”). § 8-102(25) (LEXIS through 2009); see id. § respondent’s behavior); 1021-27 Ave. 8-101. St. John Hous. Dev. Fund Corp. v. 200. ADA FAQS, supra note 115. Hernandez, 154 Misc. 2d 141, 146-48, 584 190. See Domen Holding Co. v. Aranovich, 1 201. Broadway Inwood Realty Inc. v. Belkys N.Y.S.2d 990, 994 (Civ. Ct. Bronx County N.Y.3d 117, 124-25, 802 N.E.2d 135, 140, Abreu, Index No. 93686/2001, at 1 (Civ. 1992) (staying execution of fi nal judgment 769 N.Y.S.2d 785, 790 (2003). Ct. N.Y. County 2002) (unpublished of possession to permit tenant to obtain opinion). 191. See, e.g., 169 Realty LLC v. Wolcott, N.Y. psychiatric treatment and to disengage L.J., Apr. 22, 2002, at 29, col. 3 (Civ. Ct. himself from illegal drug use and sales 202. See Goldman et al. v. Eggers, No. Kings County) (noting that a stay might in subject premises); Hertwig-Brilliant L&T 64884/2001, at 2 (Civ. Ct. N. Y. be appropriate under R.P.A.P.L. § 753(4) v. Michetti, N.Y. L.J., Nov. 9, 1993, at 26, County 2001) (unpublished opinion) to give a respondent an opportunity to col. 1 (Civ. Ct. N.Y. County) (remanding (ordering that “discovery in this case cure the alleged nuisance). Nuisance case to DHPD for further consideration [shall] proceed with the production of proceedings based on hoarding are often after concluding that petitioner should be documents and then with interrogatories called “Collyer’s cases.” See also Franz given the “opportunity to demonstrate rather than an oral deposition” based Lidz, The Paper Chase, N.Y. TIMES (Oct. 26, that he can continue to reside at his on evidence of respondent’s medical 2003), available at http://www.nytimes. apartment without posing a threat or condition). com/2003/10/26/nyregion/the-paper- danger to others or otherwise engaging 203. See, e.g., DiPasquale v. Milin, 303 F. Supp. chase.html?pagewanted=all (last visited in acts or behavior constituting a 2d 430, 431 (S.D.N.Y. 2004) (alleging that Sept. 4, 2010). nuisance to those who come in contact “a judge of the Civil Court of the City

NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 47 of New York, Housing Part (the ‘Housing Court’), violated [plaintiff’s] rights under the [ADA] by failing to acknowledge [plaintiff’s] disabilities when rendering decisions in an ongoing action in the Housing Court to which [plaintiff] is a party”); Weissbrod v. Hous. Pt., 293 F. Supp. 2d 349, 350-51 (S.D.N.Y. 2003). 204. U.S. Access Board, About the U.S. Access Board, available at http://www.access-board.gov/about.htm (last visited Sept. 4, 2010) (describing the “Mission” of the U.S. Access Board, which is a “Federal Agency Committed to Accessible Design”). 205. See generally U.S. Access Board, Courthouse Access Advisory Committee, Justice for All: Designing Accessible Courthouses (Nov. 15, 2006), available at http://www.access-board.gov/caac/ report.pdf (last visited Sept. 4, 2010).

206. Norman L. Reimer, Foreword, in N.Y. COUNTY LAWYERS’ ASS’N, REPORT: THE NEW YORK CITY HOUSING COURT IN THE 21ST CENTURY: CAN IT BETTER ADDRESS THE PROBLEMS BEFORE IT? (2005), available at http://www.nycla.org/siteFiles/ Publications/Publications195_0.pdf (last visited Sept. 4, 2001). 207. Id. 208. Zelhof et al., supra note 106. 209. See id. at 755-56 (“[I]dentifying litigants with diminished capacity at the earliest possible stage of the proceeding will allow the court to offer appropriate accommodations or protections before the case is adjudicated.”) 210. See id. at 767-69. 211. See Housing Court in the 21st Century, supra note 9, at 608-09. 212. Id. at 636. 213. Zelhof et al., supra note 106, at 770-71. 214. See id. at 771-72. 215. Id. at 771. In 2007, Washington state implemented a court rule that provides that “counsel may be appointed as a reasonable accommodation for a litigant with a disability.” Laura K. Abel, Toward a Right to Counsel in Civil Cases in New York State: A Report of the New York State Bar Association, 25 TOURO L. REV. 31, 62 (2009) (citing Wash. Ct. R. Ann. G.R. 33 (2008)). 216. See Housing Court in the 21st Century, supra note 9, at 622-33 n.178. 217. Id. at 638. 218. Id.

219. NEW YORK COUNTY LAWYERS’ ASS’N, 2005 JUSTICE CTR. PROGRAMS (2005 Programs), available at http://www.nycla.org/siteFiles/ sitePages/sitePages288_2.pdf (last visited Sept. 4, 2010).

220. December 2007 Newsletter, N.Y. CITY DEPARTMENT FOR THE AGING (December 2007), available at http://www.nyc.gov/html/dfta/ html/newsletters/newsletter-dec07.htm (last visited Sept. 4, 2010). 221. Id. 222. Id.

Kevin M. Cremin is the Director of Disability and Public Benefi ts Law for Legal Services NYC and a Lecturer-in-Law at Columbia Law School. Gerald Lebovits, a Housing Court judge in Manhattan, is an adjunct professor at St. John’s University School of Law and Columbia Law School. The authors thank Elise Brown, Diane L. Houk, and Jeanette Zelhof for commenting on a draft of this article and Meredith Hye-kyoung Chung for her research assistance.

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48 NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 Will the Issue of “Standing” (or the Lack Thereof) Impact Commercial Foreclosures? By Marvin N. Bagwell

Readers of The New York Times, where the experienced counsel those (CMOs) or credit default swaps? Can The Wall Street Journal, Crain’s, Bar- who are about to go into battle. we even fi nd the structure investment ron’s or any of the well-known and vehicle (SIV) that took out the mort- Many counsels who are not yet often-quoted business and fi nancial gage? Therefore, as a public service to battle scarred from high-level fi nan- publications are aware that many of those who are considering foreclosing cial litigation browse the pages of the the commercial projects that closed in on a commercial mortgage, here is an New York Law Journal and tsk-tsk the New York during the good old days update on the residential foreclosure recent developments in the evolution of 2004-2008 are now in trouble.1 This case law. What follows is a brief and, of residential foreclosure law. Invok- project is “underwater”; the owners due to space considerations and our ing the sanctity of contracts, they ask are about to “lose” that building; that younger readers’ attention span (or themselves, “How can a court do high rise being turned over to the lack thereof)—or if you are like me, that? Imagine, setting aside a mort- “servicers”; the owners of the so-and- daily jousts with the onset of ap- gage merely because the bank lost so luxury condominium “missed” proaching senility—simplistic outline some of the paperwork!” The more their mortgage payment, and on and of the issues to which the courts are experienced lawyers look at these on and on.2 The question that many paying attention. of us looking from the outside in and cases and are scared to death. reading versions of the foregoing Let us start with the issue of headlines have been asking ourselves “[T]he newspapers and standing. To initiate a foreclosure is, “Why have so few of these projects action, the lender must have stand- websites are filled with 9 Without standing, the gone into foreclosure?” Or better put, ing to sue. plaintiff lender may not proceed with “Why hasn’t the lender called my statistics regarding the the action.10 “Since standing to sue fi rm to fi le a foreclosure complaint or seemingly unending is jurisdictional and goes to a court’s to defend against one?” Shouldn’t the news about residential authority to resolve litigation, the Manhattan Supreme’s inbox be fi lled foreclosures. So why are [court] can raise this matter sua spon- with commercial foreclosure fi lings? te.”11 Translated, if the court does not In other words, the newspapers and we not seeing the same think that the lender has standing, websites are fi lled with statistics stories about the number the court, on its own motion, can, and regarding the seemingly unending of foreclosure complaints as we shall see often does, dismiss the news about residential foreclosures. filed against commercial lender’s foreclosure action.12 So why are we not seeing the same properties?” stories about the number of foreclo- Standing in the context of a fore- sure complaints fi led against com- Those attorneys shutter at the pros- closure action means essentially that mercial properties? pect that the precedent being set on the lender must own the mortgage that it is attempting to foreclose.13 There are several answers to this the residential side may be followed The leading case on this point is the question. The commercial market- when commercial mortgages go into often-quoted Kluge v. Fugazy, where place trails the residential and only foreclosure as well.7 As the public the Second Department’s Appellate now, two years into the foreclosure is well aware, many of the commer- Division wrote, “Foreclosure of a crisis, are the foreclosure actions com- cial mortgages were securitized and mortgage may not be brought by one mencing.3 Rumor has it that certain sold either as bonds or derivatives 14 mezzanine lenders are purchasing to unsuspecting investors world- who has no title to it.” some of the mortgages to save their wide.8 Where is the paperwork for The issue of the lender’s owner- investments.4 Other projects are being those loans? How does one foreclose ship of the mortgage in foreclosure taken over by servicers and are in the on a building whose mortgage has most often comes up in cases involv- process of being “worked-out.”5 And been sliced and diced and, combined ing the assignment of the mortgage in some cases, developers and spon- with mortgages from tens of other in question.15 In the residential sors are simply turning their keys structures and where parts of the context, it became very clear early in over to the lenders.6 However, there mortgage all of which found their the subprime crisis that the proper is another answer which is only now way into who knows how many col- assignment of mortgages and the beginning to be whispered in the cor- lateralized debt obligations (CDOs), recording of those assignments in ridors of legal power and in seminars collateralized mortgage obligations the public records were not among

NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 49 lenders’ priorities.16 Gretchen Mor- In regard to assignments of mort- It is also not a good idea, for the genson, fi nancial reporter for The gages, matters become more and not lender at least, to assign a mortgage New York Times, wrote that one of the less complicated. The traps for the during the pendency of action, sources she interviewed said: “Book- unwary lender’s attorney as well as especially in Justice Schack’s court. In keeping is such a bore, especially the opportunities for the astute bor- Deutsche Bank National Trust Co. v. when there are billions to be made, rower’s counsel are myriad. Castellanos, Deutsche Bank com- shoveling loans into trust like coal menced a foreclosure action on July Commencing the foreclosure ac- into the Titanic’s boilers…[w]ho’s 27, 2006.39 Justice Schack discovered tion and then back-dating (whoops, going to ask for proof of ownership by going on the Automated City sorry, changing the effective date of of these notes anyhow?”17 It turns Register Information System the assignment) will not work and out that the judges presiding over (ACRIS), while he was preparing to might just try the court’s patience. In foreclosure actions are now asking issue a judgment of foreclosure and Wells Fargo Bank, N.A. v. Marchione, for proof of ownership.18 Importantly, sale, that Deutsche Bank had as- Wells Fargo commenced its foreclo- standing requires that the lender own signed the mortgage to MTGLQ sure action on November 30, 2007.29 the mortgage at the time the lender Investors, L.P., a subsidiary of Option One Mortgage Corporation brings the foreclosure action, which Goldman Sachs, on January 19, 2007. assigned the mortgage in foreclosure in New York means when the lender The court had “no choice but to deny to Wells Fargo on December 4, 2007 fi les a notice of pendency.19 the application for a judgment of with a provision that the assign- foreclosure and sale without preju- In Aurora Loan Services v. Grant, ment became effective on October 30 dice. Plaintiff Deutsche Bank had no Aurora Loan Services (“Aurora”) 28, 2007. Justice Leventhal, writing standing to proceed with this action fi led its notice of pendency on No- for the Appellate Division, Second since January 19, 2007.”40 vember 21, 2006.20 However, Aurora Department, dismissed Wells Fargo’s was not assigned the mortgage until complaint for lack of standing, ruling Some courts have served notice November 29, 2006.21 Justice Rothen- that the assignment must be complete that they will not only conduct their berg of Kings County dismissed the at the time the action is commenced.31 own search on ACRIS, but heaven foreclosure complaint and vacated Put another way, the assignment of forbid, they will also examine assign- the notice of pendency.22 In Deutsche the mortgage must have occurred ment and related documents.41 Justice Bank National Trust Co. v. Stevens, Jus- prior to the commencement of the Schack in HSBC Bank USA N.A. v. tice Lewis of Kings County dismissed foreclosure action, which is the notice Yeasmin (it’s time to give Deutsche Deutsche Bank’s foreclosure action of pendency fi ling date.32 Bank a break), found that the assign- when it commenced the action on ment from Mortgage Electronic Reg- On Staten Island, on a motion June 2, 2008, but did not receive its istration Systems (MERS), as nominee for reconsideration, Justice Maltese assignment from Fremont Investment for Cambridge, to HSBC was invalid reversed himself and dismissed a & Loan until June 11, 2008.23 In Wells in that neither a corporate resolution foreclosure action because the fore- Fargo Bank, N.A. v. Burke, Wells Fargo nor a power of attorney was recorded closing plaintiff lacked standing at commenced the fi rst of three foreclo- with the assignment.42 Further, the the time it commenced the instant sure actions on June 14, 2002.24 Wells person who executed the assignment action.33 In Deutsche Bank National Fargo did not receive its assignment was an offi cer of both MERS and Trust Co. v. Abbate, the lender com- of the mortgage until July 22, 2009.25 HSBC, a clear confl ict of interest to menced its foreclosure action on Justice Silber of Kings County denied Judge Schack. Also, Judge Schack, March 1, 2007.34 The mortgage was the defendant’s pre-answer motion as he did in Castellanos, questioned assigned to plaintiff Deutsche Bank to dismiss “on the grounds that the why a lender would assign a non- on March 7, 2007.35 The assignment Statute of Limitations ran prior to performing loan. He held that the contained a clause stating that the commencement of the action.”26 Even assignment, because of the lack of the effective date of the assignment was though Wells Fargo lacked stand- corporate resolution and power of retroactively effective to February ing to bring the foreclosure action in attorney, was invalid and that there- 28, 2007.36 Justice Maltese held that 2002, the court also ruled that the six- fore, HSBC lacked standing to fore- the court should have dismissed the year statue of limitations which gov- close the instant mortgage.43 Judge action for lack of jurisdiction and he erns foreclosure actions had also run Schack, previously, found the same promptly did so, holding that “absent as against some of the payments due defect (lack of recorded board resolu- a physical or written transfer before under the mortgage.27 It is therefore tion or power of attorney) regarding the fi ling of a complaint, retroactive clear, as the court stated in Deutsche the assignment from MERS to HSBC assignments are invalid,”37 and that Bank National Trust Co. v. Stevens, that in HSBC Bank USA N.A. v. Vasquez.44 the court “lacks jurisdiction over the “an assignee of such a mortgage does He dismissed that foreclosure pro- subject matter when the plaintiff has not have standing to foreclose unless ceeding as well. no title to the mortgage at the time it the assignment is complete at the commenced the action.”38 time the action is commenced.”28

50 NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 Judge Schack is not alone in through an “allonge indorsement” of ing lender was free to bring a new examining the assignment closely. In the mortgage note by Global Home and timely action against the bor- Bank of New York v. Alderazi, MERS Loan and Finance to Option One rower. Why, as some counsels, mostly purported to assign the subject mort- who, on the same day, endorsed the from the foreclosure bar, have won- gage to Bank of New York by empow- note to Wells Fargo.49 Justice Whelan dered, waste all this time and judicial ering an offi cer to execute the assign- agreed with Wells Fargo, but it resources when the lender will sim- ment by “Board Resolution and/or should be noted that the defendants ply commence another action? The appointment.”45 However, the court defaulted and therefore did not put borrower’s bar will probably respond found no proof of authority recorded Wells Fargo to its proof. that the borrower is due his or her with the assignment. Following Judge day in court and the lender should There is one other matter of Schack’s lead, and citing Yeasmin, be required to prove its case before which the commercial foreclosure bar Judge Saitta dismissed Bank of New putting someone out from his or her must become aware. If the holder of York’s foreclosure action.46 home. The court’s response was put the commercial mortgage in fore- most succinctly by Justice Leventhal What happens when the original closure is a foreign limited liability in Wells Fargo Bank, N.A. v. Marchione: lender goes out of business or dis- company (“LLC”), i.e., does not hold “Wells Fargo might have reached this appears and as result the mortgage a license to do business in New York, conclusion earlier in its calculus to cannot be assigned? The ingenious then, pursuant to Sections 802 & 808 commence the lawsuit prior to the lender’s counsel then tries to use the of the Limited Liability Law, access execution of the assignment.”53 In note to edge his or her way through to the courts of New York will be 50 other words, those who live in glass foreclosure. Sometimes it works; denied to the LLC. In Aries Finan- houses.… sometimes it does not. cial, LLC v. 2729 Clafl in Avenue, LLC, Aries Financial sought to foreclose As Ms. Morgenson noted in her In IndyMac Bank F.S.B. v. Garcia, a mortgage given to it by Clafl in.51 article and has become common reading between the lines and having Clafl in argued that Aries could not knowledge these days even to the some street knowledge of these mat- foreclose because it did not have a person on the street, Main as well as ters, we can presume that the original license to do business in New York. Wall, the securitization process where lender, Sterling National Mortgage Aries counter-argued that it was a mortgages were sliced, diced and Company, Inc. (Sterling National), foreign bank licensed to do business packaged into bonds was a “mess” can no longer be found to execute by the States of Alaska and Delaware in terms of documentation.54 Is it an assignment of the original mort- 47 and therefore was exempt from the possible that the lack of attention gage. However, Sterling National LLC requirement. Also, Section 200 to detail may have occurred in the endorsed the note to IndyMac prior of the Banking Law permitted it as commercial securitization process as to the commencement of the fore- foreign bank to do business in New well? Given that commercial securi- closure action. IndyMac’s counsel York without a New York license. ties are much more complex than submitted an affi davit to the court The court, Justice Stinson, found that residential, I leave it to the reader to that the note with the proper endorse- Aries did not meet the defi nition of a come up with your own answer to ments was in the lender’s hands, but “bank” under the Banking Law and that question. However, if the law on the court noted that the plaintiff did that contrary to its assertions, it was the residential side is brought over to not prove that it actually possessed not licensed as such in either Alaska commercial foreclosures, senior part- the note. The court conceded that or Delaware. Therefore, the court ners had better prepare to send their the mortgage followed the note and denied Aries’ motion for summary junior associates scouring through that if the lender could prove physi- judgment and an order of refer- warehouses and computer databases cal possession of the note, the lender ence.52 The lesson is that if a Special to fi nd out who actually owns the would have standing to foreclose. Investment Vehicle (SIV) or a Special mortgages which are about to go into However, here the endorsement on Purpose Vehicle (SPV), which was foreclosure. And that ownership must the note was not on the note itself but established as a non-New York LLC, be recorded in the public records. on a separate page. The lender was holds the mortgage, it is incumbent If the pundits are correct, more not able to convince Justice Mayer upon counsel for the lender and the and more of the commercial mort- that it had actual possession of the borrower to make sure that the lender gages, which were bundled into note. Therefore, the court denied has a license to do business in New commercial mortgage-backed se- the plaintiff’s motion for an order of York. Otherwise, the foreclosure 48 curities (“CMBSs”), are about to go reference. will be delayed until compliance is into default and possibly then into obtained. However, the lender sometimes foreclosure.55 We may soon see how wins on the note indorsement is- In all of the actions set forth much of the foreclosure law, especial- sue. In Wells Fargo Bank, N.A v. Perry, above, the dismissals were without ly as it relates to standing, will move Wells Fargo alleged that it acquired prejudice. That means the day after over from the residential side to the ownership of the subject mortgage the rulings came down, the foreclos- commercial.

NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 51 This article is not meant to be an 11. Axelrod v. N.Y. State Teachers Ret. Sys., 27. Id. at 4. See also N.Y. L.J., Feb. 10, 2010, at exhaustive study of every reported 154 A.D.2d 827, 827, 546 N.Y.S.2d 489, 27, col.1 (Sup. Ct. Kings County Feb. 1, 490 (3d Dep’t 1989). For a discussion of 2010). case on standing. Certainly, there are standing in the mortgage foreclosure probably many cases which may be 28. No. 15862/08, 2010 N.Y. Misc. LEXIS context, see Justice Schack’s decision 1103, at *2 (Sup. Ct. Kings County May reported and have not been cited in in HSBC Bank USA v. Yeasmin, No. 18, 2010); see also Wells Fargo Bank, N.A. this article. Also, many issues have 341242/07, 2008 WL 1915130, at *2 (Sup. v. Marchione, No. 2008-02775, 2009 N.Y. Ct. Kings County May 2, 2008). not received their due. For example, Slip Op 7624 at *2 (App. Div. 2d Dep’t as between the parties to an assign- 12. For discussions regarding standing in Oct. 20, 2009); LaSalle Bank Nat’l Ass’n v. earlier foreclosure cases, see Suzanne M. Ahearn, 59 A.D.2d 911, 912, 875 N.Y.S.2d ment, whether the assignment is Garcia, A New Perspective on Foreclosure 595, 597 (3d Dep’t 2009). recorded before, during, or after a in Title, N.Y. L.J., Aug. 25, 2008, at 4, col. 29. See Marchione, 2009 N.Y. Slip Op 7624, at foreclosure action, may be irrelevant 1; see also Marvin N. Bagwell, Judges Take *1. to the assignment’s enforceability. Notice of Subprime Mortgage Crisis, 22 No. 6 N.Y. REAL EST. REP. 1 (2008). 30. Id. However, if this article has caused 13. See Campaign v. Barba, 23 A.D.3d 327, 31. Id. at *3-4. anyone to think before leaping, 327, 805 N.Y.S.2d 86, 86 (2d Dep’t 2005) 32. Id. at *3. then its cause has been served. And (“To establish a prima facie case in thinking is what separates the good an action to foreclose a mortgage, the 33. Deutsche Bank Nat’l Trust Co. v. Abbate, 901 N.Y.S.2d 905, 905, 2009 N.Y. Slip Op lawyers from the not-so-good. Here’s plaintiff must establish the existence of the mortgage and the mortgage note, 52154U, at *5 (Sup. Ct. Richmond County to being on the side of the thinking. ownership of the mortgage, and the Oct. 6, 2009). defendant’s default in payment.”). 34. Id. at *1-2. Endnotes 14. Kluge v. Fugazy, 145 A.D.2d 537, 538, 536 35. Id. at *2. N.Y.S.2d 92, 92 (2d Dep’t 1998); see also 36. Id. 1. E.g., Floyd Norris, Banks Stuck With Bill Manne v. Carlson, 49 A.D. 276, 278, 63 For Bad Loans, N.Y. TIMES, August 19, N.Y.S.162, 162 (1st Dep’t 1900). 37. Id. at 2-3. 2010, at B1; Carrick Mollenkamp, To Fix Sour Property Deals, Lenders ‘Extend and 15. See Gretchen Morgenson, Guess What Got 38. Id. at 5. See also N.Y. L.J., Oct. 26, 2009, at Pretend’, THE WALL STREET JOURNAL, July Lost in the Loan Pool?, N.Y. TIMES, Mar. 20, col. 1 (Sup. Ct. Richmond County Oct. 7, 2010; Theresa Agovino, Gramercy Park 1, 2009, at BU1 (reporting that judges 6, 2009). Hotel Owners Default on Loan, CRAIN’S N.Y. in California and Florida are beginning 39. Deutsche Bank, Nat’l Trust Co. v. BUSINESS, July 9, 2010. to seek proof of ownership of mortgage Castellanos, No. 22375/06, 2007 N.Y. notes in foreclosure proceedings). 2. Norris, supra note 1, at B1; see also, Misc. LEXIS 3394, at *4 (Sup. Ct. Kings Mollenkamp, supra note 1, at 1; Agovino, 16. See id. County May 11, 2007). supra note 1, at 1. 17. Id. 40. Id. at *5. 3. See e.g., Mollenkamp, supra note 1, at 1; 18. See infra, notes 19-27. 41. See EMC Mort. Corp. v. Batista, No. see also, Agovino, supra note 1, at 1. 34145/06, 2007 WL 1599986 (N.Y.Sup.), at 19. See Fed. Nat’l Mortgage Ass’n v. *4 (Sup. Ct. Kings County June 5, 2007) 4. Agovino, supra note 1, at 1. Youkelsone, 303 A.D.2d 546, 546- (holding that plaintiff lacked standing 47, 755 N.Y.S.2d 730, 730 (3d Dep’t 5. See e.g., Agovino, supra note 1, at 1; see to foreclose on defendant’s mortgage 2003) (holding that when plaintiff has also, Amanda Fung, First Ave. Building because plaintiff failed to present proper standing to sue when he is assignee of Site Hits Market Via Loan Sale, CRAIN’S power of attorney documentation the mortgage and the underlying note N.Y. BUSINESS, July 19, 2010, at 1; relating to the assignment of the at the time the foreclosure action was Binyamin Appelbaum, Mortgage Role for defendant’s mortgage). U.S. is Affi rmed, N.Y. TIMES, August 17, commenced); see also, LaSalle Nat’l 2010, at B1. Ass’n v. Ahearn, 49 A.D.3d 911, 912-13, 42. HSBC Bank USA, N.A. v. Yeasmin, No. 975 N.Y.S.2d 595, 597 (3d Dep’t 2009) 34142/07, 2008 N.Y. Misc. LEXIS 2585, at 6. See Bob Tedeschi, Mortgages: Seeking to (holding defendant failed to demonstrate *3 (Sup. Ct. Kings County May 2, 2008). Close off an Exit, N.Y. TIMES, July 25, 2010, standing when assignment of note 43. Id. at 20-3. at RE5. and mortgage was dated subsequent 7. Richard S. Fries, Address at the N.Y. to commencement of the foreclosure 44. HSBC Bank USA, N.A. v. Vasquez, No. Bar Ass’n Real Property Section Annual proceeding against mortgagor). 37410/07, 2009 WL 2581672 (N.Y.Sup.), at *3 (Sup. Ct. Kings County Aug. 21 2009); Meeting (Jan. 28, 2010) (stating the 20. Aurora Loan Servs. v. Grant, No. possibility that the precedents being set N.Y. L.J., Aug. 28, 2009, at 28, col. 3 (Sup. 35680/06, 2007 WL 2768915 (N.Y.Sup.), at Ct. Kings County Aug. 21, 2009). in residential foreclosure law might affect 2 (Sup. Ct. Kings County Aug. 29, 2007). the foreclosure of commercial properties). 45. Bank of New York v. Alderazi, 28 Misc. 21. Id. 8. See Gretchen Morgenson, Fair Game: 3d 376, 376, 900 N.Y.S.2d 821, 822-23 Seeing vs. Doing, N.Y. TIMES, July 25, 2010, 22. Id. at *3. (Sup. Ct. Kings County 2010). at BU1. 23. Deutsche Bank Nat’l Trust Co. v. Stevens, 46. Id. at 376. 9. See JP Morgan Chase Bank, N.A. v. No. 115862/08, 2010 N.Y. Misc. LEXIS 47. See IndyMac Bank F.S.B. v. Garcia, No. George, No. 10865/06, 2010 N.Y. Misc. 1103, at *1-2 (Sup. Ct. Kings County May 7282-2008, 2010 WL 2606498 (N.Y.Sup.), LEXIS 943, at *6 (Sup. Ct. New York 18, 2010). at *1-2 (Sup. Ct. Suffolk County June County May 4, 2010). 24. Wells Fargo Bank, N.A. v. Burke, No. 22, 2010) (explaining the multiple 10. Id. at *4 (“If a plaintiff lacks standing 25077/09, 2010 N.Y. Misc. LEXIS 133, at defi ciencies concerning Sterling to sue, the plaintiff may not proceed in ***2 (Sup. Ct. Kings County Feb. 1, 2010). National’s purported indorsement of the note to plaintiff, prior to commencement the action.” (citation omitted)); see also 25. Id. Stark v. Goldberg, 297 A.D.2d 203, 204, of the instant action). 746 N.Y.S.2d 280, 281, 2002 N.Y. Slip Op. 26. Id. at 1-5. 06091 (1st Dep’t 2002).

52 NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 48. Id. at 3. See also N.Y. L.J., July 7, 2010, at 54. See Morgenson, supra note 15. The author would like to credit 27, col. 1 (Sup. Ct. Suffolk County June 55. Lingling Wei, For CMBS, ‘Worst Is Yet to Richard S. Fries, a member of Bing- 22, 2010). Come,’ THE WALL STREET JOURNAL, June 2, ham McCutheon of New York City 49. Wells Fargo Bank, NA v. Perry, 23 Misc. 2010, at C6. and an expert on fi nancial work- 3d 827, 829, 875 N.Y.S.2d 853, 856 (Sup. Ct. Suffolk County 2009). outs, who, in his presentation at Mr. Bagwell is the Vice-Presi- the Real Property Section’s 132nd 50. See N.Y. LTD. LIAB. CO. LAW §§ 802, 808(a) (McKinney 2006). dent and New York Chief Counsel Annual Meeting held at the New 51. Aries Financial, LLC v. 2729 Clafl in of Old Republic National Title York Hilton on January 28, 2010, Avenue, LLC, No. 381809/2008, 2010 WL Insurance Company. He is a former became one of the fi rst counsels to 932753 (N.Y.Sup), at *1 (Sup. Ct. Bronx President of both the New York suggest that the precedents being set County Jan. 26, 2010). State Land Title Association and in residential foreclosure law might 52. Id. at *5. See also N.Y. L.J., Feb. 10, 2010, at the Title Insurance Rate Service affect the foreclosure of commercial 26, col. 3 (Sup. Ct. Bronx County Jan. 26, Association and he is a member of properties. 2010). the American College of Real Estate 53. Wells Fargo Bank, N.A. v. Marchione, 69 Lawyers. A.D.3d 204, 210, 887 N.Y.S.2d 615, 615 (App. Div. 2d Dep’t 2009).

Editors’ note: Since the submission of this article to the editors, three major lenders, GMAC (now Ally Bank), Bank of America and JP Morgan Chase, have suspended their residential foreclosure actions to amend the improper paperwork, which had been submitted to the courts. See David Streitfeld, 3rd Lender Will Freeze Foreclosures in the Courts, N.Y. TIMES, October 2, 2010, at B1. Undoubtedly, this development has not gone unnoticed by the commercial borrowers’ bar nor by the lenders’ bar. There are millions of reasons to do Pro Bono. (Here are some.)

Each year in communities across New York State, indigent people face literally millions of civil legal matters without assistance. Women seek protection from an abusive spouse. Children are denied public benefi ts. Families lose their homes. All without benefi t of legal counsel. They need your help. If every attorney volunteered at least 20 hours a year and made a fi nancial contribution to a legal aid or pro bono program, we could make a difference. Please give your time and share your talent. Call the New York State Bar Association today at 518-487-5640 or go to www.nysba.org/probono to learn about pro bono opportunities.

NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 53 BERGMAN ON MORTGAGE FORECLOSURES: Can the Mortgagee Take a Check After Acceleration? By Bruce J. Bergman

This contin- or 15 or 20 or 30 years from now) and acceptance of a sum which doesn’t ues to be one of we will not accept periodic install- cure all arrears should not give rise to the genuinely ments as we had in the past.” a defense to continuation of the fore- thorny and con- closure. [This was recited in a New After acceleration, law in New fusing issues for York case in 1997, CME Group Ltd. v. York provides that anything inconsis- mortgage hold- Cellini, 173 Misc.2d 404, 661 N.Y.S.2d tent with that declaration could be a ers, although 740 (1997).] And a more recent case waiver. So, is it inconsistent to accept another case in bolsters that position, ruling that some payments after acceleration (as- New York offers acceptance of additional payments suming those payments do not cure clarifi cation and towards a mortgage after default and the default)? answers the acceleration is not inconsistent with question “yes.” But it needs some Lenders have understandably the mortgage holder’s insistence that exploration. been wary about taking such pay- the entire debt immediately be paid. ments lest it give rise to a waiver. [Lavin v. Elmakiss, 302 A.D.2d 638, First, let’s not confuse this issue Perhaps the most practical problem 754, N.Y.S.2d 741 (3d Dept. 2003)]. with accepting payment after sending is that a borrower could argue that the breach/cure letter so typically re- So, whether a mortgagee will the reason partial payments were quired in residential foreclosures and choose to accept post-acceleration sent (and accepted) was because an in more than a few commercial cases checks is a business decision. As far arrangement had been made with as well. As a reminder, if a borrower as the law is concerned in New York, the lender to accept this and forgo responds to a breach letter by sending taking those checks is not a waiver. foreclosure. While the lender would less than all the past due sums, the counter that no such understanding mortgagee can accept the payment ever arose, courts could be sympa- because it does not cure the default. thetic to borrowers asserting this Mr. Bergman, author of the three-volume treatise, Bergman on The instance of acceleration, how- argument and, absent clear written New York Mortgage Foreclosures, ever, is somewhat different. Recall proof that there was never such an Matthew Bender & Co., Inc. (rev. that acceleration is an act which agreement, it could be surmised that 2009), is a partner with Berkman, occurs only after the breach letter has there would be some jeopardy to the Henoch, Peterson & Peddy, P.C. in been sent and the cure period has mortgage holder. Garden City, New York, a member expired. (This assumes that a breach On the other hand, some lenders of the USFN and an Adjunct Asso- letter is required by the mortgage welcome receipt of sums of money ciate Professor of Real Estate with documents. Absent such a clause in (representing considerable amounts New York University’s Real Estate the mortgage, in New York there is across a broad portfolio of loans), Institute, where he teaches the mort- no obligation to send a cure letter as a willing to take the occasional protest gage foreclosure course. He is also a prerequisite to acceleration.) Once an (and possible loss) when a wily bor- member of the American College of acceleration has been declared, what rower makes the argument. Real Estate Lawyers and the Ameri- the mortgagee in essence has said to can College of Mortgage Attorneys. the borrower is that “we require that But the legal answer to the ques- you pay the full amount of the mort- tion posed is, no, post-acceleration Copyright 2010, Bruce J. Bergman gage (which would have come due 10

RRealeal PPropertyroperty LawLaw SectionSection VVisitisit onon thethe WebWeb atat wwww.nysba.org/RealPropww.nysba.org/RealProp

54 NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 SCENES FROM THE REAL PROPERTY LAW SECTION

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* The titles included in the NEW YORK PRACTICE MONOGRAPH SERIEs are also available as segments of the New York Lawyer’s Deskbook and Formbook, a seven-volume set that covers 27 areas of practice. The list price for all seven volumes of the Deskbook and Formbook is $750. Get the Information Edge NEW YORK STATE BAR ASSOCIATION 1.800.582.2452 www.nysba.org/pubs Mention Code: PUB0864N

58 NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 Section Committees & Chairs The Real Property Law Section encour ag es members to participate in its programs and to volunteer to serve on the Commit- tees listed below. Please contact the Section Offi cers or Committee Chairs for further information about the Committees.

Alternative Legislation for Low Income Karla M. Corpus Gerald Lebovits Workers & Affordable Housing Hiscock & Barclay LLP New York City Civil Court Laura Ann Monte One Park Place 111 Centre Street Hodgson Russ LLP 300 South State Street New York, NY 10013 The Guaranty Building Syracuse, NY 13202 [email protected] 140 Pearl Street, Suite 100 [email protected] Buffalo, NY 14202-4040 Legislation [email protected] Condominiums & Cooperatives Karl B. Holtzschue Dennis H. Greenstein Law Offi ce of Karl B. Holtzschue Stacy L. Wallach Seyfarth Shaw 122 East 82nd Street Pace Law School 620 Eighth Avenue New York, NY 10028 Land Use Law Center New York, NY 10018 [email protected] 78 North Broadway [email protected] White Plains, NY 10603 Samuel O. Tilton [email protected] Ira S. Goldenberg Woods Oviatt Gilman LLP Goldenberg & Selker, LLP 700 Crossroads Building Attorney Opinion Letters 399 Knollwood Road, Ste. 112 2 State Street Charles W. Russell White Plains, NY 10603 Rochester, NY 14614 Harris Beach PLLC [email protected] [email protected] 99 Garnsey Road Pittsford, NY 14534 Continuing Legal Education Low Income and Affordable Housing [email protected] Joseph M. Walsh Richard C. Singer Walsh & Walsh, LLP Hirschen Singer & Epstein LLP Gregory P. Pressman 42 Long Alley 902 Broadway, 13th Fl. Schulte Roth & Zabel LLP Saratoga Springs, NY 12866 New York, NY 10010 919 Third Avenue [email protected] [email protected] New York, NY 10022 [email protected] Lawrence J. Wolk Steven J. Weiss Holland & Knight LLP Cannon Heyman & Weiss, LLP Awards 31 West 52nd St., 11th Fl. 726 Exchange Street, Ste. 516 John G. Hall New York, NY 10019 Buffalo, NY 14210 The Law Firm of Hall & Hall, LLP [email protected] [email protected] 57 Beach Street, 2nd Fl. Staten Island, NY 10304 Green Real Estate Membership [email protected] Nicholas M. Ward-Willis Laura Ann Monte Keane & Beane, PC Hodgson Russ LLP Commercial Leasing 445 Hamilton Avenue, Ste. 1500 The Guaranty Building Elizabeth A. Holden White Plains, NY 10601 140 Pearl Street, Ste. 100 Hodgson Russ LLP [email protected] Buffalo, NY 14202 The Guaranty Building [email protected] 140 Pearl Street Suite 100 Sujata Yalamanchili Buffalo, NY 14202-4040 Hodgson Russ LLP David L. Berkey [email protected] The Guaranty Building Gallet Dreyer & Berkey LLP 140 Pearl Street, Ste. 100 845 Third Avenue, 8th Fl. Bradley A. Kaufman Buffalo, NY 14202 New York, NY 10022 Pryor Cashman LLP [email protected] [email protected] 7 Times Square New York, NY 10036 Land Use and Environmental Law Not-for-Profi t Entities and Concerns [email protected] John C. Armentano Leon T. Sawyko Farrell Fritz PC Harris Beach PLLC David J. Zinberg 1320 RXR Plaza 99 Garnsey Road Ingram Yuzek Gainen Carroll & Bertolotti LLP Uniondale, NY 11556 Pittsford, NY 14534 250 Park Avenue [email protected] [email protected] New York, NY 10177 [email protected] Matthew F. Fuller Mindy H. Stern FitzGerald Morris Baker Firth, PC Schoeman Updike & Kaufman LLP Condemnation, Certiorari and Real 16 Pearl Street, P.O. Box 2017 60 East 42nd Street, 39th Fl. Estate Taxation Glens Falls, NY 12801 New York, NY 10165 Donald F. Leistman [email protected] [email protected] Koeppel Martone & Leistman LLP P.O. Box 863 Landlord and Tenant Proceedings Mineola, NY 11501 Edward J. Filemyr IV [email protected] 11 Park Place, Ste. 1212 New York, NY 10007 fi [email protected]

NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 59 Professionalism Gino Tonetti Task Force on e-Recording Legislation Patricia E. Watkins Greenberg Traurig, LLP Melvyn Mitzner Bartlett, Pontiff, Stewart & Rhodes PC 200 Park Avenue Keene & Beane, PC One Washington Street, P.O. Box 2168 New York, NY 10166 445 Hamilton Avenue, 15th Fl. Glens Falls, NY 12801 [email protected] White Plains, NY 10601 [email protected] [email protected] Real Estate Financing Alfred C. Tartaglia Richard S. Fries Task Force on Fraudulent Practices 720 Milton Road Bingham McCutchen LLP Peter J. Battaglia Rye, NY 10580 399 Park Avenue, 26th Fl. Chicago Title Insurance Company [email protected] New York, NY 10022 424 Main Street, Ste. 200 [email protected] Buffalo, NY 14202 Public Interest [email protected] Lewis G. Creekmore Frank C. Sarratori Legal Services of the Hudson Valley Pioneer Savings Bank Harold A. Lubell 90 Maple Avenue 21 Second Street Bryan Cave LLP White Plains, NY 10601 Troy, NY 12180 1290 Avenue of the Americas [email protected] [email protected] New York, NY 10104 [email protected] Rebecca Case Grammatico Real Estate Workouts and Bankruptcy Empire Justice Center Garry M. Graber Elizabeth A. Wade One West Main Street, Ste. 200 Hodgson Russ LLP Gateway Title Agency LLC Rochester, NY 14614 The Guaranty Building 250 Osborne Road [email protected] 140 Pearl Street, Ste. 100 Albany, NY 12205 Buffalo, NY 14202 [email protected] Publications [email protected] William P. Johnson Task Force on Hydrofracking/Wind Power Nesper, Ferber & DiGiacomo, LLP Robert M. Zinman Elizabeth A. Holden 501 John James Audubon Pkwy St. John’s University School of Law Hodgson Russ LLP One Towne Centre, Ste. 300 8000 Utopia Parkway The Guaranty Building Amherst, NY 14228 Queens, NY 11439 140 Pearl Street, Ste. 100 [email protected] [email protected] Buffalo, NY 14202 [email protected] Vincent Di Lorenzo Title and Transfer St. John’s University School of Law Gerard G. Antetomaso John E. Jones 8000 Utopia Parkway Gerard G. Antetomaso, PC Hinman Howard & Kattell, LLP Belson Hall, Room 4-46 1674 Empire Boulevard, Ste. 200 700 Security Mutual Jamaica, NY 11439 Webster, NY 14580 80 Exchange Street [email protected] [email protected] Binghamton, NY 13901 [email protected] Marvin N. Bagwell Thomas J. Hall Old Republic National Title Insurance Co. The Law Firm of Hall & Hall, LLP Task Force on Increasing Participation of 192 Lexington Avenue, Ste. 804 57 Beach Street Section Members in Committee Meetings New York, NY 10016 Staten Island, NY 10304 Ira S. Goldenberg [email protected] [email protected] Goldenberg & Selker, LLP 399 Knollwood Road, Ste. 112 William A. Colavito Joseph D. DeSalvo White Plains, NY 10603 One Robin Hood Road First American Title Insurance Company [email protected] Bedford Hills, NY 10507 of New York [email protected] 633 Third Avenue, 17th Fl. Task Force on Public Option Title Insurance New York, NY 10017 Joshua Stein Real Estate Construction jdesalvo@fi rstam.com Latham & Watkins, LLP Kenneth M. Block 885 Third Avenue Tannenbaum Helpern Syracuse & Unlawful Practice of Law New York, NY 10022 Hirschtritt, LLP Robert W. Hoffman [email protected] 900 3rd Avenue Hoffman & Naviasky, PLLC New York, NY 10022-4728 1802 Eastern Parkway Task Force on Taxation of Recorded [email protected] Schenectady, NY 12309 Documents [email protected] Peter V. Coffey Brian G. Lustbader Englert, Coffey, McHugh & Fantauzzi , LLP Mazur Carp Rubin & Schulman P.C. George J. Haggerty 224 State Street, P.O. Box 1092 1250 Broadway, 38th Floor George Haggerty & Assoc., PC Schenectady, NY 12305 New York, NY 10001-3706 500 North Broadway, No. 128, Ste. 580 [email protected] [email protected] Jericho, NY 11753 [email protected] David Pieterse Bond, Schoeneck & King, PLLC 350 Linden Oaks, Suite 310 Rochester, NY 14625-2825 [email protected]

60 NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 From the NYSBA Book Store

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Get the Information Edge NEW YORK STATE BAR ASSOCIATION 1.800.582.2452 www.nysba.org/pubs Mention Code: PUB0865N

NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 61 Section Officers N.Y. Real Property Law Journal Chair Co-Editors Anne Reynolds Copps William A. Colavito Law Office of Anne Reynolds Copps One Robin Hood Road 126 State Street, 6th Floor Bedford Hills, NY 10507 Albany, NY 12207 [email protected] [email protected] William P. Johnson Vice-Chair Nesper Ferber & DiGiacomo, LLP Heather C. M. Rogers 501 John James Audubon Parkway Davidson Fink LLP One Towne Centre, Suite 300 28 East Main Street, Suite 1700 Amherst, NY 14228 Rochester, NY 14614 [email protected] hrogers@davidsonfi nk.com Marvin N. Bagwell Old Republic National Title Insurance Co. Secretary 192 Lexington Avenue, Suite 804 Steven M. Alden New York, NY 10016 Debevoise & Plimpton LLP [email protected] 919 Third Avenue New York, NY 10022 Prof. Vincent Di Lorenzo [email protected] St. John’s University School of Law 8000 Utopia Parkway Budget Offi cer Belson Hall, Room 4-46 S.H. Spencer Compton Jamaica, NY 11439 First American Title Insurance Company of New York [email protected] 633 Third Avenue New York, NY 10017 St. John’s University School of Law SHCompton@fi rstam.com 2010-2011 Student Editorial Board Editor-in-Chief N.Y. Real Property Law Journal Lisa Viscount Executive Managing Editor Submission Guidelines Brianne Mitchell The Journal welcomes the sub mis sion of ar ti cles of Associate Managing Editor timely interest to members of the Section in addition to Allison Hoyt comments and sug ges tions for future is sues. Articles should be submitted to any one of the Co-Editors whose Executive Articles and Notes Editors names and addresses appear on this page. Nicholas Stadtmueller Michael Ward For ease of publication, articles should be sub mit ted via e-mail to any one of the Co-Editors, or if e-mail is not Student Notes and Publication Editor available, on a disk or CD, pref er a bly in Microsoft Word Owen Gu or WordPerfect (pdfs are NOT acceptable). Accepted Senior Staff Members articles fall generally in the range of 7-18 typewritten, Stephen Chou double-spaced pages. Please use endnotes in lieu of foot- Nneka Martin notes. The Co-Editors re quest that all sub mis sions for Kirsten Wood con sid er ation to be pub lished in this Journal use gender- neutral terms where ap pro pri ate or, al ter na tive ly, the Staff Members mas cu line and fem i nine forms may both be used. Please Matthew Ellias contact the Co-Editors re gard ing further re quire ments Constantine Kalogiannis for the sub mis sion of ar ti cles. Milana Khlebina Ashley Morris Unless stated to the contrary, all pub lished ar ti cles Alexander Nicas represent the viewpoint of the author and should not be Aggeliki Pantelios regarded as rep re sent ing the views of the Co-Editors, Board of Editors or the Section or sub stan tive approval Faculty Advisor of the con tents there in. Prof. Vincent Di Lorenzo

This Journal is published for mem bers of the Real Property Law Section of the New York State Bar Association. We reserve the right to reject any advertisement. The New York State Bar Association is not re spon si ble for typographical or other errors in advertisements. Copyright 2010 by the New York State Bar As so ci a tion. ISSN 1530-3918 (print) ISSN 1933-8465 (online) Cite as: N.Y. Real Prop. L.J.

62 NYSBA N.Y. Real Property Law Journal | Fall 2010 | Vol. 38 | No. 4 Your key to professional success… A wealth of practical resources at www.nysba.org

• Downloadable Forms organized into common The N.Y. Real Property Law practice areas Journal is also available online • Free legal research from Loislaw.com • Comprehensive practice management tools • Forums/listserves for Sections and Committees • Ethics Opinions from 1964 – present • NYSBA Reports – the substantive work of the Association • Legislative information with timely news feeds • Online career services for job seekers and employers • Learn more about the Go to www.nysba.org/RealPropertyJournal Lawyers Assistance Program to access: at www.nysba.org/lap • Past Issues (1998-present) of the N.Y. Real Property Law Journal* • N.Y. Real Property Law Journal Searchable Index (1998-present) The practical tools you need. The resources you demand. • Searchable articles from the N.Y. Real Property Available right now. Law Journal that include links to cites and statutes. This service is provided by Loislaw and is an exclusive Section member benefi t* Our members deserve nothing less. *You must be a Real Property Law Section member and logged in to access. Need password assistance? Visit our Web site at www.nysba.org/pwhelp. For questions or log-in help, call (518) 463-3200.

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NEW YORK STATE BAR ASSOCIATION AAnnualnnual MMeetingeeting January 24-29, 2011 Hilton New York 1335 Avenue of the Americas New York City RRealeal PPropertyroperty LLawaw SSectionection MMeetingeeting andand ProgramProgram Thursday, January 27, 2011

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