Case Notes in
Estate
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First published: Oct 2024
‘Death Of Lessee’ Provision PitfallsTAKEAWAY The central legal issue here is over the meaning of a lease provision known as the “Death of Lessee” provision. The Death of Lessee provision in this proprietary lease is a typical variant that provides that if a shareholder dies, “consent shall not be unreasonably withheld to an assignment of the lease and shares to a financially responsible member of the Lessee’s family.” There are several potential interpretative pitfalls in this provision, two of which are at issue in this case. First, what is the meaning of the phrase “member of the Lessee’s family”? Does a niece qualify? Complicating matters is that, while “family member” is not defined here, a different provision of this co-op’s proprietary lease limited use of the apartment to shareholders and their “children, grandchildren, parents, grandparents, brothers and sisters.” Does the fact that this other provision does not include nieces mean that “member of Lessee’s family” should also be read to not include nieces? Or does the fact that the Death of Lessee provision not specifically list immediate family members imply an intent to read “family member” more broadly? Second, the parties disagreed over what it means for the co-op to “not unreasonably withhold” consent. According to the co-op, this means nothing more than it could not act unreasonably in denying consent. In this case, the co-op contended that Stauber had engaged in a “pattern of disruptive behavior” and showed “an utter lack of judgment and inability to get along with others,” which provided a basis for rejecting her application. According to Stauber, however, the reasonableness standard must be confined to the elements specifically identified in the text of the provision – whether she is “financially responsible” and whether she is a “member of the Lessee’s family.” Thus, in Stauber’s view, the alleged behavior identified by the co-op is legally irrelevant because it has nothing to do with whether she is a financially responsible member of Cohen’s family. By denying summary judgment in favor of additional discovery, the court deferred resolving these ambiguities. For co-op boards looking to avoid these problems in the first place, the lesson here may be to consider amending your “Death of Lessee” provision to resolve these two potential sources of conflict.
Read full articleFirst published: Apr 2010
Warner v. KaplanThis case raises issues concerning the rights and obligations of an estate when a person dies while a contract is pending. The court first explained that, where a contract – even if merely in its printed form – provides that it shall be binding on the parties’ heirs, that means that if a person dies before the contract is consummated, their estate must complete the contract. The court was very clear that if the parties wanted a different result, they should have negotiated and amended the form contract. The other aspect concerns the purchaser’s obligations to the co-op under the contract. The court explained that, where an estate is responsible to complete the contract, it must comply with the terms of the contract and submit its own application to the board for approval. Because the estate here did not submit the application, the court did not consider what would have happened in the event that the board – which had approved the purchaser – refused to approve the estate. While we cannot be certain (particularly because we are neither familiar with the specific terms of the contract nor the assets held by the estate), we believe that if the board did not approve the estate, the estate would have been able to recover the down payment. However, the estate did not submit an application and, as a result, lost the down payment without any opinion as to whether it would have been an acceptable shareholder.
Read full articleFirst published: Jul 2004
129 East 69th Street Corp. v. Estate of Louise M. AndersonBecause the defendant here was not properly identified, the co-op's action to recover possession was dismissed. Service on the executor of the estate of a deceased shareholder was not only ambiguous, but also defective under state law. As a result, the action was delayed and additional legal effort was required.
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