New York Real Estate Lawyer Blog

December 1, 2008

What is a CEMA and How Does it Save Money in New York?

“CEMA” stands for Consolidation, Extension and Modification Agreement, and is used to save mortgage tax in certain situations.

Sellers sometimes use this process and procedure to refinance real estate located in New York State because, when recording a New York Consolidation, Extension and Modification Agreement, they pay only the mortgage tax on the difference of the new money and old. The idea behind a CEMA is to renew the terms of an existing mortgage by re-financing an existing note and mortgage. The CEMA is the actual legal document which combines into one set of rights and obligations all the promises and agreements stated in existing Notes and Mortgages secured by the property being re-financed.

If the new Consolidated Note and Mortgage includes additional monies (or funds), the Borrower pays only the Mortgage Tax on such “new funds.” In counties such as Dutchess, Rockland, Westchester, Ulster this process can save thousands of dollars because the mortgage tax is paid (over one percent) on the difference between the old money and the new funds.

November 26, 2008

Have You Executed a Simple Will to Protect Your New York State Relatives?

by Peter Klose

Why do so few people choose to control the disposition of their own estates after they die? Perhaps you fear death, you procrastinate, you are too lazy to think about your death, or you think that a will is unnecessary or too expensive. Why haven’t you e-mailed your lawyer, called your closing attorney, or actively engaged in executing a will? What is holding you back?

There is a debate among various elder law attorneys and marketing professionals about why New Yorkers and fellow Americans do not see their local attorney to prepare or revise their Last Will and Testament. Did you know that more people die without a will than with one!!

There are two givens in life– death and taxes. So, why not control what happens in death through the execution and preparation of a Will? Do you really want the New York State Legislature to dictate where your personal belongings go after you die? The truth is that all people in New York State are empowered to execute a Will to override the rules relating to “intestacy” (where your stuff goes if you don’t have a Will).

November 25, 2008

Small Business Transactions–New York Bulk Transfer Affidavit

by Peter Klose

Buyer Beware: When buying a small business in New York be sure that your small business attorney follows the New York State Bulk Sales rules.

Prior to 1990, Article 6 of the Uniform Commercial Code (UCC) regulated bulk sales– the transfer of large pieces of inventory, notes, etc. Article 6 was enacted to deal with sellers who attempted to fraudulently convey inventory (obtained on credit) by selling in a “bulk sale” transfer to a single buyer outside the ordinary course of business, disappearing with the proceeds, and leaving creditors without paying.

Under New York’s version, the Code provides various mechanisms to protect both potential buyers and creditors of businesses where bulk transfers of inventory occur. Failure to comply with the Bulk Sales or Transfers Act means that the original creditors (of the seller) get a lien against the assets (inventory) transferred to the buyer. Buyers must comply with the Bulk Sales provision and be ready for its implications.

November 24, 2008

What is an “Apostille” or “Authentication?”

by Peter Klose

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.

November 17, 2008

New HUD Rules, Too Little, Too Late for “Uninformed” New York Borrowers?

by Peter Klose

If anyone has ever closed on a HUD inspired (guaranteed) loan, you know that there are millions of forms that are designed to provide notice of the borrowers’ rights and responsibilities. The prevailing view of policy makers was let the borrower beware, give them notice, and then let them make the mortgage– move the closing along.

The present housing crisis, however, has everyone re-thinking whether the borrowers are really getting well advised about the meaning of all these lending terms, prices, fees, etc. Hardly surprising given American’s thirst for debt and former “equity” in their homes.

The problem, however, should not be so prevalent in New York, where attorneys are still largely responsible for closing with clients and, presumably, advising them of the mortgage process.

November 13, 2008

How is this Mortgage Crisis Going to End as Home Values Plummet in New York?

by Peter Klose

Citibank took a bold step to solidify and quell the concerns of its mortgagors by halting foreclosures, and voluntarily considering how to modify the terms of its mortgages on a wholescale scale.

According to the WSJournal, the US Government is considering various ways to fix the problem from the top down, rather than having to modify each and every loan on each and every house. Other top lenders are seeking to avoid such intervention by the government, including Bank of America Corp., J.P. Morgan Chase & Co. and Citigroup Inc., the banking industry has announced measures to make loans more affordable. Citi said Tuesday it would modify terms on as much as $20 billion in mortgages for borrowers who are current on their loan payments but could fall behind. Here’s the article.

Stay tuned!

November 12, 2008

Will Seller Financing Help You Sell that Hard to Sell Home in New York?

by Peter Klose

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.

November 6, 2008

Is Your Home Worth Less Than Your Mortgage in New York?

by Peter Klose

That is the question that many home owners, politicians, and policy makers are worried about these days.

With various federally guaranteed and initiated plans designed to help homeowners in this time of falling home values and prices, how are we going to decide which homeowners should get assistance, and which sellers are just savvy enough to ask for such assistance?

Here’s a recent article from the WSJ, but there are many recent articles identifying the rub– which home owners should get the help.

November 5, 2008

Traps of the Reverse Mortgage Tool in New York.

by Peter Klose

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.

November 4, 2008

Additional Short Sales Tips for Those Proceeding in New York.

by Peter Klose

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.