New York Real Estate Lawyers Blog

April 4, 2019

Return of the Rogue Rabbi – Elections and New York Religious Corporation Law

Recently in the news is a follow-up story relating to a dispute regarding control over a Chelsea synagogue. A prior blog post related the original story about a “rogue Rabbi” who took control of the synagogue pursuant to a lease agreement, and was accused of violating the lease by, among other things, tearing out original pews, renting the synagogue out for parties, and other alleged wrongful conduct. That dispute is still being litigated.

The new dispute relates to a recent election held by the synagogue to elect a new Board of Trustees. Certain members have disputed the validity of the election, and have filed suit to reverse the results of the election. As our prior blog posts have explained, such disputes are usually governed by the New York Religious Corporation Law. The law governs all religious institutions, including the so-called “major” religions, Christianity, Judaism, Islam, and Hindu.

However, New York Religious Corporation Law only provides general guidelines regarding many of the issues which may arise over a disputed election. One potential issue is which individuals qualify as members of the congregation, and, therefore, would be allowed to vote in an election. Congregants or members are usually defined under the law as those who are over 18 years old, and who worship regularly at the institution in question. Certain churches may define congregants as those who receive communion regularly at the church. Contributing funds to the institution on a regular basis may also be a factor in membership qualification. Our firm recommends that the institution’s by-laws be drafted to include a more specific description of membership qualification. Institutions are free to define membership in their by-laws, and such by-laws will be upheld by the Courts. For example, the institution may define regular attendance at services as a qualification for membership, or may limit membership to dues-paying individuals, or to individuals who have contributed a certain level of funding. Specifically defining membership is important for any religious institution, as participants in elections are limited to only members of the congregation. Qualified members may then vote in elections to determine the leadership of the organization.

March 28, 2019

Mortgaging the Church’s Future?

By Weiss & Weiss

A recent New York Supreme Court decision relates to the intersection of two major practice areas of our firm, foreclosure and Religious Corporation law. The case involved a mortgage loan taken out by Grace Christian Church, located in Brooklyn, New York. According to the Court, the Church mortgaged its property to the plaintiff, John T. Walsh Enterprises, LLC, in exchange for a loan of $350,000.00. When it failed to make payments under the terms of the note, the plaintiff brought a foreclosure action against the Church property.

This case is an excellent example of the interaction between these two areas of law. The reason for this is that, under New York’s Religious Corporation Law, a religious corporation cannot sell, mortgage, or lease its property for a term exceeding five years without the consent of the New York Attorney General. Prior blog posts have discussed the legal procedures necessary for a religious institution to obtain such consent. Recent changes in the law have made it possible to obtain such permission directly from the office of the Attorney General, without the necessity of a Court proceeding. However, if the Attorney General’s Office does not give initial consent, the religious institution then has the option of bringing an action in Supreme Court to obtain such consent. Such action must be served upon the Attorney General’s Office, and, if the Court subsequently approves the transaction, whether it be a sale, lease, or mortgage, then the religious institution may proceed with its real estate transaction.

In the Grace Christian Church case, although the Church’s Board of Directors approved the loan transaction, they did not seek approval of the New York Attorney General, as the law requires. In addition, the loan terms were significantly altered at the loan closing, without the consent of the Church’s Board of Directors. A title search performed by an experienced title company would have shown that the property was owned by a religious corporation, and would have required such consent by both the Board of Directors as well as the Attorney General as a condition of closing the loan.

March 15, 2019

Varsity Blues? Misrepresentation in New York Real Estate

By Weiss & Weiss

Many of our readers are aware of the recent college admissions cheating scandal. Credentials of proposed candidates were misrepresented in an effort to obtain admission to prestigious colleges. Parties to real estate transactions in New York may also misrepresent financial qualifications and property conditions in an effort to close the sale of a property. This post will address the types of misrepresentations that may occur in real estate transactions and the remedies if such misrepresentation is discovered.

From the prospective of a purchaser, misrepresentation can take the following forms. It is not unusual for a contract to purchase a house to contain a provision that the purchaser represents that she has adequate funds to close, has not filed bankruptcy during the past seven years, and is not aware of any judgments filed against her. The purpose of this clause is to deter a seller from entering a contract, taking the property off the market and later discovering that the purchaser cannot obtain cooperative board approval or obtain a loan commitment due to facts that the purchaser knew at the outset of the transaction.

Purchasers also are often required to represent that a loan application will be pursued with diligence. A purchaser may falsely elevate financial details on his mortgage application in an effort to qualify for a mortgage for which he is not otherwise qualified. Lenders protect themselves as to this potential form of misrepresentation by requiring proposed borrowers (and applicants for short sale approval) to deliver a signed IRS form 4506-T. This document allows the lender to obtain tax returns directly from the IRS, in case the borrower falsified tax returns delivered to the lender in an effort to look more favorable as a borrower. In addition, lenders typically contact the borrower’s employer immediately before the closing to confirm continued employment and salary awarded. Cooperative applications commonly contain personal and business letters of reference. Due diligence may dictate that the authors of such letters be contacted to confirm that they did indeed write and submit such letters as part of the board application.

March 7, 2019

Who’s Next? Successor 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. The first issue which needs to be determined is whether the premises in question 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 many rental units in Westchester and Nassau Counties.

Whether an apartment is subject to rent regulation depends on many factors. Defining these factors is beyond the scope of this blog post. It may depend on the number of units in the building, the age and history of the building, and whether the owner accepted certain government benefits or loans. A rent regulated unit will generally be subject to the rent stabilization laws of New York State or the local municipality in which the unit is located. Generally, only cities with large populations will have apartment units subject to rent regulation.

There are local government offices, known as the Division of Housing and Community Renewal (DHCR) which maintain databases allowing for a tenant to determine if their unit is rent regulated.

February 21, 2019

New York Foreclosure Defense – Public and Private

By Weiss & Weiss

A recent article in the New York Law Journal discussed the possibility of public foreclosure defense services being in jeopardy due to government funding cuts. What does this mean for the homeowner whose home may be in danger of being foreclosed?

Homeowners who are having problems paying their existing mortgages may be in danger of having a foreclosure action brought against them. New York State currently provides public services to assist such parties. These agencies may provide legal advice on avoiding foreclosure, help with loan modifications and refinancing, and other financial services related to mortgages. Generally, these services may be provided free of charge by non-profit agencies, such as Legal Services of the Hudson Valley.

However, many of these agencies are overwhelmed by the demand for their services. As stated in the article, state budget cuts may result in these agencies being unable to provide assistance for all homeowners who may be at risk of foreclosure. What should these homeowners do in this situation? We would recommend hiring a private attorney with experience in defending foreclosure lawsuits. Prior blog posts have shown the various ways in which an experienced attorney can defend a foreclosure case in litigation. Even delaying a foreclosure action can buy a homeowner valuable time in which to negotiate a loan modification, obtain a refinance commitment, or even sell the property and pay off the mortgage, if there is sufficient equity.

February 8, 2019

Bucket List- Who’s in Charge after Your Death?

By Weiss & Weiss

So long as one is alive and mentally capable, one is in control of her own financial and legal affairs. Once a person passes away, a fiduciary needs to be appointed by the Surrogate’s Court to determine and pay estate debts , collect and distribute assets, file relevant tax returns and pay taxes, vacate a rental property used by the deceased or sell a property owned by the deceased. Also, if the deceased left minor children surviving, a guardian needs to be appointed to care for the children on a daily basis. This post will explore the types of fiduciaries that may be involved after a person’s death and how they are appointed.

If a person dies without a will (intestate), the Court will appoint an Administrator to serve. The Administrator to be appointed will be the same person who will inherit according to the intestacy statute. For instance, if the closest survivor is a sister, such person will inherit the deceased’s assets and serve as the estate administrator. Guardians for minor children (under 18 years of age) will need to be appointed by the Court in the event that the person dies intestate. Since a parent should not leave it to the Court to appoint a guardian for her children, it is prudent for such person to engage the services of a qualified professional to draft a will containing her wishes relative to fiduciaries.

We have posted previously about the merits of having a will and/or trust. In either case, fiduciaries are selected by the person making the will or trust. Executors are formally nominated in wills. They are charge of paying valid financial obligations and distributing assets that are collected. The testator (person making the Will) can select the best person in her life for the position of executor. Perhaps she is estranged from family and would prefer not to have the Court appoint the surviving relative according to statute in the case of intestacy. Also, the testator may have a friend who is sophisticated with respect to financial matters and is best suited to act as executor. Trustees of trusts take on similar roles as executors. Of course, selecting a guardian to raise one’s children in the event of death is a highly personal and important choice to be exercised.

February 1, 2019

Illegal Procedure? Legal Sports Betting and its Impact on New York Rentals

By Weiss & Weiss

Scheduled for this Sunday is the Super Bowl between the New England Patriots and the Los Angeles Rams for the championship of the NFL. Recent news stories in the New York metropolitan area involve the possibility of making legal sports bets on the “big game” at casinos or racetracks located in New Jersey. The reason for this development is a recent decision by the United States Supreme Court which invalidated a federal law prohibiting individual states from making sports betting legal, with limited exceptions.

The Supreme Court, by a seven to two vote, held that it was a violation of the Constitution to prohibit states from making their own decision regarding the legalization of sports betting. The result is that every one of the fifty states can now legalize sports betting (or decide not to legalize sports betting), and may determine where, when, and how such bets will be made within their state. The details of such legalization are left up to each state, including whether to allow online betting.

New Jersey, which brought the case before the Supreme Court, has already passed legislation permitting sports betting in racetracks and casinos, such as the Meadowlands Racetrack located just a few miles from New York City. New York State has lagged behind, and has not yet legalized sports betting or decided on a structure for such potential legalization. For the time being, New York State residents who wish to bet against the Patriots in the Super Bowl must travel to New Jersey, or to another state such as Nevada, which has authorized legal sports betting.

January 25, 2019

Paying the Piper – Ending a New York Foreclosure

By Weiss & Weiss

Our firm frequently handles defenses for clients whose property is in foreclosure. It is possible, for various reasons, that such an individual may eventually be in a position to pay off or reinstate the mortgage loan in question. There can be many reasons for this to occur. For example, let’s say a homeowner encounters financial difficulties, and, as a result, defaults on her mortgage. As prior blog posts have explained, the legal process to foreclose a property may take several years. Potentially during this period of time, the property owner may inherit a large sum of money from a relative. She is now in a position to either pay off or reinstate the loan.

Another example may be where the homeowners are a couple who are going through a divorce. They may be arguing about money matters and cannot agree on whether to pay their mortgage, or to sell the property and move into separate residences. One of the spouses may have already moved out, and may refuse to pay the mortgage as a result. While they are going through legal divorce proceedings, the property may go into foreclosure as a result of their failure to make payments. It is possible that in resolving their divorce action, the parties agree that one of the spouses is to pay off the mortgage in full, with the other spouse receiving full title to the house as part of the settlement.

Assuming that there are now sufficient funds to pay off or reinstate the mortgage, what happens next? The first step is to have experienced legal counsel contact the lender, or their attorneys. Both a payoff letter and a reinstatement letter should be requested. These are written documents which will detail the exact sum due in order to pay off the mortgage in full, or to reinstate the mortgage and resume making regular payments. These documents will include all sums due to the lender, such as principal and interest, late fees, attorneys’ fees, and any taxes or other fees which the lender has advanced on behalf of the borrower. Importantly, the letter will also state a date through which the payoff or reinstatement figure is effective. After that date, the amounts may change, as additional interest or property taxes may become due.

January 17, 2019

Legal Effect of Delays in New York Foreclosure Actions

By Weiss & Weiss

Prior blog posts have discussed the legal steps required to foreclose property in New York State. Often, our firm will encounter a foreclosure case that has been in litigation for many years. In fact, it is entirely possible for a foreclosure matter in New York to take between five and ten years from the commencement of an action to the final sale of the property at auction. Even after the final sale, there may be additional landlord-tenant litigation involving the owner or tenant being evicted from the foreclosed property.

This post will discuss the legal ramifications of a delay in a foreclosure procedure. Foreclosure cases can be delayed for many reasons. Common reasons are court backlog, which may involve a Judge taking up to a year to render a decision on a motion, or simply failure of the lender or their attorneys to expeditiously file the various necessary motions in order to advance the case. Experienced counsel for the defendant may also further delay the case’s progress by interposing legitimate defenses to the action, such as a lender’s failure to provide the correct notices to the borrower as required by law.

As a result, the case may take years to resolve itself. What is the effect of such a delay? The first effect is that if the borrower is residing at the property, it allows her time to arrange for new living arrangements. If there is insufficient equity in the property, and the borrower feels that ultimately, it will be sold at an auction, any delay will allow her to continue living at the premises while the case plays out in Court. Even after the property is sold, the new owner must bring separate legal proceedings in order to evict any persons living at the premises. Our attorneys may be able to negotiate with the new owner to give the former owner sufficient time to obtain a new residence and arrange for movers. We have even successfully negotiated for the new owner to pay the prior owner’s moving expenses in order to have the property vacated.

January 10, 2019

Up Against a Wall- Legal Negotiation Strategies

By Weiss & Weiss

Our readers who follow the news are aware that the Federal government has been partially shut down for several weeks. President Trump has taken the position that he will not agree to re-open the government unless a wall is erected along our southern border. The Democratic leadership has responded that it will absolutely not agree that a wall is to be installed. It is not the goal of this author to side with either of these positions. Rather, we find it striking that neither side is negotiating effectively. By stating an absolute, such as there must or must not be a wall, both sides are preventing a satisfactory resolution; which requires agreeing to terms that inherently will be neither of these positions. Presenting an “all or nothing approach” is not how matters are successfully concluded. This post will address one of the tools that experienced attorneys have at their disposal- strong negotiating skills. We will explore how these skills are utilized in various legal matters.

Negotiation strategies can take the following course in real estate transactions. We recommend that parties to a proposed deal let their attorneys “do the talking” and thereby prevent themselves from showing emotion or desperation to sign the contract. Otherwise, such a party is vulnerable to agreeing to issues in the contract that may not be beneficial and result in regret. For instance, a seller who needs to sell for financial reasons or who may be facing foreclosure, without other viable offers, may agree to excessive demands from the buyer like making repairs, credits for inspection issues, etc. On the flip side, a buyer “in love” with a particular house that has multiple offers in a strong Spring market may agree to risky decisions such as waiving the mortgage contingency, allowing violations to remain and the like. The more prudent negotiation move is to allow only a qualified attorney to be aware of these factors, not display feelings and allow the attorney to be the only one to negotiate on a party’s behalf.

Commercial lease negotiations contain their own strategy. A tenant may want to be in a particular location and find it necessary to tolerate the unreasonable expectations of a landlord. For instance, a landlord may wrongfully impose snow removal obligations on the tenant. The tenant’s attorney can get more leverage in this negotiation if the tenant is willing to walk away and find another location instead. Such flexibility may help to achieve better results for the client. Perhaps the landlord has an opportunity to rent to a “big box” nationally known tenant. In such a case, the tenant will require that its form of lease be signed and will not be amenable to many landlord requirements. Locating another tenant who is willing to accept landlord demands could be best in some situations.