New York Real Estate Lawyer Blog

Two parties settle a long running dispute, then one become disenchanted, can that party sue her attorney for negligence in "forcing" a settlement. There are all sorts of ramifications, both for the clients and their attorneys. Here's one case.

In 2005, Joseph and Teresa Guidos settled a shareholder dispute with Allstates WorldCarger Inc. Two years later, the Guidos filed a malpractice suit against their attorneys from the settlement alleging that Joseph Guido was ‘stripped’ of his majority shareholder as a result of ineffective representation. The New Jersey Supreme Court decided a client can sue for malpractice if ‘particular facts’ serve as evidence of as attorney incompetence even in light of the fact that the client might have originally accepted the settlement. Does that make sense?

Dismissed on summary judgment, but reversed on appeal, the appellate court found that genuine issue of material fact as to whether the clients would have taken the settlement, whether the attorneys reasonably explained the significant details, and whether the clients understood the ramifications of the settlement before it became final. The attorneys argued that the "malpractice claim" was based on ‘hindsight bias’ or 'buyer's remorse" because the clients simply wish they had acted differently.

The consequences of the New Jersey ruling are immense for both attorneys and clients because of the potential that making the attorney liable in this type of situation pits the attorney against the client, having an adverse impact on the attorney-client relationship, and militating against the traditionally strong policy of favoring dispute resolutions and settlements.

The fact that clients have survived summary judgment suggests that lawyers will become a more attractive target for malpractice suits if they fail to detail objections or concerns – in writing – regarding a settlement before it becomes final.

Bottom line-- there are important issues to consider for both clients and attorneys (and their malpractice insurers).

Posted by Peter Klose | Permalink | Email This Post

Posted In: Lawyers and Legal Malpractice

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As reported in prior entries on this blog, corporate, real estate, and estate planning attorneys in New York are concerned about the ramifications of the new Power of Attorney laws. The New York Law Journal published a recent article discussing the possible pitfalls to parties in New York. [Article-- Joel Stashenko 01-22-2010].

The problems include well-established areas of commercial transactions, because they should not apply to the creation of valid proxies for the voting of shares of stock held by investors of New York corporations and non-New York corporations.

Practically speaking, the new form are very unwieldy because they require notarization of signatures by an agent being designated as having power of attorney.

51 large New York Law firms also argue that the new forms should not apply to registration of transfer of a certificated security issued by a non-New York issuer and with the formation of non-New York limited liability companies. New York Uniform Commercial Code §8-110.

Bottom Line-- Don't just go print a form from the Internet and think you are doing the right thing. Pay an attorney to prepare it for you-- even if it costs some money, find a reasonable firm and forge a bond with that attorney.

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Posted In: General Interest

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For years most attorneys representing sellers of real estate in New York State have been counseling not to complete a Property Disclosure Statement. This recent case is an example of why, in New York, the Property Condition Disclosure Statements (PCDS) can cause trouble.

Sellers in New York are required to either "disclose" what they know on a 32 question Property Disclosure Statement, or give the buyers a $500 credit in lieu of such disclosure. The problem, however, is that these property "disclosures" are mini-representations, which can lead to all sorts of claims for misrepresentation, fraud, or concealment. The question for the disgruntled buyer is always whether, when completed and delivered, the owners-sellers may be liable for buyer actual damages stemming from any willful failure to describe the property conditions asked about on the "form."

In one recent case, the the buyers purchased a residential property from the defendants in "as is" condition after having been given notice through the form PCDS that the Sellers (defendants) of a previous kerosene leak on the property. Shortly after taking possession of the property, however, the plaintiffs discovered that the septic system had failed, the heating system was inadequately established, debris had been left on the property, kerosene had spilled in the basement, and the house was infested with mice.

Plaintiffs (buyers) filed a suit against the defendants on the grounds that the defects were not disclosed on the Property Condition Disclosure Statement (PCDS) that they had received from the defendants, and that they had purchased the property based on the PCDS.

New York's trial level court (the Supreme Court) ruled the:

That the Defendant's silence about any "knowing of any material defects in the septic system did not provide grounds for a remedy; that PCDS is expressly limited to the seller's actual knowledge, and nothing in the record suggested that Defendant had any actual knowledge or special knowledge of heating systems; the Defendant did NOT make misrepresentations with respect to debris left on the property (because it was there to see); that the Seller's disclosure on the PCDS of a previous kerosene spill effectively put Plaintiffs on notice of this condition; and there was an issue of fact on whether the Defendant had actual knowledge of the mice infestation based on her testimony she had found mouse droppings in the house and used mouse traps prior to the sale.

The bottom line: Sellers-- be careful when you fill out the PCDS; Buyers, your case based upon the PCDS is limited because New York is a caveat emptor (buyer beware) state.

Posted by Peter Klose | Permalink | Email This Post

Posted In: General Interest , Real Estate Hints and Help

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So your thinking of living in Pearl River, Rockland County. Originally called Muddy Brook, the town was renamed in around 1870 after a resident said he had discovered pearls in mussels from the waterway.

The community boasts wonderful people, active community involvement and modestly priced homes. Read a recent Download file">New York Times Article here, and hire the very best real estate attorneys in Rockland County.

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Posted In: General Interest , Real Estate Hints and Help

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I saw this in a Texas case recently. On November 23, 2009, a lawyer filed a property litigation alleging that his neighbor, a Church Cathedral was a private and public nuisance because they essentially operated church-sponsored services for homeless people. It seems that the complaining land owners objected to the Church providing homeless services nearby (such services included free meals and counseling).

Arguing the Church services (and their clients-homeless people) constituted a “private nuisance,” the plaintiffs (attorneys) described those who were served by the homeless center as “derelicts.”

One of the patrons of the services, a former navy officer, sued the attorneys for defamation, discriminatory practices, emotional distress, and mental anguish. In his colorful description of the attorneys, he claimed that they had a “twisted heart full of unwashed socks, with a soul full of gunk Grinch type rappie act(s).” He is seeking $2.4 million in actual and punitive damages and a published apology.

Bottom line-- when you describe others in a pleading (court document), it may be better to describe the conditions, and not characterize the victims of homelessness as "derelict.”

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Posted In: General Interest

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As of January 1, 2010, the federal government will enforce rules that require mortgage lenders and brokers to prepare a three-page ‘Good Faith Estimate’ report that provide home loan estimates to consumers. Implemented by the Real Estate Settlement Procedures Act (RESPA), lenders and mortgage brokers must now give consumers standard estimate forms within three days of receiving loan applications. RESPA aims to prevent millions of Americans making poor loan choices particularly those who do not know that the lowest loan rates may not be the most beneficial option. To distinguish and compare plans with different combinations of rates, fees, and other terms, the ‘Good Faith Estimate’ report standardizes lender estimates by requiring lenders to provide an ‘origination fee,’ or payment to establish a bank or broker to handle the loan process, cannot increase. Other charges including title insurance, however, may increase.

Opponents of the new rules argue the new forms will not only add costs to lenders but ultimately make no mark on the shopping choices of consumers who often end up basing loan decisions on the recommendation of a real estate agent or broker.

When will the Banks tell prospective borrowers the true cost of their loan by giving them the Annual Percentage Rate (APR). As many people don't know, the APR is the only true cost comparison when it comes to shopping for a mortgage. The APR is a function of the cost of the money over the entire course of the loan, with the bank fees and costs rolled into the calculation. If each broker and lender confessed how their fees impacted the actual cost of the loan, consumers would be in a position to quickly and easily understand which loan cost more.

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Posted In: Real Estate Hints and Help

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Real Property Taxes are at the front of everyone's mind these days because property values in New York have declined so dramatically. Did you know that the tools to grieve your taxes are often right at your finger tips.

For example, in Dutchess County, the Real Property Tax Service Agency’s Parcel Access system provides tax assessment information for your parcel and your neighbor's parcel, including development plans, property tax estimates and other information supplied by local municipal governments. Updated twice a year to coincide with the submission of Tentative Assessment Rolls every May and every July of each year, the Parcel Access allows Search Tools by type of property, name of debtor, and by map.

The website’s main objective is to function as a tool for real estate buyers and sellers to have access to and view assessment information. If a seller disagrees with a listed assessment, however, value the home owner may "grieve" those taxes by seeking a review first by the assessor and then by a formal review with the Board of Assessment Review.

The Dutchess County, New York, GIS, Parcel Access system can be accessed here.

Posted by Peter Klose | Permalink | Email This Post

Posted In: General Interest , Real Estate Hints and Help , Real Estate Litigation

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As a result of recent Court of Appeals and Statutory Changes in New York, litigation and law suits relating to adverse possession are wending their way through trial and appellate courts throughout the state.

Adverse possession is a method of gaining title to property. Although not the favored means to procure land, a person may acquire title to land by adverse possession if she holds the property in a manner that conflicts with the rights of the true owner for a period of time.

There are five elements that establish a claim of adverse possession. Possession must be 1) hostile and under claim of right, 2) actual, 3) open and notorious, 4) exclusive, and 5) continue for the specified period as determined by jurisdiction. Adverse possession is generally a question of fact to be decided by a court. Recent decisions in New York have included:

In Walling v. Przybylo, the plaintiffs deposited fill and topsoil, dug a trench, installed drainage pipes, and an underground dog fence and a bird house on a disputed parcel of land. The court ruled that the plaintiffs were adverse possessors because they had actually, openly and notoriously, exclusively and continuously possessed and ‘cultivated’ the disputed parcel for the ten year required period. Notably, the court held that the plaintiff’s potential knowledge that the parcel was owned by the defendants was inconsequential because adverse possession is fundamentally the defendants’ compliance to the plaintiffs’ open ownership. (2006).

Application of the Walling Decision:

1. First Department: In United Pickle Products v. Prayer Temple Community Church, 843 N.Y.S.2d 1 (N.Y.App. Div. 1st Dept. 2007), the defendant leased the disputed property to the plaintiff since 1979. The plaintiff brought suit to quiet title under the doctrine of adverse possession arguing the defendant had made no claim to be the rightful owner during which the plaintiff’s use of the property was actual, exclusive, open notorious, and continuous for at least ten years. Applying an interpretative analysis of Walling, the court articulated the exclusive access to the disputed lot by the plaintiff amounted to hostile possession, or ‘cultivation.’ This type of ruling applies in New York City and the Bronx Counties.

2. Second Department: In Merget v. Westbury Props., LLC, 885 N.Y.S.2d 347 (N.Y. App. Div. 2nd Dept. 2009), the plaintiffs brought an action to quiet title based on adverse possession alleging they cleared debris to use the disputed parcel of land as duel yard and parking lot as well as maintaining the property by planting trees and shrubbery for the requisite ten year period. As in Walling, the court ruled in favor of the plaintiffs reasoning that there was not only clear and convincing evidence that the plaintiffs’ possession of the property satisfied the elements of adverse possession by being actual, open, notorious, and exclusive, but more importantly, the plaintiff’s had ‘usually cultivated or improved’ the disputed lot during the ten years. This judicial department handles Nassau, Suffolk, Dutchess, Westchester, Rockland Counties.

3. Third Department: In Robinson v. Robsinson,825 N.Y.S.2d 277 (N.Y.App.Div 3rd Dept. 2006), the plaintiff sought title to the property by virtue of adverse possession. The plaintiff stated he had operated a seasonal canoe rental and camping business since 1987, and in doing so he had placed signs on the property, mowed the grass, cleared debris, maintained shrubbery, and blocked the use of the property by trespassers. Similar to Walling, the court articulated that the plaintiff’s cultivation and improvement on the property through maintenance satisfied the elements of adverse possession. This judicial department rules in upstate New York and includes Ulster County.

The bottom line-- you must hire a competent New York State trial and real estate attorney to assess the situation in your specific case. Documents, testimony and actions may change the course of the claim and your right to claim or your defense to adverse possession in New York. At Klose & Associates, we carefully investigate these situations.

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Posted In: Real Estate Litigation

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Last month, the New York Court of Appeals ruled that the state of New York may legally seize private land for private developers use. In the 6-1 decision, the court allowed the seizure of a 22-acre plot located in downtown Brooklyn – effectively allowing the Atlantic Yards Project to proceed – reasoning it would allow for improvements on the “blighted conditions” of the property. The recent ruling falls in line with the 2005 decision by the Supreme Court in Kelo v. City of New London that similarly allowed a corporation to seize private homes and businesses to build a research campus.

The New York court’s ruling has raised arguments from opponents that ownership rights amount to being worthless if a government deems private land for the ‘public good.’ The Atlantic Yards Project, headed by Forest City Ratner Cos., seeks to develop office towers, apartments, and most notably an $900 million arena for the NBA’s New Jersey Nets. The only dissenter on the court’s bench stated, “It might be possible to debate whether a sport stadium open to the public is a ‘public use’ in the traditional sense, but the renting of commercial and residential space by a private developer clearly is not.” The New York Court of Appeals, however, ultimately ruled that the definition of ‘blight’ is a matter for the legislature, not the courts, to change.

Posted by Peter Klose | Permalink | Email This Post

Posted In: General Interest , Legislation-Regulation , Real Estate Litigation

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This blog has identified recent legislation in the State of New York discussing adverse possession. Adverse possession is a method of gaining title to property based upon use of the property (not written). Although not a favored means to procure land, depending upon the facts a person may acquire title to land by adverse possession if she holds the property in a manner that conflicts with the rights of the true owner for a period of time.

There are five elements that establish a claim of adverse possession in New York. Possession must be 1) hostile and under claim of right, 2) actual, 3) open and notorious, 4) exclusive, and 5) continue for the specified period as determined by jurisdiction. Adverse possession is generally a question of fact to be decided by a court. Since the enactment of the statute and recent decisions by the Court of Appeals in New York, it is important to consider what judicial department you might be located.

For example, in the First Department, in the case entitled Eller Media Co. v. Bruckner Outdoor Signs, the plaintiffs constructed a billboard on a disputed parcel and surrounded that billboard with a chain-link fence. The defendants appealed the trial court’s summary judgment in favor of the plaintiffs arguing that the disputed parcel was held by a city for a public purpose. The court disagreed and determined that the plaintiffs or claimants had not only satisfied the elements of adverse possession because its use was hostile, open and notorious, exclusive, and continuous for more than the ten year statutory period, but that the parcel was not held for a public purpose and therefore not immune to the plaintiff’s adverse possession claim.

At Klose & Associates, we handle real estate litigation including adverse possession claims in the first department. You should always contact a specialized New York real estate litigation attorney if you have concerns about adverse possession.

Continue reading "Recent Highlights in the Neighbor Wars-Adverse Possession" »

Posted by Peter Klose | Permalink | Email This Post

Posted In: Real Estate Hints and Help , Real Estate Litigation

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You hear the old adage-- "if its too good to be true . . . . " Homeowners in New York and elsewhere should be on the look out for the newest form of fraud on the rise--“house theft.” Under various permutations of the fraud, con men and thieves conspire to to take ‘ownership’ of a home through various scams and false documents. In one version, the group acquires a house then ‘sells’ it to their associates, who obtain a loan from unsuspecting banks. The fictitious ‘seller,’ gets paid the loan proceeds, and then shares the sale proceeds with the fraudulent ‘buyer.’

The FBI estimates that from 2007 to the 2008, the reported cases of house theft have jumped 36% to an estimated 64,000 incidents. House theft, also known as title theft, most frequently occurs in larger urban areas particularly in cities with many vacant properties such as Detroit and Miami.

In reaction, several new online services offer free help to protect homeowners from house theft. Among its free services, www.ePropertyWatch.com provides informal house appraisals, monitors public real estate documents, and alerts homeowners to possible criminal activity. ePropertyWatch will also provide information on recent sales and foreclosures in the user’s neighborhood and observe long-term changes in the median sale prices relative to a ZIP code.

Bottom line, you can never be too careful in today's world of sophisticated criminals. At Klose & Associates, we take care to assist our clients to thoroughly investigate every real estate transaction.

Posted by Peter Klose | Permalink | Email This Post

Posted In: General Interest , Real Estate Hints and Help , Real Estate Litigation

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Chalk one up for the diligent little guy here. Cite-884 N.Y.S.2d 634 (2009)

In a recent New York State case involving claims for legal malpractice arising from the failure of an attorney to adequately and timely respond to a fire insurance claim loss, the person injured by the malpractice was able to keep the malpractice insurer responsible even after the target attorney failed to notify his insurer of the malpractice claim.

As discussed in this New York Real Estate Lawyer Blog in the past, late notice of a claim defenses have been harder and harder for the insurance industry. In this New York case, the negligent attorney failed to respond to plaintiff’s repeated attempts to obtain insurer information until after the policy notification period had lapsed. The insurer denied coverage for "late notice," but under an applicable statute the claimant had the right to give notice after policy period had lapsed.

In denying the motion for summary judgment, the court held required the insurance company to indemnify the attorney for his malpractice, noting that there are circumstances in which injured parties can notify insurers of claims after the policy notification period has lapsed. Insurance Law Section 3420(a) so long as notice of the claim is as soon as reasonably possible once the insurer’s identity is discovered.

In this case, the claimant's new attorney was diligent in attempting to ascertain the identity of the insurer and notified the insurer promptly after discovering its identity.

The Bottom line-- injured parties in New York legal malpractice actions have some potential leeway when notifying the target insurance company of the claim, so long as it is diligent in ascertaining the identity of the insurer.

Posted by Peter Klose | Permalink | Email This Post

Posted In: Lawyers and Legal Malpractice

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