reverse-300x206Prior blog posts have discussed the legal ramifications of reverse mortgages, which are becoming more common, and, with this, have become the subject of more court actions, including foreclosure cases.  Reverse mortgages allow a person to borrow against the equity in their home, and are limited to those homeowners older than age 62.  The sums borrowed against a person’s primary residence are usually not legally required to be repaid until after the borrower’s death.

Of course, no one lives forever, and, eventually, all things must pass.  At that point, the legal heirs of the borrower will often receive collection notices from the reverse mortgage lender, demanding repayment of the loan.  This post will discuss the legal options available to the heirs when a reverse mortgage has become due as a result of the borrower’s death.

The first recommendation is that the heirs retain experienced legal counsel to represent their interests.  Counsel should examine the documents underpinning the reverse mortgage, and check to ensure that the borrower actually took out the loan, and understood the ramifications of the transaction.  Unscrupulous lenders may take advantage of our senior citizens, some of whom may not be in top shape physically or mentally.  If a surviving heir suspects this to be the case, the reverse mortgage may be challenged in Court, depending on the overall circumstances of the transaction.

squatter-300x200A recent article in the New York Post discusses a 61 year old man who had refused to move out of his Hunter College dorm room, where he had lived for the past 38 years.  Obviously, this is not the ordinary landlord-tenant matter, in which a tenant has a written lease with their landlord, and the rights and obligations of the parties are clearly defined.  Although most eviction matters involve a landlord-tenant relationship, there are certain situations which involve a different legal framework, which will be discussed in this blog post.

The first type of unconventional situation is that of a licensee.  A licensee is a person who is given permission to live at the premises by the owner of the premises.  Usually, the licensee is not paying rent.  One example would be an unmarried couple, where one person is the sole owner of the property.  The other person moves into the premises with the consent and permission of the owner.  After some time passes, the couple may develop relationship problems, and decide to split up.  What happens if the licensee refuses to move out of the premises at that point?

In order to evict the licensee, a special proceeding must be commenced, usually in the local landlord-tenant Court, under Real Action Property and Proceedings Law, Section 713(7).  This section of the law covers eviction proceedings where no landlord-tenant relationship exists.  The first step would be for the property owner to revoke their permission for the licensee to live at the premises.  We would recommend this be done in writing, with experienced counsel preparing the necessary documents.  Once the notice of termination has been given, the licensee has ten days to vacate the premises.  If they fail to do so, an eviction proceeding can be brought in the appropriate forum.

pondMany of us have recently enjoyed watching the Winter Olympics.  The competitive spirit of the athletes is enhanced by the beauty of the snow and ice and the vistas in South Korea.  Back in our region, snow and ice can be dangerous for homeowners and subject them to damages for injury to person and property.  Of course, young children are most susceptible to injury and tragic consequences are sought to be avoided.  Homeowners should take reasonable measures to avoid dangerous conditions caused by ice and in warmer times, swimming pools.

Let’s imagine that a young couple purchases a lovely home overlooking a lake.  What a wonderful lifestyle to be enjoyed.  Skating on the frozen lake in the winter and swimming in it in the summer.  However, should the lake not be sufficiently frozen, and a person falls in as a result and drowns, the homeowner could be subject to a claim for personal injury if he did not take adequate measures to protect against harm.  Some of these measures are limiting access by fencing or a gate with a key and posting signs in multiple languages advising of the danger.

Swimming pools are also what can be termed as an attractive nuisance.  Using them is appealing to neighbors, even if not invited by the homeowner.  Those who are unable to swim or are impaired by drugs or alcohol can be injured if they have easy access to the swimming pool.  As with the lake, it is essential that a locked gate or fence surround the pool.  Also, potentially a pool alarm should be installed to alert the homeowner to unauthorized use.  These measures are important even if the properties are spaced far apart, as in some areas served by our firm.

chelsea-300x200A recent article in the New York Times discusses the purchase of the building which currently houses Chelsea Market by Google.  Of course, this raises the issue of what becomes of the tenants in the building, including the all-important food vendors.  Commercial real estate in New York, whether in the New York City area or its surrounding suburbs, often changes hands.  The question then becomes what are the legal responsibilities of the new owner regarding the existing tenants.

In most cases, the property is sold subject to the current tenants’ leases.  This means that if the tenants have valid leases, and most commercial tenants would have such leases, then the new owner “steps into the shoes” of the existing landlord, and takes the property subject to the leases.  It is important for anyone purchasing such commercial real estate to have experienced counsel review the existing leases, and be aware of the rights and responsibilities of both landlord and tenants.  A commercial property such as Chelsea Market may have dozens of commercial tenants, who may have different leases, expiring at different points of time, with potential options to renew.  The new owner must analyze the situation prior to purchasing to ensure that the existing rent obligations create sufficient cash flow for their purposes.  Also, if the new owner wants the space vacated, an evaluation is needed to determine how long the existing tenants may remain.

Assuming the buyer is obtaining financing for its purchase, the institutional lender will require subordination non-disturbance and attornment agreements from the tenant.  This is an acknowledgement from the tenant of the status of the lease, such as term, security deposit held, rent due and whether either party is in default, and that it will pay the lender if the buyer does not make payments on their mortgage loan.  In exchange, the tenant should obtain an estoppel certificate, which is a document confirming their tenancy, and stating that they will not be evicted assuming they continue to meet their obligations under their existing leases.

retaxes-300x168In December, 2017 a new federal tax bill was enacted.  Such legislation has a profound effect on relatively high tax states such as New York.  This has resulted in a lawsuit filed by the State of New York as well as other regional high tax jurisdictions.  Previously, there was no limitation on deducting real estate taxes and mortgage interest paid.  With the new tax legislation, state and local tax (“SALT”) deductions are limited to $10,000.  Real estate taxes due for properties owned by clients represented by this firm typically exceed this $10,000 limitation.  As such, panic sweep homeowners before the end of 2017.  These people tried to pay their property taxes for 2018 while it was still 2017, so that they could deduct as much as possible.  This post will address if this strategy was effective and discuss the means by which real estate taxes are paid in New York.

Apparently paying taxes in advance may not be effective for the following reasons.  Let’s assume that the property taxes on a home in Scarsdale are $24,000 in 2017.  The homeowner wanted to pay an extra $25,000 in 2017 to cover anticipated 2018 taxes.  Such a strategy is ineffective because taxes are levied as a result of a budget and warrant resulting in a tax bill to the homeowner.  If the taxing authority has not completed this process, paying an estimated amount would not allow such payment to be deducted.

Further, many homeowners with mortgages have a tax escrow associated with their mortgage.  This means that every payment will include mortgage interest and principal, as well as an amount determined by the lender that is sufficient for the lender to pay real estate taxes on behalf of the homeowner once they are due.  The lender sends an annual statement to the homeowner and the IRS stating the taxes paid on the account.  If the homeowner pays taxes on her own, it will not match the amounts reported to the IRS, potentially subjecting her to a tax audit.  Thus, any homeowner who has her taxes escrowed should not pay real estate taxes on her own outside of her ordinary loan payment.

cooprejectConsider the following scenario.  A shareholder in a cooperative  has been trying to sell her apartment because circumstances have resulted in her opportunity to buy a house in a sunny location out of town.  Her buyer is a young professional gentleman who wants to own, rather than rent, and build equity to trade up to another home in the future.  Their real estate agents make the deal.  All parties look forward to closing.  Of course, such a transaction requires approval not only of the lender making the purchase loan but of the cooperative board.  Once the buyer obtained his loan commitment, after having submitted numerous financial documents and information, he finds out that either the board will not even interview him or has declined to approve the purchase after the interview was held.

It has been longstanding practice in New York that a board does not have to disclose the reasons why it is declining an applicant.  The board is governed by the “business judgment rule” , allowing it broad latitude for its decisions, assuming that most decisions are made for the benefit of the cooperative as a whole.  The board’s decision is only subject to being overturned if the parties can prove that the decision was made for an illegal reason, such as discrimination.  Let’s say that the proposed buyer is a homosexual, which became obvious by information contained on the board application as to affiliations or as discussed in the interview.  Should that have been the reason why the declination was issued and the applicant was able to prove same, the decision could be overturned and subject the board to potential damages because homosexuals are a legally protected group.

It has recently been proposed in the Westchester County Legislature that cooperative boards should be legally required to disclose their reasons for rejection.  Those advocating for the rule suggest that it will prevent discrimination and is helpful to “protected classes”.  This author feels that the law already protects applicants against boards that discriminate.  However, the proposed law would be helpful for other reasons.  It contains specific timeframes for the review of applications.  Should a board decide not to interview during the summer so that its members can travel, the law would prevent a three month delay in the review of an application.  Our readers should be aware that if a person’s loan is declined, reasons will be stated in a letter, allowing the applicant to improve his submission in the future.  However, without any stated reason for a board declination, the seller and the real estate listing broker will have no information as to the type of buyer sought by the board.  What if the board now prefers that applicants earn more than $100,000 annually, but it has not communicated this information to shareholders?  With free disclosure of information, the broker will know how important it is to verify income and will not suggest a buyer who cannot meet the criteria.

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We have written extensively about the pitfalls in not having a will. As such, many clients heed that warning and request that their attorney draft a will and other associated estate documents on their behalf.  While these clients have taken responsible action and had their estate documents drafted, additional tasks are required.  We suggest that estate documents be reviewed and potentially redrafted on a periodic basis for the reasons highlighted in this post.

Most people experience changes in their life and in the lives of those around them that require revision of estate documents.  Such internal changes are as follows.  Perhaps the executor appointed in the will does not currently get along with the testator (person making the will) or is unable to perform his duties due to illness or death.  Maybe the formerly adorable child is now an irresponsible young adult, whose inheritance should be left in a trust.  Perhaps an estrangement of relationship has occurred, so that the testator wishes to disinherit a relative.  These events are under the knowledge and control of the testator.

Relationships and events may result in the need to revise estate documents.  Some of these events are divorce of the testator or adult child, a grandchild’s birth, receipt of inheritance, retirement, and chronic disability.  Your attorney will assist you in adjusting your estate documents whether or not such events are joyous.

tenant-300x161Our firm handles real estate transactions as well as landlord-tenant matters.  At certain times, these two areas of the law may intersect.  One situation which occurs frequently is when a multi-family house is sold by its owner, who may have one or more tenants living at the property.

In such a situation, what are the legal responsibilities regarding the tenants?  Most standard real estate sale contracts contain a clause requiring that the property be conveyed vacant and free of tenants.  Unless there is a rider to the contract modifying this clause, this means that it is the seller’s responsibility to remove all tenants prior to closing.   When our attorneys are confronted with such a situation, the first thing to do is to ask the proposed new owner’s attorney whether they wish to retain the tenants living at the premises.  It is possible that the new owner would also like to rent the property, or a portion of same, and does not want to go through the time and expense of locating new tenants after the purchase is complete.

If the new owner wishes to retain the tenants after she purchases the property, the next step is to determine whether the current tenants have a written lease for the premises.  If they do, the lease should be reviewed by the buyer’s attorney, and, at closing the lease should be legally assigned to the new owner.  What this means is that the new owner “steps into the shoes” of the former owner regarding the obligations under the lease.  Any security deposit being held by the seller of the property should be transferred to the buyer at the closing.  In addition, any rent already paid by the tenant prior to the closing should be pro-rated at the closing.  For example, a closing is scheduled for April 15.  The tenant pays his monthly rent of $1,000.00 on April 1 as per his lease.  At the closing, the buyer should receive a $500.00 credit as his share of the rent for the one-half month that he owns the property.  He will collect rent directly from the tenant starting in the first month after the closing.

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Our firm is frequently engaged to handle disputes over property ownership.  In many cases, a partition action is necessary.  This post will explain the essential components of such an action.  The first and most important element is that the dispute be over real property.  Although there can be disputes over personal property, such as possessions and vehicles, a partition action can only concern real property.  Including other types of property in a partition action should be avoided, as it is not covered by the statute in question, and leads to issues not readily resolvable in such an action.

The real property in question must be located in New York State, and also should be owned jointly by the parties.  There are several types of joint ownership in New York.  Married couples often own property as joint tenants with right of survivorship.  This means that if one of the joint owners passes away, their ownership interest immediately passes to the surviving spouse.  However, it is fairly uncommon for a spouse to bring a partition action against the other spouse.  The reason for this is that such disputes between spouses are almost always part of a divorce action, where other assets and liabilities are at issue.  Therefore, the resolution of the dispute is heard in the Matrimonial Part of the Supreme Court, rather than in a partition action.  The Matrimonial Part will usually resolve the dispute over the real property (as well as any other jointly owned property) as part of the divorce case.  In certain rare cases, the real property in dispute is not resolved in the divorce action, and then, a separate partition action may be necessary.

In these times, it is becoming more common for couples (whether single sex or heterosexual) to remain unmarried, but still purchase real property together.  As married couples may split, so may unmarried couples.  However, the legal ramifications of such a split may differ for unmarried couples.  Because they are not married, no divorce action can be brought in the Supreme Court Matrimonial Part to resolve all property issues.  Therefore, a partition action would be necessary to resolve the issues regarding real property jointly owned by the couple.  Such an action would be brought by one of the owners, in order to have the property sold by the Court, if the parties cannot agree between themselves how to dispose of the real estate.