It’s one of those dismaying rules of law many business owners don’t learn until they litigate.

Contrary to popular belief, a business owner lacks a direct ownership interest or property right in the company’s underlying assets. An equity interest in a partnership, corporation, or limited liability company is nothing more than personal property – even if the entity’s sole asset is a piece of real estate.

This principle of law applies across-the-board to partnerships (Gross v Neiman, 147 AD3d 505 [1st Dept 2017]), to corporations (In re Estate of Zaharopoulos, 38 Misc 3d 1227[A] [Sur Ct, Queens County 2013]), and to limited liability companies (Sealy v Clifton, LLC, 68 AD3d 846 [2d Dept 2009]).

Under this doctrine, courts overseeing litigation between closely-held business owners routinely vacate Notices of Pendency placed by a business owner upon the entity’s underlying real estate asset (Pappas v B & G Holding Co., 208 AD3d 1105 [1st Dept 2022] [partnerships]; 5303 Realty Corp. v O & Y Equity Corp., 64 NY2d 313 [1984] [corporations]; Yonaty v Glauber, 40 AD3d 1193 [3d Dept 2007] [LLCs]).

But in Toporovsky v Toporovsky (2026 NY Slip Op 50028[U] [Sup Ct, Bronx County Jan. 12, 2026]), Bronx County Commercial Division Justice Fidel E. Gomez reached the rather surprising opposite result, declining to vacate a Notice of Pendency placed by an LLC member upon the entity’s single real estate asset to thwart the property’s sale to a third-party purchaser. Does Toporovksy now offer a limited foothold in business divorce litigation to successfully record a Notice of Pendency against a business’s underlying real estate asset? Or is it just a flash in the pan?

The LLC Membership Dispute

Plaintiff Juana Toporovsky (“Juana”) was a 30% member of Van Courtlandt Assets, LLC (“Van Courtlandt”). Simultaneously with the filing of her Complaint, Juana recorded a Notice of Pendency against an apartment building at 155-165 and 171 East Mosholu Parkway North, Bronx, New York (the “Building”).

The Building’s title was solely name of Van Courtlandt. Juana record the Notice of Pendency on the cusp on an attempted closing by her majority co-members — against Juana’s wishes — of a sale of the Building to a third-party purchaser, Defendant John Gojcaj (“Gojcaj”), for $8.5 million.

For those unfamiliar, a Notice of Pendency is a mighty litigation tool, a simple piece of paper one files with the county clerk once litigation is underway, which effectively becomes a “cloud on title,” deterring prospective purchasers from closing on a sale of real estate, lest they acquire the property with a competing claim to title. In most real estate deals, a Notice of Pendency is a deal breaker, hence its awesome power.

No doubt to the immense displeasure of the majority members — and Gojcaj — the Court denied a motion to vacate the Notice of Pendency, presumably halting the real estate sale dead in its tracks, possibly scuttling the deal altogether, while the parties litigate the merits of Juana’s claims.

Toporovsky’s Uncanny Resemblance to Worbes

The facts of Toporovsky are eerily similar to those of the Worbes case we litigated and blogged about here, here, and here:

• A closely-held entity owned by distant, estranged family members.
• A written contract governing the relations among the entity’s owners.
• A single underlying real estate asset in the Bronx.
• A distressed property needed major physical improvements, facing possible foreclose because of enormous debt.
• An owner who believes that the property is worth a lot of money and wants to keep the property.
• Another owner who believes the property is worth far less money, and who wants to sell it to stave off potential foreclosure.
• A contract of sale one side enters into with a third party to sell the property, but without securing the consent of the other owner.
• Same start to the litigation: a Complaint, a simultaneous Notice of Pendency, then a motion to vacate the Notice of Pendency.
• Same courthouse. Same Justice.

That is where the facts of Toporovksy and Worbes sharply diverge.

In Worbes, before we got involved in the case, the Court dismissed the complaint for lack of standing. The owner who wanted to sell the property commenced a separate action. In the separate action, again before we got involved, Justice Gomez granted a motion to vacate the Notice of Pendency, then went a giant step further by granting a mandatory injunction prohibiting the dissenting shareholder from interfering with the sale of the property, blessing the sale to with the third-party purchaser, and ordering the proceeds deposited into Court. The sale closed, leaving the owners to fight about the correct pro rata division of the sale proceeds, which we handled until the case resolved.

In Toporovksy, things went in a very different direction.

Van Courtlandt had an Operating Agreement and Restated Operating Agreement. Section 6 created a right of first refusal for any the members, including Juana, to acquire Van Courtlandt’s real estate, providing, in effect that if any member desired to sell the Van Courtlandt’s property, she first had to follow notice and appraisal process. If, at the conclusion of the process, one or more members wanted to keep the property, the “member or members other than the one desiring to sell shall have the opportunity to purchase provided they sign a contract to do so at a price at least equal to such minimum price prior to any third party entering into negotiations for such a contract.”

According to the Amended Complaint, Juana’s co-members excluded her the sale process, declining to follow the procedures in Section 6. Juana alleged that some appraisals valued the Building at between $14 million and $10 million, far more than the $8.5 million for which her co-owners contracted to sell the property. She also alleged that the sale price was inadequate to cover the Building’s $8.7 million mortgage. Her Amended Complaint alleged three claims – first, an equitable accounting of Van Cortlandt, second, a declaratory judgment to enforce Section 6 of the Operating Agreement and to declare the contract of sale null and void, third, a permanent injunction to enjoin the sale the Building’s sale.

The Motion to Vacate and the Orange-Gowanus Opinion

Juana’s estranged co-owners quickly moved by Order to Show Case to vacate the Notice of Pendency, filing an affirmation explaining defendants’ rationale for the transaction and a memorandum of law. In their brief, they relied upon the familiar legal rule that kicks off this article: a mere owner of a membership interest in an LLC lacks a sufficient property right or interest in the LLC’s underlying real estate asset to support a Notice of Pendency under CPLR §§ 6501, 6514, and case law applying the statutes.

Juana opposed the motion, filing an affirmation and a memorandum of law.

In her brief, Juana relied upon an unusual case from Brooklyn County Commercial Division Justice Reginald A. Boddie. In Orange-Gowanus LLC v Ben-Yosef (78 Misc 3d 1231[A] [Sup Ct, Kings County 2023]), an LLC member exercised, then sought to judicially enforce, a buy-sell option in an LLC agreement for the compulsory sale of a member’s LLC interest. The members’ inability to agree upon a sale of the LLC’s real estate asset triggered the membership interest buyout option. Litigation erupted. Plaintiff filed a Notice of Pendency. Defendants moved to vacate it.

In just three sentences, Justice Boddie concluded: “Here, the record fails to establish that plaintiff’s action herein was commenced or prosecuted in bad faith. Further, from a review of the complaint, plaintiff alleged claims to real property in which the outcome will affect title to the Property. Thus, the motion to cancel the notice of pendency is denied.”

The Decision and Order Denying the Motion to Vacate

Based upon the case law at the outset of this article, once could accurately call Orange-Gowanus an outlier. But Justice Gomez had a similar perspective. In a characteristically comprehensive written decision, the Court wrote:

Contrary to moving defendants’ contention, given the allegations in the amended complaint, wherein it is alleged that plaintiff has a right of first refusal to purchase the properties, she has a potential interest in more than her interest in her membership shares in Van Courtlandt. Indeed, her causes of action could, if she succeeds, give rise to a judgment giving her an ownership interest in the properties.

Justice Gomez continued:

To be sure, it is true that the amended complaint interposes causes of action largely premised on plaintiff’s rights as owner of 30% of Van Courtlandt’s membership, which rights are governed by the Operating Agreement. Ordinarily, these claims without more, are not tantamount to plaintiff having an ownership interest in real property such as the properties at issue here, owned by Van Courtlandt.

But Justice Gomez found Juana’s claims to be of a different character, sufficient to support a Notice of Pendency:

[A] review of the amended complaint . . . evinces that it alleges that pursuant to Van Courtlandt’s Operating Agreement Section 6 requires, inter alia, that if the properties are sought to be sold, members holding the majority of Van Courtlandt’s shares must notify all other members of the intent to sell the properties in writing, and if all members cannot agree on a sale price, it requires the retention of an appraiser, and upon determination of the value of the properties, any member other than those desiring to sell the properties must be given an opportunity to purchase the properties.

Thus, here, one of the objects of this action is a judgment nullifying the agreement to sell the properties to Gojcaj because prior to Gojcaj’s agreement to purchase the properties, in contravention of the Operating Agreement, plaintiff, as Van Courtlandt’s member not desiring to sell the properties, was never given an opportunity to purchase the property. If plaintiff is successful in this action and moving defendants are forced to abide by the Operating Agreement, the amended complaint establishes that plaintiff would be given an opportunity to purchase the properties. As such, this action does, in fact, plead a cause of action where the judgment demanded would affect plaintiff’s potential title to, or the possession, use or enjoyment of, real property.

The Battles Yet to Come

And so, Toporovksy declined to vacate the Notice of Pendency, a decision that may spawn additional legal battles on multiple fronts.

Van Courtlandt now faces exposure to the buyer, Gojcaj, for breach of the contract of sale, possibly a vendee’s lien against the Building to the extent of the purchase price.

The majority members face exposure to derivative claims by Juana on behalf of Van Courtlandt for breach of fiduciary duty and waste for foolishly entering into a contract of sale in contravention of the entity’s governing contract, a maneuver we know from prior articles can be deadly to prospective real estate estate deals. The majority also faces a potential direct money damages claim by Juana for breach of the Operating Agreement. So litigation is virtually guaranteed to continue. Perhaps there will be more for us to write about in this messy dispute.

In the meantime, Toporovsky provides some valuable precedent to close business owners: where a business entity’s governing instrument creates a right of first refusal or option for an owner to acquire the entity’s real estate, a claim to enforce the contract may sufficiently “affect the title to, or the possession, use or enjoyment of, real property” to support a Notice of Pendency against the entity’s real property.

If any of our readers happens to be front of a computer this morning, I’ll be arguing an appeal in the Appellate Division – Second Department. Anyone watch live at this link. Our case is Suprina v Goodman, fifth on today’s 10 am appeal calendar. We’re advocating for reversal of pre-answer dismissal of a complaint alleging claims for breach of oral escrow agreement and fiduciary duty.