Saturday, July 30, 2011

Know Before You Owe - RESPA

Just last week, on July 21, 2011, the Real Estate Settlement Procedures Act (RESPA) was shifted by the Department of Housing and Urban Development (HUD) to being administered and enforced by the Consumer Financial Protection Bureau (CFPB). To visit the CFPB's website, click here.

In one of CFPB's first initiatives, the Bureau is researching Mortgage Disclosure Statements and making changes for the stated purpose of Simplicity. To have your voice heard on this initiative, click here.

The purpose of the Bureau's initiative is to comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires the Bureau to combine the 2 page Truth in Lending Disclosure Form and the 3 page Good Faith Estimate Form.

Lieb at Law supports this initiative because we know from experience that home purchasers do not read forms when they are cumbersome. The key is simplicity with easy to access graphical layouts. We hope that this project is only the start in simplifying imperative consumer information for home mortgage borrowers.

Friday, July 29, 2011

Foreclosure Primer by Justice Whelan

If you want to learn about the current landscape of foreclosure law, this opinion is the most thought-out and well drafted I have seen on the topic. Take a read by clicking here.

Also interesting is the discussion of the mortgage expert who was used in this matter by the Defendants. I have never heard of such a tactic and the Court seems dismayed as well as to why a purported expert would advance the papers as opposed to the Defendant's attorney. Yet, the key to this blog post is not what is peculiar, but instead how Justice Whelan so aptly explains the current laws in this field.

This is a must read by attorneys entering the field or anyone facing a foreclosure predicament.

Let's Go Islanders

There is a very important vote for the future of Long Island coming up on August 1st, which is Monday. While this is not a political blog and I am not going to take a stand on the varying estimates that this arena may cost homeowners in tax payments, I will submit that the Islanders remaining on Long Island is crucial for our region's identity, particularly our real estate market.

Growing up on Long Island, I always knew who I was, an Islander. I was a fan of the team since an early age from watching the glory this team creates when they score a goal or knock an opponent to the ground. Yet, that is not why I am a fan or why I am writing a politically charged post on a blog designed for the real estate community. Instead, I am writing to endorse the new arena proposal for only one (1) reason, IDENTITY. I am an Islander. We only have one (1) professional sports team. The team represents us throughout the entire Country as our ambassadors. The team lets out-of-staters know who we are; that we exist. They are the welcome wagon to our beaches, restaurants, entertainment and wineries. The Islanders represent Long Island and it is imperative for our community to keep our team.

Now the owner, Charles Wang, may be bluffing when he states that this is his last go at saving the Islanders in Long Island, but I don't like playing with fire. Let's keep our team. If you are a Nassau County resident I strongly suggest voting YES for the coliseum on Monday.

Thank you. Let's Go Islanders.

Wednesday, July 27, 2011

Recyclebank

Brookhaven has launched a new program to inspire people to recycle. Check it out at www.recyclebank.com.

Tuesday, July 26, 2011

When must a residential landlord supply heat to its tenants?

According to a recent Nassau County Case (Olszewski v. Neuman) - A landlord must supply heat once October begins, but is not obligated from May through September.

While this Court made this specific decision based upon its individual facts, it is estimated that the weather during a given year would be applicable to a proper determination of a future case. Also, this decision is not from an Appellate Court and does not constitute precedent that is binding into the future.

Nonetheless, a great black line for those who dabble in the business - Get that heat on before October!!!

Monday, July 25, 2011

Brokerage / Attorney Fee Sharing

Pursuant to Formal Opinion 845 of the New York State Bar Association, while an attorney can act as a real estate broker and gain a commission in a transaction, that attorney cannot share his / her fee with a referring attorney who represents a party to the real estate transaction and suggested that the party utilize the broker.

The rationale for this rule is that the referral fee would work a conflict of interest for the attorney working on the transaction where he / she would be motivated personally to have the deal close to get a commission instead of blocking a deal if such action was in their client's best interest.

The opinion does have an exception though. The exception is that if the attorney's clients gives informed consent to the referral fee and the attorney transfers the referral fee to the client such an action would be acceptable.

Therefore, the takeaway is an attorney cannot benefit financially in any way from referring a broker in a deal in which the attorney is working in a transactional representative capacity. Instead, the attorney must have unabridged motivation to guard the real estate client's best interest.

Saturday, July 23, 2011

Question: Should a real estate seller be forced to payoff liens over the sales price?

A seller with a good attorney will not ever run into this problem because the attorney will utilize a short sale contract where a sale is subject to the seller's ability to obtain a full release of liens by way of only the proceeds of sale. In such a situation if the lien holders will not provide a release, the seller can cancel the contract without suffering damages.

Yet, I was called this morning by a contractual purchaser of a property where the contract allegedly does not include any right to cancel for the seller if the lien holders will not release their liens by way of an accord and satisfaction - the traditional short sale scenario. The contractual purchaser wants the property without any liens. Now what?

I suggested that the seller should be able to sue for either specific performance (forced sale with paid off liens) or for benefit of the bargain monetary damages. Yet, I cautioned that not only are the terms of the contract operative and may preclude either remedy, but that this is not often frequented territory and its therefore unpredictable.

What do you think? Should the seller just be able to cancel the contract? Or, should the seller have to reach into their own pocketbook to satisfy existing liens? What happens if there is nothing in that pocketbook?

Remember law is not often easily predictable and many different factors will play into the result.

Maybe, the easiest solution would be for the potential purchaser to just go to the beach and forget the whole thing. It is awfully hot to think of anything else.

Not all lease guarantees are the same

While reading the law journal on this HOT Saturday afternoon I am reminded of a frequent problem in negotiating a lease; strict norms in defining terms of art always restrict creative thought. Be creative in negotiations.

What do I mean?
Often agents, landlords and tenants are so accustomed to how something was previously done that they forget that the purpose of a lease, which is a contract, is to tailor rights and remedies as the parties deem fit in their own unique situation.

What is a guarantee?
In essence, a guarantee is a third-party insuring the debt of a first-party to an agreement. Yet, the case that I am currently reading gives great insight to the job of a real estate agent. This case is about a guarantee of only the first $50,000, not the entire lease, which in the case damages were awarded in the amount of $510,510; a substantial difference. Here, the tenant was liable for the entire $510,510, but the landlord could only collect from the guarantor the first $50,000 and nothing more.

What is the lesson?
A guarantee doesn't need to be for the entire amount contracted between the parties. It can be for whatever amount provides the landlord with adequate additional security in the deal. A guarantee is a contract in of itself and its terms should be carefully negotiated. The key is to be creative. In this case the guarantee was limited to $50,000 even though the language also included attorneys' fees. This means that even though the debt was over $500,000 and attorneys' fees were a lot more, only $50,000 was guaranteed. We often forget in our business to explore the why instead of the what. Yes, landlords will say we want a guarantee; the what. Yet, the question is why? For additional security in the tenancy because the tenant is not credit worthy? Maybe. Or, maybe its just to motivate the tenant not to default because they need a push. If that is the case, getting a guarantee from someone the tenant respects and is ashamed to let down would be enough even if that person is not wealthy enough to guarantee the lease and maybe that person will not need to be on the hook for the whole amount to accomplish this if its the only way to convince the person to provide a guarantee.

The lesson of this blog is to always not assume that something means what you think it does. A guarantee, can be limited to a Good-Guy Clause where the guarantee only covers use to date of exit from the premises or a guarantee can, more importantly, mean anything that the negotiating parties want it to. Stop trying to speak like a lawyer and use terms of art. Instead, think about what the parties want to agree to by talking to each of them about their concerns and desires and find the terms of art to reduce it to writing later or better yet, hire a good lawyer to do that later.

Remember, contract law is party defined law. So define the law that you want. Real estate agents' jobs in lease negotiations is to spark conversation, to encourage ideas and to help find a meeting of the minds. Good luck and stay cool, its hot out there.

Thursday, July 21, 2011

Emergency Homeowners' Loan Program

It’s Not Just HAMP Anymore

Another great program that clients often use when facing foreclosure in the Emergency Homeowners' Loan Program (EHLP). On another note, another awful name for a program if you want people to remember it. Anyway, this program is great and particularly for real estate agents struggling to make their payments.

Why you ask? Well the reason is that its target population is defined as:

homeowners who have experienced a substantial loss of income (a reduction of at least 15%) due to unemployment or underemployment caused by adverse economic conditions or medical condition.

Now think about, who in the real estate business has not lost substantial income of at least 15% because of adverse economic conditions? I can’t think of anyone.

So what’s the benefit?

The program provides a zero interest, forgivable bridge loan in order to pay certain arrearages to bring them current, as well as ongoing monthly assistance to help them to make their monthly first lien mortgage payments (including payments of principal, interest, taxes, and insurances). Assistance is limited to a maximum duration of 24 months, or up to a maximum loan amount of $50,000 in mortgage payment assistance, whichever occurs first.

How does it work?

the assisted homeowner's contribution to the monthly payment on their first mortgage will be set at 31 percent of their monthly income at the time of application, but in no instance will it be less than $150 per month. EHLP funds will be used to pay for the remaining balance.


What’s the catch?

In NY, mortgagors’ 2009 tax return cannot have a combined annual income of more than 124,300.00 & their back-end DTI must be less than 55%. Also, this must be concerning your primary residence and you must be at least 3 months delinquent on your mortgage and in imminent danger of foreclosure.


To learn more, click here.


Why am I a great real estate agent? MARKETING

How many times have you heard this one? I am a great marketer. I know how to use Craig's List and my listings are posted on 16 sites.

I am still unclear as to what it means. Is the agent saying they are good because they invest the most money on ads for the house (electronic or hard-copy). Is it because they have a pretty website? How about that their business cards have a picture on it, and of them, not the house? Maybe its because they hire a professional photographer to take staged pictures of the house? Now that would be something and may even add value.

The point of this posting is to share a different perspective of what makes a great real estate agent; PROFESSIONALISM.

There is no question that a real estate agent who is willing to go the extra mile and perform due diligence about the existing deed, survey, marketability of title, current COs & Certificates of Compliance, coupled with the physical condition of the home by way of analyzing a home inspection coupled with many ancillary inspections is a great real estate agent. They add value. Instead of blanket marketing, they can perform targeted marketed. Instead of finding a buyer, they can find a qualified buyer. Instead of sending a binder / memorandum of agreement /terms sheet to an attorney with a sales price and vague financing terms, they can send the actual terms of the deal with specific time frames and expectations of the parties, which have been negotiated and laid out after each party receiving informed consent.

What makes a great real estate agent is NOT an open house. It is NOT an add in the newspaper. Certainly its NOT their business cards.

Don't get me wrong, all of these things are very important. Yet, they should be standard, not extraordinary.

What makes a great real estate agent is learning to be the best real estate professional and as a professional continuing to become more educated throughout a career about land use and mortgage law, construction, contracts, and negotiation skills.

What makes a great real estate agent is self-respect and demanding to know about every ancillary profession to your job.

After all, its your commission on the line. Isn't it?

Here is to the Real Estate Professionals who help to define an industry.

Tuesday, July 19, 2011

NOFO Rock & Folk Fest 2011

Lieb at Law, P.C. is a proud sponsor of the fabulous event NOFO to take place on the North Fork of Long Island on 7/30 and 7/31/2011 at Peconic Bay Winery.


Not only will there be local wine and beer as well as top musical performances in a vinyard's park setting, but you as a friend of Lieb at Law can use our coupon code to get 20% off of tickets. 


And don't forget, this amazing event is benefiting the non-profit East End Arts Counsel. 


To purchase tickets - go to www.noforockandfolkfest.com 
*Bring the Family - Kids 12 and under are free


DISCOUNT CODE: RealEstateSchool2011





Tuesday, July 5, 2011

NY Courts Enforce Fed Modification Program

In one of the most important decisions of the year, the Appellate Division recognized the Making Home Affordable Handbook as binding on lenders (servicers) and precluded a foreclosure until its rules were followed.

The newest version of the Handbook can be found by clicking here.

To review the decision, click here.

While the decision was very narrow in that it only discussed how the lender participates in the program and must evaluate the borrower under the program prior to selling the house at foreclosure, the decision should be interpreted as a sounding horn to all foreclosure defense attorneys to study every word in the Handbook. Now, if a lender (servicer) makes a crazy decision, outside of the rules prescribed by the Federal Government, a borrower's attorney should attack that decision in the NY Courts.