Cooperative and Condominium

October 2, 2015

The Changes Are Here- New Mortgage Disclosure Rules Effective Date Has Finally Arrived

As stated in a prior post , we promised to keep you advised of the progress of intended updates to the mortgage disclosure regulations. Due to comments from the loan industry, the effective date of the regulations was pushed back from August 1 to October 3, 2015. The delay in the implementation allowed for certain revisions to the intended regulations and allowed for the loan industry to engage in the task of preparing to close loans consistently with the new regulations.

If you are applying for a residential mortgage after October 3, 2015, these revisions will apply to your loan. Within three business days after your loan application is submitted, a Loan Estimate is to be provided to the borrower. This document will provide the loan amount, interest rate, monthly payment, estimated taxes and insurance and anticipated cash required to close.

The major concept behind the new regulations is that additional charges to the borrower of any type are not to be disclosed for the first time at the closing. Collection and sharing of accurate data concerning charges among those professional partners involved in the closing is crucial. Also, attorneys in New York will need to get accustomed to preparing the final financial details of closings much more in advance than is currently typical. Those attorneys who do not conduct many real estate closings may not be abreast of these developments and may not be prepared to act.

August 20, 2015

Is the House Still for Sale?

By Weiss & Weiss

As we enter the last days of summer, this author can’t help but notice that some houses for sale seem to have languished on the market for months unsold. This post will address the practical and legal ramifications of unsold houses. Because “For Sale” signs from real estate agents cannot be posted on cooperative or condominium apartments, requiring potential purchasers to search real estate listings online or in the newspaper, this post will address houses only.

In the suburbs surrounding New York City, most house sales occur with the school calendar in mind. For instance, a seller usually prepares her house to be listed starting in April, so that her buyer signs a contract by June, closes in August, and the buyer’s children can start school in the selected neighborhood in September. When the seller cannot follow this ideal schedule, she is limited to the buyers who are not concerned with the school calendar, which by its nature develops fewer potential buyers. If the property takes too long to sell, Thanksgiving and the holiday season arrive, along with winter weather, making buyers too busy or too uncomfortable to look at houses.

First, we should discuss when a seller is legally committed to sell a particular property to a buyer. In New York, until both parties have signed the contract and the downpayment has been deposited, the seller may enter a contract with any other buyer of his choosing. Our attorneys who are involved in real estate transactions are prepared to act quickly in response to an accepted offer on a property. When representing the seller, draft contracts are sent to the buyer’s attorney usually within a day. Likewise, when representing a buyer, we negotiate the contract and prepare it for signing in a similar timeframe.

August 13, 2015

Stock Transfers After Death

By Weiss & Weiss

It is not unusual for the estate of a deceased person to hold stock as an asset. Stock can take the form of shares held in a publically traded company, such as Target, or shares in a cooperative corporation. Clients often ask us how such shares can be transferred after a person passes away. This post will answer the question.

First, it needs to be determined whether the person had a Will. If there was a Will, there may have been a specific bequest of the stock. This takes the form as follows: “I give all shares that I may hold at the time of my death in Target to my daughter.” If the stock is not addressed specifically, then the residuary clause of the Will manages its disposition. Anything not specifically addressed is left to the party receiving the residuary.

If the person did not have a Will, then the rules of intestacy would dictate who would receive the stock. In New York, Section 4-1.1 of the Estates Trust and Powers Law governs the situation. For instance, if the closest surviving person to the deceased is a child, then the child would inherit the stock under New York law.

July 23, 2015

Breaking Up is Hard to Do- The End of a Real Estate Transaction in New York

By Weiss & Weiss

Real estate transactions can “break up” prior to closing for a variety of reasons. The purchaser may receive a refund of his downpayment depending upon the circumstances. This post will address the legal issues associated with a deal breaking up.

Most contracts of sale contain a mortgage contingency clause. Such a provision provides that if the purchaser applies in good faith for the loan and supplies all information reasonably requested by the lender within the timeframe required by the contract, but is declined for the loan for any reason, the downpayment will be refunded to the purchaser. Readers should also be aware that the buyer may have a loan commitment, but the lender may not have cleared all closing conditions and ultimately may refuse to fund the loan. This situation may also give rise to the buyer’s right to the refund of the downpayment. In a contract without a mortgage contingency clause, the purchaser may be subject to the loss of his downpayment if he does not obtain the necessary funds to close. A qualified attorney should monitor her client, by entering the pertinent dates in a calendar and to request extensions of applicable deadlines should her client not have the loan commitment in the timeframe required by the contract.

Contracts pertaining to cooperative apartments typically contain a condition that the approval of the cooperative’s board of directors to the transaction must be obtained prior to closing. As in a standard mortgage contingency clause, the contract provides for the delivery of the board application package by a particular date, usually ten business days after the fully executed contract is delivered to the buyer’s attorney or ten days after the loan commitment is obtained. Should the board reject the purchaser, the downpayment must be refunded. However, if the buyer missed deadlines for the submission of the package or intentionally failed his appearance in the board interview, the downpayment may potentially be withheld.

July 16, 2015

Evictions and Warrants of Eviction in New York State

By Weiss & Weiss

Many of our clients are landlords who own only one property, such as a single or multi-family house or an apartment. Although they may be renting to a tenant, it is not their primary business or livelihood. As such, our firm is often asked to assist in removing a tenant due to a default under the lease, or due to the expiration of the lease in question. As discussed in a prior blog post, a Court proceeding is necessary in order to gain legal authority to evict a tenant.

The legal document allowing an eviction to occur is known as a warrant or warrant of eviction. It is similar to a judgment, except that instead of stating that a certain sum of money is owed, it states that the landlord has the legal right to evict a tenant. A warrant can be obtained in several ways during a Court proceeding. If the parties agree to settle a landlord-tenant action, the tenant may agree to vacate by a certain date. A condition of such agreement (known as a Stipulation or Stipulation of Settlement) would be that if the tenant does not vacate voluntarily, the landlord is entitled to a warrant of eviction. Often, the agreement will allow the warrant to be issued immediately, but the parties will agree to stay, or delay, enforcement of the warrant until after the date on which the tenant agreed to vacate the premises.

The Stipulation allows the landlord to have a warrant of eviction, but gives the tenant a reasonable amount of time (usually a month or two) in which to vacate. A crucial part of such an agreement is also that the tenant must pay use and occupancy during the period of time between settlement and moving out. Use and occupancy is a legal term which applies to rent paid after the tenant has agreed to surrender possession. The agreement will usually state that if the tenant fails to pay such use and occupancy, the warrant may be executed immediately upon notice of default sent to the tenant, rather than on the later date previously agreed to by the parties.

June 25, 2015

Rent Regulation in New York – The Newest Provisions

By Weiss & Weiss

A recent article in the New York Times describes a tentative deal in Albany to extend the rent regulation laws in New York. Rent regulation in New York exists not only in New York City, but also in other large cities, such as Yonkers and White Plains. To speak generally, rent regulations usually restrict the amount of rent that a landlord can charge for an apartment. In addition, tenants are usually legally entitled to a one or two year lease renewal, subject to certain restrictions. Landlords are permitted to raise the rent a certain percentage per year, subject to an overall threshold of rent.

The proposed deal in Albany would raise the rent at which an apartment can be “de-regulated” from $2,500.00 per month to $2,700.00 per month. What this means is that apartments which rent for more than $2,700.00 per month would no longer be subject to rent regulation, and landlords would be permitted to charge “market rate” for such apartments. In addition, tenants of a de-regulated apartment would lose their right to a renewal lease at a fixed rate of rent increase. For example, if one rented an apartment for $3,000.00 per month for a two year lease, at the end of the two year term, the landlord would be permitted to raise the rent to whatever amount the market could bear. If the tenant does not want to pay the new rent, they would have to vacate the premises.

Because rent stabilized apartments renting for below $2,500.00 (soon to be $2,700.00) a month are likely to be regulated, the landlord under such a system has an incentive to remove such tenants after their current lease expires. If the tenants vacate, the landlord is permitted a “vacancy increase bonus,” which allows them to increase the rent that a new tenant would pay, to an amount greater than the legally permitted increase for the current tenant’s renewal. For this reason, some landlords will make a cash offers to “buy out” tenants of their rent regulated tenancies. Our firm has handled these situations, representing both landlords and tenants in different transactions regarding such buyouts, and we have discussed the specifics of such buyouts in a prior blog post.

May 14, 2015

“Time of the Essence” Closing Dates in New York State

By Weiss & Weiss

Parties to real estate transactions often ask us whether it is appropriate to include a time of the essence clause in their real estate contract. A time of the essence clause provides that if the parties do not close on the specified date, then the party who is not ready, willing and able to close will be in default of the contract. If the seller is in default, the remedy available to the buyer would be a lawsuit demanding specific performance, requiring the seller to transfer ownership of the property. If the buyer is in default, the seller’s remedy would be to retain the downpayment. In addition, the particular contract between the parties may dictate additional remedies available.

In New York, it is legally assumed that if a contract does not specify time of the essence, then it is not time of the essence, unless the procedure described herein is followed. Typically contracts will have the language “closing on or about x date”. This has been interpreted by Courts to mean that such a date is an approximate target and not necessarily the precise date on which the parties should presume that they are closing. Purchasers often have difficulty with on or about closing dates, as they need to know that they can close before their children are expected to enroll in school and need to arrange for movers and contractors. We advise our clients not the schedule specific moving dates or contractor start dates until the closing is imminent.

Time of the essence closing dates are not standard in residential sales transactions. Customarily, a seller does not want to be liable if unable to perform on a specific date. A purchaser does not want to potentially lose his downpayment for matters outside of his control, such as the lender not clearing the file to close. Time of the essence closing dates are more typical in residential matters where a person is purchasing directly from a developer/sponsor. In this type of transaction, the seller’s time of the essence clause provides that purchaser will pay closing adjustments such as common charges and real estate taxes as of the time of the essence closing date, even if the actual closing takes place at a later date. Further, it is not unusual to see a time of the essence clause in a commercial real estate contract.

April 16, 2015

Illegal Acts and Evictions in New York State

By Weiss & Weiss

A recent gas explosion in Manhattan’s East Village destroyed an entire building, and, more unfortunately, caused the deaths of at least two individuals and injuries to other people who were unlucky to be in the building during the explosion. Of course, the human cost of such a tragedy cannot be measured. This blog post will attempt to explain some of the legal issues that relate to illegal actions on the part of a landlord or a tenant.

Apparently the gas explosion may have been caused by the illegal siphoning of a gas line by the building’s landlord. If this is indeed the case, the landlord would be legally responsible for any injuries caused by the explosion, including the deaths of the individuals. Such legal responsibility be in both the civil and criminal categories. This means that the persons responsible for the illegal siphoning may face charges of criminal negligence, and be subject to arrest and jail time.

In addition, any persons damaged by the explosion may file civil suits seeking money damages for their injuries. This may also include wrongful death actions brought by the legal heirs of those killed in the explosion. A wrongful death suit usually seeks damages in the amount of future earnings by those who may have been legally dependent on the person who died. It is usually brought by a surviving spouse or child of the decedent. Those found to be legally responsible for the death of the individuals in the explosion may have to pay compensation in the amount of estimated lifetime future earnings of the person who died as a result of their negligence.

April 9, 2015

Partition Actions, Occupancy, and Tenants in New York State

By Weiss & Weiss

Prior posts on this blog have dealt with the legal issues regarding partition of property. To summarize, a partition action may be brought when a property has two or more owners, and the owners are unable to agree on the disposition of the property. One owner may wish to sell the property to a third party, and another owner may wish to retain the property.

Often, one or more of the co-owners may live at the property in question. Another possibility is that none of the owners live at the property, and are renting the premises to a third party who is not a property owner. This blog post will explore the legal issues regarding tenants and occupancy of a property which may be subject to partition.

The first issue to be examined is where one or more of the owners lives at the property in question. Legally, any owner of the property is entitled to reside at the property if the property is residential in nature. For example, let’s assume a property owner passes away and leaves her house to her three children, each to own a one-third (1/3) share of the property. Under this scenario, any or all of the three children may reside at the house in question. None of the three new owners has a legal right to exclude the others from residing at the property. Of course, this can create problems in a scenario where one owner resides at the property, and the other owners do not. Since the non-resident owners do not have a legal right to evict the owner residing at the property, their main recourse would be a partition action to sell the property to a third party.

March 27, 2015

The Spring Real Estate Market- Timing is Everything

By Weiss & Weiss

In the New York metropolitan area, the residential real estate market is often seasonal. During the holidays between Thanksgiving and New Years Day, most sellers do not list their properties for sale or may remove their home from active listing status. During the winter months, most buyers are reluctant to be exposed to the cold weather and the snow to view properties. Fortunately, all of this changes with the approach of spring. The inventory of homes increases as more properties are listed and additional purchasers are looking to enter transactions. Both parties to transactions, who will experience increased competition as inventory increases, should take the steps described in this post so as not to miss the spring season.

The school calendar is also strongly influential on real estate transactions in the New York suburbs. The optimal time to close for both parties is between the end of June and the beginning of September, so that the children of the selling family can complete their current school year and the children of the purchasing family can start the next school year in a timely fashion. When representing purchasers, our attorneys confirm that the property is in the school district expected by the purchasers. If the closing may occur close to, but not in advance of the start of school, we will contact the school district to determine whether the children of the purchasing family can start school prior to the closing. We will provide any documentation requested by the school district to assist in enrollment. Our lawyers will creatively fashion a solution so that the closing can occur as needed to enroll the children in school.

The following steps should be undertaken by sellers considering bringing their property to market. The home should be physically ready, so that is shows more favorably, bringing the best price to the seller. For instance, decluttering should be done to make the rooms and closets seem larger and to make it easier to move when the time comes. Since painters get busy in the spring, appointments should be made to freshen up the look of the home. Did the winter cause any property damage such as leaks, broken gutters and the like? If so, repairs should be made before bringing the property to market.