New York Real Estate Lawyers Blog

March 28, 2014

Defending Reverse Mortgage Foreclosures

A recent article in the New York Times discusses the pitfalls of reverse mortgages, including the effect such a mortgage may have on the heirs of the borrowers in question. A recent blog post also examined the possible negative legal ramifications of reverse mortgages on seniors and their surviving spouses. This article will discuss possible legal defenses when a reverse mortgage is being foreclosed, or threatened to be foreclosed, by a lending institution.

The first person to be impacted by a reverse mortgage default is usually the surviving spouse of the borrower. This situation can occur when only one spouse is obligated under the reverse note and mortgage. There are several reasons why this can happen. It is possible that one spouse has poor credit, and cannot qualify for a loan. In addition, in order to qualify for a reverse mortgage, the borrower must be at least 62 years old. A couple may own a property jointly, where one spouse is over 62, and the other is younger. In that case, the reverse mortgage may be made to only the older of the owners. In this example, the lender will often force the non-borrowing spouse to remove their name from the title of the property being borrowed against as a condition to making the loan. This may cause additional legal problems if the non-titled spouse survives the borrowing titled spouse.

If the borrowing spouse passes away, the terms of the reverse mortgage usually call for the entire sum that was borrowed to be immediately paid in full. The surviving spouse may receive collection letters from the lender, demanding that the mortgage be repaid in full. This obviously comes at a time when the surviving spouse is probably undergoing emotional and financial stress.

March 21, 2014

Marital Rights in a New York Estate

By Weiss & Weiss

Our clients have inquired as to the consequences of the termination of a martial relationship upon rights in a New York estate. The resolution to this issue depends upon whether the relationship was legally terminated through a divorce and whether the estate is being conducted as an administration or a probate proceeding. Many of us are familiar with those whose relationships end, but who do not legally end the relationship by applying for and obtaining a legally binding divorce decree. In some cases, one of the partners relocates and is estranged to such a degree that they are unable to be found. In order to complete the estate proceedings, private detectives may be needed to determine if the relocating spouse predeceased, making them unqualified to inherit, or to ensure that notice as required by the Surrogate’s Court is effectuated. In other cases, the parties have a cordial breakup and interact often. However, in either case, the spouse is entitled to inherit from the deceased party’s estate, unless a judgment of divorce was obtained during the lifetime of both parties. The Surrogate’s Court will often request a copy of the judgment of divorce, so it is important for parties to maintain such significant documents in an accessible location.

In the instances when a divorce was not obtained, this blog post will analyze the distinctions between an administration and a probate proceeding. This blog has discussed in general terms an estate administration proceeding, which is appropriate when a person dies without a will (intestate). New York’s Estates Powers and Trusts Law provides that the spouse receives the entire estate if there are no children. If there are children, the spouse will still receive $50,000.00 plus one-half of the rest of the estate. Certainly, a separated person would not wish for his spouse to receive the bulk of his estate, but this would be the result in an administration proceeding.

Should such a separated person not wish to divorce, he should have a will that is consistent with his wishes prepared by legal counsel in order to attempt to prevent this result. One should be mindful that in New York State, a spouse cannot be disinherited under most circumstances. A spouse has the right to her “elective share”, which is that amount that would have been inherited in the event of intestacy. An exception to this concept is obtaining a proper waiver of elective share document, wherein the party waives her right to her elective share in the spouse’s will. This document may be appropriate even when a relationship has not dissolved. For instance, one spouse may be independently wealthy and be willing to waive her elective share so that the children of the deceased receive the bulk of the estate. The waiving spouse may also be duly provided for by other assets such as life insurance.

March 12, 2014

Every Hoarder Needs a Clutter Reduction Program

By Weiss & Weiss

Our readers may have read a recent article in The New York Times concerning a compulsive hoarder (or “collector”) and his struggle to clean out his rent-stabilized apartment in order to avoid eviction. While this situation is so notorious that it even became the subject of an episode of the television series “Hoarders”, unfortunately the issue is not uncommon. This blog post will discuss hoarding in the context of a cooperative or condominium building and the legal remedies that the cooperative or condominium board has to preserve the standard of living of the building’s residents.

Hoarding is more than a personal problem for a shareholder or unit owner. The board’s response needs to take into account more than merely trying to give the unit owner a clutter-free existence. The real concerns behind a neighbor’s hoarding are as follows. Hoarding can be a symptom of mental illness. In some cases this author, on behalf of a cooperative board, has needed to inform the shareholder’s next of kin of a potential mental illness that needs to be addressed or has commenced guardianship proceedings to have an individual appointed as guardian of the shareholder to promote the person’s safety and well-being.

Article 81 of New York State’s Mental Hygiene Law governs the procedure for appointing a legal guardian for an adult, as may be necessary to provide for personal needs (such as health and safety) and/or to manage financial affairs. Usually the Supreme Court in the county in which the alleged incompetent resides is the forum for the hearing and trial, but in some cases the Surrogate’s Court in the same county can adjudicate the matter if it is in the context of an already existing estate proceeding. The Court may appoint a guardian if there is clear and convincing evidence that the person will suffer harm because he is unable to provide for his personal needs and/or property management and the person cannot understand the consequences of such inability. The guardianship procedure can be brought by “a person otherwise concerned with the welfare of the person alleged to be incapacitated”. Such a proceeding is commenced by Petition and Order to Show Cause, personally served upon the alleged incompetent. An independent court evaluator is appointed to determine the person’s ability to manage the activities of daily living, ability to manage one’s own financial affairs, and the necessity of appointing a guardian. After a trial or hearing, the Court may appoint a guardian to handle the affairs of the incompetent, who must undergo training, post a bond and file reports with the Court at regular intervals.

February 26, 2014

Relgious Land Use Act as Applied in Westchester County, New York

By Weiss & Weiss

Fortress Bible School rendering.jpg In 1999, the Town Board of Greenburgh, located in Westchester County, New York, reviewed an application of the Fortress Bible Church to build a church and school on land that it owned within the Town borders. After review by the Town Board, the Board rejected the application, claiming that there were safety concerns regarding inadequate stopping distance from the main road to the Church entrance, as well as general safety issues related to traffic entering and exiting the Church site.

After this refusal, the Church filed a lawsuit in the United States District Court for the Southern District of New York. The case went to trial, and witnesses on all sides were heard by Judge Stephen C. Robinson. The Church alleged that the Town’s refusal to grant a building permit violated the Religious Land Use and Institutionalized Persons Act, as well as the First Amendment, the Equal Protection Clause, and New York constitutional and statutory law.

Readers of this blog may ask what is the Religious Land Use and Institutionalized Persons Act. We will refer to this Federal Law by its acronym, RLUIPA. In short, RLUIPA’s main thrust is to protect religious organizations from government discrimination in zoning decisions. It states that no government shall impose or implement a land use regulation in a manner that imposes a substantial burden on the religious exercise of a person, including a religious assembly or institution, unless the government can demonstrate that the imposition of the burden is in further of a compelling government interest and is the least restrictive means of furthering that interest. [link to text of law].

February 6, 2014

Who Gets My Stuff?

By Weiss & Weiss

The Associated Press recently reported about a controversy concerning treasured possessions belonging to Dr. Martin Luther King Jr. Dr. King’s daughter Bernice King is currently in possession of his Nobel Peace Prize Medal and personal Bible. Her brothers, who control the Estate, have been attempting to seize these items, so that the Estate can allegedly sell them. There may be a written agreement to which Dr. King’s daughter may be subject where she previously agreed to deliver these items to those controlling the Estate. While most of us do not possess such historically important and valuable items, we should make provision for our “stuff” after our passing.

The legal term for “stuff” is personal property, which is not real property (land, house or condominium). Personal property can be as diverse as automobiles, jewelry, shares of stock in a cooperative corporation or a china collection. Some personal property can be highly valuable and unique, of sentimental value or of historical interest. Other items of personal property may be a nuisance because they are “junk”, difficult to dispose of and no one wants them.

If one dies intestate (without a Will) there will be an estate administration whereby an administrator is appointed by the Surrogate’s Court to distribute the personal property. In this case, the personal property will be distributed consistent with Estates Powers and Trusts Law Section 4-1.1. If one dies with a Will, the Surrogate’s Court in the probate proceeding will appoint an executor to dispense with the personal property consistent with the terms of the Will. As our readers can see, if one dies without a Will, the statute determines who is entitled to the personal property. If one has a Will drafted by experienced legal professionals , he can specify who should receive his personal possessions.

January 30, 2014

Non-Compete Clauses in Commercial Leasing

By Weiss & Weiss

464 PG 02.JPG A prior blog post discussed the legal issues relating to the sale of a business or professional practice. One issue mentioned in that article was that of a non-compete clause. This blog post will discuss that issue in further detail as it applies to commercial leasing.

As a great deal of commercial space in the New York metropolitan area involves shopping centers and strip malls in which the stores are in close proximity to each other, a non-compete clause may be essential for a tenant. A non-compete clause in a commercial lease involves an agreement between the landlord and the potential tenant that the landlord will not rent space to a competitor of the tenant, or to a business that draws the same customers who may choose to do business with one tenant as opposed to another. A non-compete clause also comprises the tenant’s promise not to engage in particular business activities. For example, if the tenant sells office supplies, then the tenant may ask for a clause in their commercial lease by which the landlord is prohibited from renting any space in the same shopping center to another store that sells office supplies. In subsequent leases with new tenants, the landlord needs to include the prohibition from selling office supplies so that new tenants do not violate the landlord’s promise to the office supply tenant.

Of course, it is essential that such a clause be drafted with specificity and contain language sufficient to make it clear which competitors, specific activity and types of businesses are prohibited. For example, using the office supply example above, a non-compete clause must be very specific in the types of sales that are prohibited. Many establishments such as grocery stores and drugstores sell items such as writing implements and stationery, even though it is not their primary business. A non-compete clause should be crafted for the specific inventory of the store in question while also providing the business with opportunity for growth and change in inventory as needed.

January 24, 2014

Trusts Part II: Specialized Trusts Play Role in Estate Planning

By Weiss & Weiss

In our last blog post , we described trusts in general terms. This blog post will define and describe particular specialized trusts, including their purposes and benefits.

A Medicaid Trust allows for the assets to be held in trust so that the settlor will qualify for Medicaid and other governmental benefits. If the assets are no longer held in the individual name of the settlor, they are not deemed assets for Medicaid purposes, thus permitting the individual to qualify for Medicaid benefits. Medicaid Trusts must be irrevocable and the settlor is not permitted to receive the return of the principal of the trust. The individual transfers assets to the trust, retaining the right to receive income generated by the trust, with the principal of the assets eventually being transferred to the beneficiaries such as the spouse or children of the individual. Medicaid Trusts protect assets in that the assets will not be required to be employed to pay for long-term care and qualification for Medicaid will result, assuming that the “look-back” period rules (length of time that assets need to be held in the Medicaid Trust in order to disqualify them from use for long-term care expenses) have been followed. Our attorneys will orchestrate the documentation required in order to navigate the “look-back” rules.

Life Insurance Trusts have the main purpose of removing the proceeds of a life insurance policy from estate taxes. The trust purchases the life insurance policy insuring the life of the settlor. At death, the proceeds of the life insurance policy are paid to the beneficiary. Like a Medicaid Trust, if the asset (the life insurance policy) is titled in the name of the trust, rather than in an individual name, it is deemed to be an asset that is not included in the estate and is exempt from estate taxes, so long as all events took place at least three years before death. Further, Life Insurance Trusts are useful to raise the money needed to pay estate taxes when the family does not want to sell an asset, such as a family business or farm, in order to raise the money to pay estate taxes.

January 17, 2014

Trusts Part I: Estate Planning for Astute New Yorkers

By Weiss & Weiss

Trusts provide a valuable tool in estate planning because they serve the purposes of preserving assets, protecting intended beneficiaries, and potentially saving or eliminating estate taxes. A trust is a legal document that conveys a “corpus”, or body of assets, from the settlor (the person who creates the trust and owns to assets) to a trustee (the individual or corporate entity with the responsibility of holding the assets) for the benefit of the beneficiary (the person who will ultimately receive the proceeds of the trust). A charitable organization may also be the beneficiary of a trust.

These documents should be drafted by skilled legal professionals and signed in accordance with New York State Law . Trustees selected should be responsible and qualified for the tasks required. In addition, the age of the trustee should be considered. It is not sensible to appoint a trustee who may be eighty years old when he needs to perform his duties, or a trustee who does not have a good working relationship with the beneficiary. In some cases, clients may decide to appoint a corporate trustee, such as a bank or brokerage, so that the beneficiaries do not outlive the individual trustee (requiring a Court procedure to appoint a new trustee if the trust does not name a substitute) or if they do not otherwise have an appropriate individual to act as trustee.

There are potential advantages and disadvantages of trusts that will be discussed in this blog post. If assets are in multiple states, a trust can more efficiently distribute assets as opposed to the alternative, a probate proceeding in one state followed by ancillary probate proceedings in other states to dispose of specific assets. It is a myth that trusts always allow for estate tax savings, as individual circumstances may vary. Further, trusts are separate taxable entities, and are required to file income tax returns, just as an individual would be required.

December 13, 2013

Actions for Damages After a Closing for Property Conditions

By Weiss & Weiss

Our firm recently defended the sellers of a house located in Westchester County. When the property was originally inspected by the buyers, prior to a contact being entered into, a rodent infestation was discovered in the attic of the house. The buyers and sellers agreed that the infestation would be remedied prior to the closing. Our client hired an exterminator, who removed the offending creatures, and sealed off the access point through which they had entered the attic of the house.

Several days prior to closing, a “walk-through” was conducted. For inexperienced buyers, a walk-through usually is scheduled immediately before the closing. The purpose of a walk through is for the buyers to check the condition of the house and appliances, and make sure that the sellers have performed any and all repairs, such as re-painting, replacement of broken appliances, or, in the case we discussed, removal of any unauthorized animals residing at the premises. At the time of the walk-through in question, no rodents were seen by the buyers, and the closing occurred as scheduled.

A few months after the closing, the buyers alleged that they discovered a “new” rodent infestation in another part of the attic. Of course, it is beyond anyone’s knowledge as to whether these creatures were part of the group discovered at the original inspection, or a new group of animals who took up residence after the closing. The buyers made a demand on the sellers for compensation for damages caused by the creatures (they had chewed through some electrical wires and insulation in the attic), as well the cost of removing them from the attic. Our clients refused, stating that they had complied with the terms of the original Contract of Sale, requiring extermination pre-closing. The buyers then filed a lawsuit in Westchester County Supreme Court for damages.

December 5, 2013

Actions Under New York State Religious Corporation Law

By Weiss & Weiss

Our firm is often retained to represent parties in disputes regarding the control of religious institutions. 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.

Religious institutions in New York are generally formed as non-profit religious corporations. This provides tax-exempt status under state and federal law. A religious institution may encompass more than just a place of worship. Many religious institutions also run parochial schools, summer camp programs, pre-schools, and cemeteries. Although these programs may turn a profit over time, they are still considered as part of the religious institution and are considered non-profit and tax-exempt.

In certain situations, disputes may arise over the legal control of such religious corporations. For example, our firm has handled cases in which a dissident group has challenged the Board of Trustees who were in control of the institution. Under the Religious Corporation Law, the Board of Trustees is generally manages the temporal (non-spiritual) business of the institution. This would include the hiring of employees, and business decisions relating to the Church, Synagogue, or Mosque in question. The Board of Trustees is usually elected by the congregation. However, the “devil” may be in the details. Disputes can arise over who is a member, and thus allowed to vote in any such elections. 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. If there are disputes, Courts may appoint an independent mediator to determine who is a member.