Late November - December REAL ESTATE NEWSLETTER

BUILDING OWNER AND MANAGING AGENT NOT LIABLE FOR SLIP AND FALL

In a recent New York Supreme court case involving a slip and fall injury in the lobby of an apartment building, the court granted summary judgment in a favor of the defendant landlord and managing agent, finding that the defendants did not create the hazardous condition or had notice of the dangerous condition.

The case of Getta v. 332-336 East 77th Street Associates (as reported in NYLJ 12/8/2005) involved a slip and fall personal injury suit against the building owner, management company and the managing agent for negligently failing to remove an "accumulation of water upon the lobby floor" of an apartment building", which apparently was caused by "tracking in of water and/or rain water from the outside. " The Court found that there was "no evidence that the Owners created a hazardous wet condition on the lobby floor, nor that they knew, or should have known, that one existed. " The Court also observed that the Plaintiff testified he did not see any wet condition before the accident" and found his mere statement that he observed a wet floor after the accident is insufficient to establish that the landlord had notice of, or created, the condition. "

The Court also held that there was no evidence that the owners had a "general awareness of a dangerous, recurrent condition" and therefore had no duty to cover the lobby floors with mats or other materials. They also observed that there was no history of complaints of dangerous wet conditions on the floor or prior accidents. Hence, having found no evidence that the owners created a hazardous condition or had actual or constructive notice of a dangerous condition, the Court summarily refused to hold owners liable and dismissed the defendant's action. (N.Y.L.J 12/8/2005)

COURT OF APPEALS FINDS CONDOMINIUM UNIT OWNERS NOT LIABLE

In a recent New York personal injury case, the Court of Appeals held that an individual unit owner should not be held liable for injuries caused by defects in the common elements of his or her condominium building. The case of Pekelnaya v. Allyn, 802 N.Y.S.2d 669 (NY App. Div. 2005 (1st Dept.)) involved the question of liability for injuries suffered by individuals when a chain link security link fence fell from roof top of a Manhattan building. Upon determining that the condominium's insurance would not provide adequate compensation for their clients, the plaintiff's lawyers decided to sue each individual unit owner of the eleven unit condo development.

The Court observed that the condominium law that was imposed liability on an individual unit owner for injuries caused by defects in the common element of their condominium. It found that the fence was part of the common elements of the condominium building and, therefore, controlled by and the responsibility of the condo's board.

Accordingly, the Court stated "since the unit owners have no control over, or direct responsibility for, the common elements and neither statutory nor common law renders an individual condominium unit owner liable for injuries sustained as the result of defects in the common elements, the unit owners are not liable for plaintiffs' damages. " Essentially, the Court was of the position that unit owners could not be vicariously held responsible for the condominium board's actions or inactions.

Surely this decision will cause cooperative and condominium owners to breathe a sigh of relief regarding potentially significant legal and other responsibilities incident to ownership of community type property. (NY Times 11/20/2005)

TOLL BROTHERS EXPECTS TO SELL FEWER HOMES NEXT YEAR

Recently, Toll Brothers, the United States' largest builder of luxury homes, reduced its prior forecasts of expected home sales for the upcoming year. In addition to an overall weakness in real estate activity, higher energy prices and the recent natural disasters have affected prices and consumer decision with regard to purchase of new homes.

According to the company, although they expect home prices to continue to rise, they do not expect the rate of increase to be as rapid as the market has recently experienced. Rather, the expect increases to be consistent the more stable historical averages. (NY Times 11/9/2005)

WEAKENING MANHATTAN REAL ESTATE MARKET

The Manhattan real estate market, like most markets throughout the U.S. is noticing a clear slow down in housing prices and sales. The days of bidding wars and demand outnumbering supply seem to be over. The gap between asking price and the actual sale price are widening.

According to a recent report by Halstead Property, October sales prices of Manhattan apartments experienced a noticeable drop in the average price of a Manhattan apartment, since June 2005.

Most industry professionals are expressing concern with the market's weakness and hoping that activity will pick up by Summer 2006. Brokers and other real estate professionals are attributing the market weakness to interest rate increases and the general atmosphere of caution expressed by economists and talks of the real estate bubble bursting. Notwithstanding the general weakness and failing prices, some strength was observed in the prices of studios and one bedroom apartments, in contrast to most significant declines in the high end apartment market. Furthermore, there are professionals who do not agree with the general consensus of a weakening market and do not acknowledge any significant weakness.

COURT DISMISSES BID TO EVICT LIFE PARTNER FROM APARTMENT

Mr. Louis Lemarche, a Brooklyn landlord, initiated an eviction suit against Bobby Miles who was a same sex live-in partner of his leasing tenant Mr. Carson, a long time diabetes sufferer, who had resided at 450 Clinton Avenue, from the late 1980s until the time of his death in April 2004. As his health deteriorated, he became more and more dependent on his partner, Bobby Miles, who had helped him with his daily life activities, from bathing him to visiting him daily at the hospital.

Bobby Miles argued that he was to be considered as a "nontraditional family" member who had every right to succeed Mr. Carson on his lease under the state's Rent Stabilization Code.

The judge, Marcia J. Sikowitz, sought to determine whether this "nontraditional family" existed and whether there was an emotional and financial commitment as well as interdependence. Under the code, the factors for determining whether a nontraditional family relationship exists include the "longevity of the relationship, sharing of household and necessary expenses, intermingling of finances, engaging in family-type activities and holding out publicly as family members, formalizing legal obligations, and any other pattern of behavior that evidences the intention to create a long-term, emotionally committed relationship. "

After establishing depth and intimacy between both parties and extensive number of witnesses and exhibits presented to the court, the judge ruled that "It is the amalgam of enumerated factors that give rise to the essence of a family that feels like, looks like, and works like a family unit, and based on every enunciated factor that court is to consider, respondent and Richard Carson were a family. " Lemarche v. Miles (N.Y.L.J. 11/02/2005)

NATIONAL DROP IN REAL ESTATE

It is becoming clear that the seemingly continuing and rapid rise in real estate prices has reached its turning point. Relevant industry data indicates a noticeable weakness in existing home sales and drops in construction of new homes and apartments.

According to a recent report from the National Association of Realtors, sales of existing homes and condominiums have declined by 2.7 percent. This represents a seasonally adjusted annual rate of 7.09 million units. The decline has resulted in 2.87 unsold homes‹highest level in more than 19 years. And, even this decline is somewhat of an understatement, since it also includes increased activity created by hurricane Katrina and Rita. Without this additional activity, the decline would have been greater than 3.2 percent.

In terms of regional prices, the Northeast U.S. saw the biggest decline of 7.4 percent, as compared to a 1.9 percent drop in the Midwest and a 1.2. percent drop in the West. The South experienced a 1.8 percent drop in sales.

The weakness in home sales follows prior declines in new home and apartment constructions in October, which represented a drop of 5.6 percent. Similarly, there was a noticeable 6.7 percent drop in applications for new building permits during this period.

Economists are expressing concerns that rising interest rates could burst the housing bubble, likening it to the stock market bubble in early 2000. Some economists, however, are of the opinion that there may not be so much as a bursting of the bubble, but that "housing is landing softly as rates continue to rise. " This position seems to be a plausible assessment in light of the fact that, notwithstanding the declines in the actual number of home sales, there has been a significant increase in the median sale price of existing homes. As compared to October 2004 prices, the median price of existing homes rose by 16.6 percent to $218,000.00.