Monday, June 29, 2015

Does Your Broker Really Work For You?

Both buyers and sellers need to know what side a real estate salesperson is on in a transaction and also what duties they can expect from their real estate brokerage and salesperson while being represented.

Full article in Behind The Hedges, written by Andrew Lieb, Esq. here

Real Estate Brokers and Disclosure Requirements

Learn about real estate brokers' duty to disclose to those that they do not represent. Recent case creates more questions than it answers.

Full article in The Suffolk Lawyer, written by Andrew Lieb, Esq. here

Deal Killers - Free Lieb School Continuing Education Class on 7/29/15 in NYC

Course:  Deal Killers - Don't Let Your Deal Die

Instructor: Andrew Lieb, Esq.

Date: July 29th, 2015 at 353 West 46th Street (between 8th and 9th avenue)

Course Summary: You get the client, spend months looking for the perfect deal, find it, negotiate it and send it to an attorney to close it. Then, what? It dies. Have you ever wondered if you could do anything differently to have more of your deals close? Learn some of the main reasons that deals die like issues with the Sales Agreement, Title, Escrow Deposit, Closing Date, Financing / Contingencies and the Seller’s Concession. Next, learn how to proactively save your deals and earn a commission. Knowledge is commission.

CE Credits: 3

To Register: Login to Your Lieb School Account and Click "Enroll" or "Join Waiting List" 

Thursday, June 25, 2015

United States Supreme Court Holding: Plaintiffs Can Allege Disparate-Impact Discrimination Under Fair Housing Act

Today, in the case Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc., the United States Supreme Court held 5-4 (Kennedy, Ginsburg, Breyer, Sotomayor & Kagan for the majority) that disparate-impact is a cognizable cause of action under the the Fair Housing Act (FHA). In short, a plaintiff can now point to statistical evidence of discrimination in lieu of the more difficult standard of proving that the defendant had actual discriminatory intent.

In the legal world, whether under the FHA, Title VII of the Civil Rights Act of 1964, or the Age Discrimination in Employment Act of 1967,  there are two types of discrimination: disparate-treatment, and disparate-impact. Disparate-treatment typically is discriminatory on its face. For instance, when a landlord refuses to rent to women. The landlord has discriminated against a protected class and is liable under the FHA. Disparate-impact is neutral on its face, but results in statistical discrimination of a protected class. For instance, when a landlord refuses to rent to people with long hair. The landlord's policy does not on its face discriminate against a protected class, but the effect is disproportionate discrimination against women. Under the theory of disparate-impact discrimination, the landlord is discriminating against a protected class, even though that may not be his intention, and is liable under the FHA.

In the Texas Department of Housing and Communities Affairs case, the plaintiff alleged that the criteria set by the Texas Department of Housing and Communities Affairs for the distribution of tax credits intended to assist development of low income housing resulted in discrimination on the basis of race. The criteria, which was racially neutral on its face because it considered  economic factors almost exclusively, had the statistical result of higher approval rates for communities with higher proportions of African-Americans. The plaintiff alleged that the criteria resulted in the Texas Department of Housing and Communities Affairs discriminating against Caucasians under the theory of disparate-impact.

The Supreme Court, recognizing the broad expansion of liability under the disparate-impact theory, carefully established the burden a plaintiff must meet to make a prima facie showing of discrimination. That is, statistical discrimination of a protect class alone will not result in liability. First, the plaintiff must show that the action or policy results in statistical discrimination against a protected class. Second, the plaintiff must show that there is a specific policy held or perpetrated by the defendant that is causing the disparate-impact discrimination. Third, the plaintiff must show that there is an alternative practice or policy that has less disparate impact while still serving the defendant's legitimate needs.

The consequences of this ruling will be far reaching as plaintiffs attempt to link facially neutral policies to disparate-impact discrimination against protected classes. In New York, for instance, disparate-impact greatly expands the potential liability for discrimination against the numerous protected classes in our State. While the FHA has seven (7) protected classes (Race, Color, National Origin, Religion, Sex, Familial Status, and Handicap), New York State has eleven (11) protected classes (Race, Creed, Color, National Origin, Sexual Orientation, Military Status, Sex, Age, Disability, Marital Status, and Familial Status) and New York City has fourteen (14) protected classes (Race, Creed, Color, National Origin, Gender, Age, Disability, Sexual Orientation, Marital Status, Partnership Status, Alienage Status, Citizenship Status, Lawful Source of Income, and Children are, may be, or would be residing with such person). While New York City and New York State already recognized disparate-impact as a cognizable cause of action in certain circumstances prior to this most recent Supreme Court ruling, the recognition of disparate-impact under the FHA will likely cause expansion of disparate-impact theories in jurisdictions and statutes which do not specifically recognize disparate-impact as a cognizable cause of action.

The law of the land is clear - disparate-impact is just as damaging as disparate-treatment and violators cannot hide behind facially neutral policies.

Thursday, June 18, 2015

Reverse Mortgages: An Understanding Of The Risks

This month, the Consumer Financial Protection Bureau (CFPB) published the article A closer look at reverse mortgage advertisements and consumer risks, which examines its study of advertisements for this product to older homeowners. The CFPB found “many contained confusing, incomplete, and inaccurate statements regarding borrower requirements, government insurance, and borrower risks”. 

Nonetheless, CFPB does acknowledge that “reverse mortgages can help some older homeowners meet financial needs”, which makes them an important product for real estate brokers to understand. 

Unfortunately, the article finds that “[c]onsumers described ‘lifestyle enhancement’ as the primary use for reverse mortgage proceeds”, but a reverse mortgage should only be used as a last resort because “homeowners can lose their home if they fail to meet the loan terms”.

Brokers should read this article and decide for themselves if a reverse mortgage is a good product to recommend. 

Thursday, June 11, 2015

Agency Disclosure - Free Lieb School Continuing Education Class on 7/16/15 at Newsday in Melville

Course: Agency Disclosure

Instructor: Andrew Lieb, Esq

Date: July 16th, 2015 at Newsday in Melville

Course Summary: 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.
CE Credits: 3
To Register: Login to Your Lieb School Account and Click "Enroll" or "Join Waiting List"

Friday, June 05, 2015

Real Estate Brokers - DON'T Have Your Clients Sign the LIBOR Sales Agreement

Last evening, Lieb School taught a continuing education course, Estate Deals, at Newsday's Headquarters to over 100 real estate salespersons from the region.

Before the class began, I told the audience about a discussion happening right now between attorneys on the New York State Bar Association's Real Property Law Section's Listserv, called "Real Estate Binders". I advised of the conclusion of the attorneys about how terrible the results are for transacting parties when they sign Sales Agreements prepared by real estate brokers / salespersons who procured the transaction without having such an agreement drafted by a competent attorney. To my shock, many brokers thought I was wrong and they insisted to continue this practice of having their clients sign this one (1) page form contract.

After reading, I hope they will rethink their position because it is quite possible that transacting parties will end up being in a binding contract by way of this Sales Agreement, which is the furthest thing from their intended goal when working with a real estate broker and/or salesperson. The case of Pescatore v. Manniello addresses such a situation wherein the Appellate Division stated that the "agreement satisfied the statute of frauds, as it identified the parties to the subject real estate sales transaction, described the realty to be sold with reasonable particularity, and it stated the purchase price of the realty, the down payment called for as well as its due date, and the balance due upon closing. The agreement also provided for a closing date, and stated that the transaction was not subject to mortgage financing. The additional fact that the agreement stated that a more formal contract was to be signed does not render the purchase deposit agreement unenforceable".

Plus, a real estate salesperson owes their client duties of loyalty, accountability and the use of reasonable care so isn't the salesperson breaching those fiduciary duties to their client by having their client enter into a contract without knowledge of its binding effect and without advising them to utilize instead the twelve (12) page "RESIDENTIAL CONTRACT OF SALE Jointly Prepared by the Real Property Section of the New York State Bar Association, the New York State Land Title Association, the Committee on Real Property Law of the Association of the Bar of the City of New York and the Committee on Real Property Law of the New York County Lawyers' Association. (11/00)", which is supplemented by a tailored Rider by most attorneys in Downstate New York.

The Sales Agreement used by many on long island is hyperlinked.

As can be seen on the face of the agreement, it states: "THIS IS A LEGALLY ENFORCEABLE CONTRACT, YOU SHOULD CONSIDER WHETHER YOU WISH TO CONSULT YOUR ATTORNEY PRIOR TO SIGNING THE SAME". Further, the Sales Agreement contains an attorney approval clause, but such clause is waived unless the Sales Agreement is disapproved by a party's attorney within "3 business days after full execution thereof". Wouldn't it be smarter to just fill out the form without having any party sign the agreement and send the information to an attorney to negotiate within a formal contract of sale?

It comes down to this: Do real estate salespersons care more about the best interest of their clients when creating a meeting of the minds or would they rather mislead the clients that it's a good idea to be in a terrible contract just so that the salesperson feels more secure about receiving a commission?

You decide.

Thursday, June 04, 2015

Relative Matters: Thinking of Letting a Family Member Stay at Your Hamptons Estate?

If you are counting on rental income, you cannot let a relative stay at your place, even for the weekend.

Read Andrew Lieb's latest article in Behind The Hedges to find out why.

Wednesday, June 03, 2015

This Is What Happens When Your Neighbor's Falling Tree Damages Your House

Tuesday, June 02, 2015

Title Waves - Free Lieb School Continuing Education Class on 6/30/15 at the Omni Building in Uniondale

Instructor: Andrew Lieb, Esq

Date: June 30th, 2015 at the Omni Building in Uniondale

Course Summary: Did you know that approximately 25% percent of real estate deals have title problems?  This title insurance course will help you avoid dead deals due to misinformation throughout the transaction process. You will learn who the underwriting players are and how their respective roles can influence your deal. We will discuss the impact of unmarketable title with brokerage commissions.  Additional topics covered include liens and forgeries in the chain of title and what transpires in real life cases. This course will enable you to take preventative measures to accurately describe your listing and avoid terminal transactions.
Let’s prevent title issues from killing our deals.
CE Credits: 3
To Register: Login to Your Lieb School Account and Click "Enroll" or "Join Waiting List"

Monday, June 01, 2015

Making Home Affordable - New Handbook Available - Version 4.5

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 US Bank v. Sarmiento wherein the Court held that the statutory good faith standard for a CPLR 3408 Foreclosure Settlement Conference is whether the "totality of the circumstances demonstrates that the party's conduct did not constitute a meaningful effort at reaching a resolution", including 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.