New York Real Estate Lawyers Blog

June 16, 2016

Waiving the Mortgage Contingency Clause- Should Purchasers in New York Take the Risk?

Sellers of real estate in New York perceive the current market as one with a tight inventory for desirable properties. In such a market, multiple offers may be available to a seller. In order to select one offer over another, a seller may demand that the buyer who intends to obtain a mortgage waive the standard mortgage contingency clause in the proposed contract. This post will discuss whether waiving the mortgage contingency is a risk that a buyer should take.

In a typical New York real estate contract, various contingencies (conditions) need to be met between signing the contract and closing. Some of the conditions usually include proof of clear title, a satisfactory appraisal , approval of the finances of the cooperative building and the like. If the conditions are not met, the downpayment will be delivered to the seller or the buyer, depending on the circumstances.

A mortgage contingency clause works as follows. After the contract is signed, the buyer is afforded a particular number of days to obtain their loan approval. If the buyer does not obtain the loan, he can show that the loan was declined and request the refund of the downpayment. During this period of time, the seller is required to remove the property from the market and is relying upon this particular buyer to close. If the buyer has a valid legal right to cancel the contract and receive the return of his downpayment, the seller has lost potentially two months in being able to market the property again. In New York, missing an opportunity to market the property during the Spring and Summer seasons could cause the property to be overlooked by buyers until the following Spring, because most contracts are signed in the Spring and Summer months.

June 7, 2016

Deficiency Judgments in New York Foreclosures

By Weiss & Weiss

Previous blog posts have discussed foreclosures in New York State. Many of our clients own either residential or commercial property and may not be able to make their mortgage payments. They may become subject to a foreclosure lawsuit brought in the appropriate Supreme Court, in which the lender seeks to foreclose on its mortgage and take over ownership of the property in question.

However, our firm is often asked what happens after the lender takes ownership of the property from the borrower. This is usually done after a public foreclosure sale of the property before a court-appointed Referee. The Referee will then prepare a Referee’s Deed, in which ownership of the property is transferred from the borrower to the entity which was the successful high bidder at the foreclosure sale. The Referee’s Deed is then recorded with the County Clerk’s Office in the county in which the property is located.

Does the foreclosure action end at that point? Generally the answer is yes, but not always. The lender, which can be either an institution such as a bank or credit union, or an individual, may seek a deficiency judgment against the borrower after the foreclosure sale is finished. Whether this happens is dependent on the successful bidder at the foreclosure sale. Before the public auction, the lender will make public the amount which the borrower owes on the property. This amount will include all principal and interest on the loan being foreclosed, the costs of the foreclosure, including attorney’s and referee’s fees and court costs, as well as any other expenses that the lender incurred in foreclosing the property. Let’s assume that this amount is $500,000.00. Any third-party bidder (anyone who is not the lender) for the property must bid at least this amount for the property. In the example given, the bidding would have to start at $500,000.00. Assuming someone believes the property is worth at least this amount, the highest bid which exceeds $500,000.00 would pay this amount to the Referee and become the owner of the property. The first $500,000.00 of the successful bid would be paid to the lender, with any remaining sums going to any creditors of the borrower who have appeared in the foreclosure action, and any surplus after that paid to the borrower. In such a case, there would be no deficiency judgment.

May 26, 2016

Thanking our Military on this Memorial Day Weekend

By Weiss & Weiss

Many of our readers are looking forward to the upcoming Memorial Day holiday weekend. Most of us are thinking of spending time at a backyard barbeque or taking advantage of a sale at a department store. Memorial Day also has a more somber connotation, thanking our military for the ultimate sacrifice that they have made for our country. As attorneys, we wish to bring to your attention particular legal matters with which we can assist should your loved one make such a sacrifice for our country.

We think of our military as young and not wealthy as yet. Saving estate taxes is not the concern of this population. However, estate and financial planning is still needed due to the inherent danger in their profession and their age. For instance, an accident could result in permanent disability or death. The service member may get married. These changes could have significant consequences if the proper legal documents are not drafted by a skilled professional.

In the absence of a Will , the service member would be deemed to die intestate and an Administration proceeding would be required to manage the person’s assets and liabilities. Concerns with the disposition of personal property need to be addressed, preferably in a Will.

May 19, 2016

Who’s in Charge? Disputes over Control of Religious Institutions

By Weiss & Weiss

Recently in the news is a story relating to control over Touro Synagogue, located in Newport, Rhode Island. The Touro Synagogue was built prior to the Revolutionary War and is one of the oldest congregations in the United States. As with many older institutions, over the centuries, the original congregation and their descendants eventually moved from the area in question. Many of these individuals settled in New York, and formed a new congregation, named Shearith Israel. The original congregation in Rhode Island dwindled and even fell dormant for a period of time.

According to the Court records, there is a dispute between the current congregation of Touro Synagogue, now named Jeshuat Israel, and the New York congregation, Shearith Israel, over who was the rightful owner of the Touro Synagogue, and who has the right to make decisions such as the sale of ornaments in order to raise funds.

Our firm has handled similar cases involving control over religious institutions. Many churches and synagogues experience changing congregations and conditions over a long period of time. Depending on the location of the institution, members may move from the area, causing a sharp decrease in active membership. At that point, the institution must decide whether to continue in its present location, or consider moving to another part of the New York where membership may increase. Moving an institution will usually involve the sale of the current location. Such a sale must be approved by the Board of Trustees or other governing body of the institution in question. Prior blog posts have discussed the handling of legal disputes relating to control over a religious corporation.

May 13, 2016

New York State Landlord Prosecuted – Does this Sound Familiar?

By Weiss & Weiss

Recently in the news is the story regarding New York City landlord Steve Croman. Mr. Croman was arrested for allegedly harassing rent-stabilized tenants into leaving their apartments so that he could increase the rent for new tenants. Longtime readers of our blog will recall other posts which relate to the right to renew a lease, as well as illegal acts and evictions in New York State.

Unfortunately, the current rent system in New York State, and, more specifically, mostly in New York City, gives landlords an incentive to remove tenants, especially long-time tenants, who are paying artificially low rents due to the rent stabilization laws. Of course, this does not excuse harassing and threatening tenants, but it explains why a landlord may resort to these tactics to attempt to remove tenants.

The current rent stabilization system allows the landlord to increase the rent by a certain percentage when a tenant vacates. Although this percentage may vary, it is usually a twenty percent (20%) increase over the prior regulated rent. For example, if a tenant was paying $1,000.00 per month, and vacates, the new tenant may be charged $1,200.00. There may also be additional increases depending on the amount of time which has passed since the last vacancy, as well as increases if the landlord renovates the apartment in question. For buildings that contain more than 35 apartments, the landlord may collect a permanent rent increase equal to 1/60^th of the cost of the apartment improvement. If there are fewer than 35 apartments, the landlord may collect an increase of 1/40^th of the cost.

May 6, 2016

House Rentals in New York- Legal Issues to Consider

By Weiss & Weiss

Some of our clients have a reason why they will not live in their house in New York for a particular period of time. Perhaps an employment assignment in another location has caused the homeowner to leave the area for a set period of time and the homeowner intends to return to the house. Maybe the homeowner is downsizing, but the sale market is not strong enough to command the price sought by the homeowner. For those intending to rent their home, we wish to convey the following advice.

We suggest that you have professionals involved. Engage the service of a licensed real estate broker. The fee, usually one to two months’ rent, is a relatively modest amount to pay to insure that a professional locates a reliable tenant. If you decide to forego the services of a real estate agent , make sure that you carefully evaluate the proposed tenant by obtaining references from prior landlords and perform a credit check. Whether the tenant is located by a real estate broker or by your own efforts, trust your instinct if the tenant raises any concerns whatsoever and do not rent the house to such a person. Prior to the delivery of possession, walk through the house with the tenant, in order to show how appliances work and to document conditions together.

We also recommend that you engage the services of an attorney to have a lease drafted by a professional. A professionally drafted lease is important to have for several reasons. It will clearly identify the appropriate provisions, even if the relationship with the tenant ends up going smoothly. Your attorney will be prepared to cover changes in the law that the landlord may not be familiar with, such as the requirement to advise the tenant whether an automatic sprinkler system is present at the premises. In the event that a legal proceeding is required against the tenant for non-payment and other matters, having a professionally prepared lease will most likely cover items that protect the landlord in such a proceeding. If you intend to rent the house repeatedly, you may want to ask your attorney to also provide a form that can be used by you in the future as your needs warrant.

April 28, 2016

What Will Happen to Prince’s Little Red Corvette? Dying Without a Will

By Weiss & Weiss

Fans of the musician Prince were distressed to learn of his untimely passing last week. News reports now circulating have noted that Prince died without a Will. This post will address the implications of dying without a Will. As this firm is located in New York State, this post will address this issue from the standpoint of the law in New York.

When a person dies without a Will, an Administration proceeding is conducted. Such a proceeding is undertaken in Surrogate’s Court. The attorney for the surviving relative files a Petition in the proceeding. The surviving relative of the closest relationship will apply to be Administrator of the estate. In Prince’s case, we have heard that he was not survived by a spouse, children, or parents, making his sister the first person to be qualified to be Administrator of the estate. Both New York and Minnesota provide that half-siblings are ranked in a similar fashion, so that half-siblings may potentially share in the administration duties of the sister who filed the Petition. When significant sums of money are at stake, a kinship proceeding may also be filed to determine whether other relatives should be given the opportunity to share in the estate. Once the proper fiduciary is appointed by the Court, particular duties need to be undertaken.

What if Prince’s doves continue to cry after his death? If he had a Will, his pets could have been provided for in his estate plan. Absent such provisions, any pets would become the property of the person(s) appointed administrators. For pet lovers, this disposition could become a major problem if the person receiving the pets has no interest in taking care of beloved animals. Prince’s Little Red Corvette must also be considered. In New York, personal property could be specifically identified in a Will as a specific bequest, left in the residuary clause for the person intended to inherit all unspecified property or will be left to the person qualifying as Administrator if there is no Will.

April 22, 2016

Happy Passover from Weiss & Weiss

By Weiss & Weiss

April 21, 2016

Is This Your First Time? Property Purchases in New York State

By Weiss & Weiss

It’s that time of year again. This author is not thinking about the chirping birds and blooming trees heralding the beginning of Spring. We are thinking about another sign of the season– the first time home purchaser. This post will address issues pertaining to the person buying a home, whether a house or a cooperative or condominium apartment, for the first time. Even if a person has owned a home in another state, real estate in New York is its own animal.

The most important aspect of our advice is that the first time homebuyer should surround himself with seasoned experts throughout the process. In addition, let the experts do their work without your interference. It is usually better for a first time homebuyer to work with a licensed real estate agent and to buy a property that is listed with a real estate agent, as opposed to buying a home that is listed for sale by owner. That way, the real estate agents will resolve many of the issues that commonly develop in a transaction. If both parties are not represented by real estate agents, then the buyer may not know how to best negotiate a favorable price. Comparable sales should also be evaluated to determine the proper price to be offered by a buyer. A real estate agent knows the area best, but also has the resources to locate the comparable sales data and to evaluate the data properly.

The first time homebuyer should also get his finances in order. He should become acquainted with a potential lender or mortgage broker prior to making offers. His offer is more likely to be accepted if accompanied by a pre-approval letter, so that the seller is comfortable with taking the property off the market for this buyer. In addition, the proposed lender or mortgage broker may note possible deficiencies in the buyer’s potential loan application, such as inaccurate credit concerns, the necessity of reducing debt and the like. Given the amount of the typical downpayment to purchase a property in the New York metropolitan area, first time homebuyers may need a gift from their parents or other relatives to pursue the transaction. The buyer should discuss this with the appropriate person in advance. Further, once the gift is made, the parties need to be prepared to show the source of the gift, such as copies of bank statements before and after the gift, from the parent and the child.

April 14, 2016

Taxable Matters Pertaining to Valuable Personal Property

By Weiss & Weiss

Given that the 2015 tax filing deadline is imminent, taxes and the potential reduction of tax liability are on the minds of many of our clients. Some of our clients are fortunate enough to own collections of valuable personal property, such as artwork, cars and the like. Our estate attorneys are in the position of advising clients how to dispose of such personal property and how to reduce potential tax liability.

For purposes of this post, let us assume that the valuable collection contains artwork. It is prudent for the owner of such a collection to make a detailed catalog of the individual components of the collection. That way, it may be easier to keep track of the possessions. Gift and estate taxes could be due to the extent that an event of a public nature occurs, such as a sale or auction, or museum loan of the artwork. If the owner of the artwork merely decides to give a work of art to his daughter, who will privately display it in her home, then such an act may be unlikely to trigger the interaction of the tax authorities.

If the artwork is given to an institution during one’s lifetime, then the value of such item can be deducted from the donor’s taxes. Should the artwork be given to an individual and be valued at less than $14,000, then the annual gift tax exclusion will apply to make this event not taxable. Once a person passes away, estate taxes may be due, depending on the value of the estate.