Cooperative and Condominium

February 25, 2016

Mortgage Modifications in New York State

Our firm is often called on to assist homeowners whose properties may be in foreclosure. This can occur when a person falls behind in their mortgage payments to a bank or other lending institution. Because of the high volume of such foreclosures in New York State over the past several years, additional safeguards have been added to the judicial process to protect people from losing their primary residence in a foreclosure case.

Prior blog posts have explained how New York State requires a mandatory settlement conference in most residential foreclosure matters. The main exceptions are cases involving a reverse mortgage, or situations in which the homeowner does not reside at the property being foreclosed, such as a second home or vacation house. Our attorneys will attend settlement conferences in Court to attempt to resolve outstanding foreclosures. Court referees, who meet with the parties in an attempt to resolve these cases, encourage lending institutions to offer mortgage modifications. The first step in the process is that the borrower must provide complete financial information to the lender (or, in most cases, their attorneys). This information usually consists of a standard Request for Mortgage Modification Form (RMA), copies of state and federal tax returns for the last several years, a hardship letter from the borrower explaining why they fell behind on their mortgage, proof of income, bank statements, and other financial records as the lender may request.

Once this information is provided, the lending institution will consider whether a modification is possible. Based on the borrower’s income and assets, as well as the value of the property in question, as well as the mortgage amount, the lender may offer a trial modification. The trial modification may reduce the interest rate on the original mortgage, and may also shift the past due payments to the end of the loan term, allowing a delinquent borrower to resume payments and have the property removed from the foreclosure process. In certain instances, the lender may even reduce the actual amount of principal owed on the mortgage.

February 11, 2016

Getting Engaged this Valentine’s Day?

By Weiss & Weiss

Are you planning to get engaged this Valentine’s Day? While legal concerns may not be particularly romantic, our firm offers the following legal advice pertaining to issues that arise upon marriage in this post. Legal issues arise whether it is a first or second marriage and may become more complicated if there are children from a prior marriage.

Estate planning matters should be considered. If you do not have Wills, it is prudent to consult an estate attorney to develop the appropriate estate planning documents. Wills, trusts, and health care directive documents may be drafted on your behalf. Even if you already have estate documents in place, the beneficiaries and fiduciaries could be different now that you’re engaged. The persons that you select to make health care decisions for you are also likely to change.

If you have children from a prior marriage, provisions should be included in your Will to include a testamentary trust . Your new spouse would be afforded the opportunity to use some of the assets during her life, with the balance left to your children from your prior marriage. Without such a trust, your spouse could remarry and leave monies that you intended for your children to someone else. Also, consider how your estate plan should address personal property. If there are family heirlooms that you would want your children to inherit, rather than your spouse, you should have your attorney specify the particular items in your Will.

January 22, 2016

Unlivable Conditions in New York Coops

By Weiss & Weiss

Many legal issues arise in New York relating to rental apartments. Disputes between landlords and tenants are extremely common, and have been discussed in many posts on this blog. Extremely prevalent are situations in which the living conditions of the apartment have deteriorated to the point where the apartment may not be suitable for an individual or family to reside at the premises.

When this occurs, legally, it is considered a breach of the “warranty of habitability.” Whether or not it is explicitly stated in a lease or other document, every dwelling place has an implied warranty of habitability, meaning that the responsible party must insure that the space is livable. Certain conditions which may cause an apartment to be unlivable are lack of heat (especially during the winter), water leaks causing flooding conditions, roaches and other vermin, and excessive noise. This is not an exclusive list, and other conditions may arise which could cause a landlord to be in breach of the warranty of habitability.

However, a question arises when the apartment in question is a cooperative unit. In such situations, the owner of the shares allocated to the apartment unit is usually the same person residing at the premises. In essence, they are both landlord and tenant. What happens legally when such a unit has severe problems which cause them to be unfit for human habitation? Our firm has been consulted by many clients in such situations. The first issue to be resolved is the responsible party for the conditions. Every cooperative has a proprietary lease, which is a document that defines whether the cooperative corporation or the unit owner is responsible to correct certain conditions. For example, a cooperative apartment may have windows which have deteriorated to the point that they no longer seal and keep cold air out of the apartment. The proprietary lease needs to be examined to determine whether the cooperative corporation is responsible for replacing such windows. Other conditions, such as excessive noise, or poor sanitary conditions at the building, may also be the responsibility of the cooperative corporation, rather than the individual owner.

December 11, 2015

Let’s Adjust: Calculating Amounts Due at New York Real Estate Closings

By Weiss & Weiss

Those people who are new to the real estate closing process in New York may not be aware that the amount delivered by the purchaser at closing is not as simple as the amount of the downpayment as subtracted from the purchase price. Adjustments are to be made for real estate taxes, vendors serving the property, and potentially remediating a seller-caused situation. Our real estate attorneys are experienced in making such calculations and in delivering the information to the parties in a timely fashion in order to prepare for closing.

The first adjustment to be made involves a credit to the purchaser for the amount of the downpayment. Another common adjustment is a $500.00 credit to the purchaser for the property disclosure statement. New York State law mandates that a seller complete a detailed questionnaire and deliver same to the purchaser. In the absence of the completion of such questionnaire, the purchaser is given a credit of $500.00 against the purchase price at closing. Certain sellers, such as estates, are exempt from the requirement to deliver a property disclosure statement and are not required to apply a credit at closing. Interestingly enough, it has become the custom for sellers to complete the disclosure questionnaire in upstate New York, while most sellers in the downstate area served by this firm typically do not produce such a statement. Our attorneys advise sellers concerning whether they should deliver such a disclosure in their specific situation.

Real estate taxes are another common source of adjustments between the parties to a transaction. In Westchester County, New York, the area in which our firm is located, there are two or three different types of real estate taxes, all of which cover different periods of time in the calendar year. For instance, County taxes cover the calendar year, January 1-December 31. School taxes cover the dates July 1-June 30. In those jurisdictions subject to Village taxes, the year is calculated from June 1-May 31. Even though the various real estate taxes cover particular periods of time, the taxes are not necessarily due on these specific dates. County taxes are due on April 1, with penalty for late payment being applied on April 30.

December 3, 2015

Landlord-Tenant Eviction Action in New York – Holdover or Non-Payment?

By Weiss & Weiss

Our firm frequently represents both landlords and tenants in eviction actions. Unlike many law firms who specialize in only representing landlords or only defending tenants, we recognize that valid legal issues and valid defenses may exist for both the party owning a given property and the party who may be renting the property. This blog post will discuss the basics of an eviction action, and may be viewed from the perspective of either a landlord or a tenant.

Eviction cases in New York State are classified as either holdover actions or non-payment actions. They cannot be both. When the landlord (who is usually called the “petitioner”) decides to file a petition for eviction in the appropriate court, the landlord’s attorney must decide whether the case is a non-payment action, or a holdover action.

A non-payment action is an action for eviction based on the tenant’s failure to pay rent as due. The rent due may be based on a written lease, or simply an oral agreement between the landlord and the tenant. For example, a tenant enters into a lease to rent a house for $6,000.00 per month. The tenant then does not make the rent payments as due. Our attorneys will usually advise the landlord not to proceed with a non-payment action until several months’ rent has accrued. The reason for this is that a tenant may always end a non-payment action by making payment. Once any and all rental arrears are paid by the defaulting tenant, the non-payment action will be dismissed by the Court and the tenancy will continue.

November 12, 2015

The Online Conduct of Cooperative and Condominium Disputes

By Weiss & Weiss

With the prevalent use of the internet, grievances against cooperative and condominium boards can spread like wildfire. The means used may be standard e-mail forwarded to all unit owners, a specifically developed Facebook or Google chat page, a publically accessible website, or another type of private intranet system. The New York Times recently published an article concerning the airing of disagreements online with an audience of all unit owners and the implications. In the past, if a neighbor had a complaint, she would approach one of the board members individually and directly, so that all unit owners would not be aware of the grievance. As an alternative, it is almost expected that a unit owner will raise concerns loudly and perhaps not so politely during the annual meeting. Such concerns will be addressed in front of all unit owners present.

Now it is not uncommon for unit owners to have a day-to-day online community, allowing for constant communication of all matters. Online discussions may concern such matters as whether a neighbor is willing to watch a pet while someone is away, whether someone wants to buy unneeded furniture or more serious matters concerning how the building is being run. The board may be publically attacked for building conditions or for the manner in which a financial transaction was handled. Modern online communities make it almost too easy for unhappy unit owners to gather strength. Some proponents argue that such an online community encourages transparency of the board. The board is continually required to state and justify their actions. Even though the board is legally required to be responsive to all unit owners and must follow the business judgment rule , the current expectation that every action of the board should be known and debated among all unit owners is likely to diminish the authority of a current board.

With the potential reduced authority of a board, the takeover of a board is a potential concern. Opponents of such online communities argue that such communities are developed merely for the purpose of such a takeover. Using the online method as an easily disseminated platform, it is easier than ever for dissident groups to develop allies and arrange for other unit owners to elect them to the board. Once opinions are readily shared, the slate of dissident candidates likewise develops more easily than in the past.

October 29, 2015

Evictions and “Stuff” Left Behind by Tenants in New York

By Weiss & Weiss

Prior blog posts have discussed the possibility of terminating a lease prior to its legal end date. However, in a residential setting, such a situation is not always cut and dried. If there is no formal document, executed by both parties, terminating the lease, then the lease between the parties may still control the situation. This blog post will examine the different possibilities, and advise both landlords and tenants regarding the disposition of property left behind by a tenant.

Our first example would be when a tenant simply leaves the premises, but does not advise the landlord in writing that he is moving out. In such situations, the tenant may also leave behind personal property at the rented premises. The first question is whether the tenant has legally abandoned the property. If the tenant does not return the keys to the landlord (or their attorney) and state in writing that they are surrendering possession, then they are still considered a legal tenant and the original lease will still control the landlord-tenant relationship.

Even if it appears to the landlord that the tenant has moved out, in the absence of a formal surrender, the landlord will still have to legally evict the tenant. This means service of a Notice of Petition and Petition of Eviction, obtaining a warrant of eviction in Court, and then having the City Marshal or Sheriff serve and execute the warrant. This will give the landlord legal possession and allow the landlord to dispose of the personal property left behind by the tenant. If the landlord decides not to follow this legal procedure, the tenant could return, and claim that they did not formally surrender possession. The landlord in such a case could be liable for an illegal eviction, as well as the cost of replacing the disposed-of property.

October 15, 2015

Insurance Disputes in New York Concerning Damages to Real Estate

By Weiss & Weiss

As many of us know, insurance carriers are most profitable when they collect premiums and resist paying claims. Some of our clients consult us when they have a legitimate insurance claim that is not being paid, so that we can interpret their insurance policy and pursue the insurance company to properly manage the claim. There may be a casualty event in a cooperative or condominium building where it is not clear whether the building’s or individual owner’s insurance carrier is responsible for the claim. This post will address the legal issues that arise with respect to insurance claims pertaining to real estate.

Our attorneys recommend to individuals purchasing apartment units that they procure their own insurance policies, whether or not the building requires same. Otherwise, damages within the walls of the apartment unit need to be paid out-of-pocket by the unit owner. When a unit owner has her own insurance, such policy will cover damage within the unit, such as water damage to interior finishes and painting and wallpaper that are not covered by the building’s insurance. Further, our firm recommends that contractors engaging in apartment renovations to common areas of the building or to individual units demonstrate adequate insurance coverage for damages that may occur during the renovation.

The following is a typical scenario involving the cooperative and condominium boards or individual unit owners that we represent. A casualty event such as a severe ice and snow storm causes ice dams to appear in the gutters of the building. Such ice dams eventually melt, causing mold within the walls between apartment units and water leaks within specific units. How do the applicable insurance policies manage the resulting insurance claims? The entire building will most likely have insurance coverage. However, most buildings in their proprietary leases or bylaws provide that building insurance only covers common areas and damages within the walls of the building between units. As a general guideline, if the repair necessitates the removal of the wall in order to make the repair, then it is the responsibility of the building, rather than the unit owner. Therefore, the building’s insurance should pay the claim.

October 8, 2015

Settlement of Partition Actions in New York State

By Weiss & Weiss

Prior posts on this blog have discussed the general aspects of property partition actions. A partition action arises when there are two or more owners of real property, and the co-owners cannot agree on the disposition of the property. The property may be residential or commercial in nature. This blog post will discuss possible out-of-court resolutions to a partition action.

A partition action may be brought by any of the co-owners to force a sale of the property, with the proceeds being divided among the owners according to their percentage of ownership. However, it is a fact that most lawsuits are settled prior to trial or another resolution by a Court. In a partition action, there are several alternatives to explore when deciding to resolve a case without the need for further Court intervention.

The first alternative would be for the parties to agree to sell the property to a third party who is not one of the current co-owners. In such a situation, the co-owners should agree on sale terms, and, in most situations, hire a professional real estate broker to list and show the property in question. The parties would also agree to share the costs of the broker, which is usually a set percentage of the sales price. It is advisable at this stage that a formal written agreement, usually called a “Stipulation of Settlement,” be entered into between the parties. Such an agreement should contain an initial listing price for the property. It should also state that any offer at or above the listing price will be accepted by all of the owners. In the event that the property cannot be sold at or above the listing price, the agreement should also delineate a set period of time in which the parties will attempt to sell the property at the initial listing price, such as three months. After this time period expires, the agreement should state that the listing price will be reduced by a set percentage, such as five percent. This will allow the property to be sold at a price acceptable to all parties, and will prevent any co-owner from refusing to sell the property. Our firm has handled many partition actions and has a standard Stipulation of Settlement that contains the necessary clauses for an effective resolution.

October 2, 2015

The Changes Are Here- New Mortgage Disclosure Rules Effective Date Has Finally Arrived

By Weiss & Weiss

As stated in a prior post , we promised to keep you advised of the progress of intended updates to the mortgage disclosure regulations. Due to comments from the loan industry, the effective date of the regulations was pushed back from August 1 to October 3, 2015. The delay in the implementation allowed for certain revisions to the intended regulations and allowed for the loan industry to engage in the task of preparing to close loans consistently with the new regulations.

If you are applying for a residential mortgage after October 3, 2015, these revisions will apply to your loan. Within three business days after your loan application is submitted, a Loan Estimate is to be provided to the borrower. This document will provide the loan amount, interest rate, monthly payment, estimated taxes and insurance and anticipated cash required to close.

The major concept behind the new regulations is that additional charges to the borrower of any type are not to be disclosed for the first time at the closing. Collection and sharing of accurate data concerning charges among those professional partners involved in the closing is crucial. Also, attorneys in New York will need to get accustomed to preparing the final financial details of closings much more in advance than is currently typical. Those attorneys who do not conduct many real estate closings may not be abreast of these developments and may not be prepared to act.