Friday, May 24, 2013

Listen NYC Residents - Airbnb is Dangerous: Be warned

On November 8, 2012, we wrote a blog called Airbnb is Brilliant - NYC Housing. Therein, we said that "[a]   major barrier to their success are local laws that prohibit short term rentals in many municipalities across the Country". We also referenced NYC's rental law and said that maybe Airbnb's helping with housing in the wake of the hurricane would generate enough good will to overturn the City's minimum rental law.

It didn't.

On 5/9/13, a NYC resident was found liable for a $2,400 Civil Penalty for violating AC 28-118.3.2 as a result of renting his condominium unit (actually the rental at issue was offered by the tenant of the unit, but that is irrelevant for this discussion) to two Russian women from the 9th to the 14th of September in 2012.

NYC's minimum rental period law is designed to prevent transient guests, which is a topic that have discussed previously on quite a few occasions such as in February of 2010 and May of 2012. The thrust of the topic is that there are safety issues in permitting unregulated hotels to exist for consumers and that there are further issues for other unit owners in allowing unscreened strangers to have access in and out of their condominium and cooperative buildings. There are also many arguments that transient guests in neighborhoods greatly reduce property values.

Its important to note that the decision distinguished the violated act from simply having "house guests or lawful boarders, roomers or lodgers" who stay for less than 30 days. The decision sets forth that house guests cannot be strangers who pay for occupancy and with respect to the other terms it looks to the definition of a common household in the Code as "A common household is deemed to exist if every member of the family has access to all parts of the dwelling unit. Lack of access to all parts of the dwelling unit establishes a rebuttable presumption that no common household exists".

So, NYC residents stop using Airbnb, it advertises your illegal rentals and gives the government great evidence if they wish to prosecute. To read the decision for yourselves, click here.

Thursday, May 23, 2013

Is Your Tattoo a License Law Violation?

In early May, a newspaper article was passed around our office which churned up more than a few laughs from the staff. New York City based Rapid Realty offers its Real Estate Agents a 15% raise in their commission split if they get a tattoo of the broker's logo. Check out the article here. Turns out, their decision to get a tattoo of Rapid Realty's logo could result in a potential License Law violation.

Lieb at Law and Lieb School have gotten their hands on the new Real Estate License Law Advertising Regulations which will take effect on January 2, 2014. Anyone with a tattoo of their broker's logo may want to pay particular attention to sections (a)(1) and (c)(1) of these new regulations.

Section (a)(1) defines an advertisement as "promotion and solicitation related to licensed real estate activity, including but not limited to, advertising via mail, telephone, website, e-mail, electronic bulletin boards, business cards, signs, billboards, and flyers."

Section (c)(1) states that any advertisement "shall indicate that the advertiser is a real estate broker or provide the name of the real estate broker or real estate brokerage and either: (i) the full address of the real estate broker or real estate brokerage or, (ii) the telephone number of the real estate broker or brokerage."

So, agents with a tattoo of your broker's logo - that tattoo just might make you a walking advertisement! Make sure your tattoo is in compliance with your license law. You have until January 2, 2014 to schedule another session at your local tattoo parlor to add your broker's name and address or telephone number to go alongside your broker's logo!

The sign off line of that May 2nd article could end up being more applicable than the author probably imagined.

"Perhaps getting permanently branded with a company logo gives a whole new meaning to the term 'walking billboard.'"

Andrew Lieb on Radio 5/24 and 5/25 88.3

REAL LIFE

Tomorrow & Saturday 5/24 & 5/25 at 5:30pm WPPB Peconic Public Broadcasting 88.3- Check out the season launch of Real Life hosted by John Christopher from Brown Harris Stevens. John will be interviewing Andrew Lieb concerning a multitude of issues facing Hamptonites in the real estate market from commercial valuation to simply the new regulations requiring a bank to verify ability to repay a loan.

Tuesday, May 21, 2013

Suffolk County Real Estate Agents! Some New Seats Opened - Divorce Deals & Property Management

We have some last minute cancellations for the free 3 credit CE course Divorce Deals in Riverhead tomorrow on 5/22/13. We also have new seats available in the course Property Management 101: A Good Piece of Dirt in Hauppauge on 6/6/13.

Visit www.liebschool.com to learn more about our free continuing education courses for licensed Real Estate Salespersons and Brokers in New York.




Wednesday, May 15, 2013

Sex Offenders & Disclosure Obligation of Real Estate Agents

While teaching agency disclosure, I was recently questioned about the duty of a seller's agent to disclose to prospective purchaser customers whether a sex offender lived in the subject Condominium.

The agent made inquiry pursuant to Real Property Law 443(4)(a) where the statute requires a seller's agent to "disclose all facts known to the agent materially affecting the value or desirability of property, except as otherwise provided by law."

The agent's point was that a sex offender's presence would lower the "desirability of property", if not the "value" of the Condominium unit. It was a good point that the agent made and it stumped me. So I said that I would check some law and let everyone know the answer on this blog.

Here goes - The closest case on point is Glazer v. LoPreste. Therein, a home purchaser sued the seller and real estate agents stating that the seller and agents fraudulently misrepresented that the home was a good place to raise children and concealed the existence of sex offenders in the neighborhood. The Appellate Division (2nd highest Court in the State) held (decided) that there was no rightful claim under these circumstances and dismissed the case.

Glazer is differentiated from the facts presented in that Glazer involved allegations of an affirmative misrepresentation whereas the facts presented only involved a failure of a duty to disclose. However, Glazer involved a sex offender in the neighborhood whereas the question presented involved one living within the same Condominium, which appears to be a heightened situation. Nonetheless, it seems safe for a real estate agent not to disclose the existence of a sex offender in this facts presented because, as the Court stated in Glazer, "the information was not 'peculiarly within the knowledge of the seller or unlikely to be discovered by a prudent purchaser exercising due care with respect to the subject transaction'".

Stated otherwise, the Glazer decision seems to limit the obligations for a real estate agent to disclose to facts that are not generally known nor easily discovered through due care. Meaning, why didn't the purchaser check the sex offender registry for himself?

So, agents, while there is no license law opinion directly on point, it appears that Glazer, while not addressing license law compliance and section 443(4)(a) expressly, would make nondisclosure permissible.

Commercial Space: Municipal use prohibitions prohibited

New York's highest court, the Court of Appeals, ruled earlier this year that "zoning is concerned with the use of land, not with the identity of the user" in the case of Sunrise Check Cashing and Payroll Services, Inc. v. Town of Hempstead. 

What does this mean to commercial landlords and tenants? How should you, a real estate professional, be equipped to now navigate the commercial real estate industry? 

Wednesday, May 8, 2013

Andrew Lieb receives award from the Bar Association

We are very happy to announce that Andrew Lieb, Esq. received an Award of Recognition from The Suffolk County Bar Association for Chairing the Real Property Committee of the Bar Association.

Child Support and Maintenance as Lien Priority

At our continuing education course, Title Waves, held last week at Chase Plaza, a real estate agent inquired whether child or spousal support (maintenance) received lien priority in the same way that real estate tax liens do.

The answer is that they don't. In fact, a child support or spousal support Order is not even a lien in the first place, much less a prioritized lien. Instead, only after there are arrears and a money judgment concerning those arrears is a lien even possible.

So, in every situation, in order to even receive a lien, a judgment is necessary. To be clear, a judgment for periodic future support payments does not qualify for a lien regardless that the Judge Ordered someone to pay. The lien only arises when a Judge indicates through an Order that the payor is in default.

With respect to lien priority, only real estate tax liens and certain mechanics' liens can skip the general rule of first in time, first in right with respect to lien priority.

However, this is not the end of the discussion. You see, while there is no lien priority with respect to real property for child support and maintenance liens, CPLR 5234(b) does provide for priority with respect to personal property. In fact, the CPLR section states, in pertinent part, that "child support shall have priority over any other assignment, levy or process" with respect to satisfying an execution or order of attachment against a debtor.

So, while there is no lien priority to support obligations with respect to real property (land & structures thereon, such as a house); there is lien priority when a Sheriff sells personal property to satisfy the debt on behalf of the creditor.

Wednesday, May 1, 2013

Mortgage Foreclosure Alert: New Making Home Affordable Program Handbook Released - Version 4.2


To access the new Handbook for MHA, inclusive of HAMP and HAFA, click here. While reviewing the Handbook you should be aware of the case of Flagstar Bank v. Walker wherein the Court held that the statutory good faith standard for a CPLR 3408 Foreclosure Settlement Conference is compliance with the Handbook. To review the case, click here.

This Handbook is the rules for banks / servicers to modify mortgages, so pay careful attention to detail and make sure that they comply.

President Broker is no more - DOS bans use of corporate titles

This past Friday, the NYS Department of State provided an Opinion Letter stating that the use of corporate titles by real estate agents, who do not actually hold such related authority, is misleading and impermissible.

On Friday evening attorneys and senior management at brokerage houses throughout the State were scrambling to address this issue immediately as many companies give out titles based upon agent's earnings as a reward as opposed to an implied authority and the companies needed to have a plan of action to address this change of understanding of Real Estate License Law.

Somehow the news got a hold of this Opinion Letter and now it is flying around at a rampant pace. So, what you should know is that your company can no longer permit you to utilize titles such as President, Vice President, Senior Vice President, Chairman, Vice Chairman, Managing Member, Director, Managing Director or anything else that is contained in the Business Corporation Law or Limited Liability Company Law as a term that implies authority. Instead, companies need to utilize titles without any correlated authority that does not exist.

Some articles flying around are:

The Real Deal - Brokers with false titles must now toe the line, regulators say
The Wall Street Journal - Titles Could Change for Some Real-Estate Brokers

Yet, there is no need to read the news, instead read the Opinion Letter for yourselves and understand why your companies are doing what they have to.