United States: The Realist - Volume 1, Edition 4

A publication of Seyfarth Shaw's New York Real Estate Practice. The ReaList newsletter covers New York real estate news, events, and trends.

Real Estate:

Construction Loan Guarantees

Commercial mortgage loans secured by existing income producing properties are often made on a non-recourse basis to the borrower (and its principals).  These loans generally have the benefit of real property collateral producing sufficient cash flow to service the lender's debt and cover operating expenses for the property.  Construction loans, however, present a different risk profile for the mortgage lender due to, among other things, no cash flow being generated from the property during the course of construction, the possibility of the project not being completed within budget (or at all) and the increased risk of liens for labor and materials being filed against the property.  In addition, even after construction is completed there is often a period of time prior to stabilization when there is insufficient cash flow to pay debt service on the loan and operating expenses for the property. 

In order to minimize payment and performance risks associated with construction loans, lenders typically require guarantees from creditworthy parties.  One such guarantee that is usually required is a completion guaranty, which guarantees the prompt and complete performance by borrower with respect to the design, construction and lien-free completion of the improvements.  In addition, construction lenders may require other guarantees for the project, including carry guarantees covering interest and other payments to lender and the costs of operations of the property, and payment guarantees (partial or full).  The lead article in the July/August 2017 Edition of The Banking Law Journal which was written by Mitchell S. Kaplan discusses in greater detail the foregoing guarantees, as well as others that may be required by construction lenders. 

If you have any questions, please contact Mitchell S. Kaplan.


Owners of Development Rights May Be Able To Compel Their Sale

Sections 1602 and 1604 of the New York Real Property Actions and Proceedings Law ("RPAPL") allow the owner of an interest -- including a future interest -- in real property that has multiple owners to force the sale of the "real property, or a part thereof" if such a sale would be "expedient" -- e.g., the property does not generate enough income to cover taxes and upkeep.  A recent decision by the New York Appellate Division, Second Department holds that "real property, or a part thereof" includes development rights for the property, and that an owner of development rights can therefore compel their sale over the objection of the other owners if he or she can demonstrate that the sale would be "expedient."

In Hahn v. Hagar, 2017 N.Y. Slip Op. 05710 (2d Dep't July 19, 2017), a dispute arose regarding a farm that had been in the litigants' family for more than 240 years.  Three family members, who had either a life estate or remainder interests in the farm property, sought to sell the development rights for the property in order to permanently restrict the use of the property to farming.  A fourth family member, who held a remainder interest in the property, refused to agree to such a sale.  The other three family members sued to force the sale of the property's development rights under the RPAPL.

A unanimous panel of the Second Department held in Hahn that development rights constitute "real property, or a part thereof" for purposes of the RPAPL.  The Second Department found that the definition of "real property" in New York's General Construction Law includes "intangible rights" in the property, and that development rights are part of the "bundle of rights" included in an ownership interest in real property.  The Second Department concluded that development rights are at least "a part" of real property for purposes of the RPAPL, and are therefore subject to a forced sale if that sale would be "expedient." 

In Hahn, however, the Second Department held that the plaintiffs were not entitled to compel a sale because they had not demonstrated that such a sale would be "expedient" within the meaning of the case law.  The plaintiffs based their claimed right to force a sale of the property rights upon their desire to preserve the property for farming use; the Second Department held that a "laudable and moral goal" was not enough to demonstrate that the sale would be "expedient."  

Hahn nevertheless confirms that an owner of development rights may be able to compel the sale of those rights over the objections of other owners if (s)he can effectively demonstrate that the sale would be "expedient."

If you have any questions, please contact Jonathan P. Wolfert or Owen R. Wolfe.

Labor and Employment:

Has Your Website Been The Subject Of An ADA Lawsuit Yet?

If not, it's probably just a matter of time.  Since the beginning of 2015, at least 350 businesses have been sued under Title III of the Americans with Disabilities Act (ADA) in federal court for having allegedly inaccessible websites that cannot be used by blind individuals who use screen readers to access online content.  This litigation surge continues, fueled by a recent ruling by a Florida federal judge who found Winn Dixie to be in violation of the ADA after a full trial about whether Winn Dixie's website could be used by the blind plaintiff. 

The ADA requires public accommodations to provide individuals with disabilities equal access to their goods and services.  To the extent that there are goods, services, and other benefits that are offered on a business's website that are not available through an equivalent channel (e.g., the telephone), plaintiffs with disabilities can claim that they are being denied equal access to such goods, services and benefits.  Most of these lawsuits settle quickly.  However, in the few that have not, defendants have had mixed results.  More often than not, the courts have allowed the cases to proceed to discovery, refusing to dismiss them at the beginning of the lawsuit.

Businesses that open their doors to the public need to start working on making their websites accessible now if they have not already done so, as the lawsuits show no signs of abating.

If you have any questions, please contact Minh N. Vu or Kristina Launey.

Intellectual Property:

Movietime or Paytime?

Ever watch a movie at home on your Blu-ray or DVD player, and notice that ominous FBI warning on the opening screen: 

"Federal law provides severe civil and criminal penalties for the unauthorized reproduction, distribution or exhibition of copyrighted motion pictures, video tapes, DVDs or video discs." 

Pretty scary stuff.  Well, if you're a residential condominium or cooperative, or a senior home or community center, and if you have a "common room" or "event space," or perhaps advertise in your promotional materials and website that you have such rooms, chances are that Hollywood will be knocking on your door.  And when it does, it will be seeking compensation for past and future "exhibition" rights to show films in these non-private areas of your building or facility. 

Many intellectual property rights holders these days, and the movie industry is no exception, are going further and further down the chain to exact licensing fees and other payments for what have been, until now, unenforced copyright infringements by users who believed their conduct to have been innocent. 

When you buy a movie for home viewing, you are not buying the movie itself.  Instead, you are buying a license to view the movie in the privacy of your home.  Using that disc or tape to show a movie outside of your home is likely a public performance and therefore a likely copyright infringement.  Without a prior license to show that movie in a public space, the movie studio owning the rights can seek to enforce a payment for such a showing through a demand and, if necessary, litigation.

Because the amounts recovered for these public performances have usually been relatively low, most copyright owners have not previously sought to enforce their rights.  In other words, the cost of enforcement usually outweighed the likely recovery.  But copyright owners of all stripes are changing their tune, seeking to squeeze every last possible penny out of the works they own while they still have some value.

As a result, licensing companies representing movie studios and production companies are actively demanding that condos, coops, senior homes, community centers and the like buy a license that allows the public showing of a vast library of films.  These licenses do not cover every single film, but instead only those that the licensing company has rights to license out.  It is possible that several licenses may be needed to cover the gamut of movies that may be of interest.  The license price is usually based on the number of potential viewers as determined by the number of units in a building, the number of occupants of a facility, the number of members of a community center and other similar viewer approximations.  The cost of the licenses are often added to the common charges of a building. 

So next time you want to have a movie night in your building's common space, ask whether you have the right to exhibit the movie.  You will want to breathe easily when that FBI warning screen pops up.

If you have any questions, please contact Ed Maluf.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions