NOVEMBER 2011

 

A prospective purchaser of a cooperative unit may proceed with a lawsuit alleging that the cooperative discriminated against him in denying his application to purchase the unit because he is a single man. Lax v. 29 Woodmere Boulevard Owners, Inc., 10 Civ. 4008, 2011 WL 4425507 (E.D.N.Y. Sept. 23, 2011).

The plaintiff in this case, a college professor, is a single man. He entered into a contract to purchase the unit from its current owners for $200,000, subject to approval by the Cooperative’s Board of Directors. Plaintiff submitted a purchase application, providing the information and documents that the Board requested, including reference letters, pay stubs, income tax returns, and other information and documents concerning his assets and liabilities.  Nevertheless, the managing agent told Plaintiff that his application had been denied. 

 

Plaintiff alleged that at the time the Board rejected his application, the current tenant-shareholders advised him that the Board had denied the application because the purchase price was too low. Plaintiff claimed that after he was told this was the reason for the rejection, he had indicated that he was open to paying more for the unit. However, as plaintiff was waiting for the Board’s response to this suggestion, he learned from another resident that the Board was engaging in a pattern of discriminatory conduct against single men.  A few weeks later, plaintiff asserted, the current tenant-shareholders informed him that the Board would refuse his purchase application no matter how much he was prepared to pay. Thereafter, plaintiff received a letter from the Board which insisted that its denial was based on the purchase price of $200,000, but which failed to address plaintiff’s offer to pay more. Meanwhile, the unit remained listed for sale for $200,000.

 

Plaintiff then filed a lawsuit under the federal Fair Housing Act, asserting that the Cooperative, its board members, and the managing agent had rejected his application because they had become prejudiced against single men as tenant-shareholders after a previous unmarried male owner in the building allegedly threw loud parties and smoked marijuana. Plaintiff alleged in his complaint that disapproval of his application based on his status as a single male constituted “sex plus” discrimination, i.e., bias based on the plaintiff’s sex plus another factor, his marital status.

 

The court denied a motion to dismiss this claim. It held that under applicable law, it was “well settled that a discrimination claim can be based on membership in a class based on gender plus another characteristic,” such as gender plus marital status. Turning to the alleged facts of the case, the court found the allegations of the complaint, viewed in a light favorable to the plaintiff as required at this procedural stage of the case, were sufficient to survive a motion to dismiss.

 

In addition to allowing the litigation to proceed against the Cooperative itself, the court allowed the case to proceed against the individual Board members and against the managing agent. With respect to the managing agent, the court rejected the argument that the managing agent was a disclosed agent of the Cooperative and could not be sued for its actions as such. The court held that the managing agent’s status as a disclosed agent did not protect it from suit because the plaintiff had sufficiently alleged that it participated in the discriminatory conduct and decision-making.

 

PURCHASER OF CONDOMINIUM UNIT IN FORECLOSURE SALE MUST

 

Under the provisions of New York’s Condominium Act, the lien of a first mortgage on a condominium unit is generally superior to a Condominium’s lien for unpaid common charges and fees. Thus, upon foreclosure of the first-position mortgagee’s lien, a purchaser at a foreclosure sale will have no liability for the past-due common charges and fees. However, a recent court decision held that specific terms of a foreclosure sale, which were drafted by a mortgagee bank in connection with its foreclosure, contained a clause suggesting that the sale was subject to payment of the outstanding common charges. As a result, the mortgagee bank was required to pay the outstanding condominium charges. Deutsche Bank National Trust Co. v. Tabares, N.Y.L.J. Oct. 18, 2011 (Sup. Ct. Suffolk Co. Sept. 27, 2011).

 

The case arose following a unit owner’s default in payment under his mortgage, resulting in a foreclosure action by the mortgagee bank. The court appointed a referee, who conducted a foreclosure sale, in which the bank acquired the property for $100. When the bank then sought to sell the unit to a third party, the Condominium asserted that under the terms of the foreclosure sale, it was entitled to be paid for the unpaid common charges and associated fees. The bank’s position was that it was responsible for common charges only for the period it owned the property, that is, from the date it purchased the unit at the foreclosure sale through the date it would resell it. The bank paid the amounts demanded by the Condominium under protest and then sued the Condominium for a refund.

 

The terms of sale contained in the Notice of Sale included a provision that the unit was to be sold “subject to ‘any covenants, restrictions, declarations, reservations…’” and also that the purchaser of the unit “will at the time and place of sale, sign a memorandum of his purchase, and an agreement to comply with the terms and conditions of sale herein contained.” More importantly, the terms of sale provided that the property would be sold “subject to … [o]utstanding condominium charges, if any.” The court observed that the terms of the Notice of Sale were “tantamount to a contract” and that, because the terms were drafted by the bank, any ambiguities must be construed against the bank.

 

The court held that “[u]nder the circumstances presented, the payments made by the [bank] were required by the Terms of Sale, which was drafted by plaintiff’s attorneys, and referenced in the Notice of Sale, providing that the subject premises were sold subject to the payment of the outstanding condominium charges.”

 

 

            Ganfer & Shore, LLP is pleased to invite clients and friends of the firm to a wine tasting, seminar, and tour to be held on November 17, 2011 at the New York Design Center. The panel discussion will focus on employment law and electronic discovery and is entitled “Sex, Tattoos, and E-Mail Blunders.” The panel discussion will include Steven J. Shore, Robert I. Gosseen, and Mark A. Berman. This event will include an optional tour of the Design Center located at 200 Lexington Avenue (at 32nd Street) from 4:00 to 5:00 p.m., and the Legal Panel at 5:00 p.m., followed by an expert-led wine-tasting. To sign up, please call Amarilys Garcia at (212) 922-9250, ext. 262, or e-mail her at agarcia@ganfershore.com, by November 10, 2011.