Recalling, A New York Judge

By Charles Helm

A jury of wine connoisseurs in Verona has rejected an appeal by the owner of a home she had purchased only as a last-minute home fixer-upper.

Thanks to a series of court rulings in recent years, the value of apartments, condominiums and luxury condominiums has fallen, as the lines of housing supply are lengthening, allowing homeowners to buy and flip properties on the verge of foreclosure to keep the rentals as cash flow.

But, as the court case illustrates, buying an empty home may not be as easy as it looks, especially for the uninitiated or uninstructive. Your hard-earned money may be held hostage, like counterfeit hot chocolate, by owners anxious to offload their belongings in case they are eventually unable to sell their home before taxes.

The Superior Court of New York’s Appellate Division rejected the owners’ appeal on Monday. In 2010, the owners, Jeffrey Collins and Demetris Martell, purchased the three-bedroom home from the Parramore real estate agent on New Year’s Eve 2010 for $500,000. They had planned to rent the property to six people starting in January 2013 for $650 per month for three months of no need for housing, according to court documents. Collins and Martell moved in the first week of February 2013, and the following month set a rent of $2,000 for six months. As the year wound down, they put the property on the market, and the sellers had two weeks to accept a reduced offer. After waiting nearly two months, they accepted the reduced offer on February 22, one week before the plaintiff appealed the trial court’s ruling.

Collins and Martell have claimed that at the time of the sale, they were not licensed to own a leasehold interest in the property, so the court has to rewrite the sale agreement. But the trial court of two years ago rejected the argument. As it states in the November 2016 appeal decision, “the current Florida statute does not authorize lease-holding as an alternative mortgage. The court shares the home-owner’s misgivings that it is not a reasonably foreseeable situation of default that would result in the adoption of a lease-holding option.” The 2006 Florida law states that “loans shall be decided by the court of deeds unless taken separately; the court may pass a similar order by concurrence of the parties.” The defense arguments, as it pertains to the home sale, suggest that a rental arrangement would need to include renters who would not expect any value from the property. The state’s attorney, Melanie Ridgeway, argued that “a rental option must also include an appraisal under state statute, the contents of which would be taken into account by the home-owner, and the receiver.”

Nonetheless, the trial court of two years ago rejected that argument, explaining that for eight- to ten-month intervals (maximum), the defendant would have to supply the requested data through an affidavit to the receiver. In their appeals to the Appellate Division, the families argued that the basis for an appraisal violates a stipulation in the settlement agreement between the parties that they had “voluntarily agreed upon.” The daughters also argued that the rules of Florida open up another opportunity to freeze the home sale. Here, after a two-week hearing, the Appellate Division seemed sympathetic to their argument. “As the appeals court observed, ‘[t]he mere existence of the option offers to someone who is hoping to put the home back into lease-holding does not just permit the sale of the property,’ but also provides reason to assume that … the sale can be produced by law”—in other words, “without an opening of accounts at the depository, the [depository] can establish the basis for the sale without either the sale or the document mandating a price.”

The judges tried to find a language in the settlement agreement that did not allow the sale or the documents mandating the sale.

“The court quotes from a court of probate order: ‘The document required — meaning all the documents requisitioned, such as notices, advertisements, bills of lading, etc.,—must make possession or execution of the agreement mandatory.’ The court realizes that perhaps we ‘have a hard time with this,’ ” Judge David Abula wrote in dissenting from the trial court. “But in fact there is in the [Florida] statute plainly language that a sale may be effected, and the acceptance of the agreement has to follow not only that sale, but also a certain enforcement procedure in which reasonable people would be able to get to know the terms of the agreement.”

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