A recent ruling from the Appellate Division of the Supreme Court of the State of New York has resolved a significant property dispute involving 853 Lexington, LLC and JB Lexington, LLC. The court's decision, issued on August 26, 2026, upheld a lower court’s ruling that dismissed claims made by 853 Lexington against JB Lexington. This ruling is important as it clarifies the protections afforded to bona fide purchasers in real estate transactions.
The case, identified by docket number 2024-10386, centers on a property in Brooklyn that was sold to JB Lexington in August 2019. The plaintiff, 853 Lexington, alleged that the sale was a “sham” orchestrated by its managing director, Yechezkel Strulovitch, in collusion with JB Lexington. The outcome of this case affects not just the parties involved but also sets a precedent for how similar disputes may be handled in the future.
The parties involved in this case are 853 Lexington, LLC, the appellant, and JB Lexington, LLC, the respondent. 853 Lexington claimed ownership of the property until it was sold to JB Lexington. The dispute arose when 853 Lexington alleged that Strulovitch acted without proper authority, effectively defrauding the company and unlawfully selling the property. The plaintiff filed an amended complaint seeking to quiet title to the property and impose a constructive trust, arguing that the sale was fraudulent.
This case reached the Appellate Division after the Supreme Court of Kings County, under Justice Reginald A. Boddie, granted JB Lexington’s motion for summary judgment. This motion sought to dismiss the amended complaint and cancel a notice of pendency filed against the property. The lower court found that JB Lexington had established itself as a bona fide purchaser for value, meaning that it purchased the property without knowledge of any fraudulent actions related to the sale.
The court ruled that JB Lexington had met the burden of proof required to show it was a bona fide purchaser. The opinion stated, “JB Lexington established, prima facie, that it purchased the property for valuable consideration without actual or constructive notice of Strulovitch's alleged lack of authority to execute the sale.” The ruling emphasized that JB Lexington had made a significant payment of $3,850,000 for the property and acted in good faith during the transaction.
Furthermore, the court noted that Strulovitch appeared to have the authority to sell the property based on the documents provided to JB Lexington. The opinion pointed out that Strulovitch was the only organizer listed in the articles of organization for 853 Lexington, and he had provided a seller’s affidavit confirming his authority. The court concluded that JB Lexington’s reliance on Strulovitch’s apparent authority was reasonable, as they had no knowledge of any issues regarding the sale.
In its decision, the court also addressed the plaintiff's claims that JB Lexington should have been aware of a federal action related to the property. However, the court found that the plaintiff failed to provide evidence of any notice of pendency filed in that action before the sale took place. The opinion stated, “the plaintiff failed to submit any evidence in opposition to JB Lexington's motion demonstrating that a notice of pendency was filed with respect to the federal action before the property was sold.”
The ruling has significant implications for property law, particularly regarding the rights of bona fide purchasers. It reinforces the idea that purchasers who act in good faith and without knowledge of any fraud can protect their interests in real estate transactions. This case may serve as a reference for future disputes involving claims of fraudulent property sales and the responsibilities of purchasers to investigate the authority of sellers.
Looking ahead, this ruling may affect how similar cases are litigated in New York and potentially influence other jurisdictions. The decision underscores the importance of due diligence in real estate transactions and clarifies the legal protections available to bona fide purchasers.
As for the possibility of an appeal, details were not available in the court filing regarding whether the decision will be challenged. However, given the implications of this ruling, it is possible that 853 Lexington may consider further legal options. There are no related cases mentioned in the court opinion.