Insight

Adam Leitman Bailey, P.C. Wins Co-op’s Right to Retain Multimillion Dollar Security Deposit Post-HSTPA

Adam Leitman Bailey, P.C. Wins Co-op’s Right to Retain Multimillion Dollar Security Deposit Post-HSTPA

Adam Leitman Bailey

Adam Leitman Bailey

August 10, 2021 03:00 PM

In one of the first tests of the 2019 Rent Law’s provisions restricting security deposits and prepaid rent, Adam Leitman Bailey, P.C. won for an extreme upscale cooperative in Manhattan, the right to keep the multimillion-dollar, multi-year prepaid maintenance it had negotiated from a foreign national with an unsavory international reputation. Arguing that the prepaid maintenance was not subject to the 2019 law, Adam Leitman Bailey, P.C. preserved the cooperative’s ability to secure itself against its shareholder’s possible defaults. This was a particularly important victory for the cooperative as the shareholder did ultimately file bankruptcy while owing considerable maintenance to the cooperative, but the cooperative was left unharmed because of the now protected large prepaid maintenance deposit.

Bringing an action in State Supreme Court to declare entitlement to return of the bulk of the prepaid rent, the shareholder argued that the 2019 law made it illegal to retain as security prepaid rent in excess of one month’s maintenance.

Adam Leitman Bailey, P.C., however, argued that the shareholder’s reliance on the 2019 law was misplaced, that the action was based on an incorrect reading of the law, and that the law only forbade asking for such prepaid maintenance, not keeping it. The court then ruled in the cooperative’s favor, dismissing the lawsuit. Soon after this victory, the shareholder declared bankruptcy in a high profile case, making the client realize that if we had lost the case, the money would never have been seen again.

The co-op was represented by Adam Leitman Bailey, P.C. attorneys Adam Leitman Bailey, Carolyn Z. Rualo, Dov Treiman, and Jeffrey R. Metz.

Original Case Study

Adam Leitman Bailey, P.C.

Trending Articles

2025 Best Lawyers Awards Announced: Honoring Outstanding Legal Professionals Across the U.S.


by Jennifer Verta

Introducing the 31st edition of The Best Lawyers in America and the fifth edition of Best Lawyers: Ones to Watch in America.

Digital map of the United States illuminated by numerous bright lights.

Unveiling the 2025 Best Lawyers Awards Canada: Celebrating Legal Excellence


by Jennifer Verta

Presenting the 19th edition of The Best Lawyers in Canada and the 4th edition of Best Lawyers: Ones to Watch in Canada.

Digital map of Canadathis on illuminated by numerous bright lights

Discover The Best Lawyers in Spain 2025 Edition


by Jennifer Verta

Highlighting Spain’s leading legal professionals and rising talents.

Flags of Spain, representing Best Lawyers country

Unveiling the 2025 Best Lawyers Editions in Brazil, Mexico, Portugal and South Africa


by Jennifer Verta

Best Lawyers celebrates the finest in law, reaffirming its commitment to the global legal community.

Flags of Brazil, Mexico, Portugal and South Africa, representing Best Lawyers countries

Presenting the 2025 Best Lawyers Editions in Chile, Colombia, Peru and Puerto Rico


by Jennifer Verta

Celebrating top legal professionals in South America and the Caribbean.

Flags of Puerto Rico, Chile, Colombia, and Peru, representing countries featured in the Best Lawyers

Prop 36 California 2024: California’s Path to Stricter Sentencing and Criminal Justice Reform


by Jennifer Verta

Explore how Prop 36 could shape California's sentencing laws and justice reform.

Illustrated Hands Breaking Chains Against a Bright Red Background

Tampa Appeals Court ‘Sends Clear Message,” Ensuring School Tax Referendum Stays on Ballot


by Gregory Sirico

Hillsborough County's tax referendum is back on the 2024 ballot, promising $177 million for schools and empowering residents to decide the future of education.

Graduation cap in air surrounded by pencils and money

Find the Best Lawyers for Your Needs


by Jennifer Verta

Discover how Best Lawyers simplifies the attorney search process.

A focused woman with dark hair wearing a green top and beige blazer, working on a tablet in a dimly

Paramount Hit With NY Class Action Lawsuit Over Mass Layoffs


by Gregory Sirico

Paramount Global faces a class action lawsuit for allegedly violating New York's WARN Act after laying off 300+ employees without proper notice in September.

Animated man in suit being erased with Paramount logo in background

The Human Cost


by Justin Smulison

2 new EU laws aim to reshape global business by enforcing ethical supply chains, focusing on human rights and sustainability

Worker wearing hat stands in field carrying equipment

Introduction to Demand Generation for Law Firms


by Jennifer Verta

Learn the essentials of demand gen for law firms and how these strategies can drive client acquisition, retention, and long-term success.

Illustration of a hand holding a magnet, attracting icons representing individuals towards a central

Social Media for Law Firms: The Essential Beginner’s Guide to Digital Success


by Jennifer Verta

Maximize your law firm’s online impact with social media.

3D pixelated thumbs-up icon in red and orange on a blue and purple background.

ERISA Reaches Its Turning Point


by Bryan Driscoll

ERISA litigation and the laws surrounding are rapidly changing, with companies fundamentally rewriting their business practices.

Beach chair and hat in front of large magnify glass

How Client Testimonials Fuel Client Acquisition for Law Firms


by Nancy Lippincott

Learn how client testimonials boost client acquisition for law firms. Enhance credibility, engage clients and stand out in a competitive legal market.

Woman holding blurb of online reviews

Critical Period


by Maryne Gouhier and Armelle Royer

How the green-energy raw materials chase is rewriting geopolitics

Overhead shot of mineral extraction plant

Best Lawyers Expands With New Artificial Intelligence Practice Area


by Best Lawyers

Best Lawyers introduces Artificial Intelligence Law to recognize attorneys leading the way in AI-related legal issues and innovation.

AI network expanding in front of bookshelf