New York Real Estate Lawyers Blog

June 4, 2015

Foreclosure and Bankruptcy in New York

A recent decision by the United States Supreme Court raises important issues for those whose homes are in foreclosure and are considering filing for federal bankruptcy protection. This case involved a borrower whose home was “underwater,” which means that the mortgage debt on the property (both a first and second mortgage) exceeded the current value of the home. In such cases, the bankruptcy counsel will often seek to have the second mortgage “stripped off,” that is, removed, so that it is no longer a lien on the property.

The Supreme Court ruled that, in such situations, the second mortgage could not be removed simply because the house was worth less that the total mortgage debt. This ruling will prevent such homeowners from having second mortgage loans (which are often in the form of home equity loans) discharged by the Bankruptcy Court in a Chapter 7 liquidation proceeding. This ruling protects banks that make second mortgages from having these mortgages dismissed in bankruptcy proceedings where the home currently has a negative equity.

Our firm handles many cases in which we defend homeowners who are in foreclosure. We are often asked what the effect of a bankruptcy filing would be on such a proceeding. The first effect of a bankruptcy filing is to freeze all current litigation against the person filing for bankruptcy, as well as all collection efforts on any debts. Therefore, if an individual is delinquent in their mortgage payments, a bankruptcy filing would suspend all collection letters, phone calls, and, of course, litigation relating to all debts, including mortgage debts. Failure to comply with the automatic bankruptcy stay may subject the lending institution to Court sanctions, including fines.

May 21, 2015

Where Will You Be Driving This Memorial Day Weekend?

By Weiss & Weiss

After another harsh winter in New York, many of us are looking forward to getting away this Memorial Day weekend. Those of us who are driving may have acquired the vehicle from an estate. This post will address estate issues as they pertain to cars and other vehicles.

As many of us know, cars in New York involve title, registration, and insurance. They may also involve a lease or a loan. We have written another post concerning how to manage debts of the deceased. The first step is that the Surrogate’s Court of the County in which the deceased resided needs to appoint an executor (if there was a will) or an administrator (if there was not a will). The executor or administrator needs to act on behalf of the estate to manage all relevant aspects of this matter.

Every car must be insured. The executor or administrator should employ his best efforts to maintain the insurance policy on the vehicle. Certainly, the car should not be driven if insurance has lapsed, because this could result in a ticket from the police if one happens to be stopped for another violation.

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.

May 8, 2015

Employment Issues as Related to New York State Religious Corporation Law

By Weiss & Weiss

Our firm is often retained to represent parties relating to their employment at religious institutions. Such employment refers to, among other persons, the clergy, whether it is a Rabbi or Cantor at a Synagogue, a Minister or Reverend at a Church, or an Imam at a Mosque. A dispute may arise between a clergyperson and the institution at which they officiate. Such disputes may be the result of the termination of said employment, the interpretation of an employment agreement, or the failure of the institution to make payments pursuant to a retirement agreement or pension. This blog post will discuss the various legal issues relating to such disputes.

The first issue relating to a clergy’s employment is whether the individual at issue is an independent contractor or an employee. An exact legal definition of these categories is beyond the scope of this post. However, many smaller institutions attempt to categorize their clergy as independent contractors. This usually means that no taxes are withheld from their pay, and they are free to set their own hours and employment conditions. An employee is subject to W-2 tax withholding, and must generally keep regular hours and is subject to a greater degree of control by the institution in question.

If the individual clergy is classified as an employee, the next question is whether there is a written legal contract for their employment. Most clergy will have a written agreement with the religious institution which sets forth their terms of employment, salary (including any bonuses or pensions), benefits, renewal terms, and duties which they are expected to perform. Such agreement will usually be for a set period of time (for example, five years), and may contain provisions for renewal after expiration.

April 30, 2015

Recent Developments in New York Religious Corporation Law

By Weiss & Weiss

News outlets have recently reported a case involving a dispute over the sale of a synagogue located on the Lower East Side of New York City. Certain individuals, claiming to be members of the Board of Trustees, have submitted a petition to the New York State Attorney General seeking approval for a sale in the amount of Thirteen Million Dollars.

At issue is a dispute over whether the individuals who claim to be Board Members are, in fact, legally elected Board Members of the institution in question. Since the synagogue has been in existence for seventy-six years, there are many legal issues related to the authority of any individuals may have the authority to petition the Court to allow a sale of the property, which is also being used as a nursing home for the aged. An excellent overview of this highly contentious case to date may be found by reviewing a recent article in the New York Observer.

Readers of this blog may recall that this subject has been written about by us previously. A dispute involving a Hindu temple was analyzed in a recent post. Of course, every case has its own unique set of facts, but it is important to note that Courts are reluctant to intervene in decisions that are essentially religious in nature, for example, if a spiritual leader decides to excommunicate certain members. Such excommunicated members will have a difficult time finding a Court to overturn such a decision, due to First Amendment concerns.

April 23, 2015

Will the HUD Form be Disappearing from our Closings?

By Weiss & Weiss

Our readers who have attended residential real estate closings are familiar with the HUD Settlement Statement (the “HUD”). This document is meant to clearly identify all of the financial figures in a residential real estate transaction. The HUD is a disclosure document required when a mortgage is obtained from an institutional lender (such as Chase, CitiMortgage or Wells Fargo). The borrower is provided with this form either immediately before or during the closing in order to identify the real estate tax adjustments with the seller, costs of making the loan (such as origination fee, application fee, credit report fee and appraisal fee), real estate tax and insurance escrows established by the lender (including the breakdown of the number of months collected at the closing to be held in reserve), itemization of title charges (such as the insurance premium, search fees and recording fees) and the like. The HUD follows other well-known disclosure documents such as the Good Faith Estimate and Truth-in-Lending Disclosure delivered to the borrower before the closing.

However, the HUD as we know it may soon be disappearing from our closings, with certain exceptions discussed below. Beginning with applications for mortgage loans made after August 1, 2015, the Consumer Financial Protection Bureau will be requiring a new series of disclosure documents. Lenders and their attorneys may encourage loan applications to be made before August 1, so that they only need to comply with the disclosure regulations with which they are familiar.

Rest assured, the basic content of the new disclosures and the intent behind them will remain the same. The disclosures are meant to integrate the first disclosure (Loan Estimate) with the last disclosure (Closing Estimate). The Loan Estimate form will replace the Good Faith Estimate and Truth-in-Lending Statement. It needs to be delivered three business days after the loan application is made. Some of the data on the Loan Estimate will be precisely the same on the Closing Estimate, so that the borrower will be familiar with the financial terms of the transaction. The Loan Estimate will be likely to please borrowers, in that it will disclose information that our clients have been seeking from the early stages of the transaction: is there a rate lock and for how long, what is the interest rate, what are the monthly payments expected, is there a prepayment penalty and most significantly, how much cash will be needed to close. This allows borrowers to take the steps needed to liquidate assets as needed to raise the funds needed to close. In the past, some people have been unduly surprised by the amount of the cash needed to close and have been unprepared.

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.

April 3, 2015

Happy Holidays from Weiss & Weiss

By Weiss & Weiss

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.