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diploma.jpgOur readers should be wary of persons who may be engaging in the unauthorized practice of law. This issue is defined as a non-lawyer rendering legal advice or drafting legal documents. Section 478 of New York’s Judiciary Law declares that it is unlawful to practice or appear as an attorney for another person, to render legal services or hold oneself out to the public as entitled to practice law, without being duly licensed and admitted to practice law. This blog post will define the unauthorized practice of law, discuss New York laws pertaining to same and describe situations that our readers should avoid.

Common situations comprising the unauthorized practice of law include the following. A real estate broker drafts a contract, lease or mortgage. A “loan modification expert,” claiming to be an attorney, negotiates with a lender and then advises the borrower to enter into a loan modification. A client or customer dealing with such persons should be especially concerned if they are told that the transaction is on the “fast track,” that there is “no time” to consult an attorney and that they are advising them as an attorney. Another red flag is the person’s self- interest. A real estate broker wants to get the deal done to earn his commission and will encourage a simple contract to be signed without attorney objections, which objections may be validly protective of the client.

Real estate brokers and agents are subject to the loss of their license for the unauthorized practice of law. Article 12-A of New York’s Real Property Law governs the licensing requirements of real estate brokers and salespersons. This Article contains the provision requiring real estate brokers and agents to be licensed and the procedure for the potential revocation of their license. The New York Attorney General’s Office prosecutes criminal actions for violations of said Article. In addition, the New York Department of State accepts complaints against licensed brokers and conducts investigations accordingly. Brokers are vulnerable to claims involving the unauthorized practice of law if they draft any document pertaining to real estate such as a contract, lease, mortgage or deed, especially if they are paid to do so. However, if they use one of the forms approved by the bar association or local brokerage association in the county in which they are located, including only ministerial terms such as name, date, property address, they will not be subject to claims of unauthorized practice of law; particularly if they note in boldface type that the document is subject to review by each party’s attorney.

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church.jpgOften the most significant asset owned by a religious corporation such as a church, synagogue or mosque in New York is real estate. For a variety of reasons, the religious institution may wish to sell, mortgage or lease its property. New York’s Religious Corporation Law prescribes the procedure to be followed in order to legally complete such a transaction. For the purposes of our discussion in this blog post, we will be discussing a sale by a religious corporation.

New York’s Religious Corporation Law declares that “[a] religious corporation shall not sell, mortgage or lease for a term exceeding five years any of its real property without applying for and obtaining leave of the court…”. In layman’s terms, the New York Statute requires that the religious corporation apply by Petition to the Supreme Court of the county in which the property is located for an order permitting the sale. Without the Supreme Court’s consent, the transaction will be void. The purpose of the statute is to prevent the congregational leadership from dissipating congregational assets.

Prior to submitting the Petition, we will assume that the following steps will have already occurred. The congregation must enter into a contract of sale with the party purchasing the property. The Constitution and By-Laws of the congregation will specifically detail the notice and quorum requirements for voting to approve the transaction as a congregation. Our firm will analyze the organizational documents and draft the required documents to hold the vote to approve the transaction as well as conducts the meetings where such vote takes place. In many cases, the Board of Trustees will be required to vote on the matter before the entire congregation also votes to approve the transaction. Written evidence of the congregational vote to approve the transaction will be submitted with the Petition. The Petition will describe the nature of the transaction and indicate that same was approved pursuant to the congregation’s organizational documents. Attached to the Petition will also be a Verification of the President or other lay leader of the congregation certifying the authenticity of the contents of the documents, our attorney’s Affidavit of Regularity confirming the proper procedures were followed with respect to the congregational vote and other aspects of the transaction, a Certification of Authentication of the organizational and other congregational documents submitted, and the proposed Order.

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monet.jpgA recent article in the New York Times addresses the interesting question of whether a testator (a person who has made a will) can “attach strings” to a bequest (a gift by will of personal property). Wealthy philanthropists have left collections of artwork to museums and have specified conditions on the bequest, such as all works of art need to be displayed together or never sold. When a donor leaves such property in a will and the intent of the bequest is no longer being met, the museum or other institution to which the donation was made cannot request that the donor change the conditions or request a clarification of the donor’s intent, because the donor is deceased. In some cases, institutions have sought Court intervention to address donor intent and request a change in conditions so that donor’s intent is achieved.

The most well-known case in recent years involves the Barnes Foundation. Dr. Albert Barnes possessed a comprehensive collection of post-impressionist and early modern artwork. He specified the specific manner in which the artwork was to be displayed and that it was to be displayed together in a building owned by the foundation in suburban Philadelphia. The foundation was to conduct educational programs and never move from its location. Over time, the foundation experienced financial problems that jeopardized its very survival. In order to maintain the institution at all, the Attorney General and Governor brought suit to request an order permitting the foundation to move from suburban Merion to downtown Philadelphia. The Court agreed that relocating the foundation was necessary to preserve the foundation.

There are many situations where an arts institution has requested the Court’s intervention in revising the terms of a bequest in a will or a gift in a charitable trust. The Attorney General, as the supervisor of charitable organizations, may also participate or lead such lawsuits. The reasons behind requests to reform the conditions of a bequest could be based on financial considerations. Perhaps the institution needs to sell the artwork to raise funds in order to avert bankruptcy, or the artwork is later deemed not to be attributed to the artist as assumed by the donor.

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arod.jpgRecently, there have been several news stories regarding Yankees’ superstar Alex Rodriguez and his contract. For those unfamiliar with the situation, Rodriguez, who has admitted using performance-enhancing drugs during his tenure with his former team, has been linked to a Florida company that allegedly supplied additional performance-enhancing substances in recent years. Rodriguez has denied these allegations.

The situation has raised many issues regarding Rodriguez’s contract with the Yankees. After the 2007 regular season, Rodriguez used a clause in his contract to opt out of his existing contract. After becoming a free agent, he re-signed with the Yankees for ten years for a total of 275 million dollars, which runs through the 2017 season.

During the last few seasons, Rodriguez has seen his productivity and durability decline, which is part of the normal aging process for a professional athlete. However, frustrated fans are asking whether the recent accusations regarding performance-enhancing drugs may be used as grounds to void the contract and release Rodriguez without the Yankees having any further financial obligations. There are several legal issues which must be addressed to answer this question fairly.

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apartment building.jpgNew Yorkers who purchase an apartment typically buy what is known as a cooperative (“Co-op”) or condominium (“Condo”). There are important legal distinctions between a cooperative and a condominium that are notable during the purchase process and after the closing of the transaction. This blog post addresses these distinctions.

A cooperative is a corporation formed for the purposes of common ownership, where the New York State Attorney General has accepted the relevant Offering Plan for filing. An owner of a cooperative apartment owns a particular number of shares in the corporation and is also designated a proprietary lease whereby the shareholder may occupy a particular unit in the building. A condominium is also governed by an Offering Plan. However, a condominium is real property, wherein a unit owner obtains a Unit Deed identifying a particular unit to be occupied and a percentage of common interest (i.e. common areas of the building such as the lobby, hallways, roof, etc.) in the building that is owned.

Generally, cooperative boards strictly govern all resident activities, starting with the purchase of an apartment. A detailed application is usually required to be submitted to the board along with all references and financial data requested by the cooperative board, prior to attending a personal interview and obtaining board approval to the transaction. Once approved, the parties in the transaction will attend the closing at the office of the transfer agent for the cooperative to obtain the stock certificate and proprietary lease evidencing ownership of the unit. A purchaser cannot acquire the apartment without the approval and participation of the cooperative board and its transfer agent.

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A purchaser of real estate in New York State typically has plenty to evaluate in determining whether to buy a property. Usually the evaluation is limited to the four corners enclosed by the property line. This blog post addresses the matters that are beyond the property line that should concern a buyer.

fence.jpegFences can be seen enclosing many properties in New York State, but are often not within the legal property line. When a fence is erected, a property owner should have a staked survey prepared and the fence installed consistent with the property line as shown on said survey. Of course, many people do not know that surveying is a prudent means by which to install a fence or do not wish to incur this expense. As a result, many fences may be installed over another person’s property line. This may not be discovered until a neighbor attempts to sell his property and the neighbor’s buyer conducts a title search and survey, discovering that the selling party is out of possession as to a portion of his property. If the portion that is out of possession is less than six inches, most title companies will insure such an exception to coverage. If the out of possession portion is more than six inches, the selling party will need to request an affidavit from the encroaching neighbor stating that they know their fence encroaches beyond their property line and that they make no legal claim to the encroaching portion. This affidavit will allow the title company to insure as if the encroachment were less than six inches.

Should the out of possession issue not be discovered for some reason or the encroaching neighbor is not willing to sign such an affidavit, the encroaching neighbor may acquire the strip of land by operation of law under the legal principal known as adverse possession. It is not uncommon for the encroaching neighbor to request a fee to sign such an affidavit or to request an easement (right to use) the strip of land in exchange for signing any agreement. The parties to a transaction will need to determine whether it is worthwhile to agree to such terms in order for the transaction to proceed.

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ghost.jpgPrevailing law in New York State favors the making of a Last Will and Testament. The person making the Will (called the testator) may leave his property to any person that he chooses. However, those who would inherit if the testator did not make a Will, known as intestacy, have the right to legal notice when the Will is eventually offered for probate. New York notice requirements allow the persons who would be notified (called distributees) the opportunity to contest the Will being offered for probate if they choose. If their contest is successful, the distributees may have the Will overturned, resulting in intestacy, as if there were no Will, or negotiate a settlement from the Estate in order to pragmatically dispose of the contest. This process is easy to imagine if the person offering the Will for probate knows who to contact in order to deliver the legal notice that the Will is being offered for probate. This post will discuss how “ghosts” are treated under New York law.

A ghost is a term describing a person who we think could or has existed, but we do not know their name or whereabouts. Examples of ghosts are as follows. The testator had a brother with whom she became estranged. As a result, no one knows if the brother is alive or where he may live. While no one may expect the testator to leave her estate to her long lost brother, instead of to her best friend, the Court will still require efforts to locate the brother before admitting the Will to probate. Another common example is when an elderly testator (who was an only child) never married and left no children or grandchildren. This testator’s distributees could be first cousins or first cousins once removed. The Court will require efforts to locate these persons.

The ghost, having an interest in the proceeding, has the right to appear in Court on the return date of the Citation on which it is named. Since the ghost may not actually exist or may be unable to be found, the Court will appoint an independent attorney, known as a Guardian ad Litem, to represent the interest of the ghost. The Citation must be advertised in a newspaper as identified by the Court. Sometimes the Court selects a newspaper that offers the most competitive rates for the Estate, while in other cases the Court may select a newspaper of ethnic interest if the ghost may be of a specific ethnicity. After the Court appearance marking the return date of the Citation, the Guardian ad Litem will issue a written report as to whether admitting the Will to probate is recommended.

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Kennebunk_Professional_Building38925.jpgOur firm is often asked by clients to handle the purchase or sale of an ongoing business. This business may also be a professional practice, such as a pharmacy, or medical or dental office. There are many legal aspects of such a transaction, which will be discussed in this blog post.

Such transactions often involve the sale of real estate which is owned by the business being sold. For example, if a pharmacy is being sold, the building in which the pharmacy is located may be owned by the business in question. In such a situation, the sale of the real estate would be part of the transaction in which the actual business is also being sold. For tax purposes, the amount paid by the buyer should be allocated separately to both the real estate (if applicable) and business in question. A further allocation may be made with respect to fixtures and equipment that are part of the transferred items. Therefore, if the total purchase price is $600,000.00, $300,000 may be considered the price for the real estate, and $300,000.00 for the purchase of the actual business. We recommend that all parties consult their accounting professionals to determine the most favorable allocation for tax purposes.

The first legal issue relates to the legal structure of the business being purchased. If the business is an entity such as a corporation, professional corporation (P.C.) or limited liability company (LLC), the entity and its assets can be sold to another party. The first step in this process involves confirming that the corporation is in “good standing” in the State of New York. This involves checking to ensure that the entity has made all necessary filings and is current in paying its franchise taxes. A certificate of good standing should be obtained from the New York State Department of State. In addition, all corporate documentation, including the stock certificates, stock book, and corporate seal should be delivered at the time of the completion of the purchase.

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Home purchasers in New York State often request warranties in connection with their home purchase. However, depending upon the type of property purchased, warranties on general construction and mechanical systems will not be obtainable. Without an express and separate warranty, any representations made in the contract of sale with respect to property condition will expire upon the delivery of the deed at closing. As such, the purchaser must generally discover all property defects prior to receiving the deed in order to expect a remedy from the seller. New York is a “caveat emptor” jurisdiction, meaning that buyers generally take title without a seller’s warranty as to condition and without recourse if the buyer discovers unacceptable conditions after the closing.

The most common warranty that is realistic for a New York real estate purchaser to obtain applies to new construction of a home to be used as the primary residence of the purchaser, who is also the first person to live in the home. In this instance, the warranty will have a monetary limit and will expire in stated periods of time depending on the type of item. A standard new home warranty will cover construction defects, flaws in the plumbing, electrical, heating, cooling and ventilation systems servicing the home and material defects. A new home warranty typically excludes appliances, which are covered by the manufacturer’s warranty. However, if the builder installed the appliances improperly, the purchaser can rightfully bring a claim under the new home warranty. A homeowner making a claim must follow the notice deadlines specified in the warranty and afford the builder an opportunity to inspect and correct the defect, as outlined in the warranty.

Most purchasers in New York acquire a home that is “used”, having already been lived in by someone else. The standard contract provision in New York states that all warranties and representations made by the seller expire upon the delivery of the deed, unless they are expressly stated to survive the delivery of the deed. This means that once the deed is delivered at the closing, the purchaser is accepting any conditions that may exist at the property. As such, the purchaser should thoroughly inspect the property immediately before the closing. Any condition that could have been discovered becomes the purchaser’s problem once the closing has concluded. In any event, a purchaser of a used home should receive the benefits of manufacturers’ warranties with respect to appliances.

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Uprooted Tree.jpgRecent extreme weather conditions in the New York metropolitan area have caused great hardship for many of its residents. We hope that those individuals and families who suffered damage or destruction of their residences are in the process of recovery. This blog post will discuss some of the legal issues which may arise from some of the results of the “super-storm.”

The first issue for many homeowners is when there is property damage which may be covered by their homeowner’s insurance. Most standard homeowner’s policies will pay to repair damage to a house and other physical structures located on the property caused by extreme weather conditions, with the exception of flood damage, which is covered under separate insurance policies that a homeowner may obtain. One example of this may be an uprooted tree which fell on a house and caused damage to a roof. If this occurs, the homeowner should contact their insurance agent and notify them immediately of the damage. The insurance company will then send an insurance adjuster to the property. The adjuster will survey the damage and will then estimate the amount it will take to repair the property. Repairs made before the insurance company has inspected the damages and approved of the cost to repair are unlikely to be reimbursed.

The homeowner may receive a check from their insurance company to pay for the repair work in question. However, where the property is mortgaged, the lender usually must be notified. The reason for this is that most loan documents contain clauses requiring the homeowner to keep the property in good repair and to involve the lender in the event of a casualty. If the homeowner receives a large sum of money from an insurance settlement, the lender has a vested interest in making sure these funds are applied to repair the property, and not spent by the homeowner for other purposes. Most lending documents therefore require that any insurance proceeds in excess of $10,000.00 be endorsed by both the homeowner and a representative of the lender. In practical terms, the check from the insurance company in excess of this amount will be issued to both the homeowner and the lending institution as co-payees. The homeowner must then obtain consent and a written endorsement on the check from their mortgage lender in order to deposit these funds, and must show that the funds are being used to repair the property which is the subject of the mortgage.

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