Articles Posted in General Interest

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:

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.

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.

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.

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.

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.