Real Estate Litigation

August 11, 2016

Selling a New York Property While in Foreclosure

Prior blog posts have discussed a “short sale” of a property in foreclosure. A short sale is when the house is worth less than the mortgage owed to the lending institution, and the lender agrees to accept less than the full amount owed when the transaction takes place. However, a situation may also arise when a house is worth more than the loan balance, or when the amount owed is small enough that the seller may decide to pay the difference in order to sell the property to a third party. This post will discuss legal issues related to these circumstances.

Many of our firm’s intend to sell their houses or other property in foreclosure. They have listed their properties with a real estate agent, and are confident that the selling price will exceed the amounts owed on the property’s mortgage. In that case, the first legal recommendation is to have an attorney file an answer to the foreclosure complaint in the appropriate court, including all legal defenses . This will allow the homeowner additional time in which to find a buyer for the property while the foreclosure process plays out in Court. Mandatory settlement conferences for foreclosure actions may also further delay a lender’s obtaining of a judgment of foreclosure and sale, allowing more time to market and sell the property.

Once a buyer is procured, it is important that the seller’s attorney immediately prepare a Contract of Sale. Assuming all parties then execute the contract, the buyer’s downpayment should then be deposited in the attorney’s escrow account. The next step would be for the seller’s attorney to contact the attorneys handling the foreclosure for the lending institution. The attorney should provide copies of the fully signed contract, together with proof of the downpayment deposit. At this point, the attorneys for the lender may agree (although legally, they are not obligated) to put a “hold” on any foreclosure litigation, pending the closing of the sale of the property. The reason for this is that at the closing, the lender will be paid in full. Therefore, it is usually not cost effective for a lender to continue to pursue a judgment of foreclosure in Court once there is a signed contract and downpayment.

June 7, 2016

Deficiency Judgments in New York Foreclosures

By Weiss & Weiss

Previous blog posts have discussed foreclosures in New York State. Many of our clients own either residential or commercial property and may not be able to make their mortgage payments. They may become subject to a foreclosure lawsuit brought in the appropriate Supreme Court, in which the lender seeks to foreclose on its mortgage and take over ownership of the property in question.

However, our firm is often asked what happens after the lender takes ownership of the property from the borrower. This is usually done after a public foreclosure sale of the property before a court-appointed Referee. The Referee will then prepare a Referee’s Deed, in which ownership of the property is transferred from the borrower to the entity which was the successful high bidder at the foreclosure sale. The Referee’s Deed is then recorded with the County Clerk’s Office in the county in which the property is located.

Does the foreclosure action end at that point? Generally the answer is yes, but not always. The lender, which can be either an institution such as a bank or credit union, or an individual, may seek a deficiency judgment against the borrower after the foreclosure sale is finished. Whether this happens is dependent on the successful bidder at the foreclosure sale. Before the public auction, the lender will make public the amount which the borrower owes on the property. This amount will include all principal and interest on the loan being foreclosed, the costs of the foreclosure, including attorney’s and referee’s fees and court costs, as well as any other expenses that the lender incurred in foreclosing the property. Let’s assume that this amount is $500,000.00. Any third-party bidder (anyone who is not the lender) for the property must bid at least this amount for the property. In the example given, the bidding would have to start at $500,000.00. Assuming someone believes the property is worth at least this amount, the highest bid which exceeds $500,000.00 would pay this amount to the Referee and become the owner of the property. The first $500,000.00 of the successful bid would be paid to the lender, with any remaining sums going to any creditors of the borrower who have appeared in the foreclosure action, and any surplus after that paid to the borrower. In such a case, there would be no deficiency judgment.

May 19, 2016

Who’s in Charge? Disputes over Control of Religious Institutions

By Weiss & Weiss

Recently in the news is a story relating to control over Touro Synagogue, located in Newport, Rhode Island. The Touro Synagogue was built prior to the Revolutionary War and is one of the oldest congregations in the United States. As with many older institutions, over the centuries, the original congregation and their descendants eventually moved from the area in question. Many of these individuals settled in New York, and formed a new congregation, named Shearith Israel. The original congregation in Rhode Island dwindled and even fell dormant for a period of time.

According to the Court records, there is a dispute between the current congregation of Touro Synagogue, now named Jeshuat Israel, and the New York congregation, Shearith Israel, over who was the rightful owner of the Touro Synagogue, and who has the right to make decisions such as the sale of ornaments in order to raise funds.

Our firm has handled similar cases involving control over religious institutions. Many churches and synagogues experience changing congregations and conditions over a long period of time. Depending on the location of the institution, members may move from the area, causing a sharp decrease in active membership. At that point, the institution must decide whether to continue in its present location, or consider moving to another part of the New York where membership may increase. Moving an institution will usually involve the sale of the current location. Such a sale must be approved by the Board of Trustees or other governing body of the institution in question. Prior blog posts have discussed the handling of legal disputes relating to control over a religious corporation.

March 17, 2016

Fraudulent Conveyances of Real Estate in New York

By Weiss & Weiss

Occasionally, our clients inquire as to whether a real estate transaction could be considered a fraudulent conveyance. This situation can occur when an individual or entity transfers property due to a judgment or pending judgment, in an attempt to evade creditors. In New York, a judgment is a lien on real property for a period of ten years. After ten years, the creditor can move to have the lien extended for an additional ten years. Therefore, those who own real estate may have an incentive to transfer such property to prevent a lien from being placed on it, possibly for a twenty-year period.

New York Debtor and Creditor Law, Article 10, is the state law governing fraudulent transfers. It states that, first, when any defendant transfers property in an attempt to evade a judgment creditor, that transfer is considered fraudulent and may be rescinded in a court action. An important consideration in this evaluation is whether the transfer is made for consideration, that is, whether the person transferring the property received value in exchange for the transfer.

Let’s give a hypothetical situation to help clarify the law. A husband and wife own a house jointly. The husband alone is sued individually for a business debt, and a judgment is obtained against him. Before the judgment is entered by the Court, the husband transfers his one-half interest in his house to his wife, so that the house is solely in his wife’s name. The husband receives no compensation for this transfer.

March 10, 2016

Preserving Real Estate Assets for the Defaulting New York Homeowner

By Weiss & Weiss

It is not unusual for some of our clients to be presented with the following scenario. An owner of a single family house or apartment falls behind on his mortgage and his lender commences a foreclosure proceeding while a sale is pending. In an apartment scenario, the cooperative board pursues a maintenance default matter while a cooperative unit owner is actively attempting to sell the unit. These are not situations where a short sale is sought. Rather, significant equity exists. The anticipated sales proceeds will allow for the full payment of the balance of the mortgage loan or maintenance arrears due to the cooperative.

Another common component of these situations is that the lender or cooperative board is aggressively pursuing their claim, jeopardizing the owner’s ownership of the asset. For instance, if the lender forecloses on the mortgage, the homeowner will lose title to the property and have nothing to sell. If the cooperative default goes to its final conclusion, an auction of the unit (and eviction of the occupant) , the unit owner will likewise lose her ownership interest. These results should be avoided when the closing proceeds are more than sufficient to pay any outstanding amounts due. The goal of the attorney representing the homeowner is to encourage the lender or the cooperative board to delay its proceeding pending the sale of the property , at which time the lender or the cooperative will be paid in full for the monies owed. When a homeowner falls behind in payments due, he may claim to a creditor that he is trying to sell the home in an effort to stall proceedings. While it may be true that the homeowner is trying to sell the home, the following suggestions may make such a claim more credible to the creditor and convince them to delay the proceedings.

First, it is helpful to have a skilled attorney present this information to the creditor. Second, for sale by owner scenerios should not be used. Having a licensed real estate agent involved who has an active listing that can be shown to the creditor is convincing evidence that the home is actively for sale. Third, if there is a signed contract of sale with downpayment monies on deposit and also a loan commitment letter from the purchaser to deliver to the lender or cooperative’s attorney, such documents will show that the means to pay the past due balance will be imminently available. A new loan may be sought by the homeowner as another means to resolve the default. If these strategies are not effective, our attorneys may file an Order to Show Cause with the applicable Court, seeking a temporary restraining order curtailing the creditor’s right to pursue the activity until the sale occurs.

February 25, 2016

Mortgage Modifications in New York State

By Weiss & Weiss

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.

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.

January 7, 2016

Legal Issues Relating to Private House Rentals in New York

By Weiss & Weiss

Many of our firm’s clients own private houses in Westchester County, in Brooklyn (Kings County), the Bronx, and Queens County. These may be one or two family houses, and many of these houses are part of the rental market, rather than owner-occupied. Renting a private house involves many legal issues that may not occur in an apartment rental. These issues will the subject of this blog post.

The first issue relates to a written lease. Many apartment rentals use a standard form lease (which may be a rent-regulated form lease), or no lease at all. It is important when renting a private house to have a qualified attorney prepare a written lease specific to the property to be reviewed and executed by the tenant. The reason for this is that while there are standard Court practices for apartment rentals (particularly if the apartment is rent-regulated) house rentals are more specific and unique. Therefore, it is important for anyone renting a house to have a lease which will incorporate the specific requirements for the rental, as there are fewer standard terms. Some of the issues to look at are the length of the lease term, whether the lease can be renewed after it expires (as opposed to rent-regulated apartments, in which a renewal right already exists), the amount of the security deposit, responsibility for maintaining the property, and other terms which are specific to the house being rented.

For example, many houses have older appliances. The written lease needs to state who is responsible for maintaining the appliances, and who will incur the expense of replacing a major appliance which no longer works. Further, a landlord may specify who needs to have the appliance serviced and the allocation of repair expenses should be negotiated. Many landlord-tenant disputes in private house rentals relate to the condition of the appliances, as well as heat and air conditioning systems. The lease should specifically delineate each party’s rights and responsibilities for these conditions.

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 19, 2015

What’s in a Name? Name Change Petitions in New York State

By Weiss & Weiss

Our firm often receives inquiries from individuals who desire to legally change their name. People may desire to change their name for many reasons. Some want to avoid a name which may be linked to celebrities or individuals with unsavory or even criminal histories. Others may need their name legally changed so that it matches other legal documentation that they may have, such as a passport. Whatever the reason, this post will discuss the legal requirements required for name changes in New York State.

The first step in legally changing one’s name is to file a Petition in the Supreme Court in the county in which the individual currently resides. There are legal requirements regarding the contents of the Petition, including whether the individual has ever been convicted of a crime, judgments against the individual, pending litigation involving the individual, and information regarding child support and spousal support obligations. The reason that this information is required is that a person may attempt to evade legal obligations, such as judgments or child support, by changing their name. In order to prevent this, a name change Petition will not be accepted unless all information regarding such outstanding legal obligations is provided.

The Petition also has to provide the reason for the name change application. As discussed above, there are many valid reasons for such application. Once the Petition is complete, it is filed with the appropriate Court. The Court will also require a certified copy of the applicant’s birth certificate, showing the original name.