Wednesday, February 24, 2010

Continuing on Foreclosures

It seems to be my topic of choice this week, so I figured I would add to it.

Predatory lending is everywhere, but not just in the lending. They keep their predatory ways when they are foreclosing upon borrowers. Watch out for the banks saying don't worry about the foreclosure, we are modifying your mortgage. That is hogwash. The truth is that they will continue to foreclose. Plus, once you miss your time to answer the foreclosure action, you need to show a variety of factors to extend your time to answer. Some of these factors include the length of the delay, the reasonableness of the delay, if the delay was intentional and strategic, the prejudice the bank would feel if an extension was granted, the public policy that favors litigation being resolved on the merits, and finally if you have a meritorious defense.

Often, its easy for a mortgagor (borrower) to have every factor, but a meritorious defense. If you borrowed money and did not pay it back, do you not owe the money? Probably. I guess what I am saying is you have an uphill battle if you default.

Anyway, I will be out of town for a week and in my absence Keith Riley of Lieb at Law will be blogging to keep you informed on the latest that are the issues involved in Long Island Real Estate. Enjoy.

Tuesday, February 23, 2010

Short Sale Timing

My belief is that the purpose of a short sale is to have the bank forgive the deficiency. Yes, getting the Lis Pendens lifted and the sale approved is important. Nonetheless, if not for the waiver, you will owe whatever the sale price doesn't cover from the mortgage and all the costs of the foreclosure. For example if you owe $500,000 on the mortgage and both the foreclosure action costs and closing costs were $30,000 and the auction sale price was only $400,000, you would still owe $130,000 after the sale if the mortgage company did not waive the deficiency. Thats a lot of money to be in the whole. Its worth fighting for the bank to waive that money and by fighting I mean going on the offensive and seeing whatever mistakes they made on their end and using those mistakes as negotiation leverage.

I met with a potential client today and with her real estate agent (I like the agents in on my meetings so we can collaborate) and the whole chat was about how much money we can get forgiven. I will tell you why. The clients back was against the wall having already received a Judgment of Foreclosure. Therefore, the Loss Mitigation Department at the bank (or risk assessment department as I characterize them) has all the bargaining chips. If they approve the short sale they will get less than they are owed just as if they perform the sale, but they have already financially and emotionally invested in the sale. Moreover, my ability to determine if predatory lending existed and if I can set forth such a claim is handcuffed by the fact that we have an impending auction sale. Therefore, I put forth to all of you that this could all have been potentially avoided and the short sale could have been approved with the deficiency waived if the client would have come to their lawyer earlier. By the way, this was the second client I met with in the same day with an upcoming auction. I want to help, I even agreed to try, but please stop waiting for the last minute to come to me. This is the difference between going to a doctor with a cut and with an infection from the cut that requires amputation. More importantly, you get to decide how injured you are by determining how long you want to wait. The longer you wait after you are served with legal papers to contact an attorney, the worse chances there are that the attorney can help you.

Why does everyone think that people wait so long to ask an attorney for help?

Monday, February 22, 2010

Modification and Foreclosure

I just had a consultation with a client who wanted to know why they were being foreclosed on if they were close to agreeing to a modification.

This question has been asked so often that I need to lay out the rule to everyone.

Unless a Court action is withdrawn, dismissed, or otherwise - it exists!!!

Negotiating a modification, whether under the government's making home affordable program or otherwise, does not stop a foreclosure. You must answer legal papers if you are served regardless of your modification. If you think otherwise, you are incorrect. If you think the nice bank will just stop going after you, you are incorrect. Unless you have a written agreement providing for the end (discontinuance) or pause (stay) of an action or a Court Order, you are still being sued. WAKE UP.

Foreclosure Redemption - BE WARNED

Nothing is stayed, stopped, or otherwise unless ordered by the Court.

In either a mortgage or tax forelcosure, the only requirement to redeem the property during a foreclosure proceeding is to provide, without condition, the full amount due prior to the property being actually sold. BE WARNED - providing part of the amount due does nothing unless in an express agreement ordered by the Judge.

To be clear, paying part of the money DOES NOT work a statutory stay of the foreclosure proceeding.

There are 2 stay (stop) statutes that are applicable to stop a forelcosure: CPLR 5519 (only applies when there has been a judgment of the court directing the payment of a sum of money) and RPAPL 1341 (only applies to partial foreclosures).

Redemption is the last chance to save a foreclosed property if all else fails. Don't play around, pay everyting and be sure the foreclosure is cancelled. Assumptions make a ____ out of you and me.

Brooklyn Nets

Lets talk about the Atlantic Yards Project. Some local private property owners tried to block the eminent domain taking of the Atlantic Yards by saying the project was not for a "public use". They lost, it is a "public use", but what is a "public use"? It is a project that has a dominant public purpose said the Court of Appeals when defining the area as substandard and insanitary with a need for rehabilitation.

Do you think its fair for the government to take property and allow a developer to make a profit on that property?

Also, did you realize that the Long Island Real Estate Blog includes Brooklyn. Lieb at Law considers any part of the island to be part of Long Island. Do you agree?

More importantly, LETS GO NETS! (now when are we getting LeBron?)

Sunday, February 21, 2010

Cultural Design

The front page of the real estate section from the Times led with an article on adding elements of one's culture to the design of one's home. (see Saturday, February 21, 2010). For example, in my culture, I would add my wedding Ketubah (contract) as a piece of art and mezuzahs to the corners of each entrance to a room because of my Jewish culture and heritage. I think it would be useful for us to make a list of different cultural items that you could expect to be in a home owned by people of different descents in order for real estate agents to identify such items and be respectful of same when advising about staging. Also, do you think that these items should be removed before listing a house as a matter of strategy? I do for resale purposes (potential purchasers may not identify with these items and may even be turned off by them), but good luck selling the homeowner on that idea. People are very intrenched with their beliefs and this could be a conversation that causes a sales agent to lose a client if you don't tread lightly. Also, be sure not to offend. What are your thoughts?

Friday, February 19, 2010

From my friend - Appraiser Jackie Monette

Just heard about a free website, picnic.com, that is supposed to let you adjust exposure, color and sharpness of pictures resulting in “richer and warmer” (their words) photos. I haven’t tried it but thought you might want to pass it along to realtors to enhance their listings.

Thursday, February 18, 2010

Last Night's Class - Mold is Money

Last Night's Class - Mold is Money

Last Night's Class - Mold is Money

Top 10 Mistakes of Commercial Tenants

1. Due Diligence – the tenant forgets to check if the leased property is zoned for the intended business use. So the result is that the tenant cannot work in the location they are stuck with by way of the lease.

2. Improvements – the tenant takes the terms of a lease as they are offered without negotiating for either the property being updated to their needs or rent-free months to update themselves. Remember this is a tenants’ market, not a landlords’ so use this to your advantage.

3. Sublease / Assignment – the tenant agrees to a lease without this right. Who knows if your business will be successful. In fact, 9 out of 10 fail. A proper exit strategy is appropriate for risk management.

4. Options – the tenant agrees to a lease for a set term without additional terms or ability to purchase the property. If you are the 1 out of 10 that succeeds, your success will be jeopardized if you are kicked out after your initial term. A proper expansion strategy is appropriate for growth management.

5. Timing - probably the biggest problem faced overall. Tenants think that negotiating and agreeing to a lease is a rush job. If you are intending to open for a specific season allow ample time. If the landlord knows your back is against the wall, they will prey on you.

6. Term - when it is commercial, you need more than a year. You should get at least 3 years because that is the average time for a new company to turn a profit.

7. Restrictions - if the property is one of many spaces, you should ensure that a competitor cannot open next door. This applies mostly in shopping centers.

8. Guarantee - the purpose of a corporation is to minimize your personal exposure to liability. If you do not need to guarantee the lease, do not offer a guarantee. If you do need to guarantee the lease, you may want to think of putting your assets in your spouse's name.

9. Due Diligence - some leases require the tenant to pay all utilities. Get the prior bills and add the average to the cost of your monthly rent before you determine affordability of the leased premises.

10. Self-Help – lots of tenants negotiate and sign a lease without professional help by a licensed attorney. A real estate agent’s help is simply not enough and may even constitute the unauthorized practice of law. The key is to spend a little bit of money now in order to avoid ambiguities and therefore avoid spending a lot of money later when litigation arises.

Wednesday, February 17, 2010

Property Conditions Disclosure Statement

GENERAL RULE: Sellers should pay $500 every time.

Tonight at The Real Estate School I was asked why only Long Islanders pay (as a general practice) and don't fill out the Property Conditions Disclosure Statement (PCDS)?

For starters, I believe that everyone in New York State (NYS) has this practice, not just Long Islanders. If someone knows otherwise, please elaborate. Also, this law is State specific, NY's is called NY REAL PROPERTY LAW ART. 14 sec. 462(2), so other States don't use this law as it is enacted in NYS.

For those who don't know what I am talking about, the PCD Act, which was enacted in NY on March 1, 2002 is a law that requires sellers of residential real estate to complete and deliver a 48 question disclosure statement to buyers as part of the transaction. Yet, failure to deliver the PCDS before the buyer signs the contract, requires the seller to give a $500 credit against the purchase price to the seller at the time of closing. As a result, a seller can avoid answering any questions, which may potentially expose the seller to liability, by only paying $500.

A copy of a PCDS form can be found by clicking here

So - Caveat Emptor lives on!

Great class tonight

Thank you for all who attended "Mold is Money", you were a great class!!!

Tuesday, February 16, 2010

10 Lease Musts for a Residential Tenant

1. Inspect the property with pictures signed / initialed by landlord before take occupancy to verify condition of property for security deposit purposes.
2. Right to assign / sublet - if conditioned on prior approval, said approval should not be unreasonably withheld.
3. Option for additional term.
4. Right to subtract self-help repairs from rent.
5. Landlords right of entry is restricted to business hours with reasonable notice except in emergency circumstances.
6. Landlord is responsible for all maintenance (outside and inside).
7. Unrestricted right of access to all common arrears (such as laundry machine).
8. No more than 1 month security deposit with security deposit being returned upon termination of lease and delivery of keys.
9. Liquidated damages provision (set damages) for landlords failure to repair in a timely maner.
10. Have an attorney review the lease so you don't get pushed around.

Monday, February 15, 2010

Another Hamptons RE Blog to Check-Out

Please see my friend Chad Hooper's blog at http://chadhooper.tv/

It has a great display of selling prices in the Hamptons with interesting visuals, plus Chad is a great local agent who deserves your support.

Mold is Money Course

There is 1 seat left for Wednesday's, 2/17/10, CE course, which runs from 5:30 PM - 8:30 PM in Center Moriches, NY. If that wasn't enough, there its free and dinner will be served.

Go to http://liebatlaw.com/RealEstateSchool/Register to sign up & check out our other courses while you are there.

Check Out Google's RE Listings

http://maps.google.com/help/maps/realestate/

10 Lease Musts for a Residential Landlord

1. Reasonable or fixed attorneys fees on breach inclusive of other costs
2. Bounced check fees of between $25 and $50 (exactly what your bank charges you)
3. Late payment penalty ranging from set fee or % of rent
4. Snow removal, landscaping, and other outdoor maintenance falls upon tenant
5. Appliances are "as is" following tenant's inspection
6. Pre-possession inspection with pictures and report based upon pre-printed checklist to avoid disputes
7. Don't ever do month to month - creates problems with eviction
8. Fuel oil - tank must be returned as found upon termination of lease (or reduction in security deposit)
9. Sublease / assignment must have prior written approval
10. Proposed tenants sign authorizations for credit checks

One extra - Get a big security deposit, spell out costs for damage in lease, & expressly state that return of security deposit is made following 2 weeks of landlord's inspection

Please tell us what our list is missing. With your suggestions it can be the 100 Lease Musts for a Residential Landlord

Thursday, February 11, 2010

A lease isn't a lease

I drove my mother to the airport 2 days ago and somehow she thought our hour trip to Kennedy was a legal consultation. My step-father has been running her building for a long time as the property manager, but now she wanted answers. My mother now wanted to know everything and every choice she had with respect to her property. Wow did the questions come, but interestingly they were really good questions.

Here was my overall answer: A lease is a contract that can contain anything that the landlord and tenant agree upon. There is almost no issue that can't be addressed. As an attorney, I must warn you that there are certain laws that can't be superseded by a lease - so pay attention to Federal, State, and Local laws when drafting, but don't let that stop you from being creative.

My mother's first question was if I had a form that she could look at, which is where I typically start with everyone - they all want a form. Let me be crystal clear, if you want a form lease, stop reading now, you are wasting both of our time. Don't get me wrong, I am not against forms, but they should just be a starting place. After that, you must determine many issues that will be addressed in my next blog. Yet, for now lets discuss what minimum requirements there are for a lease to be valid.

A lease is a contract that deals with land, so the Statute of Frauds requires it to be in writing and signed by the parties to be bound (in English, both the landlord and tenant must sign the lease). Moreover, a contract has 4 required elements to be enforceable, including:
1. It must have a definite term - meaning that its length must be clearly articulated;
2. It must be offered by the landlord;
3. It must be accepted by the tenant; and
4. It must have mutual consideration (in English, both the landlord and the tenant must give up something whether money or the ability to stay at a location).

Now that you have the basics, start thinking about things you would want in a lease if you were a landlord (the topic of discussion for tomorrow). Would you want a monthly lease, an annual lease, a multi-year lease? Would you want a right of entry? How much money would you want? Would you want an automatic increase in rent every year? Would you want a security deposit & how much? Would you want key money (in English - bribery money to get the lease in the first place)? Would you want someone to guarantee that the tenant will pay? What about the utilities, should the tenant pay them? There are so many questions, so start thinking and I will put together a list tomorrow and talk about some of the answers.

Wednesday, February 10, 2010

Here comes summer rental season

Can you believe that its time to think beach house? I'm looking outside and there is a blizzard, but guess what - its time to rent.

What does everyone expect for this season? Do you expect the listings to come right away? Its Presidents' weekend early because of this storm. Lets get rested today and come out on fire.

Stay tuned for my next few blogs where I will be giving tips for negotiating leases. If you post lease questions they will be discussed first.

Tuesday, February 9, 2010

Business Brokerage

Did you know that a business broker does not need a special license to act in this profession?

In fact, many real estate agents double as business brokers.

Today, I had the pleasure of meeting with 2 of my favorite agents from ReMax Signature, Natalia D'Arrigo and Meredith Kurz and a potential seller. This was a unique experience for us all as we were able to collaborate between broker, attorney, and client before anyone was retained. This way, the client is not hiring individuals, but instead a team (while we have nothing in our contracts that bind us to each other and we all have a duty of loyalty only to the client and would work independently of each other).

With respect to real estate agents selling businesses, its important to mention that such agents should not use the same sales techniques with a business as a piece of real estate. Specifically, if you promote the availability of a business in open, the business may be put out of business. Be sure to use trade publications where consumers won't find the business for sale.

Also, an interesting topic that we discussed at our meeting was that if you sell a book of business, you will likely have to sign a non-compete. While that seems to be a "duh" moment for an attorney, it appears that clients don't often think about that and intend to sell their book and then just compete in the next town.

Do you all think real estate agents should work as business brokers as well, or should a separate license and industry emerge?

Monday, February 8, 2010

Illegal Hotels in NYC, is Long Island next?

The Real Deal, which is my benchmark for this blog with respect to Long Island, is reporting that 4 state bills were introduced (this could not be independently verified), which if enacted, would make it illegal to rent apartments on a nightly basis. To read the article, click here.

Do you think Long Island will have similar bills enacted next?
Do the same issues present with houses as with apartments?
Remember, the Hamptons has a large problem with transient rentals, a topic that I am discussing in my next 2 articles in Homes of the Hamptons. The reader can always find links to my articles at the Lieb at Law website by clicking here.

While these 4 bills would make it illegal to rent for less than 30 days, the Town of Southampton prohibits rents of 29 days or less and the Town of East Hampton prohibits rentals of 14 days or less.
What should be the minimum time that you can rent your house / apartment?

Of note: transient rentals is also referred to as short-stays; daily rates; weekend rentals.

Interestingly, many have argued that this is a business move for the hotel and motel associations. Yet, do you want to purchase in a transient neighborhood for millions of dollars? I for one, don't.

But what about if you didn't intend this to be your plan (to be a hotel operator), but need to pay the mortgage?

On the other hand, what about permits, shouldn't they be required to protect the safety of tenants?

Saturday, February 6, 2010

Beach Lane

When I said this blog was all things Long Island Realty, I meant it. We have discussed the law, appliance stores, appraisals, inspections, and much more that involves real estate, whether directly or indirectly.

Today, I was reading some news on the Internet to come to learn that another TV show is leveraging the Hamptons (following Royal Pains from last summer, which was a great show). Matthew Broderick will be starring in a comedy pilot about a famous writer who moves out east to help a struggling local paper. Well Matthew, I hope you are talking about Homes of the Hamptons because I would love to work with you (I am a contributing editor of that magazine for full disclosure).

Just a suggestion, but Matthew's magazine should come do a story about Lieb at Law's real estate school, which is making some noise in the Hamptons in reshaping the real estate market.

On a side thought, I believe these 2 shows are going to help the Hamptons real estate market boom as they bring exposure to our secret Jewel of the east end.

What are all of your takes on another show in the Hamptons - will it help the real estate market on the east end, hurt it, or make no impact? Lets discuss...

Friday, February 5, 2010

Carbon Monoxide Alarms - Suffolk Service Suggestion

These guys are great and do the hard wiring that is required under the new law - explained in a blog earlier this week.

http://www.secureoperations.com/

Ask for Cliff for some great service!

Thursday, February 4, 2010

From my friend - Appraiser Jackie Monette

Times are tough and it's more important than ever for all segments of
our industry to work together. As an appraiser, I can tell you that
banks are interested in seeing in contract properties and listed
properties on an appraisal report that support the value of the house
being appraised. Most of my work is done in areas where MLS coverage is
sketchy at best and this info is not readily available to me. A broker
who can provide this information and perhaps some indication of the true
condition of these homes becomes an invaluable tool in the appraisal
process. Perhaps one of the biggest issues in the present banking
climate is the appraiser coming from outside the area. Besides the
obvious lack of knowledge of the area, there is a more subtle deal
breaking phenomenon at work here. If an appraiser comes in at a value
equal to the sale price of a property and the bank is not satisfied with
the comps provided (which happened a lot over the past year when there
weren't enough sales), the bank will ask the appraiser for more comps
and the appraiser is expected (for no more remuneration) to go out and
get more comps. However, if the appraiser comes in lower than the sale
price, the bank sits back and waits to see what happens. If the seller
and buyer renegotiate to the lower price, the deal goes forward. If
they don't, the deal dies. The appraiser is never asked to find more
comps. It is to the advantage of a far away appraiser to bring in the
homes at this lower value so as to avoid an extra trip. I am sure many
of you have been caught in the middle of this nightmare scenario. The
appraisal industry is trying to lobby for legislation to stop this
practice. Hopefully, realtors will also join in this effort.

Please help the appraisers out there and lobby your legislator.

Jackie can be reached at 631-431-0035 with questions and comments.

Redemption at forelcosure

A debtor can redeem (pay off the amount owed) at a foreclosure (prior to the actual sale) and stay in the home. The debtor does not need prior court approval regardless of CPLR 5236 & CPLR 5240 (which are statutes regulating legal practice that state to the contrary) because there is a common law (general understanding law) that permits such payments.

See Rondack Constr. Servs., Inc. v. Kaatsbaan Intl. Dance Ctre., In.c, 2009 NY Slip Op 09264 - for the Court of Appeals' (highest court in the State of New York)decision stating this rule.

Take Away - Until a house is sold at foreclosure a homeowner can always pay off the entirety of their debt and avoid foreclosure - its equitable - its fair - and its the way it should be.

Thoughts?

Wednesday, February 3, 2010

Carbon Monoxide Alarms

Amanda’s Law-Carbon monoxide alarm requirements to go into effect February 22, 2010.
It requires essentially all residences, both new and existing, to have carbon monoxide alarms installed.

Constructed before January 1, 2008 - must have one alarm installed on lowest level with a sleeping area.
Constructed after January 1, 2008 - must have an alarm installed on each level with a sleeping area or where a carbon monoxide source is located.

Key
- Alarms must be interconnected so the actuation of one alarm will activate all of the alarms in the individual unit.
- Primary power source for the alarms should be from building wiring with secondary power from a battery if building was constructed after January 1, 2008. For older construction, the alarm can be battery operated.

The full text of the law is available at: click here
If you want to learn more about this law from other lawyers at the bar association, go to: click here

Home Improvement Outlet

Matt Kaplan mentioned this great store last night and we have been getting tons of questions today on where it is and who to speak with.

The store is run by Habitat for Humanities and its called Restore.

At Restore most of the items are new, and sell for 66% off of the retail price.

The closest store is at 2111 Lakeland Avenue, Ronkonkoma, NY 11779 or you can visit them on the web at: click here

The phone number is (631) 521-7789, and the email is restore1@optonline.net.

After speaking with Matt, I'm told that Arnold Stever is the salesman to speak to at the Ronkonoma location.

Tuesday, February 2, 2010

Matrimonial / Real Estate Conflict

Can an attorney who represented one of the spouses to the divorce represent both spouses in selling the marital residence?

I think its bad practice at best and a potential conflict of interest at worse because an attorney has an ongoing duty to his / her divorce client to not disclose confidences even after the conclusion of the representation, which has the potential to conflict with that lawyer's new duty of loyalty to the ex-spouse that would develop by way of the representation in the real estate transaction.

What are your thoughts?

Great Class

We learned so many interesting things tonight from Mr. Kaplan of Housemaster. Thank you for a great class.

Welcoming Housemaster to the RE School

Tonight from 5:30 - 8:30 our newest instructor will be Matt Kaplan, owner of our local Housemaster (home inspections). Mr. Kaplan will be co-instructing our course entitled, "Discovering the Home Inspection". Lieb at Law believes this will be our best class yet. The next scheduled class of "Discovering the Home Inspection" is on 4/6/10 from 5:30 - 8:30 at our Center Moriches location, but stayed tuned to liebatlaw.com for added dates. Look forward to seeing you here.

Monday, February 1, 2010

Carrying 2 Homes

If you see a great deal on a home while you are selling should you make an offer?

My take is that if you can't present yourself as flush with money, potential purchasers of the home on the market will have leverage and lower their offers because your back is against the wall while trying to float 2 homes.

What's your thoughts?

The Real Estate School

Calling all Real Estate Agents - Register for free CE Credits at Lieb at Law

Current Courses:
1) Foreclosure & the Economy
2) Mold is Money
3) Intro to Commercial Real Estate
4) Discovering the Homes Inspection

Weekend Rentals

Did you know that the Towns of Southampton and East Hampton prohibit weekend rentals?