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mortgage-300x250Our firm handles many cases where two or more people co-own property, and there is a dispute between the parties over whether to sell the property.  These situations can be resolved in Court by bringing a partition action, as has been discussed in prior blog posts.  However, our attorneys always attempt to negotiate a resolution before bringing an action in Court.  Such resolutions may involve one party buying out the interests of the other, or all owners agreeing to list the property for sale, and sell the property to a third party, with the co-owners dividing the proceeds.

One important issue that often arises in these situations is where there is an outstanding mortgage on the property.  Co-owners, when they buy the property, may take out a loan to cover the purchase price.  In most cases, all co-owners will be signatories on the note and mortgage, meaning that they are both individually and jointly liable for the obligations under the note (which is a contract to repay the amount borrowed).

Mortgage loans are usually made with an institutional lender, such as a bank or credit union.  However, what happens when one party agrees to buy the other out in a settlement of a partition action?  For example, an unmarried couple purchases a house together and takes out a mortgage in the amount of $500,000.00.  Both parties sign the note and mortgage and are therefore co-obligors for the loan obligations.  They then split up, and one of the individuals wishes to retain the property and continue living there.   Although they may agree on a “buyout price,” where the individual remaining in the house purchases the equity interest of the departing person, the mortgage and note is still outstanding as far as the bank concerned, both parties remain legally responsible for the loan, and both parties can be sued in a foreclosure action if future payments are not made.

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officebldg-300x259Prior blog posts have discussed the concept of surplus monies in foreclosure proceedings.  Surplus funds occur when a property is sold at a public foreclosure auction, and the amount bid exceeds the amount of debt owed on the property.  For example, a homeowner defaults on his mortgage, and owes $300,000.00 to his lender.  After extensive legal proceedings, the house is sold at public auction, and the winning bid is $400,000.00.  There is therefore an “extra” $100,000.00 now available.  Does the defaulting homeowner have a right to these surplus funds?

The answer is yes.  In general, subject to other liens, the owner of the property which is sold at auction has the right to collect the surplus funds if the house is sold for more than the foreclosing creditor (usually a bank) is owed.  How does the former owner of the property go about collecting these funds?  We would advise that any homeowner who may be in such a position to engage experienced counsel to represent his interests.  The reason is that collecting surplus funds requires knowledge of the Court system and the procedures necessary to allow the funds to be disbursed.

When a property is sold at auction, a Court-appointed Referee is responsible for collecting the funds from the winning bidder, and paying off the creditor who brought the foreclosure action.  Once this is done, the Referee will file a report in the appropriate Court, showing an accounting of the sums received from the auction, and the disbursement of same.  The report will also show whether there were surplus funds; that is, whether the winning bid exceeded the amount owed to the foreclosing entity.  If that is the case, the Referee will deposit the surplus funds with the Department of Finance in the County in which the foreclosure took place.

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guramrit-300x200A recent cover story in the New York Post relates the astonishing story of Guramrit Hanspal, who has lived in a house he doesn’t own for over twenty years.  However, for those attorneys experienced in the areas of foreclosure, landlord-tenant, and bankruptcy, Mr. Hanspal’s story, while certainly an outlier, is not actually that surprising.

According to the Post, Mr. Hanspal purchased a house in East Meadow, New York in 1998, with a mortgage loan from Washington Mutual Bank.  He made exactly one mortage payment before defaulting on his loan.  Of course, Washington Mutual Bank then commenced foreclosure proceedings against him in Supreme Court, Nassau County.  Foreclosure proceedings can take many years to be resolved in Court, and the foreclosure sale was not actually completed until the year 2000.  Our firm’s experience has shown that although the foreclosure case took approximately two years to be resolved, delays of five or even eight years are not unusual, especially if the borrower retains experienced counsel who can use completely legal methods to ensure that Court proceedings take significant time to be resolved.

Even though the foreclosure proceedings had been completed, Hanspal did not vacate the premises.  As prior blog posts have discussed, simply because a house is foreclosed, and sold to another owner (usually the lending institution simply takes back title to the property), does not mean that the owner is legally obligated to leave.  In order to evict a former owner, additional legal proceedings must be brought in the appropriate landlord-tenant forum.

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dividehouse-300x225Our firm handles many partition matters.  A partition action is when one co-owner of a property brings a lawsuit because he no longer wants to co-own a property.  The lawsuit usually demands that the property be sold and the proceeds be equitably divided among or between the various co-owners.  If a partition action is not settled by the parties, the Court will appoint a Referee to sell the property and distribute the proceeds after hearings are held on how the proceeds should be divided.

However, in our experience, most, if not all, partition lawsuits can be settled by the parties before there is a Court-ordered sale.  There are generally three ways in which such actions may be resolved.  Let’s say there are two co-owners of a house, named Amy and Bob.  The first way to settle the action is that Amy buys out Bob’s interest, and becomes the sole owner of the property.  The second way is the reverse, in which Bob buys out Amy’s interest and becomes sole owner.  The third possibility is that Amy and Bob agree to sell the property to a third party, and also agree on how the sales proceeds will be divided between Amy and Bob after the sale.

This post will discuss the first two scenarios.  If one party is buying out another’s interest, it is possible that there is a mortgage lien already on the property.  Before finalizing a settlement, a title search should be conducted. This will show all liens and judgments on the property.  Experienced counsel can order such a search and interpret the results for the parties.  Once this is done, the parties need to decide how an existing mortgage will be handled in any settlement.  This will depend on several factors, such as the balance due on the mortgage, which of the parties has been making the payments, and which party is going to remain at the premises after the settlement.

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https://www.newyorkrealestatelawyersblog.com/wp-content/uploads/sites/164/2021/04/15.1.pngNews outlets have reported the recent death of rap icon DMX, whose real name was Earl Simmons.  The New York rapper was born in Mount Vernon and raised in Yonkers, the territory served by our law firm.  Two candlelight vigils are being held for DMX in order to soothe his grieving fans.  DMX anticipated such events when he rapped “[t]hink when you die, how many’s gonna miss you.”  Since Simmons lived in Westchester County  at the time of his death, his estate case will now proceed in the Westchester County Surrogate’s Court.  Arguably the most notable characteristic of DMX’s life is that he was allegedly the father to fifteen (15) children.  This post will examine the legal issues that arise from DMX being the father to so many offspring.

This author is not privy to the details of DMX’s estate, but is using the procreative life of DMX as a springboard for discussion.  For the purposes of this post, we will assume that the closest possible heir is a child rather than a spouse.  If Simmons had a written Will, it would be subject to a probate proceeding.  Without a Will, DMX would be considered to have died intestate and those persons in the closest order of relationship would inherit.  Even in a probate proceeding, those persons who would have inherited according to the intestacy statute have the legal right to challenge the Will, so that they would potentially share in the inheritance.  With 15 children, certainly there will be such challenges as these persons will need to prove that they are related to DMX in order to inherit.  Each child may have a stronger case to inherit depending upon whether DMX was married to their mother, whether DNA evidence links DMX to the child, or if DMX formally acknowledged the child as his in writing.  As DMX understood it, “[m]y dogs is dogs with official bloodlines.”

Inheritance by non-marital children is permitted under certain circumstances in New York State.  Such a non-marital child can be determined to be the legitimate child of the father (with the right to inherit from him) under specific circumstances.  The Court during the father’s lifetime would need to issue an Order of Filiation declaring paternity or the mother and father of the child would need to sign a written acknowledgement of paternity and have such document notarized.  The father could also sign a written acknowledgement of paternity before a notary public, which document is required to be filed with the putative father registry, proceeds to the department of social services and is legally served on the mother.

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talleyhouse-300x169A recent news story in the New York Post discusses a real property dispute between Andre Leon Talley, a former Vogue editor, and his (former) friend, George Malkemus III, who also worked in the fashion industry.  Mr. Malkemus is a former shoe executive who expanded Manolo Blahnik in the United States.

The dispute concerns ownership of a mansion located in White Plains, the same City in which our firm’s offices are located.  This post will discuss some of the legal issues involved in the property dispute.

The dispute started when Mr. Malkemus filed a Notice of Petition in Greenburgh Town Court late last year to evict Mr. Talley from the premises.  The Petition was filed after the necessary predicate notices were given to Mr. Talley.  The Petition also demanded back rent from Mr. Talley in an amount over $500,000.00, which is an unusually large amount to be demanded in a residential eviction action.

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