New York Real Estate Lawyer Blog

March 15, 2011

What is Title Insurance and Why is it Such a Hot Topic in New York?

Almost universally as a house closing or refinance closing approaches, I am asked why the itemized cost for “title insurance” is so high. Sometimes, clients even tell me that they do not have to pay for “title insurance” because they are putting more than twenty percent down, but have confused Private Mortgage Insurance (PMI) with “title insurance.” So, what is title insurance and why do you need it?

To begin with, PMI is insurance designed to protect lenders against losses should the borrower default, and is required by lenders for virtually all borrowers who put less than twenty percent (20%) down. It has nothing to do with who owns or has “title” to the property, and who insures that no one is going to claim against it.

Title insurance is a contract where an insurer guarantees a lender or a home owner that there are no known claims or defects in title caused by past events such as mortgages, liens, or possession of property by another person not the owner. Title insurance companies search public records to develop and document the chain of title and to detect known claims (defects) in the title. For example, the title search may identify an old home equity loan that is still outstanding or that a contracting firm filed a mechanics lien against the owner years before. If they missed those defects, then the title insurance company would pay to have them fixed, even if it meant litigation.

March 14, 2011

New York Small Business and Small Towns Need Lawyers.

by Peter Klose

I own a small business, and am proud of it. In fact, I “know it all,” and, better yet I “can do it all,” because “Paying professionals a waste of money.” So, why should I need a lawyer when I buy, sell or even operate a business.

Since the bottom line is key, most small business owners I encounter genuinely think that hiring a lawyer is akin to turning on the water faucet, and getting little in return but a hefty water bill. I assure you that such rationale is flawed.

Take for example the client who was operating a thriving New York City diner. The business flourished, because it had a ten (10) year lease with options to renew; or so they thought. Then, the building was sold. Deep in the “standard form” lease agreement signed ten years earlier was the barely legible clause, “Upon sale, the incoming owner may cancel and terminate this Lease on ten (10) day notice,” and that’s what happened.

March 13, 2011

Primer-Creativity Protected by Intellectual Property in New York.

by Peter Klose

The Hudson River villages are full of talented people who are looking to protect the fruit of their creativity. Many times, however, people are confused by the different types of “intellectual property” that exist, which laws apply, and whether they can actually protect their creative ideas, designs, or other work. What are the differences between trademarks, copyrights and patents, and how can you protect them.

A trademark is identifies the source of a particular “good or service.” Most often, a trademark is a word (or a series of words), a logo or picture, but trademarks can also be sounds, colors, devices or even the way something appears. For example, a restaurant can have a trademark for the way it decorates or individual features of how it presents its food. Trademarks are geographic in nature, meaning that someone with protection in the United States may not have the same trademark in Canada, China, or elsewhere. Trademarks result from the of use (or intended use) of the mark in commerce and does not necessarily need to be registered with the U.S. Patent & Trademark Office to have enforceable trademark rights. As with any legal right, legal protection and filing brings certain rights and obligations, like statutory damages or the obligation to chase after infringing products.

A servicemark is simply a trademark that is used in connection with services instead of goods. If you wish to use a particular trademark, it is wise to conduct a trademark search prior to beginning such use. The search will enable you to determine whether someone else is using a similar mark for similar goods and services to ensure that you do not infringe someone else’s mark once you begin your use. In today’s market, where goods and services are hawked on line, on the street corner, and almost everywhere, there are millions of potential conflicts, which require careful legal analysis. It is advisable to have an attorney assist you to conduct the trademark search and to handle the application process with the US Trademark Office if you (and your attorney) decide to file. A trademark will not expire if the owner continues to use the mark in commerce in connection with the goods or services specified. Once a mark is registered, however, it does periodically need to be renewed.

March 13, 2011

Home Improvement Protections Exist in New York, Use Them.

by Peter Klose

Do you hire a doctor or a lawyer without checking their licenses, their pedigree, and their referrals? So, why is it that when it comes to investing in their greatest asset (the home), so many people become victims of dishonest contractors who demand large advance payments for projects, and then fail to complete the work fully or competently. What are your rights.

In Rockland County, there are several resources designed to protect us from unscrupulous home improvement contractors. The first, Rockland County Code, Section 286, empowers the Office of Consumer Protection to license and regulate nearly all home improvement contractors and transactions. [Rockland County Law can be found at http://www.ecode360.com/?custId=RO1021, Chapter 286].

The comprehensive law covers everything from licensing individual contractors; (286-7) the contents of home improvement contracts (286-12); the prohibited acts (286-10); the penalties for not complying with the law (286-21); and the powers of the Board. While the nuances of such law are complex, the goal is to provide minimum standards to avoid the main problems that homeowners have with contractors.

March 11, 2011

So, You’re Starting a Business. . . . . in New York?

by Peter Klose

The economy is topsy turvy, the job unrewarding, the grass always greener . . . . . so why not start a business. America runs on . . . small business (and the coffee), so let’s consider the basics. While insurance will protect your assets sometimes, starting a separate entity helps to shield yourself from liabilities.

A Name to Call Thyself. Not all names are created equal. Take a name, say, “The Chocolate Library,” creative, descriptive, perfect. Turns out that under the New York State Business Corporation Law, “Libraries” are generally known as a collection of books and other materials for reading and study. So, New York bans the use of school-related words such as ‘library,’ ‘school,’ academy,’ ‘institute,’ and ‘kindergarten,’ in a certificate of incorporation by any New York business is barred unless there is prior consent from the education commissioner.

A Form to Fill. Now that we have a name, what “type” of entity for liability and tax purposes. New York State recognizes various corporate structures, but why choose one over another. While your attorney and accountant are best prepared to advise you for your particular situation, but here are some of the more identifiable structures:

March 9, 2011

So, you don’t have a Will in New York. . . . .

by Peter Klose

What happens at your death is psychologically difficult for many of us to deal with. There are almost always more pressing issues than planning for what will happen when you die. A majority of people die without a will. This means that there is no clear message to the family about what a person’s assets are, where those assets are located, what should happen them, and what arrangements that person has made for his or her body or funeral.

In New York State, a will is a legal document witnessed by at least two people who are not “interested” in the assets of the person who is signing the will. The will sets forth how the assets (no matter how small) will be distributed by the person designated to gather and distribute them (the Executor) upon death. If you do not have a will when you die then you allow New York State to decide who gets what, without regard to your wishes or your heirs’ needs, through the laws of “intestacy.” In today’s world of blended families, long lost cousins, and global assets, it is advisable to think about, organize and have an attorney draw up your will.

Making a will is especially important if you are parents of young children because you will want to designate who will have guardianship of the children. You may consider separating the physical guardianship of the children from the guardianship of the money intended for those children. Obviously, depending upon your assets, you can make many different provisions for your family, including attempting to protect your assets from Medicaid and estate tax.

February 16, 2011

Qualified Small Business Stock– Interesting, but I am no Tax Attorney!!

by Peter Klose

I AM DECIDEDLY NOT A TAX ATTORNEY, BUT THIS IS SOMETHING I CAME ACROSS. YOU SHOULD CONSIDER IT WITH A QUALIFIED TAX PROFESSIONAL.

Qualified Small Business Stock

Noncorporate taxpayers can exclude 100% of any gain realized on the sale or exchange of “qualified small business stock” (“QSBS”) held for more than five years, if the QSBS is acquired after September 27, 2010 and before January 1, 2011.[1] In addition, the treatment of a percentage of the excluded gain with respect to QSBS as a preference item for purposes of the alternative minimum tax (“AMT”) does not apply to QSBS acquired September 27, 2010 and before January 1, 2011. Stock is “qualified small business stock” only if all of the following requirements are met: (i) the taxpayer acquired the stock at original issue in exchange for money or property other than stock, (ii) the stock was issued after August 10, 1993, (iii) the issuer of the stock was a “qualified small business” when the stock was issued, (iv) the corporation meets an active business requirement “during substantially all of the taxpayer’s holding period” for the stock, and (v) the corporation is a C corporation when the stock is sold and during substantially all of the taxpayer’s holding period for the stock. Stock should be deemed to be acquired at original issuance if the Holders exchange their LLC interests for stock of the Company. A “qualified small business” is a domestic C corporation that has not more than $50 million in assets.

February 14, 2011

When is a “sign” not a Sign in the Village of Rhinebeck, New York?

by Peter Klose

[Dutchess County, New York]. When is a television monitor a “sign,” under Rhinebeck Zoning Enforcement Regulations. That is a battle being waged between our client and the Village of Rhinebeck, New York. Since this is a pending matter, we will permit the Poughkeepsie Journal newspaper account to speak for itself.

Bottom Line– The First Amendment of the US Constitution is a powerful tool, supported by the New York State Constitution which provides even broader protection to freedom of speech.

Judge for Yourself

January 24, 2011

Are My Real Estate Taxes Going to Increase When I Buy a House in New York?

by Peter Klose

Financial planning is essential when you are buying a house– the bank checks and you want to know what your monthly nut is going to be. But, you are buying an old house which appears to have several exemptions and possibly an absurdly low tax assessment. Will your taxes go up after you close on the house?

In New York, an assessor may not selectively reassess your new property unless she is prepared to explain why a reassessment is necessary while other properties’ assessment go unchanged. Why? Because reassessing particular properties or particular neighborhoods may result in discriminatory enforcement of tax laws.

Although the highest court in New York, the Court of Appeals, has not specifically articulated a ruling on selective reassessment, lower courts have even if the decisions have been split. The divided case law results from a balancing of considering the statutory and constitutional requirements of equality in assessing properties against evaluating individual facts on a case-by-case basis. In Feigert v. Assessor of the Town of Bedford, 204 A.D.2d 543, 614 N.Y.S.2d 200 (2nd Dep’t 1994), for example, the court upheld a reassessment of a property based on proof submitted by the petitioner that a prior assessment was based upon a resale of the property. In Towne House Village Condominium v. Assessor of the Town of Islip, 200 A.D.2d 749, 607 N.Y.S.2d 87 (2nd Dep’t 1994), on the other hand, the court struck down a reassessment that was based solely on a property’s conversion from an apartment complex to a condominium property.

December 16, 2010

A Name isn’t Everything– And Not Always Available under the Business Corporation Law of New York.

by Peter Klose

So, you are an entrepreneur, a small business trying to distinguish yourself from the crowd. You pick a name, say, “The Chocolate Library,” and you think you are good. But, under the New York State Business Corporation Law, such a name may not be available.

“Libraries” are generally known as a collection of books and other materials for reading and study. In a clever play off the traditional definition, an East Village boutique tried using the name The Chocolate Library, and hoped to register the name to describe the store’s large assortment of chocolate, including various international brands, origins, types, and tastes.

Effective July 2005, however, the use of school-related words such as ‘library,’ ‘school,’ academy,’ ‘institute,’ and ‘kindergarten,’ in a certificate of incorporation by any New York business is barred unless there is prior consent from the education commissioner.