General Interest

February 27, 2009

Sale and Lease Back Options in Distressed New York State Real Estate.

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.

February 11, 2009

Powers of Attorney in New York– New Forms and Protections

by Peter Klose

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.

February 8, 2009

Lands Underwater in the Hudson River Valley and New York State

by Peter Klose

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.

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

January 29, 2009

Land Use Rules in New York Dictate Your Decisions

by Peter Klose

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?

January 5, 2009

New York Attorney General Asks–Do You Know Your Home Improvement Contractor?

by Peter Klose

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.

December 31, 2008

Professional Telemarketers Make the Money, Not the Not For Profits– Give Directly

by Peter Klose

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?

December 29, 2008

Refinancing — the Fed to the Rescue of New York Homeowners?

by Peter Klose

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?

December 17, 2008

IRS and New York State Tax Department Trying to Expedite Tax Lien Information and Closings.

by Peter Klose

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.

December 9, 2008

Second Home Taxes and Exclusions–Capital Gains Tax May Hurt in New York

by Peter Klose

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.