Saturday, June 27, 2015

Landlord Push To Drive Out Long-Time, Below-Market, Rent-Regulated Tenants Continues In NYC As Demand For Apartments Skyrockets

In New York City, The Real Deal (NYC) reports:
  • Tenant advocates claim the Orbach Group is attempting to harass and drive out lower and middle-income residents in Manhattan Valley, near Columbia University, in an effort to replace them with Columbia students and higher-income tenants.

    Orbach installed metal gates on the stoops of nearly 20 of its buildings in the neighborhood and sent letters to tenants accusing them of loitering on stoops.

    The landlord, which markets the apartments to Columbia students by offering a free campus-area shuttle bus, has reportedly challenged tenants on residency requirements in Housing Court and allegedly installed covert surveillance cameras in the properties to monitor such requirements, according to the New York Times.

    Other tactics allegedly include offers to buy out leases to tenants facing legal action, as well as the use of a private investigator to obtain information for use in Housing Court.

    Orbach’s actions have drawn scrutiny from state attorney general Eric Schneiderman, with some tenants receiving letters from Schneiderman’s office in January notifying that them of an investigation into “complaints of tenant harassment.”
Source: Orbach accused of Manhattan Valley tenant harassment (Landlord allegedly installed metal gates on stoops, hired private investigator).

See also, The New York Times: Longtime Tenants in Manhattan See an Effort to Push Them Out:
  • The Orbach Group’s methodical approach to pursuing eviction cases, even against tenants in good standing, requires such exhaustive, detailed responses that some tenants inevitably fail to properly answer motions or miss deadlines and end up losing leases, said Jason Blumberg, a lawyer with MFY Legal Services, a nonprofit that has represented several tenants in Orbach-owned buildings.

    “Part of the strategy is, you sue everybody and you get people out bit by bit, and the whole enterprise sort of pays for itself,” Mr. Blumberg said.

    It is the kind of behavior that housing activists say is common among landlords seeking to tap into the city’s heated housing market by forcing out rent-regulated tenants. And it comes as state lawmakers in Albany are negotiating rent-regulation laws that govern 1 million apartments in New York, which Mayor Bill de Blasio wants to strengthen.

20-Month Saga Of Vulnerable Senior Who Reclaimed Rented Apartment After Being Illegally Booted While In Injury-Rehab Highlights Emerging Trend Of Eviction-Hungry NYC Landlords Demolishing Rent-Regulated Units Immediately Upon Ouster So Judges Can't Put Tenants Back In

In New York City, amNewYork reports:
  • Upper East Side Tracy Morisada, is one of the rare New Yorkers who regained her apartment after being evicted. But reclaiming her tiny studio entailed a terrible, nearly two-year nightmare in which she lost all her possessions, from her passport to her computer.

    Her saga illustrates not only the lengths some landlords will go to reclaim rent-stabilized apartments, but how quickly a vulnerable renter can be stripped of all they have.

    Morisada, 81, had been taken to court by her landlord for falling behind on rent and was given more time by a judge to gather up the arrears on her then-$899 a month studio when she was mowed down by a bicycle in Central Park on July 27, 2013.

    She was gravely injured, with a traumatic brain injury, multiple rib fractures, a facial bone fracture and other traumas. Despite her condition, she had the presence of mind to tell staff at New York Presbyterian Hospital she was in the midst of a housing court case. A social worker informed her landlord, BLDG Management Co., Inc. by phone and in writing of her condition, requesting her case be postponed.

    Instead, BLDG listed her walk-up apartment as available for renovation on Aug. 1. When she failed to appear in court on Aug. 5, the landlord didn't explain to the judge why she wasn't' there. Instead, BLDG obtained an eviction order, and swiftly moved all of Morisada's possessions -- her silk kimono, computer, all her identification, gold jewelry and a prized mink coat ("it was a good one!" she recalled) into a storage facility and began renovations.

    Neglecting to tell the judge why Morisada failed to appear constituted "a fraud upon the court," said Morisada's lawyer, Jason Blumberg of MFY Legal Services.

    Morisada was recuperating in the Mary Manning Walsh Home, on York Avenue, when a social worker performed a home inspection on Oct. 25 to make sure she could be discharged safely, and discovered there was no home for Morisada to return to; her apartment had been gutted and was about to be occupied by a new tenant.

    Nursing home staff moved swiftly to obtain legal representation for Morisada through a pilot program at The NYC Department of the Aging, hooking her up with MFY Legal Services.

    A judge vacated her eviction in March 2014 and ordered that she return, but also ordered her to pay all her back rent. Mary Manning and MFY -- hobbled by Morisada's lack of personal documents -- spent a year cobbling together funds to pay the metastasizing rent arrears and enrolling Morisada in programs to supplement her Social Security check so she wouldn't fall behind again. Because all her belongings had been auctioned off for nonpayment of rent without her knowledge, advocates also had to furnish the vacant unit.

    Morisada "never would have gotten home without" the efforts of Mary Manning employees, who first filed court papers on her behalf, obtained a Medicaid waiver for her and worked arduously not only to reclaim her home, but her vanished possessions, and, when they couldn't, filed numerous complaints, added Blumberg.

    Her story points out why all vulnerable seniors need court-appointed lawyers in housing cases, said MFY director of development and communications Dolores Schaefer, who is a fan of the "right to counsel" movement. "Landlords are desperate to get these rent stabilized apartments back," she said, often so that they can hike rents and turn them into market-rate units for new tenants.

    The stakes are especially high now because "there's an emerging trend of demolishing an apartment the minute (landlords) get a tenant out so a judge can't put (renters) back in," added Blumberg, who would like sanctions levied upon landlords who do this.

Friday, June 26, 2015

Title Agent Held Liable For Corrupt Developer's Ponzi-Style Handiwork In Escrow Ripoff; Jury Awards Victim/Ex-UFC Champ $1.9M+; Investor's Funds Were Released Before Close Of Escrow Without Concurrent Title Transfer Of Properties Purchased

In San Luis Obispo, California, The Fresno Bee reports:
  • A San Luis Obispo County jury awarded former UFC champ Chuck Liddell nearly $2 million Tuesday against an escrow company he says helped developer Kelly Gearhart defraud him.

    Liddell, a Cal Poly business graduate who lived in San Luis Obispo for 20 years before moving to Southern California, had invested $2 million with Gearhart to purchase four lots at his Vista del Hombre development project. But he said Cuesta Title Company, which handled all of Gearhart’s escrows for the project, released his funds before the close of escrow and without transferring title to the properties. Meanwhile, Gearhart was using investor money to pay other investors and himself.

    During the trial, his attorney, Warren Paboojian of Fresno, said Cuesta Title escrow officer Melanie Schneider had a conflict of interest because she was close friends with Gearhart and his wifeand had invested $50,000 of her own money in the Vista del Hombre project.

    As an escrow officer, Paboojian told jurors in his closing argument, Schneider was supposed to be neutral. But, he said, she did not warn Liddell about possible improprieties committed by Gearhart because she had a financial stake in seeing the project go through.

    “You have to disclose actual fraud that’s being perpetrated,” he told jurors.

    On the stand, Schneider said she didn’t know Gearhart was committing fraud. Attorney Gerard Kelly, representing Cuesta Title, said his clients merely followed escrow instructions, as they were required.

    Liddell, he argued, should have done more research before investing with Gearhart and later signing documents that released his money.

    Liddell claimed his signatures on addendums and additional escrow documents were forged.

    Gearhart defrauded hundreds of investors. He pleaded guilty in 2012 to two counts of wire fraud and one count of money laundering at the U.S. District Court in Los Angeles. But because Gearhart declared bankruptcy, those who sued focused on Cuesta Title and their related companies, Stewart Title of California and Stewart Title Guaranty.

    Liddell was joined by two others parties with multiple defendants. While the jury awarded Liddell $1,982,727, it has yet to decide on the other plaintiffs.

Another Homebuyer-In-Possession Under Contract For Deed Claims Major Screwing Over; Despite Making All Required Payments, Seller Still Gave Him The Boot: Lawsuit

In Galveston County, Texas, The Southeast Texas Record reports:
  • A Galveston County resident is suing a woman from whom he purchased property, alleging breach of contract. Jeffrey T. Rentschler filed a lawsuit June 8 against Mary E. Gordon of Hitchcock in Galveston County District Court, citing a property dispute dating to 2011.

    According to the complaint, on April 11 ,2011, Rentschler entered into a contract of deed for property in a Galveston County subdivision, and the sales contract indicated a total price of $125,064.05, broken down into monthly payment installments of principal, interest and escrow.

    Rentschler alleges he made all monthly payments correctly, yet the defendant served him with a document Jan. 30, 2015, demanding possession of the premises by March 1 and accusing him of failing to abide by the contract’s time frame.

    The plaintiff has vacated the premises, the suit says, and maintains Gordon violated Texas property code by failing to provide a survey, written notice and several other documents required by property law.

    Rentschler seeks: injunctive action against Gordon; cancellation of the executor contract for deed; a full refund of all payments made to Gordon; up to $100,000 in compensation for liquidated and statutory damages; pre- and post-judgment interest; attorney fees; expenses; and costs.
Source: Property purchaser brings action against seller.

Go here for earlier stories on screwed over homebuyers who have been peddled properties through the use of the predatory instruments of choice for real estate scammers:

Thursday, June 25, 2015

Atlanta, Antitrust Feds Together Bag Eighth Local Real Estate Operator On Foreclosure Sale Bid Rigging Charges; Busted Racket Designed To Suppress, Restrain Competition; Conceal Payoffs To Score Home 'Steals' At Public Auctions

From the U.S. Department of Justice (Washington, D.C.):
  • A Georgia real estate investor pleaded guilty [] for his role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Georgia, the Department of Justice announced.

    Felony charges against David Wedean were filed on April 27, 2015, in the U.S. District Court of the Northern District of Georgia in Atlanta. According to court documents, from at least as early March 2007 and continuing at least until August 2011, in Fulton County, Georgia, and from at least as early as August 2007 and continuing at least until September 2011, in DeKalb County, Georgia, Wedean conspired with others not to bid against one another, but instead designated a winning bidder to obtain selected properties at public real estate foreclosure auctions in Fulton and DeKalb Counties.

    Wedean was also charged with a conspiracy to use the mail to carry out a scheme to fraudulently acquire title to selected Fulton and DeKalb properties sold at public auctions, to make and receive payoffs and to divert money to co-conspirators that would have gone to mortgage holders and others by holding second, private auctions open only to members of the conspiracy. The department said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions.

    “The defendant conspired with other real estate investors to profit by defrauding mortgage holders and property owners,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division. “This case, which is the eighth prosecution so far against defendants for rigging public foreclosure auctions in Georgia, demonstrates the Division’s continuing commitment to rooting out corruption and fraud in real estate markets around the country.”

    The primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at Fulton and DeKalb County public foreclosure auctions at non-competitive prices. When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner. According to court documents, these conspirators paid and received money that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties, and, in some cases, the defaulting homeowner.

    Including Wedean, eight cases have been filed as a result of the ongoing investigation being conducted by Antitrust Division’s Washington Criminal II Section, the FBI’s Atlanta Division and the U.S. Attorney’s Office of the Northern District of Georgia. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions in Georgia should contact Washington Criminal II Section of the Antitrust Division at 202-598-4000, call the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258 or visit

Wednesday, June 24, 2015

Luxury Living Or High-Priced Urban Trailer Parks? Skyrocketing NYC Real Estate Values Have Some Apartment Owners In Ground-Leased Buildings Biting Their Nails; Periodic Upward Rent Adjustments, Lease Expirations Threaten To Evaporate Their Home Equity While Appreciation Inures To Landowner

In New York City, The New York Times (via The Real Deal (NYC)) reports:
  • [A]pproximately 100 [residential] buildings in Manhattan have land or ground leases, according to several people in the real estate industry. They are mostly co-ops, although the list includes some condominiums. These buildings tend to have high monthly carrying charges because of the rental payments for the land. And as the co-ops do not pay real estate taxes, shareholders cannot deduct as much from income taxes as shareholders in typical co-ops do.


    Discounts in land-lease buildings are 25 percent, although I’m beginning to think it is more like 35 to 40 percent,” said Susan Landau Abrams, an associate broker at Warburg Realty. Ms. Abrams lives at 190 East 72nd Street, a land-lease co-op, and is marketing a four-bedroom there for $4 million, with a monthly maintenance fee of $14,000. She says it is deeply discounted. “This unit would probably be $8 million if it wasn’t a land lease,” she added.

    “The value of the apartments decrease because the maintenance is so obnoxiously high,” said Robert Dankner, the president of Prime Manhattan Residential.


    Land-lease buildings aren’t unique to New York. Many buildings in London are subject to ground leases that can run for 1,000 years; the queen is often the landowner, said Stuart M. Saft, a partner at the law firm Holland & Knight.


    In recent years, as the price of land surged to historic levels, some owners of land-lease apartments began biting their nails. Many land-lease buildings pay the landowner rent based on a percentage of the value of the land.

    “All over Manhattan, land values are escalating at a very rapid pace,” said Brian Corcoran, an executive vice president of Cushman & Wakefield who advised the Trump Plaza board on its land purchase. “There are many co-ops on ground leases and it is rare that shareholders get a chance to buy the land. But if they do, it is in their best interest to do so if at all possible.”

    The Excelsior, a land-lease co-op at 303 East 57th Street, is facing a potential rent increase. According to the terms of its lease, every 10 years the rent resets to 6 percent of the value of the land. The co-op’s next reset will be in 2018. With prices rising, particularly along 57th Street, where a dozen luxury towers are underway, shareholders are growing anxious that the land rent could rise precipitously.


    Co-op owners in land-lease buildings must also confront lease expirations. Every lease is different, but most are lengthy, extending 99 years or more. But as they tick down, problems may arise.

    For instance, residents of buildings that have less than 30 years left on their leases may have difficulty securing mortgages. “Banks are a little bit wary of land-lease buildings,” said Ace Watanasuparp, the regional manager for Citizens Bank. “If a buyer takes a 30-year mortgage, but the land lease only has 17 years left, who knows what will happen.

    The expiration of a lease is particularly fraught for land-lease co-ops that were once rent-regulated apartment buildings. When their land leases expire, these co-ops will be dissolved and the apartments will once again become rent regulated, with the landowner becoming the landlord, Mr. Saft said. Unless new terms are negotiated, the co-op shareholders could become tenants of their former homes.(1)

    “This has not happened yet, to my knowledge,” Mr. Corcoran said. “But it will.”

    As for Trump Plaza, when Donald Trump built the co-op in 1983, he struck a deal with the landowner in which for 40 years, the building would pay a below-market annual rent of approximately $1.2 million. But in 2023, the rent would become 8 percent of the value of the land. Mr. Corcoran could not estimate what that might be, but he advised the board that today the land would be worth about $200 million, making the annual rent $16 million.
Source: Rising Costs a Concern for Land-Lease Building Owners.

(1) To a significant degree, these apartment owners appear to be in a position somewhat parallel to homeowners living in many trailer parks. While they may own their homes, trailer park residents must often pay rent for the lot their homes are sitting on. Such an arrangement stifles the possibility of any real appreciation for their homes while most, if not all, of any appreciation in general real estate values inures to the landowner. To add insult to injury, when the lot lease expires (assuming they're not already on month-to-month leases), the homeowners may be saddled with a significant rent increase, or face having to move, no different than any tenant. Similarly, the values of the New York City apartments in buildings built on leased land will likewise be stifled by the periodic increases in ground rent and, ultimately, will be like tenants in their own homes (with any home equity having gradually evaporated over the years) when the buildings' ground leases expire.

Tuesday, June 23, 2015

Allegedly Crappy Notice At Issue Again In Another Case Where County Sold House Out From Under Unwitting Homeowner Over Unpaid R/E Taxes; Owner Suit Seeks To Void Tax Deed, Wrestle Title Away From Sheriff Sale Buyer, Avoid Boot

In Jefferson County, Texas, The Southeast Texas Record reports:
  • The trial of a civil case alleging wrongful foreclosure of a tax sale has been continued. As previously reported, Charles Kirkwood filed suit against W. Properties LLC and Jefferson County in Jefferson County District Court on Nov. 12, 2013. A bench trial was set to begin Monday, June 1 but was continued to July 6 because a jury trial was requested, according to a courthouse official.

    Kirkwood, the owner of a property located at 2356 Briarcliff Drive in Beaumont, filed a writ of review after his property was allegedly sold at a sheriff’s sale without adequate notice.

    In January 2012, the county filed suit to collect overdue property taxes but named Sara Gleason, the previous owner, as the defendant.

    Kirkwood acknowledges that his property taxes were in arrears but says he was never notified that the house would be put up for sale, since Sara Gleason was the named defendant in the lawsuit.

    Kirkwood claims that in August 2010 the property was sold without his knowledge to W. Properties LLC.

    Kirkwood says Jefferson County should have known he was the owner of the property because it was titled in his name, and they should have notified him about the lawsuit and the sale. Instead, Kirkwood claims he found out about the sale when W. Properties LLC asked him to vacate.

    Kirkwood now wants to void the sale and get his property back.

    He originally asked the court to vacate the judgment, void the Writ of Execution and grant an injunction to stop W. Properties from taking any more steps to remove Kirkwood from the property.

Monday, June 22, 2015

Brooklyn Man Faces Charges Of Using Forged Deeds To Hijack Title To Five NYC Apartment Buildings Out From Under Their Unwitting Owners; Manhattan DA: "[C]rimes Like These Become Easier & Easier In The Digital Age"

From the Office of the New York County (Manhattan) District Attorney (via The Real Deal (NYC)):
  • Manhattan District Attorney Cyrus R. Vance, Jr., [] announced the indictment of JOHN KOJO ZI, 53, a purported property developer, for fraudulently obtaining titles to five buildings on the Upper West Side and in Hamilton Heights by filing forged deed transfers with the New York City Register’s Office (“Register’s Office”).

    ZI is charged in a New York State Supreme Court indictment with Scheme to Defraud in the First Degree, Grand Larceny in the First Degree and Second Degrees, and Offering a False Instrument for Filing in the First Degree, among other charges.[1]

    “By filing forged deed transfers and lying on official forms, this defendant allegedly defrauded three Manhattan property owners, stealing five buildings out from under them,” said District Attorney Vance. “Deed fraudsters use publicly available housing data to target properties that are not actively managed by their owners, including those that are falling into disrepair, or burdened with tax liens and unpaid utilities.

    Frequently, that means properties whose owners are the most susceptible to fraud, including the elderly – or even the estate of a deceased individual. We will aggressively prosecute those who would manipulate official filings for their own profit, as crimes like these become easier and easier in the digital age.”

    “We will continue to send the message that fraudulent activity associated with the transfer of deeds will not be tolerated,” said New York City Finance Commissioner Jacques Jiha. “We have already strengthened our internal processes with the City Register and the Sheriff’s office, which have led to these types of arrests, and we are currently pursuing legislation.”

NJ Appeals Court OKs Forged Deed Used By Hubby To Swipe Estranged Wife's Interest In Marital Home Where Her Subsequent Conduct (Coupled With Title Transfer To Bona Fide Purchaser) Was Deemed To Constitute Ratification Of The 'Dirty Deed'

The following facts have been adapted from a 2013 ruling from a New Jersey appeals court:
  1. On August 29, 2001, husband ("Randy") and wife ("Maria") (who had been married since 1991) acquired property together.
  2. In January 2003, Randy and Maria seperated, and she left the marital residence with their two children.
  3. On April 1, 2004, a deed (later alleged by Maria to be forged) reflecting that Maria granted Randy sole ownership of the property for $1.00 was executed.
  4. On April 14, 2004 (ten days later), Randy sold the home to an innocent purchaser, one Mangiliman. Mangiliman obtained mortgages to purchase the property for $429,000.
  5. In the summer of 2005, Maria discovered that, unbeknownst to her, Randy sold the home. At that time, she obtained copies of the April 1 and 14, 2004 deeds, and subsequently claimed that the signatures purporting to be hers on the April 1, 2004 deed and related paperwork were forged. She acknowledged at the time, however, that the mortgage on the marital residence may have been in default in March 2004.
  6. Upon learning about the deeds and the sale, plaintiff called Cantu. According to plaintiff, Cantu told her that he had done what he had to do and that if she did anything about it he would kill her.
  7. Plaintiff called her divorce lawyer, who told her that litigation to regain her interest would be costly. Because of the expense, she decided not to pursue the issue.
  8. For approximately the next three years, she continued to acquiesce.
  9. In August 2008, three years after learning about the deeds and sale of the marital residence and discussing the matter with her lawyer, plaintiff filed a complaint for divorce.
  10. In her divorce complaint, she states that their items of real and personal property acquired by the parties during the marriage have been distributed to each party's satisfaction.
  11. On February 2, 2009, a judgment of divorce was entered. It incorporates a property settlement agreement (PSA) bearing signatures of Maria and Randy that were notarized three days earlier. Among other things, and just as Maria's divorce complaint had, the PSA represented that the parties "have heretofore divided all marital assets to their satisfaction."
  12. In September, 2010 (over five years after discovering that Randy ripped off her one-half interest in the marital home, and then sold the home to an unwitting buyer), Maria filed a complaint to quiet title to the former marital residence against her now-ex husband, Randy, and the innocent purchaser, Mangiliman.
  13. During her deposition in this action, Maria gave several reasons for signing the PSA despite her awareness of the forged deed and the fact that the PSA did not provide her with any proceeds from the sale of the marital residence. She testified, "My understanding in the property settlement agreement was this was something I was signing in order to finalize my divorce." And she further explained that she did not seek a share of the proceeds because of the litigation expense. When asked why she commenced this action after the long delay, plaintiff's only response was, "I think it's fair."

In assuming that the April 1, 2004 deed from Maria to Randy was forged (there was never an actual finding of forgery - the lower court disposed of the matter on summary judgment), both the lower court and the New Jersey appeals court validated the forged deed under the specific facts of this case. The relevant portion of the appeals court's ruling in reaching this determination follows (wife Maria is the plaintiff; husband Randy is referred to by his last name, Cantu; "PSA" refers to the property settlement agreement in their divorce proceeding):
  • Generally, a deed that is forged is deemed void and a nullitySonderman v. Remington Const. Co., 127 N.J. 96, 115 (1992) (Stein, J., dissenting) (noting that a recorded deed that is a "`forgery'" or "`procured by fraud in the execution'" is void and "`the fact that it is recorded in no sense enhances its validity'" (quoting Roger A. Cunningham et al., The Law of Property § 11.9 at 782 (1984))).
    Despite the general rule, a person such as plaintiff wronged by a forgery may engage in a course of conduct that bars her from obtaining redress.
    One who knows a deed transferring his or her ownership in property has been transferred and does nothing to repudiate it may be deemed to have ratified the forged deed and lose the right to challenge the forgery later, when an anticipated benefit does not materialize. See Thermo Contracting Corp. v. Bank of N.J., 69 N.J. 352, 363-64 (1976) (approving and relying upon Rakestraw v. Rodrigues, 500 P.2d 1401 (Cal. 1972) (a case involving a husband's forgery of a deed to property owned by his wife, who acquiesced in and did not object to the forgery until her marriage deteriorated)); Todd v. Mutual Aid Sav. & Loan Ass'n, 19 N.J. Super. 532, 537 (Law Div. 1952) (finding ratification by successors to an incompetent who knew about and would have been prejudiced by the loss).
    "Ratification requires intent to ratify plus full knowledge of all the material facts." Thermo Contracting Corp., supra, 69 N.J. at 361. While equities asserted by an innocent purchaser are irrelevant when a deed is a nullity, our cases suggest that such equities are relevant when a fraudulent deed has been ratified. See Knopf v. Alma Park, Inc., 105 N.J. Eq. 299, 301 (Ch. 1929), aff'd, 107 N.J. Eq. 140 (E. & A. 1930).
    Here, plaintiff engaged in conduct amounting to a ratification. By Summer 2005, plaintiff was not only aware of the forged deed and resulting sale of her marital residence, but also had copies of the deeds, which she discussed with her attorney. Nevertheless, she did not repudiate the forged deed or act to invalidate the sale of the marital residence — a sale that relieved her of obligations under a mortgage that was in default. Her intent to ratify the deed she knew had been forged is demonstrated by her decision to forego litigation and her representation in the divorce action that she and her husband had divided all marital property to their mutual satisfaction.
    We recognize that there is evidence that plaintiff's husband threatened to take her life if she took action to void the transaction. Giving plaintiff the benefit of an inference that she refrained from challenging the deed out of fear of her former husband does not change our view of her intent. In her deposition, plaintiff explained that she decided against litigation because of the expense. She is the person who filed the divorce complaint and opted to affirmatively assert her satisfaction with the division of marital property in that proceeding and urge the court to incorporate a PSA confirming her satisfaction in the judgment of divorce. That conduct compels a finding of intent to ratify the forgery and does not give rise to an inference of action taken under duress.
    Respecting the balance of equities relevant to ratification, the evidence establishes, as the judge found, that Mangiliman had no way of knowing that the deed in her chain of title was forged, had been paying the mortgages and the property taxes for years and that, even though it may have declined in value, the property was Mangiliman's home. The judge determined, and we agree, that the equities favored Mangiliman, not plaintiff who had asserted in her divorce action that all marital property had been divided to her satisfaction.[3]
    For the foregoing reasons, we conclude that plaintiff, acting with knowledge of the material facts — that her ownership interest in the marital residence had been obliterated with the issuance of a forged deed — and the intent to forego its repudiation, ratified the deed and is, thereby, barred from seeking redress against an innocent purchaser for value.

After reaching this conclusion, the appeals court added a second, independent basis to support its decision not to invalidate the deed: the application of the doctrine of judicial estoppel.
  • There is an additional reason for barring plaintiff's attempt to seek redress for her husband's forgery of the April 1 deed from Mangiliman. Our courts "protect the integrity of the judicial process by not permitting a litigant" to take conflicting positions or make conflicting representations in the same or related judicial proceedingsMcCurrie ex rel. Town of Kearny v. Town of Kearny, 174 N.J. 523, 534 (2002); accord State v. Galicia, 210 N.J. 364, 398 (2012); see Newell v. Hudson, 376 N.J. Super. 29, 30, 38 (App. Div. 2005) (noting that judicial estoppel applies to related litigation and applying the doctrine to bar a malpractice action arising from a settled divorce case).
    Although protecting judicial integrity is the purpose of this form of estoppel, courts invoke it only "when a party's inconsistent behavior will otherwise result in a miscarriage of justice." Ryan Operations G.P. v. Santiam-Midwest Lumber Co., 81 F.3d 355, 365 (3d Cir. 1996); accord State v. Jenkins, 178 N.J. 347, 359 (2004) (quoting Kimball Int'l, Inc. v. Northfield Metal Prods., 334 N.J. Super. 596, 608 (App. Div. 2000), certif. denied, 167 N.J. 88 (2001)).
    Plaintiff's conduct in the divorce warrants application of judicial estoppel. In that action, she attested to the truth of the allegation in her complaint, one of which was that to her knowledge all marital property had been divided to her and her husband's satisfaction. In addition, plaintiff urged the judge to incorporate the parties' PSA in the final judgment. That PSA not only memorialized her agreement that marital property had been divided to her satisfaction but also agreements favorable to her, such as the award of primary residential custody of the children and $800 monthly child support.
    Plaintiff's presentation of the parties' agreement facilitated her goals — on this evidence, her goals were more likely than not foregoing a challenge to equitable distribution to obtain some terms favorable to her and finalizing her divorce. With the PSA, plaintiff was able to obtain a judgment of divorce expeditiously and without the need to demonstrate "extraordinary circumstances" and "good cause" that would have been required to obtain a judgment of divorce before equitable distribution of marital property, custody and child support had been resolved. R. 5:7-8.
    To the extent that application of judicial estoppel depends upon a court's acceptance of the inconsistent position in a prior proceeding, Kimball, supra, 334 N.J. Super. at 607-08, that element is satisfied in this case. In the divorce action, the judge accepted and incorporated the PSA in its judgment.
    Neither the fact that plaintiff and her former husband settled questions of custody, child support and equitable distribution nor the fact that Mangiliman was not a party to that action precludes judicial estoppel. This court and others have applied the doctrine to bar a legal malpractice action against a third party that arose from a property settlement agreement in a divorce action. See Newell, supra, 376 N.J. Super. at 30, 38-40 (applying judicial estoppel in that circumstance and discussing cases involving grants of summary judgment "in legal malpractice actions based on the doctrine of judicial estoppel where a litigant repudiates a prior, sworn inconsistent statement made in order to secure an advantage in or judicial approval of the underlying settlement"). Given that precedent, there is no principled basis for concluding that the doctrine cannot be applied here.
    It is also evident that application of judicial estoppel is necessary to avoid a miscarriage of justice in this case.[4] If we were to hold otherwise, Mangiliman, the innocent purchaser of the marital residence, would be left, as the trial judge found, without a home, with the debt secured by her mortgage, and without realistic means of recovering her loss from the apparent wrongdoer, Cantu, who has at this point apparently disappeared. Noting that plaintiff knowingly misrepresented her satisfaction with the division of property, the judge found that equity could not abide upsetting title that had passed effectively to Mangiliman. We could not agree more.
    The judgment declaring Mangiliman to have good and valid title, free and clear of any title, interest, right, agreement, encumbrance or lien of plaintiff, is affirmed.
For the ruling, see Estevez v. Mangiliman, No. A-2097-11T3 (App. Div. 2013) (unpublished).

See Voidable Or Void Ab Initio (Or "Void Unless & Until Later Ratified")? on a Mississippi case discussing the issue of subsequent ratification when a court decides whether or not to invalidate a forged deed.

Sunday, June 21, 2015

Joint NY AG/NYC Mayor Task Force Pinches Brooklyn Landlord On Charges Of Unlawfully Driving Rent-Regulated Tenants Out Of 14-Unit Building In Rapidly-Gentrifying Area; Accused Of Heat Shut-Offs, Creating Fire Hazards Thru Demolition, Construction; Toxicity Level From Lead-Based Paint Dust Allegedly Up To 88 Times Permissible Levels; Only Three Families Remain

In Brooklyn, New York, The Associated Press/Crain's New York Business (via The Real Deal (NYC)) reports:
  • New York authorities brought criminal charges [] against a Brooklyn landlord they say drove tenants out of rent-regulated apartments by doing construction and demolition at his building and shutting off the heat.

    The indictment charges Daniel Melamed with three counts of unlawfully evicting tenants from rent-regulated apartments, endangering the welfare of a child and filing a false document. Authorities also accused the engineer he hired to oversee construction on the 14-unit building, Pirooz Soltanizadeh, of filing a false document.[...] Calls to their attorneys weren't immediately returned.

    New York Attorney General Eric Schneiderman and Mayor Bill de Blasio planned to discuss the Crown Heights landlord's arrest at a news conference at a Brooklyn street corner. Their offices said the arrest was the first to come from their joint task force launched in February to inspect properties that have been the subject of harassment complaints.(1)

    Meanwhile, the state law for the city's rent regulations expired Tuesday, with Gov. Andrew Cuomo and legislative leaders trying to negotiate an extension and possible revisions.

    Authorities allege the landlord illegally shut off heat to rent regulated tenants, even when outdoor temperatures fell below freezing, exposed tenants to lead dust that were up to 88 times higher than permissible levels, and destroyed interior walls and common spaces creating fire hazards.(2)

    They also allege Mr. Melamed filed false documents with the city Department of Buildings, stating the building was vacant when all units were occupied, to avoid submitting a plan to ensure tenant safety during construction. He bought the building in 2012 and owns and manages six others in the city, according to the attorney general's office.
Source: Brooklyn landlord is charged with pushing tenants out of rent-regulated apartments (Authorities say the Crown Heights landlord allowed construction on his building and illegally turned off the heat when temperatures were below freezing).

See also:

The New York Times: Brooklyn Landlord Is Arrested in Tenant Harassment Inquiry:
  • [“N]ew York’s real estate boom is generating jobs,” [New York Attorney General Eric] Schneiderman said. “It is creating revenue. But it also has put thousands of tenants at risk to unscrupulous landlords.” He continued, “Bad landlords have an incredible incentive under the current laws to get rent-regulated tenants out of their buildings by any means necessary, and harassment is reaching new lows.”
  • The busts resulted from a special task force formed in February to weed out dirty landlords who try to force out their rent-regulated tenants so they can jack up prices once the units are vacant.

    When Melamed bought the building in December 2012, all 14 units were occupied. Only three families remain now. “Initially, he offered people buyouts, but then in early 2013, he got much rougher and decided to start cutting off heat and hot water,” Schneiderman said.

(1) See Bowery Boogie: ‘Tenant Harassment Prevention Task Force’ Collars First Slumlord for Endangering Rent Regulated Tenants.

(2) The U.S. Environmental Protection Agency ("EPA") requires that firms performing renovation, repair, and painting projects that disturb lead-based paint in homes (as well as child care facilities and pre-schools) built before 1978 have their firm certified by EPA (or an EPA authorized state), use certified renovators who are trained by EPA-approved training providers and follow lead-safe work practices.

For an example where the EPA recently clipped one landlord with a $54,000 fine for failing to do so, see Stamford, Conn. Property Management Firm to Pay Fine and Take Measures to Protect Children from Lead-Based Paint in EPA Settlement.

Go here for links to examples of landlords getting hammered by the EPA for tripping over the federal lead paint rules, and here to file a complaint reporting violations with EPA.

Go here for EPA Lead Paint Renovation Compliance Guide for landlords, property managers, contractors, and maintenance personnel working in homes and child-occupied facilities built before 1978.

Editor's Note: It's not unheard of for a landlord to get sentenced with jail time for violating EPA's lead paint rules. See Baltimore City Landlord Sentenced to Prison for Lead Paint Violations in Rental Properties He Owns and Manages (Previously Cited by the State for Numerous Lead Paint Violations and Documented Children with Elevated Lead Blood Levels Living in His Properties).

One NYC Landlord Accused Of Creating Toxic Hazards In Effort To Drive Out Long-Time Rent Regulated Tenants; Blasting Layers Of Toxic Lead Based Paint From Walls, Raising Levels Of Tainted Dust To Nearly 3,000 Acceptable Level During Renovations Among Tactics Allegedly Used To Displace Residents Paying Below-Market Rents

In New York City, The Villager reports:
  • Beleaguered tenants from four Lower East Side buildings recently announced three additional lawsuits in Housing Court against landlord Samy Mahfar of SMA Equities.

    Outfitted in a hazmat suit to protest the hazardous conditions he said he has faced, one tenant from 211 Rivington St. described living under siege-like conditions. He said unprotected workers had blasted layers of paint off tenement walls, raising dust tainted with dangerous levels of lead-based paint. [...] Lab tests on air quality during construction at another Mahfar-owned building revealed lead levels “nearly 3,000 times the federal threshold,” tenants said.(1)

    The Mahfar Tenants Coalition also claims that guards were posted at one building’s entrance to block Department of Buildings inspectors from investigating complaints, and that they were successful all but once in turning D.O.B. personnel away.

    Dust levels got so bad at one building that children were hospitalized following asthma attacks. Their mother also ended up getting sick due to having no heat for a month during construction, tenants said.

    As if the hazardous conditions weren’t bad enough, there were also frivolous lawsuits, the coalition charged. These were used to drive terrified tenants out of their units, which were quickly put back on the market at rents up to five times their original value.

    Repairs were not made, except in renovated apartments, according to the coalition.

    A speaker from another Mahfar-owned building, 22 Spring St., vividly recalled what happened after Mahfar took over: The lead-dust levels rose, a phone line was cut, and the relocation specialists turned up, stressful enough to allegedly cause one tenant to suffer a heart attack, prompting her to leave.

    Councilmembers Rosie Mendez and Margaret Chin praised the tenants’ courage in bringing the lawsuits. Chin called for greater coordination between the Department of Housing Preservation and Development and the Department of Buildings, the latter which, she said, needs comprehensive reform.

    Chin questioned why D.O.H. is not working with D.O.B. to ensure that proper procedures for lead-paint removal, for example, are being followed.

    State Senator Daniel Squadron demanded change in Albany and the end of vacancy decontrol, which he said offers incentive for landlords to harass rent-protected tenants.

    Garrett Wright, a senior staff attorney with the Urban Justice Center, which filed the three lawsuits in Housing Court, said the process favors wealthy landlords, who can afford expensive attorney fees.

    Tenants, Wright said, often end up “so scared, they will wind up leaving the apartment without going to court because they are afraid of being hit with attorney fees and costs, and landlords know that.toxicity
For more, see Mahfar tenants file more suits over conditions.


(1) The U.S. Environmental Protection Agency ("EPA") requires that firms performing renovation, repair, and painting projects that disturb lead-based paint in homes (as well as child care facilities and pre-schools) built before 1978 have their firm certified by EPA (or an EPA authorized state), use certified renovators who are trained by EPA-approved training providers and follow lead-safe work practices.

For an example where the EPA clipped one landlord with a $54,000 fine for failing to do so, see Stamford, Conn. Property Management Firm to Pay Fine and Take Measures to Protect Children from Lead-Based Paint in EPA Settlement.

Go here for links to examples of landlords getting hammered by the EPA for tripping over the federal lead paint rules, and here to file a complaint reporting violations with EPA.

Go here for EPA Lead Paint Renovation Compliance Guide for landlords, property managers, contractors, and maintenance personnel working in homes and child-occupied facilities built before 1978.

Editor's Note: It's not unheard of for a landlord to get sentenced with jail time for violating EPA's lead paint rules. See Baltimore City Landlord Sentenced to Prison for Lead Paint Violations in Rental Properties He Owns and Manages (Previously Cited by the State for Numerous Lead Paint Violations and Documented Children with Elevated Lead Blood Levels Living in His Properties).

Environment Cops Clip Connecticut Landlord For $54K+, Require $20K Risk Mitigation Project To Settle Allegations That EPA Rules Regulating Lead-Based Paint Disclosure & Remediation Were Violated, Lessening Safeguards Against Exposure To Health Hazards For Tenants With Toddlers

The U.S. Environmental Protection Agency ("EPA") (Boston, Massachusetts Regional Office) recently announced:
  • EPA has reached a settlement with Garden Homes Management Corp. of Stamford, Conn. for alleged violations of EPA’s Lead Paint Disclosure and Renovation, Repair and Painting (RRP) Rules.

    The Lead Paint Disclosure Rule requires landlords and property management firms to provide information about lead-based paint to their tenants upon leasing pre-1978 housing. The RRP rule is designed to ensure that painting and home renovation contractors comply with requirements designed to protect children and workers from exposure to lead-based paint during painting and other renovation activities at pre-1978 housing.

    In a complaint, EPA alleged that Garden Homes failed to comply with lead disclosure requirements when it leased 18 residential units at nine Conn. properties. The complaint also alleged that Garden Homes performed at least one renovation in a Naugatuck, Conn. property in violation of RRP Rule requirements for certifying renovation firms, providing lead hazard information to tenants, using only RRP-certified workers, and keeping records of compliance. The violations are alleged to have occurred from Sept. 2010 to Nov. 2012, based on records obtained by EPA during two separate inspections.

    Under the terms of the settlement, Garden Homes will pay a $54,644 civil penalty, as well as complete a $20,000 lead risk mitigation project to remove and replace approximately 24 original, lead-paint containing windows from a 1961 Garden Homes property located in Bridgeport, Conn.

    Infants’ and children’s developing bodies are especially vulnerable to the harmful effects of lead exposure, which can include lifelong impacts such as developmental impairment, learning disabilities, impaired hearing, reduced attention span, hyperactivity and behavioral problems,” said Curt Spalding, regional administrator of EPA’s New England office. “The disclosure requirements, and the safe work practices found in the RRP rule, are designed to help ensure that people are protecting their kids from suffering serious, lifelong health impacts from lead exposure.”

    EPA’s Disclosure and RRP Rules are designed to prevent childhood exposure to lead-based paint and/or lead-based paint hazards.

    The RRP rule requires individuals performing renovations for compensation at most pre-1978 housing and child-occupied facilities to be properly trained. There are certification and training requirements for individual renovators and firms performing renovations to ensure that safe work practices are followed during renovations. EPA’s RRP Rule became effective on April 22, 2010 and allows for the assessment of penalties that may reach up to a maximum of $37,500 per violation per day.(1)
For the entire news release, see Stamford, Conn. Property Management Firm to Pay Fine and Take Measures to Protect Children from Lead-Based Paint in EPA Settlement.

(1) The U.S. Environmental Protection Agency ("EPA") requires that firms performing renovation, repair, and painting projects that disturb lead-based paint in homes (as well as child care facilities and pre-schools) built before 1978 have their firm certified by EPA (or an EPA authorized state), use certified renovators who are trained by EPA-approved training providers and follow lead-safe work practices.

Go here for links to other examples of landlords getting hammered by the EPA for tripping over the federal lead paint rules, and here to file a complaint reporting violations with EPA.

Go here for EPA Lead Paint Renovation Compliance Guide for landlords, property managers, contractors, and maintenance personnel working in homes and child-occupied facilities built before 1978.

Editor's Note: It's not unheard of for a landlord to get sentenced with jail time for violating EPA's lead paint rules. See Baltimore City Landlord Sentenced to Prison for Lead Paint Violations in Rental Properties He Owns and Manages (Previously Cited by the State for Numerous Lead Paint Violations and Documented Children with Elevated Lead Blood Levels Living in His Properties).

Toddler's Illness Linked To Lead-Based Paint Toxicity Drives Him, Parents Out Of Their Home; Remediation Estimated At $20K Necessary Before Family Can Resume Residency

In Fond du Loc, Wisconsin, the Fond du Loc Reporter reports:
  • One-year-old Charlie Stocks recently became so sick it completely upended his parents Nathan and Cassie's lives, forcing them out of their Fond du Lac home into a hotel. The culprit? Lead poisoning.

    A physician discovered Charlie's blood-lead levels were well beyond the threshold for hospitalization during a routine check-up through Women, Infants and Children (WIC) May 21. Preliminary results showed his levels were 48.8 mcg/dL, almost five times the amount when medical care is recommended, according to the New York State Department of Health.

    The Stocks went to their pediatrician-recommended lab to double check the test results. The new results showed Charlie had 44 mcg/dL in his blood. After more tests the next day, the Stocks were told Charlie immediately needed to be taken to Children's Hospital of Wisconsin in Milwaukee.

    The X-ray at the hospital showed paint chips on the side of his stomach. Charlie had been eating the lead-based paint on the windowsill of the Stocks' house on West Scott Street. The hospital immediately gave Charlie medicine and an IV.

    After he was released, more problems followed. Charlie's parents were told he could not return home until all the lead-based paint was removed from the house and it passed inspection.

    A building inspector has helped the Stocks assess the lead damage in their home. Five upstairs windows, two downstairs windows, the door, and a few other locations need to be replaced, stripped and painted, or painted over with protective paint. However, under state law, the Stocks have to hire a certified lead abatement contractor to make all of the repairs.

    All of this is costly. Nathan said he estimates the cost of the home repair will be around $20,000. There are also hospital bills to pay, food to purchase for the family, and gas to purchase so Nathan can get to and from work.

    Nathan Stocks has set up a page, a crowdfunding website for many causes, to raise money to fix his house so his family can return home. As of Friday, they had raised $500 from 17 donations, plus personal donations from family and friends. To help, visit