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Flood-Insurance-300x225Our firm has often been consulted by clients who inherited a house from their parents, and wish to sell the property, as they may have moved out-of-state, and the property became vacant after the passing of the last parent.

Usually, this is a straightforward transaction, which often requires legal assistance in acquiring legal authority to sell the property as part of an estate.  This involves experienced counsel filing for letters testamentary (if there is a will) or letters of administration (if there is no will).  Once the Surrogate’s Court issues the proper legal document, then the sale can proceed.

However, there is often another issue, which may become known to the surviving children only after their parents’ death.  It is possible that the parents borrowed against the property, even after the original mortgage that they took out to purchase the premises was paid off.  Often a reverse mortgage is taken out by the elderly parents, in order to raise funds to continue to live in the house.  Generally, such mortgages are only available to homeowners over the age of 62.  Once the loan funds are disbursed, there are no monthly payments.  The full amount of the loan would then be due after the death of the last borrower.

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Clients consulting our firm with respect to will drafting often ask how to leave a house or cooperative apartment to potential heirs when there may be more than one surviving child.  Perhaps a person owns a house and wants to leave it to all three of her children in her Will.  Concerns arise when one of the children has been living in the house all of his life or only one of the children frequently enjoys the use of the house as a vacation home.  In either case, the remaining children have no use for the property.  The well-intentioned parent may be inadvertently causing a family dispute after her death.  If the child who wants the property does not have the financial ability to buy out his siblings, by mortgage financing or otherwise, the remaining siblings may have no choice except for engaging an experienced attorney  to commence a partition action.

The person making the Will also needs to determine whether she wishes for her children to inherit in equal portions.  For example, if the house is of particular interest to one child and there are other assets available to be distributed to the other children, the parent may decide to leave the other assets to the other children, so that each child receives substantially similar disbursements.

We  have reviewed documents prepared by others providing that a person can continue to reside in the house until a particular triggering event such as vacating the house or death, after such event those who will inherit the property can have full access and sell it if they wish.  Such a document may provide that the occupant pay the property expenses while occupying.  This arrangement is not one that we recommend because it delays the delivery of the asset to the intended owner(s) and the occupant may not meet property upkeep demands, which provisions are difficult to enforce.

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Our firm often receives inquires regarding renewals of residential leases.  As prior blog posts have discussed, in general, a tenant in New York has no legal right to an automatic renewal lease, unless the rental unit is subject to some type of rent regulation.  Another exception may be where the lease itself contains a clause that allows either party to renew the lease upon proper notice to the other party.  The notice period may be 30 or 60 days (or even a longer time length) prior to the current lease expiration, so it is important for experienced counsel to review residential leases to ensure that, if a party wishes to renew, proper notice is timely sent to the other party under the lease terms.

However, it is also possible that the renewal clause itself may contain language which makes it unenforceable under New York law.  The main example of this situation is where the “renewal” language is insufficiently specific as to the terms of a possible renewal.  In general, a renewal clause must contain fairly exact terms as to the renewal lease term, as well as the amount of monthly rent to be paid under a renewal.

For example, if the renewal clause states that the tenant may renew this lease for an additional one year term at the same rent as the current lease, this would be enforceable, assuming that the tenant gives the proper notice as delineated in the lease for a renewal.  Another enforceable example would be if the clause states that the lease can be renewed for an additional one year term at a 5% rent increase.

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We previously posted about significant changes to the rules concerning real estate agents’ commissions.  These changes became effective in recent days.  Previously, sellers paid a commission to the buyer’s agent in the amount indicated in the listing in the multiple listing service (“MLS”), the primary source of real estate listings.  The recent changes state that the seller is no longer permitted to offer a commission on MLS and is not required to pay the buyer’s agent at the sale.  This post will examine the effect that this drastic change will have upon buyers.

With the exception of “open houses,” where any buyer can arrive and tour the property, buyers who make appointments to view properties are required to sign a compensation agreement with the buyer’s agent who shows the property to them.  In particular, inexperienced first time homebuyers are at a disadvantage.  The agreement may contain terms that may be unacceptable to a buyer, such as exclusivity (agent is paid even if she did not show the property eventually being purchased to a buyer), length of time (buyers should not be tied to an agent for long time periods), conditions to be met before the commission is to be paid and price (lower percentage, flat fee or hourly fee).  In a tough real estate market with elevated interest rates, it may be counterproductive for a buyer to be responsible for the additional costs of his real estate agent as well.

It should be noted that sellers still have the option to pay the buyer’s agent’s commission, which counteracts a buyer’s agent’s inclination to steer a buyer away from a property for which she will not be compensated.  This increases the visibility of a property to buyers.

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News outlets recently reported the tragic death of Shannen Doherty at the young age of 53.  Ms. Doherty was best known for playing “Brenda Walsh” in the series “Beverly Hills, 90210.”  She was diagnosed with cancer in 2015 and bravely fought against the disease until her death.  The actress was survived by her mother, brother and estranged third husband, as well as her dog.  She did not have children.  Knowing that she was terminally ill allowed her to make  appropriate personal and legal plans.

It has been reported that Ms. Doherty made her funeral wishes and preference for the disposal of her remains known to those close to her.  The actress handled these aspects properly.  It is not preferable to request that your attorney include these preferences in a Will for the following reasons.  The survivors are most likely to have the funeral conducted and the remains disposed of before locating a Will or other written directions from the deceased or her attorneys.  Then, it may be discovered too late that these activities were conducted in a fashion contrary to the desires of the deceased.

Ms. Doherty had an extensive furniture collection and more personal belongings than she needed.  She wanted to make things “easier for her Mom” by selling her belongings as she prepared to pass away.  Also, if her personal property in effect was converted to cash through sale, arguments over who would receive her personal property could be avoided.

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We would like to inform our readers that Transfer on Death Deeds (“TOD”) will become an option for property transfers in New York as of July 19, 2024.  Real property such as a house, condominium unit or vacant land is currently transferred by deed.  There are currently various types of deeds available for property transfers in New York State.  A Referee’s Deed applies to the transfer of property by the Court appointed Referee after a foreclosure sale.  An Administrator’s or Executor’s Deed is used by the fiduciary appointed by the Surrogate’s Court in an estate matter  to transfer property to the proper person designated by the Will or who is entitled to the property according to intestacy.  A seller in a standard real estate transaction will deliver a deed based on the level of quality of title promised to the buyer.  Such deeds may be either a quitclaim or warranty deed, or a bargain and sale deed with or without covenants.

Our readers may be familiar with transfer on death designations on bank accounts whereby the account will automatically go to the designee upon the account owner’s death.  Changes to the beneficiary can also be made during the account owner’s lifetime.  TOD deeds will operate in much the same fashion.  Such deeds will need to be signed before two witnesses and notarized before they are recorded before the owner’s death in the clerk’s office in the county in which the property is located.  Similar to the standards in making a Will, the property owner needs to have capacity, not be under fraud or duress, or unduly influenced.  The property owner retains control over the property and can sell or encumber the property with a mortgage.  The designee of the property takes it subject to any liens or mortgages to which the property is subject at the property owner’s death.  The transfer lapses if the beneficiary does not survive the owner, so it is necessary to provide for such a potential event by designating an alternate beneficiary in the TOD deed or by having a qualified attorney provide for such an occurrence in other estate planning documents.  Further, if two joint owners transfer property by TOD deed, the transfer to the beneficiary is not effective until both joint owners pass away.

The property owner can revoke a TOD deed by a properly notarized and recorded document and make a new beneficiary designation on another TOD deed, providing more control than a deed reserving a life estate.  It is important to note that a TOD deed cannot be revoked by a provision in a Will.  Transfer on death allows for the avoidance of a probate or administration proceeding as to that asset, which could prevent the delay and expense of an estate proceeding and avoid a contested estate to the extent that particular assets already have ironclad beneficiaries.  With all transfer on death designations, the property needs to be owned at death for the transfer to the beneficiary to be effective.

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