General Interest

October 20, 2008

So, You Think That You Have What it Takes to Buy a Foreclosed Home in New York.

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.

October 15, 2008

New York Homebuyers– Common Tax Traps for the Unwary

by Peter Klose

Are you buying a house in New York, but forgetting to calculate your full monthly nut? Mortgage payments are not the only bite out of the monthly payments that New York Homeowners and buyers make every month. Aside from the principle and interest payments, mortgage holders must pay real estate taxes and homeowners insurance, thereby increasing the monthly nut.

Among the assessments that new homeowners forget about are unanticipated reassessments or rate hikes, supplemental bills where there were “exemptions” for the prior owner, and significantly higher taxes because of such re-apportionment. When considering the purchase of any home, you should contact the local building inspector and the local tax assessor’s office to find out and research the current issues that might effect future taxes and the assessments of the home you are buying.

Property Taxes

October 6, 2008

Environmental Disclosure– New York Takes the Lead– But Where Will it Lead

by Peter Klose

New York State has recently enacted a new section (27-2405) of the Environmental Control Law which shall now require Landlords and Owners to Notify Tenants of “Indoor Air Contamination.” Effective December 2008, property owners and landlords will be required to to disclose the results of environmental testing to tenants (both current and prospective). What are the potential ramifications of such a new law?

First, although the New York Environmental Law focuses on “indoor air contamination” and vapor intrusion, the law broadly defines the disclosure to include all “test results.”

“TEST RESULTS” SHALL INCLUDE THE RESULTS OF ANY TESTS CONDUCTED ON INDOOR AIR, SUBSLAB AIR, AMBIENT AIR, SUBSLAB GROUNDWATER SAMPLES, AND SUBSLAB SOIL SAMPLES”

October 3, 2008

Lawyers are Just as Susceptible to Scams as Anyone

by Peter Klose

I have to comment on this scam because many lawyers are getting slammed, and I routinely get solicited from my private web-site for this type of scam:

Someone representing an Asian company goes onto my web-site and tells me they need to collect a six figure judgment against “suppliers” in New York or other states. The source is my actual web-site (Static Form) and is NOT a spam based e-mail. So someone is actually taking the time to go to my web-site– Thanks, but NO thanks. I suppose they see that I do large litigation type cases, including some breach of contract (collection-type cases).

The overseas company seems legitimate. One time, I had my trusty family member with contacts in Europe actually call the company to see if it was legitimate. The e-mail address appears to be from a recognized, established, publicly-traded Asian (or whatever nationality) company.

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 30, 2008

Housing and Economic Recovery in the Hudson Valley-New York

by Peter Klose

Will the the Housing and Economic Recovery Act of 2008 (July 30, 2008) provide the much needed support for homeowners in the Hudson Valley? Only time will tell as various financial institutions continue to feel the fall out on Wall Street.

The highlights of the new law permit the Federal Housing Administration to guarantee up to $300 billion in new 30-year, fixed-rate mortgages on loans made to borrowers who are facing foreclosure and who may owe more than the home is worth. This is a common problem in Dutchess, Putnam, Ulster and Rockland Counties.

Under the new law, the United States Government offers government insurance to lenders who voluntarily reduce mortgages for at-risk homeowners to 90 percent of the property’s current value. The lender then forgives some of the face value of the mortgage principal, bringing the balance down, but the government would potentially share in the upside when the property appreciates.

September 22, 2008

Manhattan Real Estate Prices Starting to Decline-New York

by Peter Klose

According to the Wall Street Journal, New York City real estate as a whole is down ten (10%) . S&P/Case-Shiller Home Price Index, reported in WSJ today.

Can we expect that trend to continue– probably, for three primary reasons. First, Wall Street executives and traders are taking a financial bath. According to the article, job losses on Wall Street (which employed 15.7% of Manhattan’s workers) will impinge on their average salary ($269,000-2006) causing their stiff down payments to suffer as bonuses are slashed and the subprime mortgages cause the stock options to plunge and the pink slips to issue.

Second, as the mortgage crisis deepens, access to credit is going to tighten.

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 19, 2008

Elimination of the Justice Courts– Upstate New York?

by Peter Klose

Is the New York State Office of Court Administration going to eliminate many Justice Courts throughout rural and upstate New York? That’s what the commission appointed by Chief Judge Judith S. Kaye recommended. Who amoung us has not been before the local justice court, where judges, sometimes lawyers/ sometimes not, of the local town or village courts dispenses their judgement in a reported 2 million cases a year.

According to the New York Law Journal, the recently released study recommends consolidation of 500 of the 1,250 town and village courts in New York state because of their cost, antiquated facilities or duplication of services with other justice courts.

The consolidation plan was among the recommendations made Wednesday by the Special Commission on the Future of the New York State Courts, a panel originally formed by Kaye to report on ways to streamline the court system.