New York Real Estate Lawyer Blog

No matter who your attorney is when buying a parcel of New York State real estate, s/he should ask you whether you have investigated whether there are (or were) Underground Storage Tanks serving the heating needs of the house (or a Phase I search in a commercial transaction).

An underground storage tank is a tank and any underground piping connected to the tank that is at least 10% buried underground. They were very popular during the 1970s as this area increased in population, and oil heat was cheaper than gas. The result, however, is hundreds of USTs rotting and leaking causing much litigation and consternation to buyers and sellers of real estate.

New York State is a "caveat emptor" or "buyer beware" state that requires little by way of disclosure relating to known and unknown problems. USTs are a commonly "unknown" and hard to find because they are literally a ticking time bomb buried under the lawn. If you or your real estate inspector finds an underground oil storage tank (UST) during a real estate purchase, you, as the potential buyer, should take immediate steps to ensure that the tank is sound (through a pressure test) or was legally and properly "abandoned." If there is any suggestion that the tank is not sound, or that it was not officially "abandoned" you should demand that the Seller immediately abandon the UST before the transaction takes place. "Abandonment" involves licensed contractors sealing the tank and verifying that it was not leaking, or removing the problems if they were leaking. Demand that the Seller provide you with a "spill closure" letter proving that the tank was abandoned.

If the oil or fuel tank is found to be leaking, the owner of the property and any licensed contractors have a duty to inform the Department of Environmental Protection about the alleged "spill." You can sometimes locate other homes or businesses that have had "spills" in your neighborhood .

Unfortunately, however, if no one catches the buried tank, any existing contamination will be the new owner's responsibility under the New York State Navigation Law. If, you opt to keep the UST in operation after the sale, liability transfers to you (the buyer) when title is transferred.

The best piece of advice for buyers – particularly for those concerned with the presence of underground oil storage tanks on a piece of land – is to request an investigation of the property.

The bottom line-- any remedial actions required to be performed must be completed before you take possession and title to the property.

Posted by Peter Klose | Permalink | Email This Post

Posted In: General Interest , Real Estate Hints and Help

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The New York State Supreme Court (Shafer, J) reiterates that to sue an attorney for malpractice arising out of alleged negligent will preparation there must be an attorney client relationship before the beneficiaries may sue for legal malpractice in New York. That is, there must be "privity" of contract between the attorney and her client before the client has standing to sue for legal malpractice. For a complete copy of the recent decision Leff v Fulbright & Jaworski, LLP.

Beneficiaries of wills who get less than they think they are due often call us to determine if they have any claims against the attorney. The answer in New York State tends to be who, if anyone, may sue for legal malpractice when attorneys make mistakes planning estates.

As upheld by this Court, New York is one of the few states which recognizes the "doctrine of privity," meaning that, when the decedent died, she may be the only one who could have sued the attorney for screwing up the estate plan. This rule is relaxed in the presence of “fraud,
collusion, malicious acts, or other special circumstances, but one must investigate and carefully investigate the facts to survive dismissal under those cases.

In this case, the Estate was valued at nearly $90 million. Shortly after the Husband's death, his son from a prior marriage made a claim under an old separation agreement with the first wife, wherein the Husband agreed to give "no less than one-half of his probate estate" to the son.

The claim for malpractice alleged that the Husband's New York attorneys failed to consider this agreement when drafting the most recent estate plan. Indeed, the attorneys admitted that they had only discovered the agreement when responding to the son's claim against the Estate.

After settling the case with the Son, the attorneys faced suit by the new Wife contending the attorneys committed legal malpractice by failing to inform the Husband about the existence of the separation agreement.

Not only did Justice Shafer dismiss the claims on the ground that the Wife had no "standing" to sue the attorneys, but that her claims for malpractice were speculative because there was no evidence to suggest that he would have indeed changed his plans had he known of his agreement.

This court finds that the evidence does not indicate that plaintiff was ever involved in a joint estate plan with her husband, or that a relationship approaching 'near privity' with defendants vis-a-vis Leff's estate plan existed such as might make defendants plaintiff's attorneys with regard to Leff's personal estate plan.

This ruling makes sense in this case. If you read the facts, it was clear to the Judge that the Husband and Wife never consulted with the defendant attorneys together, that only the Husband sought their advice on the Estate Planning, and that she had her own attorneys for such planning issues. The Wife repeatedly denied knowing nothing about the estate plans of her Husband, so she had a hard time showing that these lawyers were representing her. Even if she had proven the relationship, there was nothing but speculation that the Husband would have done anything differently.

The bottom line: if the wills are not "reciprocal," Husband and Wife should understand that there is an inherent conflict of interest in having one attorney do both estate plans. As hostile as you may feel, there may be no claim for legal malpractice, but you are welcome to contact our New York Legal Malpractice consultants to discuss the facts.

Posted by Peter Klose | Permalink | Email This Post

Posted In: General Interest , Lawyers and Legal Malpractice , Wills, Estates, and Trusts

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By far, the Mortgage Contingency Clause in a New York State Real Estate Contract is the most important, misunderstood, and litigated clause in residential real estate transactions and closings. By this posting, I will try to demystify the clause, and provide a sample of the Rockland County Lawyer's Contract language which addresses the clause.

To begin with, a "contingency" generally means an event which must occur before an obligation becomes final. In New York, a mortgage contingency is a common provision designed to allow the buyer a proscribed period of time to obtain a Mortgage Commitment from a Bank. The clause can elaborately describe the types of lenders, the time frames, the interest rates permitted to finance a certain amount of money needed to purchase a home in Westchester, Rockland, Putnam, Dutchess, Columbia, and all counties of New York. Depending upon the type of loan, the contingency generally permits 30 to 60 days to complete the process of getting a loan commitment.

A mortgage-contingency provides critical protection in today's economy, tight lending world and uncertain economic times because it allows the buyer/borrower to avoid (cancel) the purchase contract without penalty if the buyer cannot obtain financing on the terms specified in the contract.

Tip: The borrower must make a "reasonable" or "good faith" effort to apply for and qualify for the Mortgage sought.

Practice: Real Estate Brokers or Agents in New York often encourage the Buyers to be "pre-qualified," because it gives the seller more confidence that the buyer will earnestly apply for and obtain a Mortgage.

The absence of a mortgage-contingency means that the Buyer has agreed to pay "all cash" for the real estate. Buyers should be very cautious about signing a purchase contract that does not contain a mortgage contingency because the Down Payment or "earnest money" deposit given at the contract signing is "at risk," should the Buyer not have all of the cash needed to close.

We have provided some sample language for New York State purchasers to read and understand.

The bottom line: If you need bank financing to purchase your new home, you need to carefully understand how a mortgage contingency works. If you or your new york real estate attorney fail to comprehend the risks associated with the transaction and your credit, you are at risk of losing your down payment should you not qualify for the Mortgage.

Continue reading " What is a Mortgage Contingency in a New York State Real Estate Contract " »

Posted by Peter Klose | Permalink | Email This Post

Posted In: Real Estate Hints and Help

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