I wanted to add an update to this Blog post for a recent litigation commenced in the Hudson Valley arising from a transaction in Dutchess County.    Buyers need an appraisal contingency– even the famous Steve Miller.  It will be interesting to see how this plays out.   Here’s another Article about the dispute.

Updated Post from 2017- Peter Klose.

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

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

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

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

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

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

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

The bottom line: If you need bank financing to purchase your new home, you need to carefully understand how a mortgage contingency works. If you or your new york real estate attorney fail to comprehend the risks associated with the transaction and your credit, you are at risk of losing your down payment should you not qualify for the Mortgage.
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Technology has revolutionized our lives, from the way we communicate with each other to the way we conduct business, it permeates our lives at home, in the car, everywhere.  With the advent of smartphones , personal computing technology has is faster, smarter, and more pervasive than you think.   From black boxes in cars, tracking software in phones, technology firms incorporate privacy invaders in cars, weather stations, and now homes.   With the huge popularity of  Google Home and Amazon Echo, devices that engage with users to do tasks at their bidding, many aspects of our daily lives are being recorded for various benign and, less than benign reasons.   Simple tasks like checking the weather, turning on and off lights, or locking your car, speeding down the local street, all leave electronic trails, some more clear than others.    According to the Seattle Times, “in a bid to spread the gospel of home automation, Amazon.com has rolled out free consultations from in-house experts that help customers build out a connected home. The Smart Home Consultation advisers come to consumers’ homes to demonstrate smart home products, and make personalized recommendations on what gadgets to buy.”  The “smart home” sales grew 57% from 2015 to 2016, showing the explosive popularity, but how often do you consider the other side of the data– the intrusion into your personal space.   These machines, particularly Google Home, know everything about you.

For example, in homes, control panels regulate shade controls, televisions, temperature, security systems, lighting, speakers, music, and countless other functions. The control panel collects data which may actually track the occupant’s comings and goings, especially if the smart appliances are activated by voice control.  Much of the time the automation of daily life functions means that homes are more efficient and cheaper to manage, energy-wise, because it’s easier to quantify and control your usage.

But, have you considered the impact of this data on insurance claims?   According to the Claims Journal, data collected from smart devices will improve first notice of loss, settlement and subrogation – several steps of claims processing.    Yes, at some level, an insurance company for a smart home equipped property, could look at each stage of the insurance value chain, beginning with customer engagement all the way through pricing and underwriting, and ultimately, claim settlement, the data from connected home devices has the potential to improve each stage.

Property ownership comes in all shapes and sizes. An interesting and seldom discussed form of ownership is the idea of “tenancy by the entirety.” In the 1940s, many states abolished tenancy by the entirety, viewing it as unequal in terms of women’s rights. In England, tenancy by the entirety was outlawed by the Married Women’s Property Act of 1882 because “the English judges held that the statute abolished this estate in conveyances executed subsequent to its effective date.” An article by George Walter Klorfein in 1963 argued that “there need not necessarily be a conflict between this form of tenancy and the acquisition of equal property rights by married women [since] New York considers that the chief characteristic distinguishing this form of ownership from other classes of concurrent ownership, namely, the impossibility of either spouse defeating the right of survivorship of the other, is worth preservation.” In New York State, tenancy by the entirety is very common form of home ownership.

To determine whether two people own the home as “Tenants by the Entirety,” it is first necessary to know whether the owners are legally married.  Sometimes this is plain from the language of the deed that refers to the owners as Mr. and Mrs. John Doe, husband and wife, or something indicating legal marriage.   If the owners are legally married, then Tenancy by the Entirety is presumed; and, if the spouses want a different arrangement, it must be specified to say tenancy with right of survivorship (when one co-owner dies his share of property goes to his spouse) or tenants in common (when one or more people live on a property they each get a share of the property and this share is transferred to the estate after the death).

Under the customary arrangement of tenancy of the entirety, each spouse possesses one hundred percent of the property and, upon the death of the spouse, the other owns the property completely. Tenancy by the entirety implies that if one spouse tries to sell his share of the property, the owner cannot force the other spouse to sell or “partition” the property, and has no right to separate the property.   Spouses are prohibited from disinheriting the other by gifting it to a beneficiary in their wills, so a will that leaves a husband’s share to his son is invalid if the wife is still alive.

Technology has revolutionized the way we live. We order rides on Uber, rent cars through Turo, and stay at a person’s home though  AirBnB rentals.   The rise of the sharing economy pervades every sector of the economy, and our lives, with the idea that we can “share” our possessions – homes, cars, time – and rent them.

Sometimes its cheaper for the individual, but not the community.  Like the car share rented through Uber, Airbnb allows our neighbors a platform to rent their homes and apartments to people for short periods of time, mimicking (some say replacing) hotel rooms.

Just as with any new approach to living, driving and shopping, our old laws may not adequately address or comply with how others in that industry, or that community  want to enforce those laws.

In today’s world of e-commerce, various forms of internet and email scams have arisen because large sums of money swap hands on digital platforms, through insecure communications.  In real estate, and everyday communication, be wary that criminals often divert large sums of money by spoofing, phishing, or otherwise diverting your personal information for their own personal gain.

For example, in Minnesota the Boys and Girls Club of the Twin Cities, fraudsters posed as the charitable organization to get donations, frequently using kids on street corners to gain the sympathy of passersby. In England, according to this article, there have been several instances of fraud.

To avoid these tragedies, there are ways for you to protect yourself when conducting real estate business online. One key step is to verify that the website is properly secured.  One way to know that is  if the website starts with HTTPS (“s” means secure).   Personally ask the lawyer or the law firm assistant or other contact what kind of security features are observed both with the computer and with the maintenance of private information.   Be careful if the internet web-site you are using is not secured.  Be wary about what information you send by email communication, being sure there is a secure, encrypted connection before sending any sensitive materials or information like bank account numbers or social security numbers.

People generally view the advent of solar panels positively because the beneficial impact on the environment and expected savings from lower electricity bills.   Traditionally, homeowners have two options: buying or leasing solar panels.  Buying solar panels is often prohibitively expensive for the average American; so many homeowners now consider leasing solar panels instead.   While initially seeming like the more attractive option, solar panel leases often complicate homeowners’ lives due to hidden problems that many do not consider when initially signing the leases.

To begin with, as mentioned in this article, there are many unanticipated costs that may arise when undertaking a solar panel lease as a homeowner.  Before installation, homeowners might incur roof repair costs because solar panel leases last for, sometimes, longer than twenty years, while roofs last only thirty years.  Leasing often means that the homeowner does not get the benefits often available to owners because they are only the lessee of the panels.

For example, as mentioned in this article, Solar Panel leases can complicate the real estate transaction because solar panel companies place liens on homeowners’ properties to ensure payments are made.    A lien can stall refinance and real estate transfers because they must be satisfied or transferred.   In particular, when homeowners use property-assessed clean energy (PACE) loans to finance the use of solar panels at their properties, the company often requires a lien to secure the repayment of the loan.  Another issue with solar panel leases is the difficulty in transferring ownership of the solar panel lease to buyers.   If you cannot make the transfer of ownership, some states require the seller to pay any future solar panel expenses, as well as court fees associated thereof, according to the article. Solar panel leases have many unintended consequences for homeowners who might plan to sell their homes in the future.

In a rare bi-partisan effort, the U.S. Senate passed a bipartisan bill called the Consumer Review Fairness Act, which should give on-line reviewers some respite from overreaching “terms of service” clauses, buried deep within the fine print of the internet, which purport to limit or preclude on-line reviews through “gag” orders.

Gone are the days were people rely solely on Consumer Reports to understand whether the service or good he is buying lives up to the claims.   Since the rise of the internet, sites like Yelp, Trip Advisor, eBay, and others have allowed consumers to review all forms and types of sellers, restaurants, products and service providers.    That said, in an effort to combat negative reviews, various service providers have used their “terms of service,” to threaten and retaliate against consumers who post “negative” reviews.   The legislation arose from a series of cases like Palmer v. KlearGear, where the consumer posted a negative review and the company demanded thousands of dollars in fines because of the terms of service contained in the fine print of the terms of service.   When she did not remove the review, the company notified debt collectors of an “outstanding debt” and torpedoed Palmer’s credit rating.  In the end, the consumer won $306,750 in damages, but the case earned the ire of our elected officials.

Other examples of internet companies seeking “retribution” for on-line reviews and alleged “non-disparagement clauses” used to avoid negative online reviews led to the need for national legislation regulating the use of such “gag clauses.”   The new bill makes it illegal to have terms of service that “disparage, restrict, or penalize poor customer reviews.” If companies do not abide by these terms, the Federal Trade Commission (FTC) can penalize the company and stop lawsuits based on negative reviews, according to this article.   Notably, the law does not protect against libel or slander lawsuits by these vendors, but it is a landmark bill in protecting consumer rights, since the internet is considered the Wild West of the law with lack of government oversight in many cases. Sen. John Thune (R-ND), who chairs the Senate Commerce Committee, said in this article that “by ending gag clauses, this legislation supports consumer articles and the integrity of critical feedback about products and services sold online [the bill also protects offline reviews].”

By the time the 1970s rolled around, there were about fifty breweries in the United States, according to The Economist. A slew of new laws promoting tax breaks for small microbreweries spurred an era of innovation and explosion of smaller, craft breweries. Today, there are over 3,000 breweries, making the industry both crowded and competitive.

One of the prominent issues that arises, according to this article from NPR.org, is the challenge of finding a name that is not already taken by another brewery. There is a dearth of names that have not already been trademarked by others that connote a positive association with beer. Consequently, there have been more legal issues popping up with name trademarks because so many designs and names infringe on others’ similar ideas.

With so many breweries around the country, people do not have malicious intention to copy others’ names and designs, but there is inevitable overlap with so much market saturation.  Frequent legal issues emerge because there are public misconceptions about the fact that merely providing state registrations and ownership of domain names ensure ownership of the copyright/trademark; but that is not always the case.   A trademark attorney navigates murky waters where there is no national database of  beer brands/trademarks, and conducts common law and internet searches  – to see if there are overlapping images or names of other breweries. Intellectual property is vital to creating a strong business, and this web of legal issues associated with craft breweries’ trademarks illustrates that.

That is the question posed in a wonderfully entertaining and historically interesting article written by Dave Kluft from Boston’s firm Foley Hoag.

As his article points out, accusations of being a “witch doctor” and the use of “witchcraft” have served as a basis for defamation and slander suits around the country, and still percolate through various courts.   In New York, witchcraft is no longer considered a crime, so it is unlikely to be considered slander per se, however, you should still mind what you say.

In defamation per se cases, New York law doesn’t require a plaintiff to prove that they were “damaged” by the offending words, but a jury will decide how much or how little injury occurred. Damages are assumed only where the person defaming someone alleges that the injured person:

The Closing is scheduled for 1 PM at the office of the Bank Attorney, you arrive at your dream home, ready to sign all of the mortgage documents, and close; when you realize that the sellers have moved out, taking all of the covers to all of the electrical outlets, light switch plates, architectural stained glass windows in the bathroom and mail box.   Fact or fantasy?  That’s a real example from everyday real estate practice in upstate New York, and lead to a very unpleasant closing.

Among the standard details of a real estate contract is a paragraph innocuously labeled “personalty” or “personal property.”   First time home buyers sometimes pay close attention to the details in the contract, but not always:

  1. Personal Property: Included in this sale: (a) The sale includes all of Seller’s right, title and interest, if any, in and to: