Real Estate Litigation

August 15, 2009

WHAT ARE DECLARATION OF RESTRICTIONS IN A SUB-DIVISION AND WHY SHOULD YOU READ THEM OR ASK YOUR ATTORNEY ABOUT THEM?

The “suburbs” mean “sub-divisions,” but do you understand what a “sub-division” is? When you purchase real estate in New York State, you should be sure you understand what it means to be purchasing in a sub-division.

Take the typical scenario– Developer buys a large tract of land with the idea to break it into smaller portions of land, to build houses. Often, the sub-division of that land requires zoning and planning approval from the local village or town. During the process, the planning agencies and the Developer may draft different agreements or requirements into the “sub-division map” where you are buying your house. Generally, in addition to the local laws, you, as the owner of the smaller parcel are going to be required to abide by the terms of those “declarations of restriction,” those “easements,” those statements on the “filed sub-division map.” They could be as mundane as not permitting chickens in the sub-division, to being as complex as requiring specific types of architecture. Regardless of their content, you, as the owner are responsible to live by them.

A declaration of restrictions is a set of limitations placed on the property rights of an owner. A homeowner in a subdivision, for example, agrees to comply with the declaration of restrictions in a signed agreement with a subdivision or condominium developer. These agreements run with the land and bind your future vendees, heirs and assigns.

May 15, 2009

Brooklyn Court Does the Right Thing in Foreclosure Action.

by Peter Klose

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,

February 3, 2009

Adverse Possession is NOT so easy to Prove in New York.

by Peter Klose

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

October 7, 2008

Eastchester, New York– Flooded, What’s a Home Owner to Do?

by Peter Klose

Eastchester, New York, homeonwers are at the end of their proverbial rope. When the Town of Eastchester failed to address the flooding and sewer backups in their Westchester County home, they took the only possible next step– they filed suit.

Here’s the link to the article.

We cannot comment on this pending litigation, but it is one example of how homeowners can take some control over their own destiny by commencing litigation in New York.

October 1, 2008

Legal Malpractice Claims and Real Estate– OOPS-

by Peter Klose

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.

October 1, 2008

Real Estate Brokerage Disputes– New York Law Amended.

by Peter Klose

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.

September 21, 2008

Even the Big Real Estate Deals Have Problems– New York

by Peter Klose

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.

September 14, 2008

Study Predicts (Hints) that Plaintiffs Should Settle, Rather than go to Trial-Even in New York

by Peter Klose

Should we go to trial, or take the money? According to a recent study, the “right” answer generally depends upon whether you are a plaintiff or a defendant in the civil lawsuit.

According to the study, in a full sixty-one (61%) percent of cases analyzed, plaintiffs who failed to settle the case prior to trial often received less at trial (approximately $43,000 less). To the contrary, defendants who refused to settle and made the “wrong” decision, were wrong in only twenty-four (24%) percent of cases analyzed, but paid a much higher price for being wrong ($1.1 million). So, should you listen to your attorney?

The study looked at 2,054 cases that went to trial from 2002 to 2005, and tried to account a number of different factors relating to the lawyers, the case and the court. [See, September 2008 issue of the Journal of Empirical Legal Studies–co-authored by Blakeley B. McShane, a graduate student at the Wharton School of the University of Pennsylvania, Martin A. Asher, an economist at the University of Pennsylvania, and Randall L. Kiser principal analyst at DecisionSet, a consulting firm that advises clients on litigation decisions, found at http://www3.interscience.wiley.com/cgi-bin/fulltext/121400491/HTMLSTART]. While there are many different variables to consider, the study raises provocative questions about legal advice to go to trial, and the debate rages whether the lawyers are giving impartial advice when their pocketbook is part of the equation. While most cases settle, critics of the profession have long argued that lawyers have an incentive to recommend trial to collect fees.because of contingency fees or because they would be paid large fees to ready the case for trial.

September 11, 2008

Adverse Possession in New York–Fences

by Peter Klose

Remember the old adage– good fences make good neighbors? Well that’s not always the case, especially as neighbors get closer and closer to each other.

In this litigagion, the Defendants owned three residential parcels which adjoined property owned by the Plaintiffs. The offending fence was located three (3) feet within the boundary lines of the Plaintiffs’ parcel and extended the length of the Defendants’ property.

The Plaintiffs notified the Defendants that the Plaintiffs were going to replace the fence with a new fence and were going to re-locate it to their property line. That should clarify things for each of the parties– or so they thought.

September 7, 2008

Predatory Lending Practices May Defeat Your Foreclosure in New York

by Peter Klose

Mortgages/Predatory Lending. A New York court recently denied foreclosure and stayed the proceeding seeking to take back the home finding that the original lender violated New York ‘s “predatory lending” statue, Banking Law, Section 6-L (“High-cost home loans”).

The Court scheduled a hearing to determine damages incurred by the homeowner and indicated that the relief may actually include the voiding of the mortgage, return of all mortgage payments, return of the expenses of obtaining the loans and attorneys’ fees.

While it is still early in this mortgage crises, and the effects remain to be seen, the lender’s conduct in question included (i) lending in excess of the purchase price to enable payment of
points and closing fees, leaving the borrowers with negative equity in the property; (ii) financing
of fees and points in excess of three per cent of the principal amount of the loan; (iii) the failure
to undertake the “due diligence” required regarding the borrower’s ability to pay a “high cost
home loan”; and (iv) not issuing to the borrower a required “Consumer Caution and Home Ownership Counseling Notice”.
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