Real Estate Hints and Help

September 7, 2012

Do You Have the Right Amount of Insurance– Think About it when you Buy a House in New York?

It can be difficult to strike a balance in finding adequate insurance coverage, while avoiding unnecessary coverage or being underinsured.

While states generally require a minimum amount of auto insurance coverage, and mortgage lenders also generally require you to maintain homeowner’s insurance for at least the value of the mortgage, these amounts may not represent the optimum amount of insurance for your circumstances. For example, in New York, motorists are required to carry $25,000 in liability insurance for bodily injury to a single person, $50,000 for bodily injury to all persons, and $10,000 for property damage in any accident. Minimum “no-fault” coverage of $50,000 is also required. However, given the price of auto repairs and the price of a replacement car if a car is totaled in an accident, damages could far exceed the $10,000 minimum. If you only carry the minimum amount of insurance, you will be personally liable for any property damage in excess of $10,000.

In addition, insurance policies, whether they are auto, homeowner’s, or life insurance, contain a seemingly endless list of exclusions from coverage – it can be hard to determine exactly what is covered. However, these exclusions and limits are very important in protecting your hard earned nest egg in the event of an accident or other unforeseeable event.

August 18, 2012

How Much will that Building Permit Cost? It depends …

by Peter Klose

Before you start knocking down walls and get knee deep in home improvements, make sure you have all of the required building permits. Obtaining a building permit involves completing an application with plans for the improvements, and paying a fee.

Even seemingly small home improvement projects may require a building permit. For example, in Nyack, like many other towns, installing a wood burning stove or fireplace would require a building permit, and failing to get the proper permit can result in a fine of up to $500 or 30 days in jail, or both. Also, a “Stop Order” can be issued by the Building Inspector if he or she has reasonable grounds to believe that the proper building permit was not obtained or the work is not being done in accordance with the building permit issued.

Permit fees are generally based on the cost of construction, and bills and invoices are normally required with the application to substantiate the stated cost of construction. This serves to prevent fraud and discourage homeowners from understating the cost of construction to save some money on the permitting fees. However, building permit fees can vary widely throughout New York, with little rhyme or reason.

August 10, 2012

What Effect Does Your Landlord’s Housing Violation Have on Your Duty to Pay Rent?

by Peter Klose

So your landlord just got slapped with a housing violation – what does that mean for you as a tenant? Can you stop paying your rent altogether? If you live in New York, not so fast.

Although your duty as a tenant to pay rent is dependent on the landlord’s “satisfactory maintenance of the premises in habitable condition,” a housing violation on its own does not relieve you of your obligation to pay rent. Park West Management Corp. v. Mitchell, 47 N.Y.2d 316 (1979). The key factor is whether the violation threatens the health and safety of the tenant thereby breaching the landlord’s warranty of habitability. Park West, supra; New York Real Property Law, § 235-b. Therefore, a housing violation is merely the “starting point” in such a determination, and it is possible that the finding of a violation does not have an impact on habitability. Note, however, that the landlord’s warranty of habitability cannot be waived. Real Property Law, § 235-b-2.

If a breach of the landlord’s warranty of habitability is found, damages are measured by the difference between the fair market value of the premises in their habitable condition (as measured by the rent set forth in the lease), and the value of the premises during the period of the breach. Park West, supra. An award of damages to a tenant can be made through a lawsuit by the tenant to recover lease payments from the landlord, or in defense to an action by the landlord for non-payment of rent. Park West, supra.

August 8, 2012

Want fresh eggs everyday? Get a chicken (but check the Town Code first in New York).

by Peter Klose

(Update-COVID Response-June 23, 2020-Nyack)- A few years ago, farm to table eating became a “thing,” now it is even more important because of the COVID response of homeowners to staying in place. Everywhere you look in suburbia gardens are going in, chickens are being tended, honey bees added to back yards like never before. At the same time, people who have never lived next to animals, bees, poultry, chickens, or other back yard friends (some say “nuisances”), are reporting their friends and neighbors to building departments to complain. Suddenly the back yard chicken farmers must review the laws of zoning and morality.

We have seen these types of complaints in the Town of Clarkstown, New York. New neighbors, new problems. If taking fresh eggs to the new neighbor doesn’t work and you need to review the law, zoning and planning attorneys can help with violations, building permit applications and zoning variances we can help you. In places like Congers, Valley Cottage, Nanuet, different zones beget different sized lots. Right now, the Town of Clarkstown Code provides:

Additional Bulk Regulations §290-20(K). In the R-160, R-80, R-40, R-22, R-15 and R-10 Zoning Districts, keeping domestic animals (except pigs) for individual domestic purposes shall be permitted, provided that not more than one horse or cow per acre, five cats or dogs over six months old, and not more than 25 fowl shall be kept on any lot. No animals (except cats or dogs) shall be penned or housed within 50 feet of any lot line, and there shall be no storage of manure, animal waste or odor- or dust-producing substance or use, except spraying or dusting to protect vegetation, within 50 feet of any lot line, watercourse or wetland. [Added 3-22-2016 by L.L. No. 5-2016].

August 5, 2012

Does the Estate Owe Money in New York– Surrogate Court Bonding.

by Peter Klose

Surrogate Courts in New York may require a probate bond – also called an “executor bond,” an “administrator bond,” or a “trustee bond” – when an individual is appointed to handle the distribution of a deceased person’s estate. The bond acts as a guarantee that the estate’s debts will be paid and the assets will be distributed properly. Before a bond will be issued, bond companies will review the credit history of the person administering the estate to assess their risk in issuing the bond.

Depending upon the facts and circumstances, the Surrogate Court sitting in Rockland, Dutchess, or Westchester County, New York, may require a bond if the gross value of the probate assets for the estate is $30,000 or more. N.Y. Surrogate’s Court Procedure, § 801-1(a) and § 1301-1. The amount of the bond required is determined by the court, but is generally equal to the value of the property in the estate, including rents on real property for 18 months and the “probable recovery” of any lawsuit being prosecuted by the fiduciary of the estate. N.Y. Surrogate’s Court Procedure, § 801-1(a). The size of the bond will depend upon the number of “creditors” and the claimed amount due.

The premiums on the bond are paid from the deceased person’s estate. Bond premiums are generally paid annually until the estate is settled, i.e. all of the property has been distributed. In your will, you may direct that the court not require a bond. By doing this, you will save your estate money on bond premiums, but there will no longer be a third-party guarantee ensuring that your estate is properly distributed.

July 30, 2012

FB, Linkedin, Social Profiles and death in New York and on the internet.

by Peter Klose

So maybe your will was drafted a while ago or you are just starting to put together your important papers in anticipation of getting a new will. You’ve considered all the basics: who gets the house, the cash and stocks, and who will take care of your children, but have you thought about what will happen to your social media accounts when you die?

Most social media sites will not give your account information to anyone in an effort to protect your privacy, but allow certain people to cancel your account upon your death. For example, Facebook has a policy of “memorializing” deceased users’ accounts, and permits only confirmed friends to see the deceased user’s profile and post on their page. Facebook allows immediate family members to request the removal of a deceased user’s account, but it will not provide login information to anyone. Twitter has a similar policy allowing family members or other “authorized” persons to deactivate a deceased user’s account, but will not provide login information to third parties. LinkedIn also allows family members or other survivors to close an account upon satisfactory verification of a user’s death. On the other hand, email providers like Gmail, allow authorized persons to access the deceased user’s email account upon a lengthy verification process, including obtaining a Court Order directing Google to disclose account information.

In New York earlier this year, Assemblyman Felix Ortiz introduced legislation that would allow users to appoint an “online executor” in their will providing them with the authority to cancel social media accounts upon the user’s death. The Committee on Judiciary is currently considering the bill. Other states have enacted similar legislation in an effort to bring probate laws into the 21st century.

July 23, 2012

A Decision Heard ‘Round the Legal World—Fischer & Mandell LLP v. Citibank.’

by Peter Klose

In February 2011, the Court of Appeals for the Second Circuit (including New York) handed down a decision that should have every attorney dotting their “I’s” and crossing their “T’s.” In Fischer & Mandell LLP v. Citibank, 632 F.3d 793 (2d Cir. 2001), the court affirmed summary judgment against a law firm who deposited a client’s check into a bank, and disbursed the funds as requested by the client before the check cleared the account.

The facts were as follows: in January 2009, plaintiff-appellant, Fischer & Mandell LLP, received from a new client what appeared to be an official Wachovia Bank check. Id. at 795. The check was made payable to the firm, and the firm was advised that it represented partial payment of a debt owed by another entity to the client. The firm then deposited this check for $225,351 into its account at defendant-appellee, Citibank. In the usual case, if there is enough money in the account to cover the check, the bank will make the funds available immediately, before the check clears-that is what happened here. Id.

The client then requested two wire transfers of a portion of the funds-one to South Korea, and then next to Canada. After both transfers were complete, the Federal Reserve Bank returned the check as dishonored and unpaid. Id. at 796. A Citibank representative then telephoned the firm to advise them of the counterfeit check. Citibank then charged back to the trust account the amount of the check and a $10 returned check fee, resulting in an overdraft. Id. Next, Citibank debited an amount necessary to satisfy the overdraft from a money market account the firm had at Citibank.

June 23, 2012

Forced Place Insurance Forces Homeowners Closer to Foreclosure

by Peter Klose

Forced place insurance is an insurance policy taken out by a lender or creditor when a borrower does not carry insurance on an asset. For example, if homeowners with a mortgage do not carry property insurance, the bank servicing the mortgage will buy a policy on the homeowner’s behalf and send the bill to the homeowner. This is done to protect the bank that owns the loan.

Ironically, the reason why many homeowners do not get insurance in the first place is because they cannot afford to do so. Under the current system, companies providing forced place insurance pay commissions to banks for using their products. Many of the largest financial institutions, including Bank of America and JP Morgan Chase, also own forced-place insurance subsidiaries – generating them even larger profits. See HuffingtonPost. Clearly, banks have a financial incentive to choose the most expensive policy or to require excessive or duplicative levels of coverage: the higher the coverage, the bigger the commission. The American Banker found that the cost of bank-imposed policies could reach 10 times the normal market rates. Therefore, homeowners are not only forced to pay for unnecessary insurance that they cannot afford, but are also pushed closer to foreclosure by doing so.

In New York, hearings were recently conducted to investigate why the cost of this type of insurance has more than tripled since 2004, with premiums rising from $1.5 billion in 2004 to $5.5 billion in 2010. The status of two insurers, Assurant and QBE Insurance, who together control about 90 percent of the market for forced-place insurance, is also being scrutinized. See New York Times.

June 23, 2012

Paying for Peace: Why Surveys Are Helpful When Purchasing Real Estate in New York

by Peter Klose

One of the most stressful, but enjoyable moments in your life is when you purchase a house. Most would describe it as an experience like no other. Most would also agree that just going out and finding a plot or house you like and immediately buying it is ill advised. Since there are many things that could be wrong, getting a land survey before you purchase the land is the best bet.

Land surveys serve many purposes. The survey shows the boundary measurements of the land to make sure that the plot you think you are buying is actually what you are buying. The survey can tell you what lies on your property and what falls out of your property line. It also shows features of the property such as trees, buildings, fences, sidewalks, driveways, and the like.

A land surveyor can also be very helpful when purchasing a piece of real estate that you hope to eventually build on, as they are often familiar with zoning and building regulations. Further, if you plan to subdivide the land, a survey will provide the necessary measurements to determine whether that is possible for you to do. Essentially, the surveyor is able to take into consideration what your objective is with the land, and reach conclusions that will either make you want to go forward with the transaction or realize that you almost just entered into a very bad deal.

March 22, 2012

Home Improvement Contractors and Mechanic’s Liens Filed Against Your Home in New York.

by Peter Klose

So you have finally updated your home by addition, new kitchen or other improvement. You tried doing it by the book, went through the normal channels; obtained estimates, interviewed contractors, investigated their references and made that home improvement using your hard earned dollars. The work commences, is substantially complete and your contractor suddenly disappears, starts showing up sporadically, or starts pressuring you for more money. Ultimately, you dispute the contractor’s view of the costs, his final project or some of the final punch list items and make the decision to withhold payment. What happens next? The Contractor likely files a mechanic’s lien with the county clerk.

New York

Since the home improvement was done to your “real property”, the contractor has the legal right to file a lien, without legal process or litigation. In New York, a contractor who has not been paid for services rendered or materials furnished for the improvement of real property can file a mechanic’s lien against your home. See N.Y. Lien L., Art. 3, § 40 (2010). In other words, the unpaid contractor has the power to get in the way your ability to transfer or finance your real property (i.e. sell or refinance your home) until it is paid.

In New York, mechanic’s liens are filed in the office of the county clerk where the property is situated, and can be filed without first commencing a law suit. Once properly filed, the mechanic’s lien-like an outstanding mortgage-is an impediment to clear title. New York allows a contractor to file a mechanic’s lien against your home even if the underlying “contract” was oral (not in writing). Cynically, even though the work conducted may not have been what you wanted or you do not accept the work, the contractor may seek to “enforce” their right to payment through a lien without intervention of a court. This turns the normal idea of “due process” on its head, giving the contractor (and others) significant power.

This seemingly unfettered right to encumber real property without process does not come without a a responsibility. The law has several safeguards to protect homeowners. First, although a contractor does not need a homeowner’s permission to file the lien (and in New York, does not even need to first notify the homeowner about filing) there are stringent requirements that must be met in order for such lien to be valid.

For example, the home improvement contractor must file the lien in the county clerk’s office, then notify the homeowner of the filing by sending a copy of the lien by both regular and certified mail within thirty (30) days of the filing date, and then finally must provide the clerk with an “affidavit of service” advising the clerk that the homeowner has been properly notified of the lien’s filing. More importantly, if the contractor wilfully exaggerates the amount or nature of the lien, the law permits a counter-claim for treble damages and attorneys fees. Also, the encumbrance on your title does not last indefinitely. The contractor must file an action to “foreclose” the lien within one year, or seek court intervention to extend its duration.
Generally, the liens expire on their face after one year (unless extended), and after three (3) years in the eyes of most title companies.

The Bottom Line

Be careful. When contracting with the home improvement contractor protect yourself by requiring “lien releases” at each stage of the construction. When a dispute is inevitable, be sure that you have the paperwork to show how much you have paid and how much you agreed to pay. If it’s a really big job, pay an attorney a flat rate to advise you on the contract.

We at Klose & Associates help contractors and home owners realize clear agreements as to what improvements are going to cost, and how to handle the disputes that arise.
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