New York Real Estate Lawyer Blog

Gov. David A. Paterson recently created new legislation which is designed to protect both buyers and banks. The legislation is targeted at sub-prime loans which are defined as 1.75 percentage points above the prevailing market interest rates.

The legislation opens the possibility for buyers to avoid foreclosure actions if they can demonstrate that the loans should not have been given to them. Fannie Mae and Freddie Mac have stated that they will decline to purchase these sub-prime loans from New York given the increased exposure and cost as a result of this new legislation. Given the risks of this new law it is also possible that community banks and others that offer these sub-prime mortgages will decline to do so in the future. In addition to the risks involved with foreclosures, these banks may decline to offer sub-prime mortgages because Fannie Mae and Freddie Mac’s new policy will make it difficult for these lenders to re-sell these loans.

Federal Housing Administration (“FHA”) loans, which are insured and repaid by the government, could be the only remaining options for a buyer that cannot qualify for a loan that is not sub-prime. FHA loans are typically fixed rate loans but can become expensive because borrowers must pay FHA insurance premiums, which can add up to half a percentage point to the interest rate.

After years of litigation in the New York insurance industry, beginning January 2009, New York will abandon its often harsh rule permitting personal injury or wrongful death insurers to disclaim coverage on the ground that they did not receive timely “notice” of the claim without proof that there was some sort of harm or “prejudice” suffered by the insurer caused by the delay. [New York Insurance legislation, A11541/S8610]. This is good news for insurance customers throughout New York, who will now have some time to report claims against their insurance policies.

At Klose & Associates, we counsel our clients to promptly report any potential claims to the insurance company, thereby preserving any rights they may have under the insurance policy. Under the old rule– insurers could disclaim coverage based on a late filing of a claim. The courts did not care whether the insurance company suffered “prejudice” from the late notice of the claim, and looked only at whether there was a delay in reporting the accident. This sometimes meant that owners who legitimately did not know about a claim or potential claim were denied insurance coverage simply because the injured party failed to report the incident to the owner.

With the institution of this legislation, even the injured parties would be allowed to sue the insurer to determine the extent of responsible property or car owner’s insurance coverage, and to consider whether suits are worth pursuing. The law requires the insurance company to demonstrate that they were “materially prejudiced” by the delay in reporting the claim if the report was with the first two years after the accident. If the owner fails to report the claim within two years after the accident then the person owning the insurance policy will need to prove that the insurer was not prejudiced by the delay. Regardless, the argument will now be whether the insurance company was actually prejudiced by the delay in reporting the claim.

Governor signed Chapter 269 of the Session Laws of 2008, which significantly amends the Real Property Actions and Proceedings Law in New York State. What does that mean for the average homeowner and neighbor embroiled in a dispute over property lines or boundariesr? Only time will tell, but it appears that it may become more difficult to prove that you own a portion of your neighbor’s property if you do not have a “good faith” claim of right to such property.

In the aftermath of two fairly controversial rulings by the Court of Appeals (New York’s highest court) and a mid-level appellate court, the Legislature decided that homeowners (and their real estate litigators) needed a better definition of what it means to “adversely possess” a piece of your neighbor’s property. The new law significantly alters the requirements that must be met before courts will find that title to real property has changed under the doctrine of adverse possession.

Under the new law (effective July 2008), which actually changes various parts of other laws, the Legislature seems to have expressed the view that the existence of minor, non-structural encroachments such as fences, hedges, shrubbery, plantings, sheds and non-structural walls are deemed, as a matter of law, to be permissive and non-adverse. In every day terms, the existence of fences, planters, hedges, shrubbs, and similar objects often placed on or close to your property line will not change who actually owns that slice of property, and will not give rise to a claim for adverse possession. Just because you put your fence on a piece of your neighbor’s property, does not mean you own the property– there are various other facts and conduct required.