Real Estate

Notice to Admit: The Power of a Piece of Paper

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In the Civil Practice Law and Rules (CPLR) – the “Game Book” of civil practice in New York State courts, there is a little-used device called the “Notice to Admit.” While not as often utilized by attorneys as it ought to be, it can pack a powerful punch to the other side in litigation.

As most of us know, the old days of Perry Mason pulling out a trick at trial have greatly diminished due to the introduction into the legal process of a phase in the litigation known as “discovery.” During the discovery phase, each adversary is permitted to inspect and “discover” relevant documents and information pertaining to the lawsuit, through the use of various discovery techniques. Those discovery techniques may include, among other things, inspecting the books and records of a business, asking questions known as “interrogatories,” performing a physical examination, viewing photographs or videos made of the scene of an incident, and inspecting the geographic location of an area which is the subject of the litigation. Among those discovery techniques, there is the Notice to Admit.

CPLR Section 3123 provides that: “a party may serve upon any other party a written request for admission by the latter of the genuineness of any papers or documents, or the correctness or fairness of representation of any photographs, described in and served with the request, or of the truth of any matters of fact set forth in the request, as to which the party requesting the admission reasonably believes there can be no substantial dispute at the trial and which are within the knowledge of such other party or can be ascertained by him upon reasonable inquiry.” It is further provided that, if the latter party fails to respond, the effect is that the matter shall be deemed “admitted.”

In Rodriguez v. Moreno, it was alleged that, in 1994, the owner of a 2-family house in Brooklyn had to leave this country in a hurry and needed cash. He made an agreement with his tenant that, in exchange for $30,000 cash and the continued payment of the mortgage on the house, the tenant could effectively purchase the house from him. To memorialize their understanding, the owner and his tenant went to the owner’s attorney to sign documents.

The owner’s attorney drafted the documents necessary to transfer title to the house, including a Deed. The owner signed the documents, and the attorney held onto the originals. The agreement was, once the tenant paid off the last of the mortgage payments on the house, the Deed would be released to him from the attorney’s escrow. This arrangement continued for 13 years.

In 2007, the tenant discovered that the owner, who still held title to the house, was trying to sell it to someone else. The only proof of the agreement he had was a photocopy of the front side of the Deed that the owner signed 13 years earlier. Unfortunately, the owner’s attorney had been disbarred years earlier and was nowhere to be found; also gone were the original documents.

Quick Action Was Needed

Armed with only a skimpy photocopy of the first page of the Deed, which had the signature of the owner, the tenant hired Richard A. Klass, Esq., to bring an action under New York’s Real Property Actions and Proceedings Law (RPAPL) to enforce his rights to the house. Since the owner was actively trying to sell the house, and had signed a contract to sell the house to someone else, quick action to stop the sale was needed. With the filing of the Summons and Complaint, a Notice of Pendency (also known as a “lis pendens”) was filed against the house, which operates as notice to outsiders that someone is laying claim to ownership of the house.

The owner denied the agreement, since there was no proof of the agreement between himself and the tenant. He also claimed that the mortgage payments made by the tenant were intended as rent.

Proving the Copy To Be a Duplicate of the Original

The next, important step was to nail down through the discovery phase the proof of the agreement. In general, contracts relating to the sale of real estate require written proof under a legal doctrine known as the Statute of Frauds. Since here, there was no writing other than the photocopy of the Deed, the lawsuit appeared to be futile.

The admissions requested were as follows:

  1. That the attached Deed was signed by the defendant on September 1, 1994.
  2. That the attached Deed was prepared by the defendant’s attorney, or on his behalf by a member of his staff or office.
  3. That the defendant’s attorney prepared the attached Deed at the request of, or on behalf of the defendant.
  4. That the original of the attached Deed was taken into escrow by the defendant’s attorney at or about the time of execution thereof.

Despite being served with this Notice to Admit, the defendant failed to respond to it within the 20-day time frame in which to respond. By virtue of his not timely responding, the above allegations were deemed “admitted.”

Since it was now admitted that the owner signed the Deed in favor of the tenant, and the Deed was to be held in escrow by his attorney, the terms of the agreement were arguably established in a manner allowed by the Statute of Frauds. Coupled with the fact that the tenant made all of the mortgage payments for 13 years, the owner elected to settle the case instead of proceeding to trial.

Richard A. Klass, Esq.
 

©2008 Richard A. Klass. Art credits: page one, Der Schindanger in Livorno by Giovanni Fattori, 1865-1867.

copyr. 2011 Richard A. Klass, Esq.
The firm’s website: www.CourtStreetLaw.com
Richard A. Klass, Esq., maintains a law firm engaged in civil litigation at 16 Court Street, 28th Floor, Brooklyn Heights, New York.
He may be reached at (718) COURT-ST or e-ml to RichKlass@courtstreetlaw.comcreate new email with any questions.
Prior results do not guarantee a similar outcome.

R. A. Klass
Your Court Street Lawyer

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The (Property) Bonds of Matrimony That Can’t Be Broken

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Two sisters and their respective husbands decided to purchase a two-family house in The Bronx in 1995. At the closing, they took title to the property, reflected on the Deed, as follows: “Gilberto Hernandez and Consolacion Hernandez, his wife …. And Erlinda Que and Elpidio Rodriguez, her husband.” Erlinda executed her Last Will and Testament, in which she devised her “half share and interest in the real property” to her sister, Consolacion, and her husband, Elpidio, in equal shares. In December 2000, Erlinda passed away, survived by her husband, Elpidio.

For a long time after Erlinda’s death, Elpidio and his deceased wife’s sister continued to maintain the house. At some point, he remarried and wanted to sell it and move. And, when they all couldn’t agree on how to accomplish this, a lawsuit was initiated called a “Partition and Sale” action. In this type of lawsuit, the parties ask a judge to order the property sold at auction.

The decedent’s sister and her husband, along with the nominated executor under the Will, claimed that ownership of the Bronx property passed under Erlinda’s Last Will and Testament. Therefore, they claimed that half of Erlinda’s quarter-share went to Consolacion (or one-eighth of the total interest in the property), and half of Erlinda’s quarter-share went to Elpidio. By their claim, Elpidio would be entitled to only 37.5% of the house.

Elpidio, the decedent’s surviving spouse, came to Richard A. Klass, Your Court Street Lawyer, for legal advice. Elpidio felt that, as Erlinda’s husband, he should get more.

Tenancy by the Entirety:

One of the “perks” of being married is that real property deeded to a husband and wife creates a “tenancy by the entirety,” under New York’s Estates Powers and Trusts Law Section 6-2.2(b). This form of ownership, among other things, prevents creditors of one spouse from forcing the sale of the house and easily transfers title to one spouse upon the death of the other. The exception to this rule about a tenancy by the entirety is if the Deed expressly declares it to be a joint tenancy or tenancy in common (where each spouse owns a divisible share).

Commonly, the Deed to a husband and wife will indicate that they are married, with language such as “A and B, as husband and wife” or “A and B, his wife” or “A and B, her husband.” This form of ownership, by statute, cannot be altered or changed without the mutual consent of the spouses or a divorce. Obviously, the ownership of a house by spouses as a tenancy by the entirety gives comfort that one spouse cannot sell his/her interest in the house without the other spouse’s consent. Only in limited circumstances, such as a divorce proceeding or bankruptcy case, can a court force the disposition of a house owned by the spouses in this form without their consent.

Granting of Summary Judgment:

The term “summary judgment” means that the litigant believes that there are no issues of fact which necessitate a trial before a judge or jury. When one litigant “moves” or asks the judge to grant summary judgment, he must present proof (in admissible form) which supports the request and which demonstrates that the matter may be decided on the law alone. It can then be said that the movant has established his“prima facie” case (meaning “at first sight”). Then, the other side to the litigation must present the judge with proof that there are genuine factual issues, and that the matter cannot be decided without a trial. Many readers will understand that judges deny summary judgment motions in most cases because they want to give litigants their day in court, and the facts are not always the facts.

In the probate proceeding in the Surrogate’s Court for Bronx County, Elpidio asked the Surrogate to grant him “summary judgment” on his claim that he is entitled to Erlinda’s entire interest in the house. The ‘Exhibit A’ proof, offered by Elpidio that he was entitled to Erlinda’s whole share, was the Deed itself. There was no express declaration in the Deed that it had been conveyed or transferred to Elpidio and Erlinda as anything other than husband and wife.

In granting summary judgment to Elpidio, in In the Estate of Erlinda Que, Deceased [Surrogate’s Court, Bronx County, February 25, 2010], Surrogate Holzman determined that, despite the language of Erlinda’s Last Will and Testament granting her sister a half-share of her interest in the house, Elpidio should be declared the full owner of half or 50% of the whole house. Specifically, Surrogate Holzman held that:

“ A tenancy by the entirety is different from both a tenancy in common and a joint tenancy in that ‘it remains fixed and cannot be destroyed without the consent of both parties’ for ‘as long as the marriage remains legally intact,’ with both parties continuing ‘to be seized of the whole, and the death of one merely results in the defeasance of the deceased spouse’s coextensive interest in the property.’ (V.R.W. Inc. v. Klein, 68 NY2d 560 [1986].) ”

Accordingly, by operation of law, the death of Erlinda, one of the spouses, resulted in that spouse/tenant no longer having an interest in the property, with Elpidio, as the surviving spouse, now owning her share as well as his own. Surrogate Holzman recognized the long-standing rule that “a severance of a tenancy by the entirety cannot be effectuated by the unilateral last will of one of the spouses alone.” (Matter of Strong, 171 Misc. 445 [1939].

 
by Richard A. Klass, Esq.

Credits:
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copyr. 2010 and 2011 Richard A. Klass, Esq.
The firm’s website: www.CourtStreetLaw.com
Richard A. Klass, Esq., maintains a law firm engaged in civil litigation at 16 Court Street, 28th Floor, Brooklyn Heights, New York.
He may be reached at (718) COURT-ST or e-ml to RichKlass@courtstreetlaw.comcreate new email with any questions.
Prior results do not guarantee a similar outcome.

R. A. Klass
Your Court Street Lawyer

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Asking the Court to Grant Partition and Sale of Jointly-Owned Property

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In a recent case, in which Richard A. Klass, Your Court Street Lawyer, represented one of three owners of real property asked the trial judge to grant ‘summary judgment’ against the other owners, granting his motion to partition and sell the real property at auction. In support of the motion, it was requested that the court grant partition and sale, in accordance with Real Property Actions and Proceedings Law [RPAPL] Article 9.

It was also requested that the court order the distribution of the net proceeds  from the auction sale of the real property to the parties in one-third interests, along with crediting the plaintiff for the moneys paid at closing when the property was first purchased.

RPAPL Section 901 provides that one who holds an interest in real property as a tenant in common may bring an action against the other tenants-in-common for the partition or sale of the property. The action was brought by Plaintiff as a tenant-in-common against the other two owners. The Plaintiff had to prove the following:

A: Plaintiff is ‘seised’ with an interest in the Property:

In the action, there was no issue of fact that Plaintiff had a right to possession of the property as a co-tenant, which is all that is needed to maintain an action for partition and sale. See, Dalmacy v. Joseph, 297 AD2d 329 (2d Dept. 2002). He was one of the three owners of the property, as indicated on the face of the Deed.

Pursuant to RPAPL 915, it was requested that the court issue an Order determining the parties’ rights, shares, and interest in and to the property.

B: Physical partition would be prejudicial:

Then, the plaintiff had to show that the property could not be physically partitioned in order to sell the entire property as one. In that case, a physical partition of the house would not have been practical and without prejudice to the owners, given that it was a three story brownstone. See, e.g. Cheslow v. Huttner, 13 Misc.3d 1224(A) (Sup. Ct., NY Co. 2006) (physical partition of a townhouse would be greatly prejudicial to the owners); Donlon v. Diamico, 33 AD3d 841 (2d Dept. 2006) (plaintiff established her entitlement to summary judgment directing the sale of the property because partition alone could not be made without great prejudice to the owners).

Based upon RPAPL 915, where it would be prejudicial to the owners to physically partition the property, the court should direct the property to be sold.

C: Plaintiff should be credited for the down payment:

Since partition, although statutory, is equitable in its nature, the court may compel the parties to do equity between themselves when adjusting the proceeds of the sale. Oliva v. Oliva, 136 AD2d 611. It has been held that a court may consider, among its factors of considering the equities of the partition and sale action, the down payment made by a co-tenant. Perrin v. Harrington, 146 AD 292.

R. A. Klass
Your Court Street Lawyer

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Knocking Out Defenses Means They Don’t Get Up!

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The Executor of the estate of a man who owned a mixed-use building in Brooklyn sold it to someone for $700,000. As part of the sale, the Executor agreed to take back two mortgages on the property from the buyer in favor of the decedent’s wife, the beneficiary of the estate.

The buyer (and now building’s owner) defaulted on the mortgages by failing to make payments on them to the beneficiary/lender. At that point, the mortgagee turned to Richard A. Klass, Your Court Street Lawyer, for legal assistance to commence foreclosure proceedings on the two mortgages against the buyer.

Once the foreclosure proceeding was brought, the buyer served its “Answer with Affirmative Defenses and Counterclaim.” In general terms, an “affirmative defense” is the legal term for when the defendant in a lawsuit puts forth the reason he is not liable to the plaintiff.

The First Affirmative Defense was that the Summons and Complaint were not properly served upon the defendant according to law, so the court lacked jurisdiction over the person. The Second Affirmative Defense and the Counterclaim alleged that the buyer was coerced into buying the property, having known the decedent and his family for 15 years. The defendant claimed that the conditions of the premises were concealed from it by the plaintiff and it did not have an opportunity to inspect the premises prior to the sale. As a result, the defendant claimed that there exists a defective foundation and water seepage into the basement.

Strike First!

Both federal and state court procedural rules allow for parties to a lawsuit to make requests of the judge to deal swiftly with certain claims or defenses of a litigant. These requests are called “Pre-Answer Motions to Dismiss.” In essence, the party is claiming that the claim or defense has no legal merit whatsoever for a number of reasons and, therefore, that matter should not even proceed forward in the case.

Upon receipt of the Answer with Affirmative Defenses and Counterclaim, Your Court Street Lawyer brought a Pre-Answer Motion to Dismiss the defenses of the defendant (buyer of the building). This Motion challenged the legitimacy of these defenses.

Good service of process:

Attached to the motion papers was a copy of the Affidavit of Service of the Summons and Complaint upon the defendant from a licensed process server. New York law has traditionally held that a process server’s affidavit ordinarily constitutes “prima facie” [at first sight] evidence of proper service. National Heritage Life Insurance Company v. T.J. Properties Co., 286 AD2d 715 [2 Dept. 2001]. A defendant can rebut the process server’s affidavit with a ‘detailed and specific contradiction of the allegations in the process server’s affidavit’ sufficient to create a question of fact warranting a traverse hearing (citing to Bankers Trust Co. of California v. Tsoukas, 303 AD2d 343 [2 Dept. 2003]). However, in this case, the defendant did not deny the process server’s allegations in an affidavit, but only in the attorney’s affirmation (which has no evidentiary value). Also, the defendant failed to timely move to dismiss the case within the 60-day period in which a defendant must move to dismiss on this ground (see, Civil Practice Law and Rules Section 3211(e).

No concealment charges against the Mortgagee:

The mortgagee asked the Judge to dismiss the Second Affirmative Defense and Counterclaim that the buyer was not given the opportunity to inspect the premises before purchase, and thus, should not have to pay the mortgages. The building was sold by the executor of the estate of the deceased person but the mortgages delivered at the closing were in favor of another family member, the beneficiary of the property under the Last Will and Testament.

Using the pre-Answer Motion to Dismiss, the mortgagee pointed out to the judge that the defenses were not permitted because they were directed against the estate, as opposed to the beneficiary of the property. Thus, under Civil Practice Law and Rules Section 3211(a)(6), the claim could not be maintained even though in the form of a counterclaim because it could not properly be asserted against the beneficiary. The Judge noted that the buyer did not join the seller of the property (the estate) as a party and could not bring the claims it was claiming in its defense.

In granting the plaintiff’s motion to dismiss, the Judge held that the defenses and counterclaim of the defendant should be properly dismissed. Kodsi v. 115 Bay Ridge Ave. LLC, Sup. Ct., Kings Co. Index No. 33740/2008, 6/28/2010.

It is very important that, upon receiving an Answer to a lawsuit from a defendant, the plaintiff immediately review the Answer to determine the nature of any defenses and counterclaims, as well as decide whether to ask the judge to “knock ‘em out” right away instead of waiting until trial.

by Richard A. Klass, Esq.
“Your Court Street Lawyer”

R. A. Klass
Your Court Street Lawyer

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Bringing an Action for Specific Performance of a Real Estate Contract of Sale

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Typically, the sale of real estate involves the signing of a contract of sale between the owner of the real estate and the prospective buyer for a certain dollar amount. Each side is eager to close the transaction — the seller wants the money from the closing to purchase another property and the buyer wants to move into the house.

Sometimes, the seller/owner of the real estate attempts to delay or cancel the contract of sale for various reasons, including that another party has come along offering more money to purchase the property than the contract price. The buyer is put into a position of bringing an action to enforce his/her rights under the contract of sale to purchase the property.

The right of the prospective buyer to bring an action for “specific performance” is an important one, which is based upon an old, “common law” theory that real estate is considered a “unique asset,” for which a money judgment against the seller for breach of contract cannot recompense. The courts recognize that a certain piece of real estate cannot be replicated or replaced with another or with money.

The action to force the sale of real estate based upon a breach of contract starts with the filing of a Complaint with the Supreme Court in the county in which the property is located. At or about the same time, the buyer will file a “Notice of Pendency” with the County Clerk. The “Notice of Pendency” or, as commonly known as the “Lis Pendens,” is a document which serves as notice to the entire world that the buyer is laying an equitable claim to the ownership of the property and that an action is pending to determine the buyer’s potential ownership rights therein. Any person who later contracts to purchase the property is effectively “on notice” of the buyer’s claim and is taking substantial risk in proceeding in any transaction with the seller/owner of the real estate.

After the action is filed, the seller will have an opportunity to answer the Complaint. Then, typically, one of the parties will move for “summary judgment,” asking the judge to decide whether there was a breach of the contract of sale and whether the buyer is indeed entitled to the specific performance of the contract of sale. If the judge decides that the buyer is entitled to purchase the property, then the judge will issue an Order directing the seller/owner to proceed to closing and tender a Deed to the buyer.

It is important for the prospective buyer to move quickly to file the Notice of Pendency when it appears that a breach of the contract of sale has or will occur, in order to ensure that there is constructive notice of the action for specific performance; otherwise, the buyer, albeit entitled to money damages, will no longer have the right to the property.

by Richard A. Klass, Esq.
 

copyr. 2004 and 2010 Richard A. Klass, Esq.
The firm’s website: www.CourtStreetLaw.com
Richard A. Klass, Esq., maintains a law firm engaged in civil litigation at 16 Court Street, 28th Floor, Brooklyn Heights, New York.
He may be reached at (718) COURT-ST or e-ml to RichKlass@courtstreetlaw.comcreate new email with any questions.
Prior results do not guarantee a similar outcome.

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Bringing an Action for Specific Performance of a Real Estate Contract of Sale

Author Name:
Richard A. Klass, Esq.

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About the Author:
Richard A. Klass, Esq. maintains a law firm engaged in civil litigation at 16 Court Street, 28th Floor, Brooklyn Heights, New York. He may be reached by phone at (718) COURT-ST [(718) 268-7878)] with any questions. Prior results do not guarantee a similar outcome.

Additional articles by Mr. Klass may be found on the firm’s website.
Back issues from Mr. Klass’ quarterly newsletter, Law CURRENTS are available on the firm’s website.
Articles from Law CURRENTS may be available for reprint. Please see individual articles for license information.

 

R. A. Klass
Your Court Street Lawyer

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