Real Estate Hints and Help

September 26, 2024

Tenants by the Entirety- still a thriving area of litigation (for some reason).

In past links, I have discussed “Tenancy by the Entirety,” where a deed to a Husband and Wife is presumed to convey the property to each as equal and inseparable joint tenants. That means, one may not convey without the other, and creditors may not partition their interests. Indeed, when one tenant by the entirety dies, the other inherits the real property regardless of what any Last Will and Testament states. Despite this seemingly well established rule, it’s still litigated.

The Second Department rendered an interesting decision in Ciaccio v. Wright-Ciaccio, 2022 NY Slip Op 07215, decided December 21, 2023. The decedent’s children claimed an interest to their father’s property where the father had, prior to his death, executed and recorded a deed adding his current wife (the children’s stepmother). Although not critical, the deed mentioned that the stepmother was designated as “His Wife.”

In affirming the lower Court’s ruling, the court reaffirmed that the designation in the Deed as “His Wife” created a documented Tenancy by the Entirety and therefore, the children’s allegations that (1) the father “intended” only to create a Tenancy in Common had no merit and (2) that the stepmother destroyed a Will evidencing the father’s intention to give the children an interest in the property had no relevance given that the father’s interest in the property transferred to his wife immediately upon the his death by operation of law.

February 20, 2024

Title Vesting When a Property Owner Dies Intestate (without a will)

by Peter Klose

I often get calls from people concerned about deeds to real property when someone dies without a will. When a property owner dies intestate (without a will) the transfer of their real property does not require any action by an administrator or executor. Instead, title to the deceased’s real estate automatically passes to and vests in their heirs or next of kin at the time of death by operation of law. Under New York law, when someone dies intestate, their distributees become tenants in common of any real property the deceased owned. This means each heir acquires an undivided fractional interest in the property. The share of each heir depends on their relationship to the deceased. For example, if the only heirs are the deceased’s children, each child would receive an equal share as Tenants in Common. A “tenant in common” is owns an undivided interest that, if that tenant dies, that persons’ share passes to their heirs or to the people specified in the terms of the deceased tenant’s will.

When there is no will, the vesting of title occurs by operation of law at the moment of death, regardless of whether an administrator is ever appointed or new deeds are recorded. As several New York appellate court decisions have held, no affirmative act by an administrator is needed for the heirs to acquire their interests in the real estate. (see U.S. Bank Trust, N.A. v Gedeon, 181 AD3d 745, 747; Matter of Blango, 166 AD3d 767, 768; Kraker v Roll, 100 AD2d 424, 429). The intestacy statute confers title automatically based on the heirs’ relationship to the deceased. Recording new deeds can provide evidence of the change in title, but the failure to do so does not prevent the vesting by descent. The heirs become tenants in common of the real property at the time of death even if no new deeds are filed.

That means, even if there have been on administration proceedings to appoint an estate representative, under New York’s partition statute, the heirs (as tenants in common) have the right to maintain an action to partition and force the sale of the subject property (see RPAPL 901[1]). New York case law confirms the heirs’ standing to bring a partition action in Supreme Court after inheriting property intestate (see Goldberger v Rudnicki, 94 AD3d 1048, 1050; Graffeo v Paciello, 46 AD3d 613, 614).

August 19, 2020

Tenancy by the Entirety

by Peter Klose

(Nyack, New York) I wanted to follow up on my prior blog post about “tenants by the entirety.” As I pointed out in that post,

It is interesting to consider what other “ramifications” owning property as tenants by the entirety might have. Given the “undivided” nature of the ownership relationship, a question about whether a creditor might be able to somehow “levy” against one spouses “share” of the real property might arise. Generally, most commentators suggest that the undivided nature of the interest makes one spouse’s interest in the property indivisible, meaning that the creditor cannot force the partition of the tenancy by the entirety without the debt being against both tenants, or spouses.

In New York, when a married couple purchases real estate the interest that the married couple has in the property is called a tenancy by the entirety. In that form of ownership, each party is said to have an undivided interest in the whole property. It is as if the married couple is “one person” in the eyes of the law. This type of ownership has certain benefits for the married couple. One of those benefits is that when one spouse dies, the other spouse automatically becomes the owner of the entire interest in the real property. So, in the above example, when one member of the married couple dies, the property would automatically pass to the surviving spouse.

July 14, 2020

The State of Fair Housing in These Times of Change.

by Peter Klose

Before the recent protests and resurgence of the Black Lives Matter movement, I was asked by a group of Realtors to present a continuing education program on Fair Housing. I poured over the various laws in New York, particularly in Rockland and Westchester County to find the status of the law. With help from the Rockland County Division of Human Rights, I presented a fairly bland state of affairs to a mostly attentive group using hypothetical scenarios. Though I have dealt with some complaints over the years, as an attorney, I never really saw the how discrimination worked or operated in my communities. Until today. Today, I stumbled upon this fine piece of investigative journalism, and I commend all to read and watch the documentary.

To summarize, Newsday engaged the Fair Housing Justice Center in Long Island City, to help structure and implement testing and train testers, and then sent the results to two nationally recognized experts in fair housing standards to analyze the findings. The results are astounding.

By way of refresher, the federal Fair Housing Act prohibits discrimination in housing related transactions because of race, color, religion, national origin, sex, disability or familial status. Many state and local laws also prohibit housing discrimination based on several additional protected classes. The Fair Housing Act applies to a wide variety of housing transactions, including rentals, sales, home mortgages, appraisals and homeowners insurance. Landlords, real estate agents, lenders, insurance companies and condominium, cooperative and homeowner associations must not discriminate because of one’s membership in a protected class.

February 16, 2018

Airbnb and the sharing economy: is it legal to rent out my home?

by Peter Klose

With the rise of the so-called “sharing economy,” more homeowners have been looking to rent out their properties in the short term on websites such as Airbnb to earn extra cash. However, as short term rentals have increased in popularity, municipalities across the United States have begun considering legislation and instituting stringent regulations or outright bans, often with hefty fines for violators.

Following the law is critical to listing on Airbnb, because you (and not Airbnb) can be held solely liable for the illegal listing. Many cities have taken to scouring the website to track down listings that are unapproved, and a new law signed by Gov. Andrew Cuomo in 2016 imposed fines of up to $7,500 on those caught illegally listing on the site. Critics of Airbnb argue that by making it easier to rent out apartment units for short terms, less units are available on the wider market which drives costs higher. Since 2010, it has been illegal in New York to rent out a whole apartment for less than thirty days (although the law makes an exception for when you are staying on the property for the duration of the stay). State lawmakers saw Airbnb as a tool to evade this law, and argued that stricter fines were necessary in order to stop the illegal rentals.

If you would like to rent a house on Airbnb outside of New York City, the laws are different than those for apartments. Your municipality could have an ordinance banning Airbnb already on the books (often rules prohibiting bed and breakfasts apply to Airbnb too), unbeknownst to you. One local resident of Grand-View-on-Hudson, in Rockland County, rented his home on Airbnb for New Years Eve. Not only did he return to over $100,000 in damage from the previous night’s party, the village’s mayor later told Lohud.com that Airbnb listings were in fact prohibited under local rules. (Not necessarily accurate)!

January 5, 2018

Real Estate Broker “Dual Agency”: What it is, and what it means for you in a real estate transaction.

by Peter Klose

Most homebuyers and sellers are accustomed to the usual model of agency: the seller and buyer each have a real estate “agent” representing them during the showing, negotiation and final closing of a real estate transaction. Typically, the realtor is an “agent” who works on behalf of a buyer or seller with “fiduciary” responsibility to act in their best interest. Wikipedia defines “fiduciary” as “a person who holds a legal or ethical relationship of trust with one or more other parties . . . and . . . entrusted” to act with loyalty to their principal- either the buyer or the seller.

But, what happens when the buyer and seller are both represented by the same agent, and that agent is typically being paid by the Seller under a multiple listing agreement? Say one agent has a listing, a prospective buyer calls the number on the web-site and gets that agent on the telephone, and then shows that house to the caller. In New York, most real estate brokers who represent sellers have a written agreement to be paid a commission at the time of closing. When the prospective purchaser calls about the house they want to purchase, they don’t contemplate that the agent is working for the seller.

In New York, that listing agent can show the house to the buyer, but must disclose that they will then be working both for the seller and the buyer, a “dual agent.” This arrangement is more common in small real estate markets with fewer properties and firms, but can also occur at a large real estate brokerage firms, where buyers and sellers have different real estate agents licensed by the same company. Dual agency is legal in New York State (but not all states) so-long as conditions for written disclosure are met. New York requires all real estate agents and brokers to specifically disclose their relationship to the transaction, buyer or seller or both.

January 3, 2018

The hidden costs behind title insurance: How title companies used to pay “inducements” (kickbacks) to encourage lawyers and realtors to use them and the 2018 New York State regulations designed to stop them.

by Peter Klose

Title insurance is a must for all home buyers in New York. A title company searches the public record to identify potential issues with the title. Common problems include things like old liens, judgments, encroachments, survey overlaps, outstanding mortgages or unpaid taxes against the property being purchased. Title companies play an important role in real estate transactions because they act as a “risk mitigater” because they verify that the piece of property is unburdened by title issues and “indemnify” the owner and lender for such problems.

There are two types of title insurance; owner title insurance and lender title insurance, both of which you pay for at the closing if you are mortgaging your home. If a person emerged to claim that they were the rightful owner of the house, or had a judgment or lien against the house, then there might be title “claim” to the applicable insurer. Assuming the title insurance company agreed, and had not excepted coverage in the original policy, lender title insurance would reimburse the lender the amount they lent to purchase the home (or your title was damaged), or might hire title attorneys to repair the problem. If you had owner title insurance policy, you would be paid for the value of the loss, or the title insurance company would work to sort out the title claim (indemnify you for your losses, including attorneys fees to repair the title issue).

Either way, title companies are integral to the home buying process protecting consumers from purchasing a home that could present headaches down the road. But how do we choose a title company and how much will the buyer and seller pay at the time of closing?

March 1, 2017

What is a Mortgage Contingency in a New York State Real Estate Contract- Ask Steve Miller!

by Peter Klose

I wanted to add an update to this Blog post for a recent litigation commenced in the Hudson Valley arising from a transaction in Dutchess County. Buyers need an appraisal contingency– even the famous Steve Miller. It will be interesting to see how this plays out. Here’s another Article about the dispute.

Updated Post from 2017- Peter Klose.

By far, the Mortgage Contingency Clause in a New York State Real Estate Contract is the most important, misunderstood, and litigated clause in residential real estate transactions and closings. By this posting, I will try to demystify the clause, and provide a sample of the Rockland County Lawyer’s Contract language which addresses the clause.

To begin with, a “contingency” generally means an event which must occur before an obligation becomes final. In New York, a mortgage contingency is a common provision designed to allow the buyer a proscribed period of time to obtain a Mortgage Commitment from a Bank. The clause can elaborately describe the types of lenders, the time frames, the interest rates permitted to finance a certain amount of money needed to purchase a home in Westchester, Rockland, Putnam, Dutchess, Columbia, and all counties of New York. Depending upon the type of loan, the contingency generally permits 30 to 60 days to complete the process of getting a loan commitment.

A mortgage-contingency provides critical protection in today’s economy, tight lending world and uncertain economic times because it allows the buyer/borrower to avoid (cancel) the purchase contract without penalty if the buyer cannot obtain financing on the terms specified in the contract.

Tip: The borrower must make a “reasonable” or “good faith” effort to apply for and qualify for the Mortgage sought.

Practice: Real Estate Brokers or Agents in New York often encourage the Buyers to be “pre-qualified,” because it gives the seller more confidence that the buyer will earnestly apply for and obtain a Mortgage.

The absence of a mortgage-contingency means that the Buyer has agreed to pay “all cash” for the real estate. Buyers should be very cautious about signing a purchase contract that does not contain a mortgage contingency because the Down Payment or “earnest money” deposit given at the contract signing is “at risk,” should the Buyer not have all of the cash needed to close.

We have provided some sample language for New York State purchasers to read and understand.

The bottom line: If you need bank financing to purchase your new home, you need to carefully understand how a mortgage contingency works. If you or your new york real estate attorney fail to comprehend the risks associated with the transaction and your credit, you are at risk of losing your down payment should you not qualify for the Mortgage.
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October 27, 2016

Avoid Misunderstandings Over Fixtures and Furnishings.

by Peter Klose

The Closing is scheduled for 1 PM at the office of the Bank Attorney, you arrive at your dream home, ready to sign all of the mortgage documents, and close; when you realize that the sellers have moved out, taking all of the covers to all of the electrical outlets, light switch plates, architectural stained glass windows in the bathroom and mail box. Fact or fantasy? That’s a real example from everyday real estate practice in upstate New York, and lead to a very unpleasant closing.

Among the standard details of a real estate contract is a paragraph innocuously labeled “personalty” or “personal property.” First time home buyers sometimes pay close attention to the details in the contract, but not always:

Personal Property: Included in this sale: (a) The sale includes all of Seller’s right, title and interest, if any, in and to:

October 27, 2016

Condominium Insurance is Often Mis-Understood.

by Peter Klose

Over the years I have received various telephone calls from prospective purchasers, and handled many cases involving condominium insurance claims. Condo owners are often laboring under the misconception that the Condominium Owners Association insurance policy covers them in the case of disaster. This article from the Washington Post helps explain some of the differences between home owners coverage for the interior of the Condominium and the Home Owner’s Association coverage that covers damage to existing for already constructed portions of the unit.

Let’s take the example of a water valve break in an upstairs condominium unit. The water line breaks, flooding the upstairs apartment, and running down into, and ruining, interior walls, existing floors, and plaster ceilings of the unit below. In the case Klose & Associates handled, the water valve was originally installed by the condominium association when the unit was built, and there was a faulty water pressure regulator on the main water line coming into the stand alone building containing the five (5) units. The failure to regulate the pressure of the water caused the water filter to rupture many years later.

The condominium association had insurance coverage (but refused to pay) for the lines coming into the building (faulty regulator), and that insurance policy should have responded to the damage to the existing walls, floors and ceilings in the downstairs unit. The owner of the upstairs unit received payment from her insurance company of items damaged inside her apartment, and the owner of the downstairs unit received some coverage for items that she had installed in her unit, but the “master” insurance policy owned by Condominium Association should have paid for the damage caused by the failure of the pressure regulator to originally existing items in both Units. The condominium association refused to permit its insurance carrier to pay for any of the damage. [Whether that was appropriate or not should be the topic of another blog entry].