Friday, July 25, 2014

10 Secrets to Closing the Deal

Highlights from Andrew Lieb's latest article featured in Dan's Papers...10 Secrets to Closing the Deal

  1. Confirming Deeded Ownership
  2. Setting the Listing Price
  3. Staging and Active Concealment
  4. Proactive Home Inspection
  5. Broker's Loyalty
  6. Budgeting for Transaction Costs
  7. Certificate of Occupancy
  8. Survey and Boundary Line
  9. Avoiding Capital Gains Tax
  10. Clearing Liens
Read the full article in Dan's Papers 

Wednesday, July 23, 2014

Real Estate Agents Forbidden to Use Air Drones for Listings



If you are a licensed real estate agent and have ever used or are still using air drones to take photographs of properties to improve your listings, stop now and do not do so again. The Department of Transportation’s Federal Aviation Administration has recently provided clarification on the FAA Modernization and Reform Act of 2012, prohibiting the commercial use of model aircraft.  

Under this Act, a model aircraft is defined as an unmanned aircraft that is flown recreationally within visual sight of the aircraft operator. There are numerous statutory requirements that aircraft operators must adhere to when flying model aircraft, such as the weight of the aircraft and where and when the aircraft can be flown. However, the most important statutory requirement for real estate agents is that the aircraft must be used only for recreational purposes.

Millions of Americans have joined aircraft clubs in order to build and fly model aircraft and have used model aircraft to take aerial photographs and video of their communities, gardens, and farms. This is allowed. If you are using a model aircraft to take photographs for pleasure and do not intend to use or sell the photographs for your business, then you do not violate any statutes. Real estate agents, however, use model aircraft for commercial purposes, violating the statutory requirement of recreational use. For example, many real estate agents use model aircraft to take aerial shots of properties for their listings, especially if the properties are large and have a high sales price. With high commissions at stake, real estate agents are willing to put forth the extra effort to take these aerial photographs and improve their listings to catch a worthy buyer’s eye. It is important to note that if a real estate agent is caught using model aircraft to take photographs of properties for listings, the Federal Aviation Administration, under this Act, may fine this real estate agent (or exact punishment in any other way it deems necessary) for the violation of this statutory requirement.

Since the Federal Aviation Administration has the power of enforcement, it is wise to avoid using model aircraft for commercial purposes at all costs.

Stay tuned for an update on what kind of fines the FAA can exact on violators.

Agency Disclosure - Free CE on 8/14 in Hauppauge


Instructor: Andrew Lieb

Sponsor: Citibank

Credits: 3

Cost: Free

Every broker must send their agents to this continuing education course to learn Agency Disclosure.

This course will answer the maddening questions that are always in the back of every real estate agent’s mind in brokerage: How do I fill out the form? Who do I work for? How can I get both sides of the deal? Can the Department of State fine me if I mess this up? Why does my broker care so much? Does this affect my commission? How about my license?

You will learn the whole enchilada about agency from disclosure in the presence of another broker to disclosure by electronic means to disclosure at an open house to disclosure when your client / customer refuses to sign the form, and so much more. You will be familiarized with the applicable statute, the relevant regulation, court cases that decipher your duties and DOS Administrative Decisions that fine violators. This course even includes a skills component where you will learn how to fill out the Agency Disclosure Form in every possible scenario. Finally, you will get it right. It’s mandatory to practice Agency Disclosure and after taking this course, you will.

Seats fill up quickly.  Click Here To Enroll



Tuesday, July 8, 2014

Hamptons Real Estate by the Numbers



The Great Recession is finally showing signs of letting up, but this is old news to real estate agents in the Hamptons where the housing market recovered long before Main Street felt any relief. In 2013, the Hamptons and North Fork of Long Island saw approximately 2,600 real estate transactions – a 70% increase over 2009 when the Great Recession was at its lowest point. That number is poised to grow this year. With that in mind, let’s take a look at some of the eye popping numbers from the Hamptons this year.

The $147,000,000 Estate.  This summer, Barry Rothstein, founder of the hedge fund Jana Partners, purchased an 18 acre beachfront estate in EastHampton for a reported $147,000,000, making it the most expensive single family home ever sold in the United States. The average home price in Suffolk County is approximately $347,200, meaning Mr. Rothstein could have purchased 423 homes for the price of his Hamptons estate.

High End Homes.  According to Douglas Elliman Real Estate’s Q1 2014 market report, the average sales price in the Hamptons checks in at $1.7 million.  To show how skewed that number is by high end luxury sales, the median sales price is $880,000 – roughly half the average.  According to hreo.com, the Hamptons multiple listing service, 282 homes are listed for sale at $10,000,000 or more, a bargain compared to the $147,000,000 Rothstein Estate.  In the 1st Quarter of 2014 alone, there were 37 sales over $5,000,000. Nationwide, purchases costing $1,000,000 or more represent 2% of all home sales. Of the homes listed on hreo.com, more than 67% check in at $1,000,000 or more.

“Average” Homes Disappearing.  Hreo.com searches reveal that there are only 183 homes for sale in the Hamptons region, which stretches from Remsenberg to Montauk, listed at $350,000 or less, the average home price in Suffolk County. Of the 5,330 listings on hreo.com, only 3% are at or below the Suffolk County average. For those of you keeping track, there are more homes for sale over $10,000,000 in the Hamptons than there are homes under $350,000. Meanwhile, nationwide, the median home price is $188,900. At that budget, there are 27 homes for sale in the Hamptons, all of which are 1 bedroom summer retreats. Even mobile homes in the Hamptons come at a premium, with this mobile home checking in at a cool $199,000

Summer Rentals. According to some estimates, the population of the Hamptons increases by 500% from winter to summer. As a popular vacation spot, it should come as no surprise that many Hamptonites choose to rent a summer home instead of buying. What may shock you, however, is the price of some of these rentals. With the rental season already well underway, there are still 186 homes for rent in the Hamptons on hreo.com at a cost of over $350,000 for the summer, meaning there are more Hamptons summer rentals still available over the Suffolk County average home price than there are homes for sale at or below the Suffolk County average.

When looking to make your summer escape to the Hamptons, remember to bring your wallet with your sunscreen!

Sunday, July 6, 2014

ELIGIBILITY OF FLOOD RISK REDUCTION MEASURES UNDER THE HAZARD MITIGATION ASSISTANCE (HMA) PROGRAMS

On June 18, 2014, the Federal Emergency Management Agency (FEMA), which is an agency of the United States Department of Homeland Security that coordinates the response to a disaster that has occurred in the United States, announced a new policy entitled “Eligibility of Flood Risk Reduction Measures under the Hazard Mitigation Assistance (HMA) Programs.” This new policy, which applies to Federal, State, tribal, and local authorities involved in the administration of HMA Programs, describes a change in FEMA’s HMA Program guidance concerning the types of physical flood risk reduction projects FEMA may consider for funding under its HMA Programs.

The HMA Program authorities are provided by the National Flood Insurance Act of 1968, as amended, to use assistance made available from the National Flood Mitigation Fund for carrying out and planning activities designed to reduce the risk of flood damage to structures covered under contracts for flood insurance. FEMA’s HMA Programs include the Pre-Disaster Mitigation Program (PDM), a Hazard Mitigation Grant Program (HMGP), and the Flood Mitigation Assistance (FMA) Program. The HMGP and the PDM Programs provide assistance to State, tribal, and local governments for hazard mitigation activities that are cost-effective and substantially reduce the risk of future losses from major disasters. These HMA Programs are one way FEMA supports mitigation against flooding and other disasters.

Prior to this new FEMA policy, the 2013 HMA Unified Guidance stated that only “minor localized flood reduction projects” are eligible for funding under the FMA, PDM, and HMGP. Further, the guidance stated that “major flood control projects” related to the construction, demolition, or repair of dams, levees, dikes, floodwalls, seawalls, breakwaters, groins, jetties, and erosion projects related to the beach nourishment or re-nourishment, are ineligible activities under all programs (emphasis added). However, FEMA has now revised the HMA Program guidance after a review of relevant legislation, regulations, and policy to allow for the construction, demolition, or mitigation of dams, dikes, levees, floodwalls, seawalls, groins, jetties, breakwaters, and erosion projects related to beach nourishment or re-nourishment under the HMGP and PDM Programs.

Under all HMA Programs, approval of an eligible project must not result in a Duplication of Programs (DOP) with other federal agencies. This doctrine of Duplication of Programs prohibits FEMA, or any other federal agency, from using its assistance to fund projects or programs if funding for similar activities is available under a more specific federal authority, unless there is an extraordinary threat to lives, public health or safety, or unimproved real property. The DOP issue is of particular concern in determining eligibility for flood risk reduction projects because other federal agencies may be funding similar flood risk reduction measures under more specific authorities. This new FEMA policy addresses the DOP issue by speaking about how the DOP may affect the eligibility of HMA flood risk reduction projects and how applicants may screen projects for potential duplication prior to application.

HMA Programs are established by Sections 203(PDM) and 404 (HMGP) of the Robert T. Stafford Disaster and Emergency Assistance Act, 42 U.S.C §§5133, 5170c-(b)(2) and by Section 1366 (FMA) of the National Flood Insurance Act of 1968 (NFIA), as amended by the Biggert-Waters Flood Insurance Reform Act of 2012, 42 U.S.C §4104c. The HMA Programs are also governed by Title 44 Code of Federal Regulations (C.F.R.) Part 9, Part 10, Part 13, Part 59, Part 65, Part 79 (FMA), Part 80, and Part 206, Subpart N (HMGP).


For more information on FEMA’s Eligibility of Flood Risk Reduction Measures under the Hazard Mitigation Assistance (HMA) Programs Policy, visit http://www.fema/gov/hazard-mitigation-assistance-policy.  

Thursday, July 3, 2014

Towns Can Now Use Local Zoning Laws to Ban Fracking

There are many towns on Long Island that pride themselves on their quaint, small-town characteristics and their colonial history. Residents of these towns often worry that their communities will be tarnished or disrupted by an excavation site in their backyards.

However, New York’s highest court has recently upheld the power of local governance to regulate businesses in its borders. According to this ruling, towns have the right to ban fracking by using local zoning ordinances if fracking disrupts the character and integrity of these communities.

Fracking is a method of hydraulic extraction. High-pressure fluid is injected into cracks in the earth to release a higher quantity of oil and gas. There is a huge movement in the United States against the use of fracking as it has numerous environmental risks, such as groundwater contamination and earth tremor causation.

The towns Dryden and Middlefield, both located in upstate New York, are rural communities that rely heavily on agriculture and small town tourism. In the mid-2000s, two companies, Norse Energy Corp. and Cooperstown Holstein Corp., had tried to develop and extract natural gas in the areas. Responding to rigorous protests, the Town Boards of Dryden and Middlefield banned the use of fracking due to the environmental and health implications involved in the controversial method. Nonetheless, the two companies maintained that state law was on their side and that they had the right to develop in the areas.

The New York Court of Appeals has upheld the decisions of the lower courts by ruling in favor of the towns. Pursuant to the Municipal Home Rule Law, by banning fracking, both towns were exercising their local governance rights in the preservation of the character, welfare, and aesthetics of their communities. If fracking threatens the integrity of a town, that town should be able to reject it based on the Home Rule Law.

Interestingly, this ruling was not based on any scientific conclusion that fracking is harmful to the environment. Oil companies that want to pursue fracking may do so in areas where fracking is not restricted or banned by local ordinances. Instead, the decision discussed the towns’ objection to fracking on the ground that it would cause heavy traffic congestion in the towns and industrialize the small-town, rural areas.

Also, this decision is of note as it comes out the exact opposite of the Court’s February 14, 2013 decision in Sunrise Check Cashing and Payroll Services v. Town of Hempstead, in which the Court declared that the Town of Hempstead could not ban check cashing establishments from the area because its zoning ordinance did not demonstrate that the business had a negative impact on the community. Consequently, reading these decisions together yields an understanding that a town can ban businesses such as adult entertainment and fracking for having negative impacts on the community, but cannot ban check cashing and fast food businesses as there is no objective negative impact. So, the Sunrise case reminds us that this latest decision on fracking is not to be read broadly in garnering an understanding that a town has free rein to prevent any business it dislikes from existing in its borders. Instead, a town must have a legitimate objective belief that the subject business negatively impacts the community, beyond conjecture, in order to block it from the Town’s jurisdiction.

This ruling is a victory for local governance, granting towns the power to preserve their character and integrity. It did not address the environmental impacts of fracking in itself, and we must look for future cases in order to obtain clarification on that issue. 

The Home Affordable Modification Program has been Extended

If you are a struggling homeowner and have defaulted or are at risk of default on your mortgage loan, an application for the Home Affordable Modification Program (HAMP) may be your best chance of obtaining an affordable loan modification.

Previously set to expire in December 2015, the Home Affordable Modification Program has recently been extended by the Obama Administration through December 2016. This federal loan modification program has been successful in providing reductions in monthly mortgage payments for millions of homeowners nationwide. Unlike Lender-based modifications, this program has two tiers, one of which requires a debt-to-income of 31% in its modification terms and another which requires a 10% reduction in monthly mortgage payments. If a homeowner is not eligible for Tier 1, then he or she will be reviewed for Tier 2, thus giving homeowners two chances to obtain lower, affordable monthly mortgage payments in their application for HAMP.

Oftentimes, Lenders that have their own loan modifications will only add the arrears to the principal balance without changing any other terms of the loan, thus creating monthly mortgage payments that are, in fact, higher than the original payments. Struggling homeowners often cannot accept a modification with higher payments because their hardships are long term or even permanent.

HAMP, however, requires affordable mortgage payments as part of its program and now will continue through the remaining term of the Obama Administration.

When it's Family, Choose Your Tenants Wisely

Think before you let a family member stay at a house you rely on for rental income. Read Andrew Lieb's latest article featured in Dan's Papers.

http://danspapers.com/2014/07/when-its-family-choose-your-tenants-wisely/

Wednesday, July 2, 2014

Real Estate Broker Record Retention - Proposed Regulatory Change

Did you know that there are laws about keeping real estate brokerage records?



Currently, the applicable law reads:

§175.23 Records of transactions to be maintained 
(a) Each licensed broker shall keep and maintain for a period of three years, records of each transaction effected through his office concerning the sale or mortgage of one- to four-family dwellings. Such
records shall contain the names and addresses of the seller, the buyer, mortgagee, if any, the purchase price and resale price, if any, amount of deposit paid on contract, amount of commission paid to broker or gross 
profit realized by the broker if purchased by him for resale, expenses of procuring the mortgage loan, if any, the net commission or net profit realized by the broker showing the disposition of all payments made by 
the broker. In lieu thereof each broker shall keep and maintain, in connection with each such transaction a copy of (1) contract of sale, (2) commission agreement, (3) closing statement, (4) statement showing 
disposition of proceeds of mortgage loan.  

(b) Each licensed broker engaged in the business of soliciting and granting mortgage loans to purchasers of one to four family dwellings shall keep and maintain for a period of three years, a record of the name 
of the applicant, the amount of the mortgage loan, the closing statement with the disposition of the mortgage proceeds, a copy of the verification of employment and financial status of the applicant, a copy of the inspection and compliance report with the Baker Law requirements of FHA with the name of the inspector. Such records shall be available to the Department of State at all times upon request.

----

However, much of the currently applicable law makes no sense as often a broker does not have a contract of sale in his / her possession and often the broker keeps all records electronically. 

Now, there is a proposal to change the law to reflect reality and the new law would read as follows (underlines being additions to the law):

§175.23 Records of transactions to be maintained 
(a) Each licensed broker shall keep and maintain for a period of three years, paper and/or electronic records of each transaction effected through his or her office concerning the sale [or mortgage] of one- to four-family dwellings. In some transactions, the broker may not be provided a copy of the document required.  In such instances, the broker will not be found to have violated this regulation if said document is not kept and maintained. Records to be kept and maintained shall contain:

 (1) the names and addresses of the seller[,] and the buyer, [mortgagee, if any,] (2) the broker prepared purchase contract or binder, or if the purchase contract is not prepared by the broker, then the purchase price [and resale price, if any,] and the amount of deposit (if collected by broker) [paid on contract], (3) the amount of commission paid to broker, (4) [or g]the gross profit realized by the broker if purchased by him or her for resale, [expenses of procuring the mortgage loan, if any, the net commission or net profit realized by the broker showing the disposition of all payments made by the broker. In lieu thereof each broker shall keep and maintain, in connection with each such transaction a copy of (1) contract of sale, (2) commission agreement, (3) closing statement, (4) statement showing disposition of proceeds of mortgage loan.] (5) any document required under Article 12-A of the Real Property Law and (6) the listing agreement or commission agreement or buyer-broker agreement.  
[(b) Each licensed broker engaged in the business of soliciting and granting mortgage loans to purchasers of one to four family dwellings shall keep and maintain for a period of three years, a record of the name of the applicant, the amount of the mortgage loan, the closing statement with the disposition of the mortgage proceeds, a copy of the verification of employment and financial status of the applicant, a copy of the inspection and compliance report with the Baker Law requirements of FHA with the name of the inspector. Such records shall be available to the Department of State at all times upon request.]

Notate the addition of the sentence "any document required under Article 12-A of the Real Property Law" at the end of the second paragraph. This is a catchall that includes such items as an Agency Disclosure Form and any other document later added to the law.

So, keep an eye on the DOS's Regulatory Activity page to determine when this Recent Proposal will become a Recent Adoption and hence, applicable law, or just keep an eye on the Lieb Blog for simple updates when real estate events happen. 

Tuesday, July 1, 2014

2014 College Graduates - Take a Year Off Before Law School

Join a thriving law firm that leads our profession through advocacy and advice supported by cutting-edge technology and know-how. This exciting opportunity is for a 2014 college graduate looking for valuable office and legal experience before heading to law school. You will be exposed to real estate litigation, learn the court system and assist in cases from real estate brokerage through landlord / tenant, premises liability, personal injury and more. You will manage the firm's foreclosure defense practice by pursuing loss mitigation alternatives for our clients and by preparing attorneys for upcoming court appearances. The foundation and knowledge obtained in this position will not only get you ready for law school, but will give you an essential competitive edge before starting your legal career.

Those that succeed in this position can earn a Law Clerk position throughout Law School and potential Associate Attorney position once licensed.

Requirements:  Bachelor's Degree, GPA of 3.8 or higher, Can Do Attitude, Self-Starter, Detail-Oriented

This is a full time position out of our Center Moriches Office.

To apply: Email cover letter, resume and writing sample to careers@liebatlaw.com