Cooperative and Condominium

March 30, 2017

Real Estate Contracts- Significant Issues for Buyers and Sellers

Now that we’re entering the Spring real estate market , we should anticipate that our real estate clientele will be entering into new real estate contracts for their real estate purchases. Certain clauses of such contracts should be negotiated in a particular manner, depending upon whether your attorney is representing a buyer or a seller.

A seller may have decided to forego the services of a professional real estate agent or the property may have been on the market for an extended period of time. In these situations, the seller may be more amenable to certain requests of the buyer, such as making certain repairs before closing. The seller may not know that some of the requests are not customary or may need to move the property, which may result in more flexibility on such matters.

Your attorneys should pay particular attention to personal property issues , whether representing a buyer or a seller. The seller will be disappointed to find that a treasured chandelier was not excluded from the personal property to be sold with the house. A buyer may not approve of the removal of wall scones, without repairs being made to the wall after removal.

January 19, 2017

The Peaceful Transfer of Power

By Weiss & Weiss

One of the hallmarks of our country’s democracy is the peaceful transfer of power that will occur tomorrow. Americans recently endured a polarizing election process. Republicans will now hold the office of the Presidency instead of the Democrats. Nonetheless, the forty-fifth President of the United States is expected to take the oath of office by peaceful transition. This administrative transition occurs no more than every four years on the national level. However, in the New York metropolitan area, such an administrative change happens much more often. This author is reminded of the transitions that occur when a new board is elected to run a cooperative or condominium building.

Contested elections for cooperative or condominium boards can become just as divisive as our country’s elections. Perhaps unit owners feel that the existing board is out of touch with the current needs of the building. Shareholders may disagree as to the prudence of agreeing to sell the building’s air rights or as to the extravagance of a lobby renovation. Boards can also turn over when long-term board members sell and are replaced by much younger board members who may not follow the way in which matters have been handled in the building.

The harmonious tenor of the building may start to unravel once unit owners start to share their concerns about the board online and find that other unit owners agree with them. Then, a successful takeover of the board may result. Even though a new board may be in place, certain steps should be undertaken to ensure a peaceful transition.

January 13, 2017

It Ain’t Over ’til it’s Over – Stopping Foreclosure Judgments and Sales

By Weiss & Weiss

Our firm is occasionally consulted by a party against whom a judgment of foreclosure has been entered. Prior blog posts have discussed the foreclosure process in detail. Among the last actions to be taken in a foreclosure case are the issuance of a judgment of foreclosure and the actual foreclosure sale. This post will discuss the few options available to a foreclosure defendant at this point.

The issuance of a judgment in foreclosure by the Supreme Court of the County in which the property is located usually occurs at two points in the foreclosure litigation. The first point would be if the defendant fails to answer the initial foreclosure Summons and Complaint, and the lending institution is granted a judgment by default. If the default was inadvertent, and the defendant has a reasonable excuse for not answering, as well as a meritorious defense, it is possible for the defendant’s attorneys to file a motion to vacate the default judgment.

Another point in the litigation allowing for a foreclosure judgment would be when the plaintiff moves for summary judgment and the motion is granted by the Court. Once a final judgment is submitted to the Court and signed by the Judge, the foreclosure process is in its final stages. The plaintiff must advertise a public foreclosure sale in a local newspaper for four weeks prior to the sale, and then conduct the sale, usually at the Supreme Court Courthouse in the county in which the property is located.

December 15, 2016

Tenant Concerns Raised by Trump Tower Security

By Weiss & Weiss

As a result of the recent election of Donald J. Trump to the Presidency, the area around Trump Tower in New York City has been subject to greatly increased security, including closures of streets, as well as guards and other restrictions on pedestrian access to the shopping areas around Trump Tower. Of course, this additional security has had a detrimental effect on businesses located in and around Trump Tower.

What legal recourse do these businesses have regarding their leases? This post will discuss the legal issues related to businesses and their leases in situations when access to their properties may be limited.

New York Courts have interpreted commercial leases to incorporate a warranty of habitability for the premises. The warranty of habitability means that the landlord warrants that the property is fit to be used for its intended purpose. For example, if the ceiling collapses at a store, causing the store to be closed, then the landlord is generally responsible for making the necessary repairs. Should access to a portion of the store be limited by damage caused by a fire, or other such event, the tenant may be entitled to a partial rent abatement until full access is restored.

December 8, 2016

Due Diligence and Real Estate Purchases

By Weiss & Weiss

You have found the perfect house, cooperative or condominium apartment after a long search. It has the ideal updated kitchen to show off your culinary skills and a beautiful bathroom that rivals a spa-like retreat. Is there anything that should delay the signing of the contract and procession to closing? Yes, there is. A prudent purchaser needs to conduct the appropriate due diligence to make sure that the property and surrounding neighborhood is financially and physically sound. Otherwise, the purchaser may acquire a property that is a long-term headache and difficult to sell when desired.

First, an inspection should be conducted by a professional engineer when buying a house. Some condominium and cooperative purchasers also find it appropriate to conduct an inspection. For a house, such an inspection may reveal a serious condition, such as a crack in the foundation. In this case, the buyer may want to search for another property. An inspection may also show items that the buyer will want to monitor once she is a homeowner. For instance, if the inspection predicts that the remaining useful life of the roof or the hot water heater is going to be five years, the homeowner may want to budget for such replacement and should not be surprised if these elements need replacement at such time. The inspection may also list items that your attorney may wish to request for inclusion while negotiating your contract. The seller may agree to repair the dishwasher, replace a broken smoke detector and the like prior to closing.

Inspections when purchasing a foreclosed property serve another purpose. Although properties offered for sale after foreclosure are generally strictly “as is”, inspection results that are unsatisfactory to the buyer may allow the buyer to cancel the contract or present the opportunity to ask the seller to remedy a particular condition or offer a price reduction. In any case, the buyer will have knowledge as to the condition and the expectations going forward.

October 27, 2016

Airbnb and New York Rentals – Back in the News

By Weiss & Weiss

New York Governor Andrew Cuomo recently signed a bill into law that would impose fines on Airbnb hosts who do not follow local housing laws. For our blog readers who may not be familiar with Airbnb, it is a web-based service that allows property owners and tenants to rent out their properties for a short period of time, often to tourists visiting their home city.

For example, a person with an apartment or home in an area where tourists may visit can list their property on Airbnb, giving a proposed rental price as well as the dates on which the property is available for short-term rental. Anyone responding to the listing may “rent” the property for a short period of time, sometimes just for a few days or less than a week.

Prior blog posts have discussed the legal issues associated with these short-term rentals. These issues generally arise more often in large cities, many of which have strict laws regarding short-term property rentals. For example, many co-ops and condominiums have strict rules regarding sublets, which is what the Airbnb listings constitute. Their governing documents, such as the proprietary lease, house rules, and condominium by-laws, usually restrict the owners from renting their properties for a short term, usually less than a month. In addition, board approval is often required for any sublets in many buildings. The reason for these rules is that most buildings prefer that their units be occupied by their owners, and not by sublessees. An exception to these rules may be where the owner is actually present during the proposed occupancy. It is important to review the rules regarding sublets for any building in which an individual may be considering purchasing a unit, as they will likely prohibit an Airbnb-type short-term rental.

September 15, 2016

Everything You Need to Know About the Cooperative Board Approval Process (But Were Afraid to Ask)

By Weiss & Weiss

After a long search, you have finally located your dream apartment. In New York, such an apartment is likely to be a cooperative apartment. You have been fortunate enough to obtain your loan commitment. Are you ready to close? No, because you now need approval for your purchase from the board of the cooperative. Such a condition is contained in the form contract for cooperative purchases. This post will discuss what is entailed in obtaining cooperative board approval.

The contract will specify a timeframe for the submission of your board application package. Your attorney should monitor this deadline, along with other deadlines to confirm that you have made the submission within the proper timeframe. It is preferable to work with a professional real estate agent who is familiar with the building or its managing agent, so that the board package is prepared in a manner pleasing to the board. Typical items for submission include financial records such as bank statements, and personal and professional letters of reference, along with the completed board application and credit check authorization. Each building specifies the number of copies required to be submitted. Most buildings will require that the application not be submitted unless it is also accompanied by a loan commitment letter from your lender.

The managing agent will review the application with the building’s interview committee (usually a smaller portion of the board). If such application on its face is not acceptable to the board (usually for financial reasons), they will decline to interview the candidate. This is a wise move, so that the board is not accused of discrimination in the event that the applicant happens to be a member of a protected class, which is not discoverable unless the applicant is met face-to-face. Otherwise, the board will schedule the interview. Potentially during the summer months or holiday season, meetings may occur more sporatically.

August 11, 2016

Selling a New York Property While in Foreclosure

By Weiss & Weiss

Prior blog posts have discussed a “short sale” of a property in foreclosure. A short sale is when the house is worth less than the mortgage owed to the lending institution, and the lender agrees to accept less than the full amount owed when the transaction takes place. However, a situation may also arise when a house is worth more than the loan balance, or when the amount owed is small enough that the seller may decide to pay the difference in order to sell the property to a third party. This post will discuss legal issues related to these circumstances.

Many of our firm’s intend to sell their houses or other property in foreclosure. They have listed their properties with a real estate agent, and are confident that the selling price will exceed the amounts owed on the property’s mortgage. In that case, the first legal recommendation is to have an attorney file an answer to the foreclosure complaint in the appropriate court, including all legal defenses . This will allow the homeowner additional time in which to find a buyer for the property while the foreclosure process plays out in Court. Mandatory settlement conferences for foreclosure actions may also further delay a lender’s obtaining of a judgment of foreclosure and sale, allowing more time to market and sell the property.

Once a buyer is procured, it is important that the seller’s attorney immediately prepare a Contract of Sale. Assuming all parties then execute the contract, the buyer’s downpayment should then be deposited in the attorney’s escrow account. The next step would be for the seller’s attorney to contact the attorneys handling the foreclosure for the lending institution. The attorney should provide copies of the fully signed contract, together with proof of the downpayment deposit. At this point, the attorneys for the lender may agree (although legally, they are not obligated) to put a “hold” on any foreclosure litigation, pending the closing of the sale of the property. The reason for this is that at the closing, the lender will be paid in full. Therefore, it is usually not cost effective for a lender to continue to pursue a judgment of foreclosure in Court once there is a signed contract and downpayment.

July 28, 2016

The Implementation of the New Mortgage Closing Disclosure Rules-How’s it Going?

By Weiss & Weiss

In a prior post , we alerted our readers that the HUD real estate closing form as they knew it would be disappearing from closings. In a later post , we informed our readers that the new loan closing disclosure rules were in effect. Several months after the implementation of these rules, we would like to share with you our observations of how clients have been dealing with these new rules.

Fortunately, we have experienced a busy home transaction season. On the flip side, we have observed that transactions are closing approximately one month later than they did prior to the implementation of these new rules. The exception to later closings is when a transaction is all cash, which does not require these disclosure documents and the mandatory waiting periods involved. Longer closing timeframes are a result of lenders taking longer to issue the loan commitment, evaluate collateral, and clear the loan to close. Even if the buyer and seller are ready and anxious to close, the lenders have been disregarding the will of the parties because they can incur substantial fines for failure to provide timely disclosures under the new regulations. Lenders may also need to refund money to borrowers if the closing costs are higher than were disclosed. The mandatory disclosure timeframe can be shortened in rare circumstances, such as an actual emergency. An emergency is not that a buyer is going to have a baby imminently and wants to get settled, but is when a buyer may lose her downpayment by needing to react to a time of the essence closing notice or if the property is about to miss a short sale closing deadline .

Lenders have become much more inconsistent and conservative in recent months. We have found that most lenders are internally deciding to require disclosure timeframes that are longer than required by law. We have noted that one regional lender has required that even more time pass than required than a major national lender that is complying with the law. A lender that is open for business on Saturday may seem to get the parties to closing faster because it can count Saturday as one of the disclosure days.

July 15, 2016

Pot Luck – Smoking Medical Marijuana in Your Apartment

By Weiss & Weiss

A recent news story in Bloomberg News discusses the effects of the legalization of medical marijuana, and its effect on smoking bans in apartments. This blog post will discuss the possible effects of such new legal developments on apartments in the New York City area and its surrounding suburbs.

Although marijuana use for recreational purposes is not yet legal in New York State (although several other states, such as Colorado, have legalized its use for all purposes), it can be used legally in New York for medical purposes. According to the New York State Department of Health’s website, a person with a severe medical condition, such as cancer, HIV, ALS (Lou Gehrig’s disease), Parkinson’s disease, as well as other life-threatening conditions, may be eligible to receive medical marijuana with a prescription from a doctor registered with the Medical Marijuana Program.

Legal issues may arise from the use of medical marijuana, as many rental apartments, cooperatives, and condominium buildings have enacted bans on smoking. Many rental apartments will contain in their leases a ban on smoking within the apartment and in the building common areas. In addition, many cooperative buildings have also started to ban all smoking, even within the individual unit owner’s apartment. These smoking bans were discussed in a prior blog post. Of course, prior to the legalization of medical marijuana, these smoking bans would have also applied to smoking marijuana (or any other smokable substance) in an apartment. The use of an illegal drug within a rental unit may have also likely given a landlord cause to evict the tenant for illegal activity in their apartment.