Cooperatives & Condominiums

Both Parties Must Post Undertaking to Cancel Notice of Pendency

CDR Creances SAS v. First Hotels & Resorts Investments Inc.

NYLJ 5/5/09, p. 26., col. 1

Supreme Ct., N.Y. Cty.

(Tolub, J.)

On condominium unit owner's application to cancel a notice of pendency filed by a judgment creditor, the latter objected to cancellation. The court issued an order requiring both parties to post an undertaking as a condition for cancelling the notice of pendency.

The subject condominium unit has a market value of $10 million, and is subject to a $5 million mortgage in favor of HSBC. Judgment creditor CDR holds a multi-million-dollar judgment against the owner of the condominium unit, and sought to enforce that judgment against the unit. In the course of its effort to collect on the judgment, CDR filed a notice of pendency. Meanwhile, unit owner has located a purchaser who would not close without clear title, including satisfaction of the HSBC mortgage. Unit owner has sought cancellation of the notice of pendency, and has offered to place the sale proceeds in escrow. CDR objected, challenging the validity of the HSBC mortgage, and contending that it would be harmed by cancellation if HSBC were paid $5 million to satisfy the mortgage without an adjudication of its claim against HSBC.

The court ordered that the notice of pendency should be cancelled, but only after both parties post bonds. First, the unit owner would be required to post a bond of $10 million to protect CDR against the risk of losing the sale proceeds. Then, CDR would be required to post a bond of $5 million to protect the unit owner against loss of its equity interest in the unit over and above the amount of the mortgage.

Sponsor Has Continued Right to Name Majority
Of Association Board

Greens at Half Hollow, LLC v. Greens at Half Hollow
Homeowners Association, Inc.

NYLJ 4/28/09, p. 39., col. 3

AppDiv, Second Dept.

(memorandum opinion)

In an action by sponsor for a judgment declaring that it has the right to designate a majority of the board of the homeowners association, and for a judgment declaring invalid an election of the board of directors, the homeowners association appealed from the Supreme Court's grant of the declaratory judgments. The Appellate Division affirmed, holding that the association's bylaws gave sponsor a continuing right to name a majority of the association's board.

The bylaws of the association provide that the sponsor has a continuing right to designate a majority of the association board until “any homes to be built on the Phase II Property have been conveyed.” Sponsor in this proceeding produced evidence to show that units on the Phase II Property have not all been conveyed, and that the sponsor therefore retains the right to name a majority of board members.

In holding that the Supreme Court had properly awarded summary judgment to the sponsor, the Appellate Division rejected the association's argument that sponsor is acting in bad faith by refusing to construct the remaining condominium units. The court noted that the association had provided no evidence to support that assertion. As a result, the sponsor was entitled to declaratory relief.

Both Parties Must Post Undertaking to Cancel Notice of Pendency

CDR Creances SAS v. First Hotels & Resorts Investments Inc.

NYLJ 5/5/09, p. 26., col. 1

Supreme Ct., N.Y. Cty.

(Tolub, J.)

On condominium unit owner's application to cancel a notice of pendency filed by a judgment creditor, the latter objected to cancellation. The court issued an order requiring both parties to post an undertaking as a condition for cancelling the notice of pendency.

The subject condominium unit has a market value of $10 million, and is subject to a $5 million mortgage in favor of HSBC. Judgment creditor CDR holds a multi-million-dollar judgment against the owner of the condominium unit, and sought to enforce that judgment against the unit. In the course of its effort to collect on the judgment, CDR filed a notice of pendency. Meanwhile, unit owner has located a purchaser who would not close without clear title, including satisfaction of the HSBC mortgage. Unit owner has sought cancellation of the notice of pendency, and has offered to place the sale proceeds in escrow. CDR objected, challenging the validity of the HSBC mortgage, and contending that it would be harmed by cancellation if HSBC were paid $5 million to satisfy the mortgage without an adjudication of its claim against HSBC.

The court ordered that the notice of pendency should be cancelled, but only after both parties post bonds. First, the unit owner would be required to post a bond of $10 million to protect CDR against the risk of losing the sale proceeds. Then, CDR would be required to post a bond of $5 million to protect the unit owner against loss of its equity interest in the unit over and above the amount of the mortgage.

Sponsor Has Continued Right to Name Majority
Of Association Board

Greens at Half Hollow, LLC v. Greens at Half Hollow
Homeowners Association, Inc.

NYLJ 4/28/09, p. 39., col. 3

AppDiv, Second Dept.

(memorandum opinion)

In an action by sponsor for a judgment declaring that it has the right to designate a majority of the board of the homeowners association, and for a judgment declaring invalid an election of the board of directors, the homeowners association appealed from the Supreme Court's grant of the declaratory judgments. The Appellate Division affirmed, holding that the association's bylaws gave sponsor a continuing right to name a majority of the association's board.

The bylaws of the association provide that the sponsor has a continuing right to designate a majority of the association board until “any homes to be built on the Phase II Property have been conveyed.” Sponsor in this proceeding produced evidence to show that units on the Phase II Property have not all been conveyed, and that the sponsor therefore retains the right to name a majority of board members.

In holding that the Supreme Court had properly awarded summary judgment to the sponsor, the Appellate Division rejected the association's argument that sponsor is acting in bad faith by refusing to construct the remaining condominium units. The court noted that the association had provided no evidence to support that assertion. As a result, the sponsor was entitled to declaratory relief.