Real Estate Litigation

April 9, 2025

Recovery of Surplus Funds in New York – An Update

Longtime readers of this blog will remember several prior posts relating to the recovery of surplus funds in tax lien foreclosures. The United States Supreme Court ruled in Tyler v. Hennepin County, Minnesota whether the government could keep surplus funds in tax lien foreclosures. The ultimate ruling was that it was an unconstitutional taking of property for a municipality to retain excess funds in a tax lien foreclosure.

To summarize, if a property is sold at a tax auction in order to satisfy a lien for unpaid property taxes, and the amount for which the property is sold exceeds the amount of past due taxes, the (former) property owner is now legally entitled to the surplus funds raised by the auction. Prior to the Supreme Court’s decision, certain states (including New York) would simply keep any excess funds collected in the auction, and the former owner would have no claims to these funds under the applicable state laws, which have now been held to be unconstitutional.

What does this mean on a practical basis? Although it is beyond the scope of this blog to discuss how other states are handling the situation, counties in New York State have been preparing databases showing the surplus funds, if any, raised in tax lien sales. These lists show the amount of the tax lien, the date of the tax auction, the sum for which the property was sold at the auction, and the surplus funds being held by the county. Under the Supreme Court decision in Tyler, the former owner now has a right to claim these funds in New York.

January 31, 2025

Foreclosure Defense – Playing the Numbers Game

By Weiss & Weiss

When our firm is retained by a new client whose property is in danger of being foreclosed, one of the first issues that needs to be determined relates to the equity in the property. Equity can be defined as the net value of the property, once all liabilities are calculated. It is an important component of deciding the correct game plan for defending any potential foreclosure action.

The first step towards calculating the equity in a property is to obtain an estimate of the current market value of the property. Although there are online service such as Zillow which may give an estimate of a home’s current value, these “zestimates” are approximate and may not reflect the current physical condition of the property. In order to obtain the most accurate value, we recommend hiring a professional appraiser. The appraiser is an independent licensed professional who will thoroughly examine both the interior and exterior of the house, and also compare it to other similar properties on the market in the area where the property is located. Once they have completed their inspection, they will provide a written report which gives a current market value for the specific property.

The second step is determining the current debt on the property. Payoff letters can be requested from the current mortgage holder. Keep in mind that there may be more than one mortgage on the property, requiring obtaining multiple payoff letters. The payoff letter will show the amount needed to pay off the outstanding mortgage. Depending upon how advanced the mortgage foreclosure process has proceeded, there may be additional charges added by the lender, such as property taxes advanced by the lender, as well as costs and attorneys’ fees for any foreclosure actions.

January 13, 2025

Foreclosure Protections in New York – When do They Apply?

By Weiss & Weiss

As long-time readers of this blog may be aware, New York State has significant protections in place for defendants in foreclosure actions. These legal requirements are meant to ensure that a homeowner is allowed an opportunity to defend his case, or at least be aware of a pending and existing foreclosure matter, and allow him an opportunity to enlist experienced legal counsel in order to protect his interest in his property.

With the economy in recession, and home interest rates having significantly risen due to efforts to forestall inflation, many borrowers now find themselves at risk of foreclosure. The first legal protection in place is that if the home loan is in default, the lender must give a written notice of one hundred and twenty (120) days prior to commencing a foreclosure action. Other legal notices may also be required to be sent by the lender (or their attorneys) prior to a lawsuit being filed.

Once a lawsuit commences and an Answer is filed, the Court will then schedule a foreclosure settlement conference. Under New York law, the matter cannot proceed further until all parties meet in a settlement conference to discuss the case and attempt, in good faith, to negotiate a resolution. Depending upon the results of the settlement conference, the Court may schedule additional conferences, as the lender may require submission of financial documents from the borrower so that a loan modification can be negotiated and approved. If a loan modification is made, the borrower must show that he is complying with its terms by making regular payments before the foreclosure case can be dismissed.

November 1, 2024

Partition Actions and Foreclosure

By Weiss & Weiss

Our firm handles many partition matters. As discussed in prior blog posts, a partition action occurs when one (or more) co-owners of a property no longer wish to co-own the property. A partition action is a legal mechanism wherein a co-owner can petition the Court for an order to have the property sold, and the proceeds divided among the co-owners. Usually a Court-appointed Referee is responsible for selling the property, either through a public auction sale, or by hiring a real estate broker. The Referee will also determine, after hearing evidence submitted by the parties, exactly how the proceeds will be divided.

As the property at issue may be co-owned by several people, it is not always clear who is responsible for paying the carrying charges on the property, either before or during a partition action. For example, three siblings inherit a house after the death of their parents. They cannot agree on who should pay the mortgage and property taxes, and these obligations must be paid, regardless of the current dispute over the ownership.

Once this occurs, there may be a foreclosure action brought by the mortgage holder. All of the c0-owners would be named as defendants in such an action. In addition, if the property taxes are not paid by any of the co-owners, and the mortgage remains unpaid, the property taxes may be in arrears. In this situation, the entity to whom the taxes are owed may obtain a tax lien against the property. Often, these liens are then sold to a third party. This third party may then commence a tax lien foreclosure action against the property, and name all the co-owners as defendants in that action.

February 14, 2024

Heartbreak – Breaking Up and its Effect on Partition Actions

By Weiss & Weiss

Today is Valentine’s Day, and our firm extends best wishes to all the happy couples celebrating. However, an unfortunate truth is that sometimes couples, whether they are man and woman, or of the same sex, will discover differences and break up. When such a couple is legally married, they usually would consult a divorce attorney to negotiate the terms of the divorce and a fair division of their jointly-owned property.

However, what happens when a couple are not married? Marriage as an institution is in decline, and many couples stay together for years, even decades, have children together, purchase property together, but never take the legal step of getting married. In such situations, how is their property to be divided once they decide to break up? They cannot bring a divorce action in Supreme Court, as divorces are only available to married couples.

As this blog deals with real property issues, we will discuss the legal issues of how an unmarried couple can divide jointly owned real estate. Of course, the parties should negotiate, using experienced attorneys to represent their interests. It is possible that one party wishes to retain the real property in question, and has sufficient funds to buy out the other person. In such a case, a buyout price must be agreed upon. The individual retaining the property must have sufficient funds to purchase the one-half interest of the other party. Possibly the funds will need to borrowed through a mortgage on the property. There may also be an existing mortgage on the property that needs to be satisfied.

May 26, 2023

Tax Lien Foreclosures and Surplus Funds – The Supremes Rule

By Weiss & Weiss

Several prior blog posts discussed the Supreme Court case Tyler v. Hennepin County, Minnesota, which addressed to whether the government could keep surplus funds in tax lien foreclosures. Geraldine Tyler is a 94 year old woman living in Minnesota who owed $2,300.00 in unpaid property taxes for her condominium. Due to her age and safety concerns, she moved to a nursing home and the condominium was sold by the county to pay her unpaid property tax bill.

The property was sold by the County at auction for $40,000.00. Ms. Tyler’s unpaid tax bill was only $15,000.00 once interest and late fees were included. So what happened to the extra $25,000.00? Under existing law in Minnesota, Hennepin County (the County in which the condominium was located), kept the excess funds for itself.

Ms. Tyler then sued, claiming that allowing the County to keep the funds in excess of what she owed in taxes was an unconstitutional taking of her property. The relevant clause is located in the Fifth Amendment of U.S. Constitution and states that “Nor shall private property be taken for public use, without just compensation.”

March 3, 2023

Mediation in New York – A New Hope?

By Weiss & Weiss

Recently, New York Courts, especially in those in Westchester County, where our offices are located, are encouraging the use of mediation to resolve disputes which have been filed as lawsuits in the Court. What is mediation, and how does it differ from arbitration? Mediation is the use of an independent third party, known as a mediator, in an attempt to resolve a dispute that initially commenced in Court. Many Courts now have a mediation program, and are referring cases to mediation, and, in some cases, ordering that the parties use a mediator to attempt to resolve a Court dispute.

Legally, a mediation is different from arbitration. In arbitration, the parties usually are contractually obligated to use an arbitrator (also an independent third party) by the terms of a previously executed document such as a lease to resolve a dispute. There are organizations such as the American Arbitration Association (AAA) whose purpose is to provide arbitrators to resolve disputes. The main difference between arbitration and mediation is that arbitration, when contractually mandated, results in a binding decision reached by the arbitrator after he hears the case. Once the arbitrator makes a ruling, either party (usually the prevailing party) can file a motion in the appropriate Court to enforce the arbitrator’s decision as a judgment. For example, if the arbitrator rules, after hearing the evidence from all parties, that one party owes the other $50,000.00, that decision can be entered in Court as a binding judgment, after motion made to enforce the arbitration decision.

Conversely, mediation is generally done on the consent of all parties, and is not binding. It is an attempt to mediate the dispute between the parties, and can often replace discovery, Court hearings and a trial. In general, the parties, after appearing in Court for a preliminary conference, can consent to use a mediator in an attempt to resolve the dispute. More frequently, the Judge in the case may order the parties to use a mediator. In such cases, the Court generally provides the parties with a list of potential mediators, and the parties jointly choose a mediator.

January 19, 2023

Surplus Funds and Tax Lien Foreclosures – The Supremes Check In

By Weiss & Weiss

Prior blog posts have discussed the concept of surplus monies in foreclosure proceedings. When a foreclosed property is sold at public auction, the winning bid may exceed the total amount owed to the entity foreclosing on the property. In such a case, the excess funds are considered “surplus funds,” and the Court-appointed Referee will then deposit the surplus funds with the New York State Department of Finance, which has the authority to disburse the funds to the proper party, upon receipt of a Court order from the Court that handled the original foreclosure case.

Most foreclosure cases involve mortgage debt to an institutional or individual party, usually involving the amounts borrowed by the owner in order to purchase the property, or a loan taken out on the property after it is purchased, such as a second mortgage. However, there is another category of foreclosures that may generate surplus funds – tax lien foreclosures.

Tax lien foreclosures occur when the owner of real property fails to pay property taxes due on his property. Unless the property is tax-exempt, such as a property owned by a non-profit or religious institution, there are generally local real estate taxes, such as village, city, school, and county taxes assessed to the property. Depending on where the property is located, one or more of these taxes would be assessed to the property, either on an annual, semi-annual, or other type of payment schedule as determined by the taxing entity.

October 6, 2022

Couple or Throuple? Succession Rights in New York Rental Units

By Weiss & Weiss

Our firm often fields inquiries from clients regarding successor rights in New York residential rental apartments. First, experienced counsel should determine whether the premises are subject to rent regulation. Rent regulation in New York State applies to many, but not all, residential units. It is more prevalent in New York City than in its surrounding suburbs. However, it does also cover some rental units in Westchester and Nassau Counties.

Assuming that rent regulation does apply to the premises, then the current occupants may be allowed successor rights once the original party on the lease either passes away or vacates the premises. For example, let’s assume Grandma rents an apartment subject to rent regulation, and only her name is on the original lease. As Grandma ages, some of her grandchildren move in to take care of her, and eventually become permanent occupants of the premises. Even though they are not listed as tenants on the original lease, these individuals, as family members occupying the premises, may be entitled to a successor lease once Grandma passes away or moves out of state.

A recent New York City Court case raises new possibilities regarding the legal definition of “family members” as they apply to more modern, non-traditional relationships. The case of West 49^th Street, LLC v. O’Neill involved a New York City apartment which was occupied by three unmarried individuals, only one of whom was on the rent-stabilized lease. After the death of the named tenant, one of the other individuals claimed that he was a non-traditional family member, despite the fact that the third individual, and not him, was the “life partner” of the deceased for over twenty-five years.

December 1, 2021

Pre-Litigation Settlements of Partition Matters

By Weiss & Weiss

Our firm receives many inquiries from co-owners of properties. As longtime readers of this blog are aware, a partition action can be brought in the appropriate Court when co-owners cannot agree on the disposition of real property. Such an action would demand that the Court appoint a Referee to determine the respective shares of the co-owners, and, if necessary, actually sell the property.

However, there are often situations in which the parties may agree to the disposition of the property without resorting to actual litigation. In this pre-litigation period, the parties, through their attorneys, may negotiate a resolution in which either one party can buy the other’s share of the property, or agree to jointly sell the property and share the proceeds. In such a situation, experienced counsel should prepare a written agreement, to ensure compliance with the parties’ understanding.

What provisions should be included in such an agreement? The agreement should first state that the parties are co-owners of the property, and the exact amount of their percentage shares of ownership. Next, there should be terms for the disposition of the property. For example, two brothers inherit a house from their parents, and agree to sell the property and share the proceeds equally. The agreement should state that the parties will cooperate in hiring a licensed real estate broker to market and sell the property. The agreement may even include more details, such as the name of the real estate broker, and the initial listing price for the property.