New York Real Estate Lawyer Blog

In today's ever concentrating society, where we live in close proximity to one another, I was wondering whether citizens in our communities ever considered the chiming of church bells and the blaring of fire horns to be a "nuisance," and whether they ever sought to quite these things we hear every day. Here are some cases.

CHURCH BELLS

Langan v. Bellinger, 203 A.D.2d 857, 611 N.Y.S.2d 59 (3rd Dept. 1994)

In Langan, residents living twenty fifty (250) feet from church brought a nuisance claim against church to prevent hourly ringing of bells between 8a and 8p and presentation of carillon concerts at 12p and 6p. Among evidence presented, an acoustical expert testified that the church bells made no more noise than passing automobiles and affidavits from fifteen community residents stated the church bells were pleasant. Additionally, the village mayor and village attorney established there was no violation of an ordinance. The court granted the defendant’s motion for summary judgment because residents had failed to allege that the bell ringing and presentation of carillon concerts was an interference that was either substantial in nature or unreasonable in character particularly failing to present objective evidence that either rebutted opinion of defendant’s expert or to demonstrate that the music and chimes constituted nuisance.

Remember: whether the interference is "substantial in nature" or "unreasonable in character" are two tests for nuisance in New York.

Impellizerri v. Jamesville Federated Church, 428 N.Y.S.2d 550 (1979)

In Impellizerri, residents brought a nuisance claim against church to prevent ringing of church bells three times a day and four times on Sundays of approximately four minutes each time. Residents argued that the volume of the bells affected their son who had a neurological disease and that he suffered heightened migraine headaches and muscle spasms as a result of the church bells. The court dismissed residents motion for injunction reasoning that although residents had special circumstances, ringing of church bells did not amount to a nuisance because ringing would not have produced an unwanted effect on an ordinary person in the same circumstances.

FIRE ALARMS

Fire bells are generally not a nuisance. See Van de Vere v. Kansas City, 107 Mo. 83, 17 S.W. 695 (1891) (ruling a lot owner cannot have a city enjoined from erecting a fire engine house on an adjacent lot on the ground that fire bells constitute a nuisance and would depreciate the value of his property). Although the operation of a municipal fire alarm system may constitute a nuisance, fire bells are not an actionable nuisance in light of the public’s need to be protected from fire and other injuries. Malhame v. Borough of Demarest, 162 N.J. 248 (1978) (articulating that if operation of present fire alarm system and certain sound levels in some locations in borough were an actionable nuisance, then continued maintenance of that nuisance would be patently unreasonable and would constitute an abuse of discretion).

So you go out one day and find that your neighbor has cut down your tree. What are your responsibilities, your rights when such tree has been removed illegally. Notwithstanding the fact that many municipalities have tree ordinances of varying types, the removal of trees on another's land is illegal.

The question of whether to bring suit often turns on the question of whether the damages are sufficient to warrant a lawsuit. Was that tree your favorite Black Cherry. Indeed, the type and extent of the damages varies by statute, often determining whether the landowner brings suit in New York. For example, under New York's Real Property Actions and Proceedings Law, RPAPL § 861, a landowner may seek treble or triple damages for the improper removal or cutting of a tree. That, three times the stumpage value of the tree, or $250, or both in addition to any permanent and substantial damage caused to the land if any person removes or attempts to remove any tree without consent.

Other actions that may be brought for injury to property include arguing there was a trespass of land. In Western New York Land Conservancy, Inc. v. Cullen, 886 N.Y.S.2d 303 (4th Dep’t 2009), the plaintiff-landowner sought treble stumpage value for tree damage to its property in a trespass action against the adjoining landowner. The court ruled that the plaintiff was not entitled to treble damages because he had failed to present evidence establishing stumpage value, and, instead, presented evidence of restoration costs. If the plaintiff in this case had presented credible evidence establishing stumpage value, the court would have likely awarded treble damages.

Landowners may also file an action for negligence or nuisance under well established law in New York. Damages in such actions for negligence or nuisance, however, will likely be limited to compensatory damages – or damages flowing from the injury and harm the defendant caused – rather than treble or punitive damages. For all claims to recover for injury to property, the Statute of Limitations is three years.

If there is an illegal removal of trees in a critical environmental zone, the Department of Environmental Conservation (DEC) should be notified. Notifying the DEC will inform the agency of the situation and whether any relevant parties are in compliance with environmental laws and permits. If the illegal tree removal involved state land, the guilty party may be liable for a civil penalty or treble damages, or both.

Bottom Line-- you are not without rights against the party who illegally cuts the trees in New York. The municipality, the neighbor and the DEC might all have claims, including compensatory damages and treble damages.

Does a client have the right to bring a legal malpractice case against the attorney who forced, recommended, or otherwise allowed the client to knowingly accept in New York?

Generally, New York does not bar claims for legal malpractice arising from a litigation settled by the former client. A client may sue her former attorney after settling a case if the attorney compelled the settlement. In Latimore v. Bergman, (2nd Dep’t 1996), the plaintiffs sued their former counsel for legal malpractice asserting that the defendant had forced a settlement in a previous personal injury action. The court denied the defendant’s motion for dismissal and summary judgment articulating that a settlement in a previous case does not preclude a plaintiff from seeking the full damage amount that would have otherwise flowed from her attorney’s negligence. Latimore v. Bergman, 637 N.Y.S.2d 777 (2nd Dep’t 1996).

See also, Leone v. Silver & Silver, LLP., 880 N.Y.S.2d 676, (2nd Dep’t 2009), where the same Appellate Division ruled a client may sue her former attorney after settlement if the attorney compelled the settlement, and in doing so, failed to protect client interests within reasonable skill and knowledge and that breach of duty caused actual damages. Unless the former attorney-defendant can prove with evidence that the defendant had indeed protected client interests within reasonable skill and knowledge OR that the breath of duty did not cause actual damages, a legal malpractice suit after settlement will survive a motion to dismiss.

Obviously, each case is fact specific, but don't be deterred from having your case reviewed by a competent legal malpractice attorney in New York.

The growing popularity of the Internet as a means of communication has created a new way to spread potentially defamatory statements. Users may be held accountable in court for making defamatory remarks in these informal - but very public - forums, and blog posts. As long as statements are demonstrably false, someone other than the alleged defamer received the defamatory message, and the content was intended to injure or expose the victim to contempt or ridicule, Internet users can be liable for defamation.

So, what is defamatory, I recently saw an interesting article trying to explain when a New York Court might find a statement to be "opinion" (non actionable), as opposed to actionable words for defamation.

Defamation is generally defined as a false statement of fact that is harmful to some one's reputation. Many people mistakenly believe that only factual utterances are actionable for defamation liability. Opinion, however, is actionable if it can be reasonably understood as declaring or implying actual facts that can be proven true or false. Courts examine the totality of the circumstances to distinguish factual statements from actual expressions of opinion.

In the article, the author reported that constitutionally protected "opinion," within the context of that case, could be words and phrases as "leech," "sleazy male worm," "a showbiz reject," "parasite," "a loose cannon," "pathological," "lazy" and "unethical and sleazy."

In finding some of the words actionable, the Court permitted the case to proceed where the blogger "kept [defendant's] name and likeness on his website during the peak of the Departed and blocked work from [defendant]," that "[plaintiff] lied to many people taking credit when he brought nothing to the table" and "used [defendant's] name ... to lure people to the business" were factual, and thus provided a predicate for plaintiff's defamation cause of action.

The bottom line-- defamation actions require very careful analysis of what statements might be the expression of opinion (jealously protected by our Constitution and case law), as opposed to what might be factually based and maliciously intended statements of fact. Hire a New York Litigation Lawyer who will review the intricacies of such statements.

As we all feel, some more than others, the economic recession has resulted in hundreds of thousands of suits filed by bill collectors in the New York courts. We always learned that a plaintiff (the collector) must prove the debt. Well, New York judges are here to tell these collectors that they better have a real and viable debt, which they can prove.

As recently reported by the NYTimes, a number of New York judges are speaking out against the increasingly sloppy litigation and collection practices of credit card debt collectors, who simply fail to investigate the claims, don't have documentary proof of the debt, fail to properly serve the debtor, and make all sorts of errors when trying to collect often stale debt.

For example, one Manhattan appeals court recently threw out a credit card case because the debt collection company had apparently sued the wrong person; while a Nassau County District Court ordered a law firm to pay $14,800 in sanctions for ethical violations stemming from their improper debt collection efforts, which included ignoring court orders, making false statements, and harassing an alleged debtor even after the debt and case was dismissed. "Debt collectors seemed to think their lawsuits were taking place in a legal Land of Oz, where everyone was supposed to follow anti-consumer rules invented by some unseen debt-collection wizard."

The bottom line-- debtors have the right to verification of debt, and the Fair Debt Collection Practices Act has teeth-- use it.

There are many attorneys in New York, but when it comes to buying your home, a commercial business, or other transaction involving New York State real estate, you really should hire an attorney that handles real estate transactions. Real estate transactions can get complex. Hiring a real estate attorney has the practical advantage of simplifying the process.

How do you identify a real estate lawyer you want to work with?

One way to find a real estate lawyer is through referrals from family or friends. Ask your family or friends whether the real estate attorney was attentive to their questions, available by telephone, took their calls personally. Personal attention and attentiveness deserves a premium when you are purchasing what will likely be your most expensive asset.

What about finding an attorney on the internet. As you can see, at Klose & Associates, we believe that the internet and e-mail are essential tools in a real estate attorney's arsenal. We handle most of our transactions by constant electronic contact with real estate brokers, clients, title agents, banks and mortgage brokers. You get prompt service, prompt response to your questions, and all parties are privy to the major steps to a real estate transaction. Make sure that the real estate lawyer you hire will meet your particular needs.

Beware, not all real estate transactional attorneys also know how to deal with real estate litigation. Litigation real estate lawyers handle lawsuits involving adverse possession, zoning and planning (Article 78), and other types of litigated issues. The morass of real estate law means that a litigation attorney needs to know how and where to look for cases that are similar to the ones involving yours.

Bottom Line-- understand that different real estate attorneys bring different skills and knowledge to a transaction or litigated matter. You should call several to be sure that they have the experience you need for your matter. Ask questions regarding your concerns, including billing rates, whether there is a flat fee, hourly fee, or contingency basis. While estimated costs in litigation are hard, they may not be in a transactional situation.

As simple and obvious as it sounds, don’t hire a lawyer for your real estate case that does not practice real estate

I just noticed this recent post in the NYTimes about more modest weekend homes and retreats in the Hudson Valley.

When purchasing a second home we recommend hiring a local real estate attorney to give you the "lay of the land," to direct you as to issues that arise in "upstate" real estate transactions, and to help you avoid the pitfalls. In the past three years, as second home prices have fallen in the region, distressed real estate has become a haven for problems caused by neglect, economic desperation and ignorance. Leaking oil tanks, failed septics, contaminated water, even leaky roofs have caused problems.

Planning Boards play an important role in shaping how our community will look, feel, act and react. In a very real sense, the Planning Board is charged with overseeing the “orderly” development of real property, and in the process shaping the “public” face. Developers want the best return on their “investment,” homeowners want to protect what they know, and the Planning Board must implement the laws as enacted by the Village, Town, County and State, a difficult tight rope for a Board comprised of local volunteers and neighbors.

The process begins with an application to the Building Inspector. The homeowner (we’ll call her the “Applicant”) completes an application with the Building Inspector, who reviews the proposal (or “Site Plan”) to see if it meets various code requirements– is the lot large enough to support the planned structure, is drainage adequately directed to prevent run off, are the plans professionally drawn and contain all of the technical data required by New York State’s building code. The Building Inspector next refers the Applicant to the Planning Board with instructions to “post” notice of a “public hearing.” In Nyack, we meet the first Monday of every month to hear these applications.

The Planning Board receives the Site Plan and the Building Inspector’s opinion, and we review against our local Zoning Code and Comprehensive Master Plan. In Nyack, our Comprehensive Master Plan was adopted by the Village Board on January 11, 2007 (a process that took many years of hard work by various civic minded volunteers). Our Comprehensive Master Plan (available on line or at the Village Hall) sets the tone from its first sentence, “The Village of Nyack is a special place, proud of its historic, scenic and socially heterogeneous character– quite unlike the suburbs to the west.”

The Planning Board is granted limited rights to review the Site Plans for (1) traffic access on and near the site; (2) circulation and parking; (3) landscaping and screening; (4) underground utilities (5) and to be sure that the plans “reasonably preserve and maintain view corridors and sight lines (particularly Hudson River views) throughout the commercial zones in the Village of Nyack. Broadly speaking, the law permits the Planning Board to consider the public health, safety and general welfare, the comfort and convenience of the public in general and of the residents of the immediate neighborhood, in particular.

In conducing the public hearing, local residents, the Applicant, and the Planning Board learn what might be acceptable, negotiate various ways to mitigate the effects of various design elements, and impose “reasonable conditions and safeguards” to further the general purpose and intent of the Comprehensive Master Plan. During the process (or negotiation), the Planning Board can only apply the law enacted by the Village Board, the Town Board or the New York State Legislature. The Planning Board does not have the legal power to simply deny a Site Plan that otherwise complies with such laws. Stated differently, if the law permits a twenty (20) story apartment complex, the Planning Board may not deny the application because it requests a twenty story apartment building.

From my perspective as a lawyer and as a member of the local Planning Board, it is safe to say that when the community shows up to air its concerns at a public hearing, everyone (including the applicant) is benefitted. The moral of the story is to participate in the process, don’t simply agitate about the change that is forecast for your neighbor.

You are are sitting up late one night, thinking that your neigbor's new fence is located on your property. You type in the search term fence and property into a search engine like Google or Yahoo! and 2.5 million returns hit you in 0.15 seconds. How do you narrow that search down to find information about the law in New York.

Well, there are various lawyer "Blawgs" that will give you an idea about the content. You can go to a place like Justia.com to find a listing of various Blawgs. That might get you to a real estate blog like this one. But it's hard to find exactly the fact scenario you are looking for. Where else can you go?

New Yorkers are lucky to have a wonderful web-site that is accumulated by Cornell University. Searchers can find all sorts of helpful information on this site.

Bottom line-- you should look to law clearing houses or "meta sites" to help you narrow your search for a good article on point. Nothing substitutes for actual legal advice from competent attorneys.

In this age of ultra-competitive, make a buck at any price advisers, we have lost our focus upon what a good "fiduciary" should be providing to their real estate, mortgage, estate, insurance and other types of recommendations. What is it that you should expect from your broker or salesman when they sell you that insurance policy, annuity, or mortgage?

Well, it depends upon the type of the relationship, but here is an interesting article that provides a "stop gap" or screening device for consumers to ask their money managers, their attorneys, their mortgage brokers, here in New York and all over the country.

The Bottom Line-- you should expect that the person selling you products has your best interest in mind (not their profits).

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.

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.

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.

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.”

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.

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.

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.

I get calls every week from family members concerned that another family member might be abusing a power of attorney issued by an elderly or infirm client. We take these concerned calls very seriously, as did the New York State Legislature, who recently amended the General Obligations Law relating to Powers of Attorney. There are some traps for the unwary signer, however.

New York's new power of attorney law contains language that "automatically" revokes old powers of attorney, unless you specifically state that it does NOT. If you are asked to sign a new Power of Attorney in New York after September 2009, think long and hard about the effect of signing such form. For example, if you are a recording artist, did you sign an agency agreement; a real estate partner, a power to the managing partner; a life insurance recipient, a right to such benefits. If so, you should be careful not to revoke any old powers of attorney.

Bottom Line-- You need to be educated to be smart. Ask your attorney what the effect will be if you sign a Power of Attorney.

You owe some money on a debt, the creditor gets a judgment against you, and suddenly, your checking account is frozen by a restraining notice. That scenario is all too common, especially when we all live in a large metropolitan neighborhood, change addresses often, and sometimes don't get copies of the lawsuit naming you as a party to the action.

New York State has recently amended its laws relating to when a creditor seeks to restrain a debtor’s bank account. Specifically, New York state law exempts certain types of income from debt collection. These exemptions include veterans’ benefits, Social Security, Social Security disability, pensions, public assistance, workers compensation, unemployment insurance, child support, as well as spousal support and maintenance. Although the New York State exemptions are intended to ensure "at-risk" New Yorkers have the means to buy food, pay rent, and have basic necessities, procedural loopholes have increasingly led creditors to freezing bank accounts containing legally exempt income.

As a result, New York has recently enacted the Exempt Income Protection Act (EIPA). The EIPA limits creditors’ ability to restrain exempt funds stipulating that banks cannot restrain the first $1,716 in a debtor’s account if he or she does not receive government benefits or assistance.

In cases where a debtor is receiving governing assistance, banks cannot restrain the first $2,500 of an account during a forty five day period prior to a restraining notice. If a creditor objects to a claimed exemption, it is the creditor that has the burden to prove that a debtor’s account funds are not exempt or seek to enforce a restraining notice elsewhere. Intended to close procedural loopholes, the new statute is a further effort to protect vulnerable residents from destitution.

Bottom line-- those with only small amounts of money in the bank, receiving governmental subsidies and pensions have protection from Creditors seeking to freeze such assets. You should immediately review the restraining notice and let your bank know if the benefits are being frozen.

Have you been sued for foreclosure in New York State, are you ignoring the certified mail or the papers taped to your door. Well, that's not the best response to a foreclosure action, where they want to take your home away. Increasingly, as this mortgage foreclosure debacle ripens, courts, litigants, and attorneys are learning that foreclosure is not always the slam dunk, lock the door, win/win case that it might have been when there were fewer foreclosures. Stand up for yourself, ask an attorney about your rights, read the papers and and fight back if the facts warrant. See my prior New York State Real Estate Lawyer Blog Entry.

In past decades, bankers gave millions of mortgages to entice new homeowners to leverage their dreams, and then repackaged that leverage (loans) to sell to investors, taking their cut, nary a worry for the borrowers or the lenders. As a result of the frenzied repackaging of such loans, it turns out that many of these banks and lenders lost papers, misplaced paperwork, forged signatures, and inaccurately dated documents, creating a messy jumble of paperwork, and making it sometimes impossible to decide who owns the right to commence the foreclosure, which bank owns which mortgage. This is where you might have a chance.

As the wave of the foreclosure crisis deepens, courts are increasingly challenged because homeowners rarely show up to court to fight the process, rarely have the money to hire competent lawyers to sort out the problems. So, increasingly, judges end up examining the banks’ papers, and ruling on the affidavits before them.

Enter Judge M. Schack, 64, of New York City. Increasingly gaining respect for his no-nonsense approach to dealing with foreclosure motions, he has arguably become an exemplar of holding banks to the simple rule, “If you cannot prove ownership, you cannot foreclose.” Schack has tossed out 46 out of 102 foreclosure suits that have come before him in the past two years chastising banks for their sloppy and mistake ridden paperwork. Although a few protests from bank officials who assert Schack is unfairly acting as judge and jury are acknowledged, positive reactions from the legal community for his activism may prove to ring more loudly in the long run if more federal and state judges follow his example.

Bottom Line-- Just because the bank says it wants your house, doesn't mean it is entitled to it. You should hire competent New York legal assistance to sort out the complex and tangled web of ownership. For more on Judge Schack, read here.

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.

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.

Since lawyers have been lawyers, there has always been pressure to release the age old bonds of the attorney client privilege in favor of letting non-professionals practice law. Never more so has this pressure been as intense as in the real estate industry where many states permit non-lawyer participants do all sorts of acts that attorneys did or should do. For example, real estate brokers in some states are permitted to draft and review and prepare the contract of sale in a real estate transaction. Not only does having an attorney present raise the level of the transaction, but it also insulates parties from the self-dealing that can often occur if an attorney is not looking into the matter.

To its credit, New York State has generally avoided the trend to permit non-lawyer quasi professionals invade the traditional attorney client relationship. The reason for this is that we believe in New York that the professional, confidential fiduciary relationship between client and attorney is tantamount to making the system work.

Recently, a New York State appellate court censured an attorney who formed a company using non-lawyers to provide closing services in the sale of foreclosed properties. The attorney contended that the services his law firm (company) provided were "clerical" in nature, and did not amount to the practice of law. Despite his "previously unblemished record," however, the Court disagreed, finding that he violated ethical cannons by aiding non-attorneys in the unauthorized practice of law. Specifically, the Court held that the services performed by his closing company "were of the character usually performed by lawyers, and were formed pursuant to a contract that required an admitted attorney as a necessary presence."

After winning the contract to conduct the closing, the attorney used a non-attorney paid by the attorney to serve as general manager (she also owned a majority share in the company), and then performed all of the closing scheduling, prepared closing figures and attended closings. The attorney shared profits and losses with the non-attorney, who also happened to be a joint signatory on a non-interest-bearing trust account, used to disburse sale proceeds. [This attorney must not have taken Ethics 101 in law school].

At the same time, the attorney had only minimal involvement reviewing deeds and title searches which were also conducted by closing company. He did not exercise supervisory authority over [the non-attorney], who administered all of the closing services.

Although the complaint initiated from an attorney competitor, the respective ethics panels confirmed that the practices of the closing company violated basic tenets of ethics laws found in the Disciplinary Rules of the Code of Professional Conduct. Such violations included aiding a non-lawyer in the unauthorized practice of law and sharing legal fees with a non-attorney.

Judiciary Law §§484 and 495 bar non-attorneys and voluntary associations or corporations from requesting or receiving compensation for "preparing deeds, mortgage, assignments, discharges, leases or any other instruments affecting real estate," the panel wrote.

"We thus find that respondent has committed professional misconduct by forming a corporation with a non-lawyer for the provision of those services, failing to exercise oversight of its activities or employees and failing to safeguard sale proceeds in an adequate manner."

The Bottom Line-- while not always understood by non-attorneys, the rules governing the unauthorized practice of law by non-attorneys is designed to protect the consumer and clients using the services. While attorneys may be more expensive, they are charged with fiduciary obligations that are closely regulated and controlled by other attorneys and the State of New York. Because of this confidential relationship, clients can expect to have their confidences protected by a professional New York real estate attorney, who is also duty bound to know what she is doing.

Hire an attorney, don't be "penny wise, pound foolish."

As the fiscal crisis for government deepens, local leaders are increasingly pressed to re-tool. For years, consolidation of governmental services has been a complex labyrinth of regulation understood by few. New York State Attorney General, Andrew M. Cuomo believes that one way to improve the services and reduce the tax burden, is to remove and consolidate various layers of government-- to reduce the tax bills for everyday tax payers who often pay county and town taxes, village taxes, school taxes and taxes for special districts, including water, sewer, and utilities.

Given the current fiscal crisis New York State faces, with declining revenue (taxes) and increasing needs (costs of services), how is the local municipality going to effectively provide the services without increasing taxes or reorganizing governmental entities to efficiently provide the same services.

Just as private businesses re-organize in this global economy, the municipal market place might need re-structuring if we are to retain our middle class, our businesses, and our home rule. Think of the duplicity (redundancy and otherwise) in services provided by an estimated 10,521 overlapping governmental units, sub-divisions, etc. Would private industry permit the same wasteful bureaucracies that exist in local communities.

Under the current law, the consolidation and re-organization solution that can be executed by private industry is hampered by inconsistent, often nonsensical legal barriers, and complexities that make operational reform virtually impossible.

The New York State Attorney General proposed legislation that streamlines existing processes, eliminates inane inconsistencies, and strikes from the law offensive anachronisms such as requiring property ownership in order to vote in a special town election on a proposition to consolidate water districts.

The antiquated system (understood by almost no one) permits New York State real property owners the "privilege" of the highest local tax burden in the country, dwarfing other states, and far exceeding the national average. The theory, eliminate governments by consolidating services, saving millions of dollars.

The newly proposed legislation empowers governments across New York State to study, and then streamline, the complex rules and regulations surrounding the reorganization process.

The impact could be significant, but will local governments and their tax payers have the stamina to address the problem? Read more here.

It's not often that our New York City judiciary goes out of its way to investigate, report and do the right thing. But, that's what the Kings County, Supreme Court, (LAURA L. JACOBSON, J) just did in a mortgage foreclosure matter that crossed her desk.

After noting that the foreclosure papers were served on a "live in" nurse, the Judge took the unprecedented action of requiring the Plaintiff (Argent Mortgage) to provide proof that they were entitled to foreclosure. Even though the Debtor had not responded to the court action, she ordered the mortgage company to supply copies of the loan documents used to secure the mortgage; she required an actual loan officer to appear at a hearing and supply evidence and testimony as to why the Mortgage Company would underwrite a loan in the amount of $315,000, even though there was evidence that the borrower (a taxi driver) earned $69,900 per year, and showed total debts of $91,807, against assets of only $58,119.30. In other words, there was no chance that the Mortgage would be re-paid, and the borrower made no payments toward the Mortgage.

Incensed by the clear fraud, the Judge ordered that the Bank pay for a Special Referee and a Guardian Ad Litem to investigate the situation. It didn't get any better for the bank. In denying the referral to a Referee and foreclosure she said,

The Courts have a responsibility to society as a whole to not allow the perpetuation of a fraud. If this Court grants the application of the plaintiff, it will be giving the imprimatur of approval to a scenario as fraught with fraud as any of the worst Ponzi schemes. . . . .

Perhaps if more of the people charged with overseeing our financial institutions had focused on the improprieties being performed in the financial arenas, our economy might not have imploded as ferociously as it did.

In this matter, plaintiff as the mortgagee was initially in a position to ascertain the credit status of defendant Mentesana.FN3Plaintiff abrogated that responsibility. Defendant Mentesana acknowledged his part in the fraudulent transaction in which several people appear to have participated. Accordingly, I am not only denying the relief sought, I am referring this matter to the Office of the District Attorney; to the Attorney General's office, Fraud Division and to the Banking Department, Criminal Investigation Bureau.

Bottom Line-- Thank you Madam Justice Jacobson for taking a stand (however small) to assign the blame where it is due. . . . Make your own conclusions, but why should any bank making these "type" of loans be entitled to take taxpayer dollars to "bail them out."

May the Brooklyn District Attorneys' office secure the appropriate resolutions.

If you would like to read the entire decision, click Download file here.

In today's day and age, attorneys, rightly and wrongly, get bad reputations from the public. Often these negative reputations are undeserved, but, as a profession, we lawyers need to do a better job of protecting that status as a profession by acting "professional." So, what is it that small business people, real estate clients, and the simple estate planning clients need, and what is it that causes such clients to complain to the ethics board?

Ethics in the hometown practice of law can be complex and potentially dangerous for the local attorney who has practiced for years, given of themselves to the community and knows many in the community. What can your personal lawyer do, and what should you expect? When should you make a complaint to the local grievance committee?

Traps for the Unwary

Ethics grievances are most commonly filed against solo practitioners and lawyers at small law firms, because these are the lawyers on the "front line," for many clients who have never dealt with the legal system, are often at wits end, or stressed by a major financial hardship (divorce) or transaction (purchase of real estate). With increased stress and unfamiliarity with the process, friction often arises between the attorney and the client. When the dispute arises, clients often dispute the fees, and are generally surprised by the amount of time and care it takes to resolve even the most mundane problems.

Obviously, many ethics cases arise from fee disputes, matrimonial law, and real estate transactions because people are emotionally attached to the proceedings or transactions. In residential real estate transactions the real estate closing is the first and only time people deal with attorneys, who often know the issues inside and out, but fail to explain such transactions which are often the biggest and most important investment for these clients, making the relationship even more difficult.

The same stress, sense of loss, and tension is created when attorneys draft wills and then handle the probate process, which can be cumbersome and painfully slower than expected.

Needless to say, there are often common themes to attorney grievances which can be resolved by confident clients and communicative attorneys. For example, many ethics complaints emanate from the turbulence, delays and erratic nature of certain legal matters, especially real estate, probate, and litigation. When the client doesn't know what to expect in terms of money, time, or process, the attorney is the one who can expect a disgruntled client, who might file an ethics complaint.

The failure of communication is cause of the breakdown of the attorney client relationship. When the client and the attorney understand the process, communicate the pitfalls, and understand the potential problems, then both the attorney and the client win.

As professionals attorneys have to understand that the small town practice of law is a service business where results matter, but if a client understands the process and the pitfalls through communication, both parties exit the relationship with the attorney's reputation in tact. The first step to such communication is taking the client's call or returning it promptly.

What to Expect from your Attorney!

1. Expect to be educated about the process.

2. Expect to understand the attorney's role in resolving the matter. We don't make business or personal decisions for you, we explain the ramifications of each course of conduct.

3. Don't expect to win everything there are limitations to what an attorney can do.

4. Expect realistic even conservative estimates as to what result can be accomplished, and in what time frame.

5. Expect to speak to your attorney personally and expect a return telephone call or email.

6. Call or contact and expect updates.

7. Consider and get honest appraisals or estimates of the positive and negative results and occurrences in your matter.

8. Don't expect the sugar coating on the situation.

Credibility, cooperation and communication are hallmarks of a good relationship. I strongly believe that attorneys' "bad reputations" are fostered by the utter inability to communicate with their clients and the public at large. If we are going to improve the relationships it is going to come through communication and education.

Bottom line.

For all of you real estate, matrimonial, probate, and litigation clients out there, remember, you deserve full communication, dignity, and respect. If you are not getting it, you can move to another attorney, or demand it from your attorney.

That respect, however, is mutual. When your attorney tells you that a certain course of conduct MAY result in a negative outcome, you have to respect the fact that you chose that course of conduct. Stated differently, it's not your attorney's fault you just lost your real estate down payment because you failed to apply for a mortgage in accordance with the contract.

In a transparent effort to raise fees, the New York State Legislature has instituted a fee hike on real property transfers, by increasing the filing fees for the RP-5217 Property Transfer Report. [See Real Property Law § 333(3), amended by L.2009, c.56, Pt. JJ, approved 4/7/2009].

The new fees increased most deed filing fees from $165 to $250, (for deeds submitted for recording after June 1, 2009). For questions on the new filing fee or other transfer report related matters, contact the Rockland County Clerk's Office or the ORPS' Data Management Unit at 518-473-7222.

Bottom Line, they have to make up the budget shortfalls somewhere.

There are various standard inspections that buyers of New York State real estate customarily order in their inspection process to buying a home. According to the pest control experts, there should be another-- an inspection for Climex Lectularius or "common bed bug."

Everyone's worst nightmare is a hotel room infected with those tiny nocturnal insects that hide in nooks, crannies, and crevices during the day, but feed on humans (blood) at night. The nightmare scenario of oval flattent and wingless bodies which are a light to reddish-brown and 1/4 to 3/8 inch long (think apple seed). The welts take a day or two to develop and not all bed bug sufferers react to their bites, which delays detection and action.

Buyer beware if you're buying a house or looking for a new condo or apartment because you may be moving into a home or apartment invaded by bed bugs. New York State law provides you no protection from such pest infestations because most sellers do not complete the Property Disclosure Statements choosing instead to pay a $500 penalty for not completing it before making the sale. Indeed, real estate disclosure laws often don't apply to co-op and condo owners or lessors.

Bottom line-- before you buy or rent under the doctrine of caveat emptor — let the buyer beware — the seller has no affirmative obligation to reveal circumstances about the apartment to the buyer. That means buyers must rely on the integrity of sellers and landlords anxious to make a sale.

Many people are now hiring a pest control company to check termites, carpenter ants, and bed bugs. For more on this interesting phenomenon, read this bed bug and real estate article.

As the distress in the real estate market continues in New York, more and more people are turning to their lawyers to carefully review and consider their real estate sales contracts for any "loop holes" available to justify the cancellation of a contract and to win the return of a down payment.

The scenario in a New York City Condo purchase goes something like this. The buyer puts down a boat load of money as a down payment to secure an apartment in the hottest building in Manhattan, or any of the five boroughs. The developer starts having financial difficulties or can't meet originally intended construction deadlines, and, in the intervening months (or years), the buyer loses interest or a job and can no longer afford the price (which has also declined). As the New York real estate market crumbles, so do these deals, and the buyer wants out.

Recently, some bright and creative New York Real Estate litigators have turned to an ancient, but potentially useful, statute passed in 1968 and known as the Interstate Land Sales Full Disclosure Act, to argue that the down payments should be returned and the contracts voided because the Developer did not comply with the provisions. The Interstate Land Sales Disclosure Act generally applies to developers selling or leasing--through interstate commerce.

Under the Act, if the Developer is marketing in interstate commerce (generally the case with these fancy luxury buildings and the Internet), then they must register the project on a national scale with HUD, and give consumers (buyers) a summary of that registration in a disclosure statement called a Property Report BEFORE THE CONTRACT or agreement is signed. Hence the utility in a litigation situation if the Developer did not follow the regulations.

BEWARE: The Act does not apply to all transactions, or all buildings, so buyers looking to cancel their New York State real estate contract with a developer had better seek counsel versed in the actual contract and the Interstate Land Sales Disclosure Act.

Bottom line-- it's always best to hire local New York State real estate attorneys.

In this era of distressed real estate, and even more distressed home owners, there are several life rings being thrown around including "sale-lease back" options. Under a typical "sale and lease back" situation an "investor" buys a person's home and leases it back to them. The practice is both common and legal in real estate, and is intended to raise cash for short-term needs or to secure tax benefits. Sometimes, the leaseback agreements permit the sellers the right to repurchase the property after some prescribed period and that is often a benefit to the investor in an inclining real estate market.

In residential real estate, the sale-leaseback allows financially strapped homeowners in financial trouble to stay in their homes and pay their debts, but the practice is susceptible to fraud when investors don't give homeowners the promised money. For example, some "investors" pocket the mortgages they obtain from banks or strip equity from the homes rather than letting owners get back on their feet.

The WSJournal had an interesting article which explained the potential pitfalls of such a relationship.

Bottom Line-- contact your New York Real Estate Attorney before entering or considering a sale and lease back option for your home in Dutchess, Rockland, Westchester, Putnam, Ulster or any other County.

How much litigation is spawned by incomplete or suspicious powers of attorney issued to people in confidential or, at least, close personal relationships to the person giving the power to the agent. The opportunities for undue influence are unbelievable, and have lead to sweeping changes in the New York State laws.

By signature on January 27, 2009, New York's Governor Paterson signed into law revisions to sections of the NYS General Obligations Law which governs short form of powers of attorney. Although it is unclear whether the enactment date of March 1, 2009 will be extended, the comprehensive revisions will result in a completely new form, and, in some cases, along with a separate formal rider required when the the Agent makes significant gifts using the Power of Attorney.

One change will require the agent to have his signature "acknowledged" (with the formality of a deed) on the power of attorney giving the agent the right to do the transaction. The power will not be effective unless the acknowledged (and notarized) signature of both the Agent and the person giving the power appears on the form. For further safeguarding, statutorily defined "major gifts" will have to be separately executed as a rider (SMGR rider), with two disinterested witnesses attesting to the signature. New York title companies may refuse to write title if the form is not followed particularly.

The bills (A4392 and S1728) were referred to the Judiciary Committees of the Assembly, and are expected to move quickly through the legislature. The delay has been requested to give additional time for the legal community to become fully educated about the required changes.

Perhaps now we can avoid the familial conflicts that often arise as our older generation needs the assistance of sometimes unscrupulous caregivers.

Did you know that New York State has in the past, and continues to, sell, give, and transfer portions of navigable waters to interested upland owners. What does that mean?

Ever wonder who owns the lands under the Hudson River? In river communities where water front property is valuable for its view, the land can also be valuable for land you cannot see-- the land under water.

“Land under water”' is land submerged by water, and includes that land below the high water mark in navicable waters (rivers), tidal water (estuaries), lakes and ponds, and, at times, can appear to be dry land (perhaps it was previously filled naturally by development). The owner of property on “dry land” is referred to as the “Upland Owner,” and is often benefited by actually owning the rights to the land under water. Generally speaking, New York State owns the land under all navigable lakes, streams, and rivers.

The State, however, does sell, give, transfer and alienate certain parcels of the mud under the Hudson River, Long Island Sound, and other larger fresh water lakes, ponds, etc. Often the ownership of this land underwater helps the upland owner install wharfs, docks, piers, and to fill the land where other owners (with no rights to the land under water) could not so improve their land.

The Public Lands Law contains a number of factors affecting who may apply for and receive interests in such lands. A distinction is made between an application for a beneficial grant for private use and a commerce grant for the public benefit.

Generally, grants for "purpose of commerce" are of limited character and subject to legislative control. The grant for commerce purposes specifies the nature of the use and is conditioned on the completion of the proposed improvements. Grants for purposes of commerce are strictly construed meaning that the owner of such right owns nothing more than what is specified in the grant as necessary to the purposes of it. Because it is limited, the State has the right to regulate the use of the granted property in the interest of the public and for the protection of commerce and navigation.

The type which grants "beneficial enjoyment" means that the owner has unencumbered fee ownership, and the land granted was not otherwise necessary for purposes of commerce. Once a grantee acquires title to the land under the water (e.g., Hudson River) soil, New York State cannot take away the grant, and the owner may exclude any other person from the land granted.

Obviously, the grant for "beneficial enjoyment" is broader and therefore more valuable to the upland owner.

The bottom line-- if you are considering the purchase of a waterfront home in Long Island, the Hudson River Valley, and particularly the river towns of Sparkill, Sneden's Landing, Piermont, Nyack, Stony Point, Haverstraw, Irvington, Tarrytown, Newburgh, Poughkeepsie, Saugerties, Hudson or anywhere else in New York State, including along any of the Finger Lakes; you should consult with your title company and real estate lawyer to understand whether and to what extent the property may come with underwater land.

The Appellate Division, Second Department, has issued a recent ruling dismissing claims for adverse possession in a case involving neighboring residential lots in Brooklyn.

Klose & Associates' clients purchased several lots in Kings County and commenced construction on a multifamily dwelling. As construction proceeded, the clients had to litigate over an eight inch strip of land lying on the other side of a fence which had, for more than 10 years, separated the driveways between their parcel and the adjoining neighbor (claimant).

According to the claimant's own testimony, the fence was installed (2001) jointly by the claimants and our clients' predecessors in title, and was positioned in the same place as the old fence. In dismissing the claims, the Court recognized that

A party seeking to obtain title by adverse possession must prove by clear and convincing evidence the following common-law requirements of adverse possession: (1) that the possession was hostile and under claim of right; (2) that it was actual; (3) that it was open and notorious, (4) that it was exclusive; (5) and that it was continuous for the statutory period of 10 years

Here, after close of discovery, we presented evidence establishing that the claimants cold not prevail on their adverse possession claims because they admitted cooperating with their former neighbor in constructing and maintaining the fence separating the driveway. Thus, the "possession" of the strip of land was not "hostile," because the consensual use of the area in question did not constitute an actual invasion of or infringement on our client's right to the strip of land on the other side of the fence. The court cited a long line of cases holding that, "When permission can be implied from the beginning, adverse possession will not arise until there is a distinct assertion of a right hostile to the owner."

Bottom line-- the term "adverse possession" is not simply-- I own the strip of land because I drive on it. The party claiming possession must show acts divesting the other of ownership rights. Do you homework, don't capitulate.Download file">View Case Here

When you are buying your house did you consider whether you can have a professional office, whether you can add an addition to the north side, whether you can live in the third floor attic? These are all questions relating to the building and zoning laws both of New York State and the local town, county or village where you are buying. So what questions should you ask your real estate broker, your building inspector, your lawyer.

Here’s a quick list of some of the issues you should consider when you look at the property, whether it is residential real estate or a New York City building.

Does the property have a certificate of occupancy?

If it does have a certificate of occupancy, can you use the property for the current purpose, or can you use it for the use you intend? If the answer is that the current use does not fit the current certificate of occupancy, the issue is what does local zoning say about the past use, and any intended future use?

For example, there is an old cottage on the property, which houses a tenant, but the house and cottage pre-date the zoning code. What happens when you buy the property? Is the tenancy “grand-fathered” as a non-conforming use under the zoning code? What happens if you seek to change the use, will it require some sort of variance? These are intensive factual questions which require significant inquiry.

Generally, as towns and villages develop into zoning districts, the various uses are separated into commercial, residential and mixed uses. Often parking requirements limit or change the scope or use of a property. Sometimes individual communities or owners seek “landmark” or “agricultural” or other special designation and require special approval by architectural, agricultural, or other landmark preservation commissions.

If you are consider a sub-division of the lot, the right to sub-divide is often dictated by local law, prior sub-division restrictions on the maps, and other state or local rules, which must be followed. You must know these before you buy because ignorance of the laws or rules or restrictions is not a defense (excuse).

Sometimes, in New York City there are unused “air rights” or “ development rights,” which can be bought and sold just like property. In various agricultural areas and rural zones of New York there are laws which permit owners to transfer unused development rights to adjacent properties.

The bottom line– all towns, counties, villages and other city government planning rules and regulations dictate, through zoning, how a property can be used. Your local land use attorney should be familiar with the codes and should be able to advise you as to the use of your property. Be warned and ask the questions.

Your home is your sanctuary, your largest investment, and possibly your largest headache if you are not careful about who you hire. So, it pays to be careful when hiring home improvement contractors, whether for a small construction project or a huge renovation, you need to know that your contractor is reputable, reliable and not a cheat. Here are some helpful hints in selecting a home improvement contractor in New York.

According to a recent article in the Poughkeepsie Journal, the New York State Attorney General's office has mediated more than 1,550 complaints against home improvement contractors since January 2007, and recovered more than $800,000 in restitution, settlements, or other discounts for consumers. So, how do you avoid becoming the next victim of home improvement contractor problems?

With the Internet, you have valuable resources at your fingertips allowing you to research your selection of a reputable contractor, with know your contractor links to NY state and local county agencies offering consumer assistance and information as to status of a contractor’s license (if required), and any complaints.

The AG's web-site lists about 200 complaints, judgments, and information against home improvement contractors who are reportedly doing shoddy or incomplete work, or who take people's down payments without finishing the job. That is a violation of New York State Lien Law, and can subject the contractor to significant penalties.

The names and identities of the contractors posted on this infamous list is too great to list here, but you should spend the time researching your contractor in Ulster, Dutchess and Columbia County. In New York State, home improvement contractors must be licensed to work on your home in New York City, Suffolk, Nassau, Westchester, Putnam, and Rockland counties.

The bottom line-- be willing to investigate the person who works on your home. It's customary and expected.

We all get them-- telemarketers calling to solicit funds for the Police Benevolent Association, the PTA, or the American Heart Association. Did you know that a vast majority of the the professional telemarketers are the ones making the money, not the Non-Profit, and it's totally legal.

When I first started practicing law (as a law student in Massachusetts) I worked for the Attorney General's Office, Public Charities Division. At the time (long ago), they were investigating telemarketers for Police Benevolent Associations. Whether in New York or elsewhere, the telemarketer is making the money, not the Not For Profit.

In today's day and age, where there are so many fine charitable organizations in desperate need of your hard earned dollars, why would you give through the telemarketer who often takes more than 65% of the money the raise? The internet, credit cards, and direct giving make charitable donations so much easier. Why give to the telemarketer?

Why not-- of the 553 fund raising campaigns in 2007 (442 charities using telemarketers), a total of $178.7 million, with 60.5 percent ($108.2 million) going to the telemarketers! That's why not.

If you don't believe me-- see this recent article in the NYTimes reporting that, on average, just 39 cents of every dollar raised by commercial telemarketing companies for charities in New York State actually go to charity. I applaud the attorney general, Andrew M. Cuomo, for his report finding that such funds are used to pay fees and expenses associated with professional fund-raising, not for the operation of the charity.

I don't mean to get on a soap box, but GIVE DIRECTLY TO THE CHARITY OF YOUR CHOICE (here's mine).

Is the price of re-financing worth the expense in New York? Well, as you can imagine, that depends.

As a recent NYTimes article points out, as the prices for mortgages drop, consumer interest perks up, and we all go around wondering whether it makes sense to re-finance again!!

Here's the rub-- typical real estate mortgages last for about five to seven years before the mortgagor (homeowner) sells or refinances, but lenders compensate for such fluctuation by collecting much of the mortgage interest up front. So, if you are in your home for the long term, and have paid off more than five to seven years worth of debt, you are watching your equity grow and the overall debt drop more quickly-- a nice thought in today's market. But, now the banks are offering very low interest rates (less than five percent in some cases). Now what?

Bite the bullet and re-finance if you are in it for the long haul, but read the article, and consider a CEMA-- discussed here.

How do you sell your distressed home or refinance your real estate if you have a federal or state tax lien?

Well, WSJournal.com reports that the IRS is trying to help themselves get paid for their tax liens more quickly, thereby speeding up relief to distressed homeowners trying to re-finance.

Under the new “expedited process,” the refinancing and sellers can find out more “quickly” how much they owe on a federal tax lien, so the lien does not delay or prohibit the transaction.

According to the article, there are more than one million federal tax liens against real estate or personal property, and IRS issues 600,000 fresh federal tax lien a year. That means that the federal government is making a formal claim against the property, and such claim needs to be resolved prior to closing, and before other creditors, even foreclosing banks.

The goal: the IRS will respond more quickly, thereby clearing the liens and allowing homeowners to proceed with refinancing or sales. Although it is unclear how much faster the new plan will make the process (or if it is just a public relations stunt), the IRS says they typically respond within thirty (30) days. What’s a bailout if the IRS can’t help distressed home owners directly.

Typically, the requests to the IRS take two forms in a distressed situation: First, you could ask the IRS to make its lien “secondary” or “subordinate” to the claim of the lender willing to refinance the distressed real estate. Or, if you are “upside down” and selling your home for less its value, the IRS might agree to “discharge” or “forebear” all or part of the claim for back taxes. That does not mean, necessarily that the tax debt is erased, but it does clear the distressed real estate and allow the sale or refinance.

Some states are taking the initiative also. For example, in some cases States are offering “amnesty” (not to prosecuting or penalizing) to those who voluntarily, before officials ask, pay what they owe, or agree to pay (offering reduced interest penalties).

The New York State Tax Department has launched a “voluntary disclosure” plan , which offers protection from criminal and civil penalties to all eligible taxpayers who voluntarily disclose and "correct" their "delinquent tax liabilities," or who agree to obey the law. Under the plan, New York has raised approximately $12 million in one year, and are expecting a total of somewhere near $25 million from delinquent tax payers.

The bottom line: There are more options to settling your debts in Dutchess, Westchester, Rockland, Ulster and beyond because the government realizes that a dollar in the hand is better than 10 dollars in the bush.

It appears that the Federal Government is getting a little more needy, because it is now going to collect more capital gains taxes on the sales of residential real estate property in New York.

As discussed in other posts, under the "The Housing Assistance Tax Act of 2008," homeowners no longer are simply allowed to exclude $250,000 of capital gains ($500K if filing jointly). Indeed, the calculation becomes more difficult because the gain will now be taxed on the percentage of time you used the home as your "primary residence."

Yes, now for the "jargon." Capital gains must now be divided between "qualifying" and "non-qualifying" uses, and potentially cutting the amount of capital gain which might previously have been "excluded" from your income tax.

To earn the "exclusion" you must own and live in the property as your primary residence for at least two years out of the five years ending on the date of sale. If the real estate was not used as a "primary residence" during the entire five-years prior to the sale, (used as a rental house or a vacation home) then you would have to reduce the amount of the capital gains tax exclusion by allocating the gain to the percentages.

A "qualifying Use" means the property must be used as a primary residence, whereas, a non-qualifying use (taxable) means the property is not being used as a "primary residence" by either the homeowner or the home owner's spouse.

Example

The gain from the sale needs to be allocated between what gain is excluded as "qualifying" and what gain is not excluded (because it is "non-qualifying"). Divide the period of non-qualifying use by the period of ownership. Period of non-qualifying use/Period of ownership= a percentage.

Contact your trusty tax advisor on this because I do not offer tax advice. Taxpayers owning second homes, vacation homes, and rental properties will need to revise their capital gains strategy to account the implementation of the rules (January 1, 2009).

Bottom line-- Be careful, understand the rules and ask you accountant or tax professional when buying a second home in Dutchess, Rockland, Westchester, Putnam or Ulster County.

Mortgage Fraud, Deed Thefts and other nefarious acts by unscrupulous people in New York City lead the New York Daily News to investigate.

As part of the "investigation" they filed a bogus deed to the Empire State Building, exposing the massive loopholes in New York City's recording of documents.

Here's the Daily News Article.

Bottom Line-- Wake up!!

Beware of what you are signing in an upstate New York real estate transaction. The problems and perils of non-lawyers having contracts signed prior to attorney review.

New York State's highest court, the Court of Appeals, recently considered a frightening set of facts and protected the attorney-client relationship. But, beware.

In this case, the defendants signed a real estate contract to purchase the home of plaintiffs. The contract contained a rider with an "attorney approval contingency" stating as follows:

"This Contract is contingent upon approval by attorneys for Seller and Purchaser by the third business day following each party's attorney's receipt of a copy of the fully executed Contract (the "Approval Period"). . . . If either party's attorney disapproves this Contract before the end of the Approval Period, it is void and the entire deposit shall be returned."

Both the contract and the rider were form documents copyrighted and approved by the Greater Buffalo Association of Realtors, Inc. and the Bar Association of Erie County. After signing the contract, the defendants developed qualms about purchasing the plaintiffs' house, and instructed their attorney to disapprove the contract within the three-day period for invoking the attorney approval contingency.

Three years later, the Plaintiffs finally sold the house at a loss and sued for breach of contract and the "covenant of good faith and fair dealing." Both the trial court and the mid-level appellate court entered judgment against the defendants finding, in essence, that they had negotiated in "bad faith" by cancelling the contract within the three day right of attorney review.

In reversing, and dismissing the complaint, the Court of Appeals found two reasons to dismiss the complaint:

First, the plain language of the contract in this case makes clear that any "fruits" of the contract were contingent on attorney approval, as any reasonable person in the defendants' position should have understood that they could cancel for attorney review.

Second, the court held

any inquiry into whether a particular attorney disapproval was motivated by bad faith will likely require factual examination of communications between the disapproving attorney and that attorney's client (see e.g. McKenna, 123 AD2d at 517 ["defendant acted in bad faith by instructing his attorney to disapprove the contract"] [emphasis added]; Moran v Erk, 45 AD3d 1329, 1329 [2007] ["the evidence supports the court's determination that defendants acted in bad faith by instructing their attorney to disapprove the contract"] [emphasis added]). That is, the disapproving attorney will be subpoenaed to testify about communications the disclosure of which might be detrimental to that attorney's client -- a direct conflict with an attorney's duty to preserve a client's confidences and secrets (see 22 NYCRR 1200.19[a] [defining "secret" as "information gained in the professional relationship that the client has requested be held inviolate or the disclosure of which would be embarrassing or would be likely to be detrimental to the client"]).

Stated simply, if the attorney has to testify as to the reasons for disapproval, then it chills the right of the client to speak, and for the attorney to listen.

The bottom line-- the Court of Appeals held that where a real estate contract contains an attorney approval contingency providing that the contract is "subject to" or "contingent upon" attorney approval within a specified time period, and no further limitations on approval appear in the contract's language, an attorney for either party may timely disapprove the contract for any reason or for no stated reason.

Peter's bottom line-- Don't sign a contract until you have reviewed it with your New York State real estate attorney. Here's the full case.--Case-Attorney Contingency Clause.

You have relatives in Greece, but need them to sign a deed in a form recordable with the New York State courts. How, in today’s age, where people move, fly and otherwise re-locate, do we get them to sign a deed without coming back to Rockland County?

How do we prove that a document signed in Russia is authentic and should be given the full faith and credit of our local laws in Dutchess County? What if your wife died in England, but you need to sign a document for American Surrogate court. All of these questions are becoming increasingly common, and increasingly easy to solve.

In October 1981, the United States joined as a signatory to the 1961 Hague Convention. For most of us, that means that we can now follow the “simplified certification” process whereby public documents (including notarized deeds) will be universally admissible in America and abroad. For a list of signatories to the Convention go here.

Countries that recognize the Convention agree to recognize public documents issued by other signatory countries if those public documents are authenticated by the attachment of an internationally recognized form of authentication known as an “apostille.” The function of the apostille is to certify that the signature on the document is authentic; identify the title or capacity in which that person signed; and the identity of any stamp or seal affixed to the document.

When the document is used in a foreign country, it may be necessary to authenticate the notarization or certification. Foreign countries often require documents to be authenticated before the documents will be accepted in the foreign jurisdiction. Be sure you follow those guidelines, or your document may not be acceptable.

An “authentication” certifies that the signature and the position of the official who has executed, issued or certified a copy of a document.

In New York, an apostille takes the form of a one page document issued by the New York State Secretary of State and embossed with the Great Seal of the State of New York, and includes the facsimile signature of the individual issuing the certificate. You may need to go to the nearest American Consulate office to finalize the process.

Speak to a New York Real Estate Attorney.

Citibank took a bold step to solidify and quell the concerns of its mortgagors by halting foreclosures, and voluntarily considering how to modify the terms of its mortgages on a wholescale scale.

According to the WSJournal, the US Government is considering various ways to fix the problem from the top down, rather than having to modify each and every loan on each and every house. Other top lenders are seeking to avoid such intervention by the government, including Bank of America Corp., J.P. Morgan Chase & Co. and Citigroup Inc., the banking industry has announced measures to make loans more affordable. Citi said Tuesday it would modify terms on as much as $20 billion in mortgages for borrowers who are current on their loan payments but could fall behind. Here's the article.

Stay tuned!

As the credit markets continue to shrink, and access to credit tightens up further, some of our clients are turning to seller financing, which is sometimes acceptable in small real-estate transactions. Indeed, the WSJournal reports that large commercial real estate transactions are also including seller financing as an option.

According to the commercial real estate brokerage firm Marcus & Millichap estimates that as many of six (6%) of the deals it tracked this year involved seller financing to the buyer. [See article].

Seller financing is not for the weak of heart or slight of pocket book, however, because mom and pop real estate seller (now lender) will be in the position of the bank and have to shell out money to foreclose should the purchaser not pay the mortgage.

There are ways to mitigate such non-payment situation, not all good, but speak to a real estate attorney in Dutchess, Rockland, Westchester, Putnam or Ulster.

For example, you could do partial seller financing, but you would be second in line or “subordinate” in a liquidation to any primary lender the buyer enlists. That means that if the property must be sold in a bankruptcy or some other workout situation, the primary lender must be fully paid off with the proceeds of the sale before the seller gets anything for the financing it provided. Be sure the property appraisals are adequate before you take that risk.

You could consider holding a deed in lieu of foreclosure to secure your repayment and retake the property.

You could consider leasing the land with an option to buy.

But think about it, if the buyer isn’t credit worthy for a bank, why is the buyer credit worthy for mom and pop seller.

The bottom line– hire competent local New York real estate counsel if you are considering a seller financed deal and be aware of the risks involved.

To follow up my prior article on reverse mortgages, you should be aware of this interesting and informative article from the NYTimes., which gives you an interesting view of the types of products, the costs and risks associated with such investment stategies.

Good luck.

To follow up on other stories in this blog, Short Sales gets very complicated and uncertain if there is more than one lender involved. Be sure that you are negotiating with the primary lender because junior lenders often absorb most of the loss, but you will need their approval too. Beware, sometimes the actual mortgage was sold to another entity, and you may also need approval from that company. To alleviate those problems, do a title search to verify the lien position of the lender you plan to contact.

One way to encourage a seller to participate with you is to advise them that the Mortgage Forgiveness Debt Relief Act of 2007 gives short sellers a tax break by changing the way the forgiven amount was viewed for tax purposes. The new law removed income tax liability for the “income” realized by not having to repay the entire loan– sellers get a tax break.

You must keep pestering the lender because time is of the essence. Shorte sales fall apart because the lender moves too slowly and fails to complete the deal before the property goes to auction.

Buyer can sometimes sweeten the deal for sellers by negotiating how the sale is reported to minimize the damage to the seller’s credit rating. While the lender has no obligation to agree to this in writing, it will give the seller a head start in rebuilding their financial lives. If the loan shows up on a credit report as “paid,” but “settled for less than originally owed,” the seller is much better off than if it is reported as “foreclosure.”

Bottom line– until this market bottoms out, we need to work hard to get that short sale completed by competent real estate attorneys, especially in Dutchess, Putnam, Rockland, Ulster and Columbia Counties, New York.

So, your attorney has indicated that the Seller of a parcel of real property has an "old survey" and that you could get around the cost of a new survey with a survey inspection. What's the difference?

Survey: A licensed professional surveyor investigates the deed transfers into the owners of the parcel of property, and all of the surrounding parcels. Upon locating the various deeds, the surveyor then goes to the field with his sophisticated equipment to confirm that the metes and bounds description of the property is the same as those described by the various deeds into the owner and the neighbors. In addition to locating the boundaries, the surveyor actually investigates whether there are encroachments by fences, plantings, or other items on the property lines by physically locating such encroachments on the map. The result: you have a present day confirmation as to the boundary lines, possible encroachments, possible claims for adverse possession and an understanding what the status of "ownership" might be to that parcel of real property. The survey drawing delineates the position and boundaries the parcel.

Survey Inspection: If the seller obtained a survey, or there is an older version from the seller's seller, a title company might avoid the cost of a "new survey" by performing a visual inspection of the property, in a layman's attempt to identify "changes" to the property since the date of the last survey. Did the owners put up fences, buildings, or other items that might change the landscape and title to the property. Sometimes, the survey inspection will identify additions to the home, screened porches being converted to enclosed porches, and things that might give the buyer and her attorney pause to consider whether certificates of occupancy might be necessary.

Survey Endorsements: Are issued only to the buyer's mortgage lender., The title company assures (insures) the lender that the foundations do not encroach onto any easements referred to in the policy. The endorsement may be issued provided: (1) a physical inspection or survey discloses there are no encroachments onto any easements; and (2) the location of the foundations does not violate the covenants, conditions and restrictions of any other provisions of the title insurance policy.

Obviously, the best level of protection is the Survey because it gives you an understanding what the licensed surveyor is willing to certify as your actual boundary lines, and whether there might be any trouble brewing with the neighbors who might be claiming "adverse possession" of a portion of your property. The survey inspection is unscientific and merely provides you with an understanding of what might have changed-- did the owners add a pool which needs a fence to be "legal." You as the buyer get no protection from a survey endorsement. It simply protects your lender.

Bottom line-- To reduce the risk of real estate litigation in New York, get a survey, or risk objection and confusion about your property lines.

According to a recent article in the NYTimes, Americans thinking about a "reverse" mortgage have more clarity, and possibly, more access to the remaining equity in their homes in New York.

Reverse mortgages allow borrowers who are 62 or older to tap into their homes’ equity without having to repay the loan on a monthly basis. A "reverse" mortgage is a loan against your home that you do not have to pay back for as long as you live there. With a reverse mortgage, you can turn the value of your home into cash without having to move or to repay the loan each month. No matter how this loan is paid, you typically don't pay anything back until you die, sell your home, or permanently move out of your home.

To encourage this planning device, the president signed legislation raising the outside loan amounts on reverse mortgages, which are to be guaranteed by the federal government. By raising the limits and changing the laws to premit coops to be considered, Congress is trying to give older homeowners access to more of the equity left in their homes, provide stricter consumer protection, and offer co-operative ("co-op") owners the chance to apply for reverse mortgages.

Under the new laws, mortgage counsellors will have to take tests to show they understand the products, costs will be capped, and coops will be eligible.

The bottom line: be careful and understand the product before you agree to a reverse mortgage in New York.

To all prospective client and attorney relationships--note to self-- get the fee agreement in writing, because the terms can come back from the grave to bite you.

In New York State there is a rule of evidence known as CPLR § 4519 (the “Dead Man’s Statute”), which is designed to protect the dead from transactions that occurred during their life. Although there are many exceptions to the general rule that an interested party may not testify as to transactions with the deceased, there are many ways that the rule can change the outcome of litigation, including disciplinary or legal malpractice claims against attorneys.

In one reacent case, a long time client of a New York attorney died, leaving a sizeable estate. The attorney represented the estate in the sale of the family home and kept in contact with the Decedent's daughters, who were co-administrators. Eleven days after their mother's death, the attorney issued a check payable to himself, and did so several more times over the course of 13 months to the tune of $100,000 from his escrow account.

Upon learning of the sizeable fees paid to himself, the daughters demanded an accounting and a check for the remaining monies. In response, the attorney conceding that he did not have a fee agreement in writing, and claimed that the now dead mother had either given the money as a gift or orally told him that the fees were for legal work performed, and the daughters filed a complaint with the Departmental Disciplinary Committee.

The Committee charged the attorney with various charges of misconduct: for conduct involving dishonesty, fraud, deceit, or misrepresentation, in violation of DR 1-102(A)(4); misappropriation of funds in violation of DR 9-102(A); violation of DR 9-102(B)(4) regarding (4) engaging in conflict of interest in violation of DR 5-101(A); conduct reflecting adversely on Zalk’s fitness as a lawyer in violation of DR 1-102(A)(7).

During the hearing, the referee took testimony about the transactions with the dead mother on the ground that the plain language of the Dead Man’s Statute did not preclude the attorney from relying on his conversations with the deceased to describe the fee arrangement because an attorney's disciplinary proceeding was not,“against the executor, administrator or survivor of the deceased person.”

On appeal, the Appellate Division found that the attorney engaged in professional misconduct, and ruled that the Dead Man’s Statute precluded him from using his testimony to disprove the charges.

In reversing, New York's highest court, the Court of Appeals found that the Dead Man’s Statute only applied to testimony “against the executor, administrator or survivor” of the deceased. By the court’s reasoning, the attorney was testifying as a witness on his own behalf against the disciplinary charges, and therefore could offer testimpony that would that potentially cut against the parties’ interests in the contingent future proceeding. For you attorneys out there, the case is cited at In re Zalk, 2008 WL 2367490 (N.Y. 2008).

The bottom line-- get your fee arrangement in writing.

With all the negative press that the real estate market has been suffering lately, you are ready to look for homes in Dutchess, Rockland, Westchester, Putnam or Ulster County. You have that money burning the proverbial hole in your pocket seeking to purchase a foreclosed home for investment. Do you even know what you are talking about?

What is a Foreclosure Sale?

Foreclosure is the legal proceeding brought by a Lender acts to recover the “security” represented in a home for an overdue loan. Since banks don’t really do a good job or want to own real estate, they often want to unload the distressed property just get the bad loan off their books. In this politically charged landscape, and election years, the rules are constantly changing. Government is increasingly intervening on the behalf of the “consumer,” meaning that a foreclosure sale is not as simple as making the winning bid at auction.

In New York State, it is no longer as simple as taking several certified checks to the foreclosure auction because there are various statutory protections that give the original homeowner a second chance (and possibly third) chance to rectify the defaulted loan. Even then, after the gavel drops, you, as the foreclosure buyer might get stuck paying back taxes, transfer taxes, and rectifying various liens taking other risks that might not have occurred had you purchased the home through more conventional channels. You are not an investor unless you have done your homework and understand the substantial risks attendant to foreclosure auctions.

In short, a foreclosure sale is risky business if you don’t know what you are doing, or have competent legal counsel to wend your way through the process. Without proper legal advice, you could end up paying thousands of dollars for a house you'll never own.

Short Sales, Another Alternative?

A “short sale” as the term has come to be known involves a distressed homeowner whose real property is valued less than the mortgage amount. To avoid walking away from the debt, the owner, brokers, and bank team up to identify a “way out” of the disaster for all through the short sale. For a bank, the cost to foreclose, and then sell the property, may exceed the expense of just letting the homeowner sell the home for less than the mortgage amount. The process works out more like a cross between a normal house sale and a foreclosure, where the auction buyer has to clean up the problems without help.

With the assistance of an attorney and a broker, the homeowner can usually pick a real estate agent and market the home, but the bank negotiates the real terms of the deal by dictating the prices, and many of the terms of the contract. If the bank refuses, the buyer loses, which is often frustrating to buyers. A “short sale” may look like a great buy, but you are at the mercy of the Seller’s banks whims, even though they know nothing about the house or local market conditions.

In a short sale, the multiple listing service (MRIS) must disclose that the property is subject to a short sale. From the buyers’ perspective, you have a right to know this because, regardless of the owner's good faith and intent to sell you the property, the bank (a third party) might be controlling the final decision as to whether the house closes. Only patient buyers can withstand that waiting. The busted deals and additional paperwork of short sales also lead to increased costs for buyers.

From the seller’s perspective, make sure that you know your rights under current law. Although your mortgage contract says, "If you pay, you stay, if you don't, you won't;" the Legislature may have offered you a handy life line. Sometimes, despite the emotions, sale is the only rational way to protect your situation.

Either way, whenever you contemplate a foreclosure or short sale, be open, honest and candid with your real estate professional, whether that be the agent, broker, attorney or bank. To conceal your condition will do nothing but make it worse for everyone involved.

The bottom line, be sure that you know what you are doing when you contemplate investing in this world we live in. Oh, and hire local New York real estate counsel to help you wend your way through the morass.

Are you buying a house in New York, but forgetting to calculate your full monthly nut? Mortgage payments are not the only bite out of the monthly payments that New York Homeowners and buyers make every month. Aside from the principle and interest payments, mortgage holders must pay real estate taxes and homeowners insurance, thereby increasing the monthly nut.

Among the assessments that new homeowners forget about are unanticipated reassessments or rate hikes, supplemental bills where there were “exemptions” for the prior owner, and significantly higher taxes because of such re-apportionment. When considering the purchase of any home, you should contact the local building inspector and the local tax assessor’s office to find out and research the current issues that might effect future taxes and the assessments of the home you are buying.

Property Taxes

Property taxes are almost always based on the value (assessment) of the home, and such value can go up and down, but does not typically fluctuate.

Beyond that, each state or locality typically uses its own peculiar formula to calculate property taxes. These formulae introduce a certain amount of complexity and unpredictability into property taxes.

Ask your attorney or the assessor, how property tax is calculated; whether the home will be reassessed upon transfer to you; when the next scheduled reassessment will occur in the town, county or village you are buying in; whether the current owner has any “exemptions” or rebates that might limit their tax bills (or increase yours); whether you might qualify for tax relief of some type.

Bottom line: the real estate broker's estimate of the tax may not be completely accurate because the current owner may have taxes that will be lower than yours after the transfer. While the tax bill might provide information, you should check with the assessor to find out hidden post-sale reassessments, which might result in a substantially higher tax. For example, sometimes, there may be several property tax authorities seeking payment, including counties, cities and special districts, such as local water, sewer or school authorities.

The transfer itself, or prior unauthorized remodeling of the home may not be contained within the present tax picture and can trigger a reassessment because additional bathrooms, central heating, ventilation and air-conditioning and other capital improvements can increase the assessment.

Tax and Insurance Escrows.

As a matter of course, most lenders require new home owners to establish an escrow account, setting aside monies to cover the taxes and insurance when due. The escrow is established by estimating the amounts due annually, then dividing it by 12 monthly installments, and then banks pay the property taxes and insurance directly.

Many New York State taxing authorities are now required to provide homeowners notice that their taxes have been paid. Alternatively, it is important to keep a close watch over the disbursements, because loan servicers sometimes fail to make the payments.

Assessments

Tax assessments on residential property is usually a function of recent assessed value or sales price of the home; value of comparable homes; improvements; exemptions for which the home, home buyer, or homeowner qualifies; and property tax rates. If one of those is incorrect or improper, there is generally an appeals or “grievance” process by which the homeowner can appeal the assessment. In New York, the date is generally the third Tuesday in May, but you should check with your attorney to be sure you file your grievance timely.

The bottom line–Property taxes are unpopular but the revenue generated pays for schools, libraries, fire departments, police officers, street lights and many other public benefits– they are part of life in Dutchess, Rockland, Westchester and Columbia County. Learn to plan for them, and fight them if they are wrong.

New York State has recently enacted a new section (27-2405) of the Environmental Control Law which shall now require Landlords and Owners to Notify Tenants of "Indoor Air Contamination." Effective December 2008, property owners and landlords will be required to to disclose the results of environmental testing to tenants (both current and prospective). What are the potential ramifications of such a new law?

First, although the New York Environmental Law focuses on "indoor air contamination" and vapor intrusion, the law broadly defines the disclosure to include all "test results."

"TEST RESULTS" SHALL INCLUDE THE RESULTS OF ANY TESTS CONDUCTED ON INDOOR AIR, SUBSLAB AIR, AMBIENT AIR, SUBSLAB GROUNDWATER SAMPLES, AND SUBSLAB SOIL SAMPLES"

Therefore, such tests could mean that any tests of indoor air, outdoor air, groundwater and soils beneath homes and buildings must be disclosed to Tenants if the test results exceed federal or state air guidelines.

If the New York State property is the subject of engineering control by a municipality or the government and is subject to monitoring under a remediation program, then such tenants must be provided written notice of any testing in bold on the first page of any lease agreement.

The penalty provided by the New York statute requires owners of such properties to provide the fact sheet and notice of public meetings (if the test results will be discussed), or face monetary fines.

As with any new law, there are various unanswered quandaries:

1-- Does a purchaser of a building have to disclose the results of its environmental investigation, including any Phase I or Phase II inspections?

2-- Does the law apply to previous testing done before a new owner gains possession?

3- Assuming something is found, does the law require a building be retested?

4-- If the testing shows no problems, must the testing be disclosed?

5-- Is the owner responsible for unknown substances or areas that are not tested at first but later found to exceed some standard?

More to follow as these questions, and others get answered by the courts or attorneys.

I have to comment on this scam because many lawyers are getting slammed, and I routinely get solicited from my private web-site for this type of scam:

Someone representing an Asian company goes onto my web-site and tells me they need to collect a six figure judgment against "suppliers" in New York or other states. The source is my actual web-site (Static Form) and is NOT a spam based e-mail. So someone is actually taking the time to go to my web-site-- Thanks, but NO thanks. I suppose they see that I do large litigation type cases, including some breach of contract (collection-type cases).

The overseas company seems legitimate. One time, I had my trusty family member with contacts in Europe actually call the company to see if it was legitimate. The e-mail address appears to be from a recognized, established, publicly-traded Asian (or whatever nationality) company.

Credible sources say that other attorneys have actually commenced communication with the potential "client" by e-mail, entered into engagement letters, obtains documents supporting the debt (or judgment) and begins to work "collect" on the new matter. Some have, unfortunately, even "settled the debt" with the company that "owes" the money. As part of the satisfaction, the debtor provides the attorney with a bank check. The attorney deposits the bank check, deducts his/her fee and arranges for a wire to the overseas client. The bank wires the funds
before the bank check clears, and the check is forged, causing the bank to reverse and sometimes freeze the the attorney's account (usually escrow accounts).

Obviously, this is a serious problem that can lead to immediate disbarment for failure to protect the escrow funds. Please, whether you are a lawyer or not, beware of scam artists bearing "gifts," including bank checks.

Use extra diligence in accepting matters initiated by overseas parties not known. You have a responsibility to protect yourself and your clients. Although the allure of international business litigation can be mesmerizing, please ensure that your client selection processes avoid this common problem.

The forged bank check is also a common problem for everyday businesses.

According to an American Bar Association, real estate lawyers are being sued more often for bad advice arising from real estate transactions According to a recent study of various insurance companies, and their claims between 2004 and 2007, malpractice claims against lawyers related to real estate transactions climbed four percentage points to 20 percent of all such malpractice cases between 2003 and 2007, a four percent jump.

Lawyers are getting sued for errors in real estate transactions with alarming frequency, and were second only to attorneys handling personal injury claims, which also rose in frequency.

Real estate transactions apparently went bad in a variety of ways for the lawyers. Such claims stemmed from conflicts of interest, closing and contract-drafting errors, and problems linked to zoning and escrow issues.

The study results are based on a survey of insurance companies that provide legal malpractice coverage in the United States and Canada, with 18 U.S. and six Canadian companies responding to the investigation.

Finding lawyers willing to take New York State legal malpractice claims against other lawyers can often be difficult.

When commission disputes arise, how do you handle them in New York?

Real Estate brokers, realtors, and other real estate professionals who depend upon a commission to be paid will now have a clearer path to address their commission disputes. Under the recently amended NY Real Property Law ("RPL"), Section 294-b, ("Recording brokers affidavit of entitlement to commission for completed brokerage services"), a duly licensed real estate broker may undertake a special procedure to protect their right to an earned real estate commission. (Effective January 1, 2009).

Under the "Commission Escrow Act," a licensed real estate professional may claim entitlement to a brokerage commission for sales and leaseholds by filing an affidavit stating the right to such commission with the recording officer of the county in which the real property is located.

While the filing of the affidavit does not invalidate the transfer or lease of real property, and does not create a lien, it requires the Seller to establish an escrow of monies to "protect" the brokerage commission.

Under the amendment, the so called "Notice of Entitlement" to the commission has been expanded to include claims for transfers of cooperative units; and will be now be recorded upon the "lien docket."

If the property is a one-to-four family dwelling, condominium unit or cooperative apartment, used as a residence and there is a brokerage dispute where the Notice of Entitlement has been filed; the seller shall establish an escrow fund, as follows,

"the lesser of the net proceeds of the sale or the amount of the unpaid portion of the compensation agreed to in such written contract [the brokerage agreement] shall be deposited by the seller… with the recording officer in whose office the affidavit was recorded…until the rights of the seller and broker to such monies has been determined by order of a court of competent jurisdiction…",

Real estate professionals should understand that there are very specific procedures that must be provided, including (i) the brokerage contract includes a notice, as required by the law, (ii) the Notice of Entitlement and affidavit has been recorded, and (iii) the broker serves a copy of the affidavit on the seller prior to closing.

Because the law is still new, it is unclear what will occur if the seller fails to deposit monies into the escrow account since the law does not "create a lien or encumbrance against any real property" and does not invalidate "any transfer of real property".

The term escrow generally means a pool of money held by a third party until the matter can be adjudged by some court or other tribunal. Here, the idea is that buyers and sellers of real estate can deposit the money into a fund and fight over it knowing that there is a pool of money at the end of the dispute. The measure does not pre-judge who is guilty and who is innocent, but provides the outline of a process for keeping the funds available in New York State.

The bottom line-- how often does your attorney tell you,"the cost of fighting is going to be more than the cost of recovery, just settle or give up?" Now, the money will be tied up, offering more of an incentive to capture that money. Call your new york state real estate litigation lawyer if you are uncertain.

Will the the Housing and Economic Recovery Act of 2008 (July 30, 2008) provide the much needed support for homeowners in the Hudson Valley? Only time will tell as various financial institutions continue to feel the fall out on Wall Street.

The highlights of the new law permit the Federal Housing Administration to guarantee up to $300 billion in new 30-year, fixed-rate mortgages on loans made to borrowers who are facing foreclosure and who may owe more than the home is worth. This is a common problem in Dutchess, Putnam, Ulster and Rockland Counties.

Under the new law, the United States Government offers government insurance to lenders who voluntarily reduce mortgages for at-risk homeowners to 90 percent of the property's current value. The lender then forgives some of the face value of the mortgage principal, bringing the balance down, but the government would potentially share in the upside when the property appreciates.

Other provisions of the life saver include, (1) FHA, Fannie Mae and Freddie Mac loan limits will be capped at $625,000 – more than a 50 percent increase over the previous conforming loan limit; (2) $4 billion dollars in grant money will be available to communities to purchase distressed properties and rehabilitate them for resale; (3) the government can infuse capital or buy into Fannie Mae and Freddie Mac; (4) First-time homebuyers will receive a refundable tax credit, almost an interest-free loan of up to $7,500 (paid back over 15 years).

Obviously, these are complicated and new programs designed to lighten the load of everyday homeowners in the Husdon Valley. Contact your mortgage, legal and financial professionals to assist you.

According to the Wall Street Journal, New York City real estate as a whole is down ten (10%) . S&P/Case-Shiller Home Price Index, reported in WSJ today.

Can we expect that trend to continue-- probably, for three primary reasons. First, Wall Street executives and traders are taking a financial bath. According to the article, job losses on Wall Street (which employed 15.7% of Manhattan's workers) will impinge on their average salary ($269,000-2006) causing their stiff down payments to suffer as bonuses are slashed and the subprime mortgages cause the stock options to plunge and the pink slips to issue.

Second, as the mortgage crisis deepens, access to credit is going to tighten.

Third, as the US dollar strengthens, Western Europeans are going to stop dumping their Euro's in the NYC real estate market.

The bottom line-- perhaps some of us mortals will be able to afford some of these coops and condos soon.

You would think that paying $53.5 million for two separate penthouse apartments in New York's famed Plaza Hotel would get you what you paid for. Not always! According to published reports about one recent real estate transaction, Andrei Vavilov, hedge fund financier, has sued the hotel developers El-Ad Properties and real estate brokers Stribling & Associates for breach of contract, fraud, deceptive trade practices and negligence, demanding return of his $10.7 million deposit and $30 million in damages because the Penthouse was "attic-like."

Another story of buyer beware-- sometimes very aware. Vavilov reportedly made the luxury purchase after watching a video- shot, produced and directed by the sellers. Apparently, the video didn't do the small windows, low ceilings, obstructed views and ugly drainage grates justice. According to the lawsuit and published reports, every time the buyer tried to investigate and inspect the apartments (four times), they were "denied access" to the units.

The Sellers have counter-claimed in New York State Supreme Court, accusing the buyer of libel and filing a "sham" lawsuit-- seeking $36 million in damages.

Apparently the advertised penthouses are not the "one of a kind" oases, perched on top of one of the city's most magnificent addresses, which originally induced Vavilov to risk $10.3 million down.

The bottom line-- be sure you have your house inspected before you plunk down your life savings to buy that fixer-upper, even if it does cost $55 million.

Is the New York State Office of Court Administration going to eliminate many Justice Courts throughout rural and upstate New York? That's what the commission appointed by Chief Judge Judith S. Kaye recommended. Who amoung us has not been before the local justice court, where judges, sometimes lawyers/ sometimes not, of the local town or village courts dispenses their judgement in a reported 2 million cases a year.

According to the New York Law Journal, the recently released study recommends consolidation of 500 of the 1,250 town and village courts in New York state because of their cost, antiquated facilities or duplication of services with other justice courts.

The consolidation plan was among the recommendations made Wednesday by the Special Commission on the Future of the New York State Courts, a panel originally formed by Kaye to report on ways to streamline the court system.

Here's a link to the article, but stay tuned.-- Study supports elimination of Hundreds of NY Courts.

That is the question in a recent lawsuit filed in Rockland County Supreme Court.

Most real estate attorneys would say that closing with out a certificate of occupancy on a newly constructed house is not a good idea, even a departure from accepted standards.

A certificate of occupancy is the legal notice by the municipality that the house is habitable and constructed in accordance with the building permit. Accordingly, when purchasing a residential piece of real property to be occupied as a dwelling, the attorney should recommend a certificate of occupancy. The failure to have a c/o means that occupancy of the premises "illegal," and the failure to have that document means that any occupancy violates the law.

Although we cannot comment on pending lawsuits, here are the contentions of the parties.