New York Real Estate Lawyers Blog

April 21, 2016

Is This Your First Time? Property Purchases in New York State

It’s that time of year again. This author is not thinking about the chirping birds and blooming trees heralding the beginning of Spring. We are thinking about another sign of the season– the first time home purchaser. This post will address issues pertaining to the person buying a home, whether a house or a cooperative or condominium apartment, for the first time. Even if a person has owned a home in another state, real estate in New York is its own animal.

The most important aspect of our advice is that the first time homebuyer should surround himself with seasoned experts throughout the process. In addition, let the experts do their work without your interference. It is usually better for a first time homebuyer to work with a licensed real estate agent and to buy a property that is listed with a real estate agent, as opposed to buying a home that is listed for sale by owner. That way, the real estate agents will resolve many of the issues that commonly develop in a transaction. If both parties are not represented by real estate agents, then the buyer may not know how to best negotiate a favorable price. Comparable sales should also be evaluated to determine the proper price to be offered by a buyer. A real estate agent knows the area best, but also has the resources to locate the comparable sales data and to evaluate the data properly.

The first time homebuyer should also get his finances in order. He should become acquainted with a potential lender or mortgage broker prior to making offers. His offer is more likely to be accepted if accompanied by a pre-approval letter, so that the seller is comfortable with taking the property off the market for this buyer. In addition, the proposed lender or mortgage broker may note possible deficiencies in the buyer’s potential loan application, such as inaccurate credit concerns, the necessity of reducing debt and the like. Given the amount of the typical downpayment to purchase a property in the New York metropolitan area, first time homebuyers may need a gift from their parents or other relatives to pursue the transaction. The buyer should discuss this with the appropriate person in advance. Further, once the gift is made, the parties need to be prepared to show the source of the gift, such as copies of bank statements before and after the gift, from the parent and the child.

April 14, 2016

Taxable Matters Pertaining to Valuable Personal Property

By Weiss & Weiss

Given that the 2015 tax filing deadline is imminent, taxes and the potential reduction of tax liability are on the minds of many of our clients. Some of our clients are fortunate enough to own collections of valuable personal property, such as artwork, cars and the like. Our estate attorneys are in the position of advising clients how to dispose of such personal property and how to reduce potential tax liability.

For purposes of this post, let us assume that the valuable collection contains artwork. It is prudent for the owner of such a collection to make a detailed catalog of the individual components of the collection. That way, it may be easier to keep track of the possessions. Gift and estate taxes could be due to the extent that an event of a public nature occurs, such as a sale or auction, or museum loan of the artwork. If the owner of the artwork merely decides to give a work of art to his daughter, who will privately display it in her home, then such an act may be unlikely to trigger the interaction of the tax authorities.

If the artwork is given to an institution during one’s lifetime, then the value of such item can be deducted from the donor’s taxes. Should the artwork be given to an individual and be valued at less than $14,000, then the annual gift tax exclusion will apply to make this event not taxable. Once a person passes away, estate taxes may be due, depending on the value of the estate.

April 6, 2016

Assignment of Commercial Leases in New York

By Weiss & Weiss

Our firm is often involved in landlord-tenant situations involving assignments of commercial leases. What this means is that one party to a commercial lease (usually the tenant) wishes to transfer their rights and responsibilities to a third party, either an individual or company who is not a party to the original lease. Most often this occurs when there is a potential sale of the business associated with the lease.

For example, a commercial tenant operates a car repair business and has a lease for the business for a period of five years. A third party approaches the business owner and offers to buy the business. As part of the purchase, the lease needs to be assigned from the current tenant to the purchaser of the business.

The main legal issue relates to the lease itself. Most, but not all, commercial leases contain a clause allowing assignment of the lease to a third party with the consent of the landlord. They may also state that such consent is not to be unreasonably withheld or delayed. Some leases will further delineate what “unreasonable” may entail. For example, it may state that it is not reasonable to refuse consent to a purchaser who intends to operate the same type of business as the current tenant, assuming they have the financial standing to assume the lease.

March 25, 2016

Happy Easter from Weiss & Weiss

By Weiss & Weiss

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.

March 4, 2016

Can a Promise to Make a Will Be Enforced in New York?

By Weiss & Weiss

From time to time our firm is asked if a promise to make a Will leaving one’s inheritance to a particular person is enforceable. Such promises occur in the following situations. A relative spends a lot of time with another, perhaps even doing substantial favors for the person, who repeatedly says “I won’t forget about you in my Will.” A person may have intended to revise his Will to include someone, told that person of such intent, but never got around to making the revision. Such a suggestion may also be part of a resolution of a marital dispute wherein the spouse agrees to provide for a child in his Will. Our basic answer is that such promises are not enforceable in New York.

Even if a particular disposition is made in a Will favoring a particular person, such a provision could be removed upon the execution of a Codicil (amendment to a Will) or in an entirely new Will. Since Wills are organic documents that can be changed as the Testator (the legal term for the person who makes a Will) desires, obtaining assets through a lifetime gift or having a dispute settled by the payment of funds during lifetime is the only way to make sure that such assets are left as desired by the recipient. The testator can leave his assets to any person or charity that he wishes.

Our readers may have heard of the term intestacy, which is the legal term for passing away without a Will. In such a situation, New York State’s statute determines who will inherit a person’s assets, which is dependent upon such person’s relationship to the deceased. If the closest surviving person to the deceased is his daughter, then she would inherit the assets. Should the deceased have a surviving spouse and children, then spouse receives $50,000.00 plus half of the assets and the children divide the other half of the assets.

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.

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 28, 2016

New Yorkers Need Estate Plans for Their Disabled Children

By Weiss & Weiss

Some of our trust and estate clients have adult children who are disabled. The child may have been born with a disability, such as cerebral palsy, making the parents accustomed to allowing for the disability while knowing that such disability will never go away. In the alternative, the disability may have occurred later in the child’s life, such as drug or alcohol addiction or mental illness. The parents of these children need to acknowledge the limited capabilities of their children while also providing for the possibility that the child could be self-sufficient if the underlying condition is abated. In either case, parents need to provide for the possibility that the child could outlive both parents or the parents could become ill and unable to care for the child. This post will address the legal issues to be considered for disabled children.

As discussed in our prior post pertaining to providing for pets in one’s estate plan , parents should write a detailed letter to caretakers and trustees specifying care for the child, such as favorite foods and activities, details of relationships with relatives and friends and medical care history and details. Practical matters should be considered such as selecting housing, like a licensed group home or assisted living facility, for the disabled child. This should be done prior to the decline of the parents.

It is crucial that potential access to government benefits be preserved for a disabled child. These government benefits may pay for health care and community services. In order to preserve access to government benefits, refraining from titling assets in the child’s name outright is crucial. As such, there should not be a bequest in the parent’s Will in the name of the child. Instead, the Will should leave assets to the child by means of a Special Needs Trust . The Special Needs trust needs to specifically state that it is not to be applied in such a fashion that access to government benefits would be denied. As such, the government benefits will be used to pay for the child’s basic needs and the Special Needs Trust will be used to pay for the extras that would assist the child.