Wednesday, January 28, 2015

Neighbor Issues: Snow Removal, Repair and Maintenance on Shared Driveways

Unfortunately, the term shared is such an inexact state of being and only through first deciphering how the driveway is actually owned can the mutual obligations for maintenance be precisely determined.

To force your neighbor to share in the upkeep and maintenance of a driveway or, better yet, to force your neighbor to pay for the entirety of the driveway maintenance is a complex proposition. To do this, you should first look to the deeds for all of the properties sharing the driveway. Typically, the deeds will show how the driveway is owned. There is only a true sharing of the driveway when there is a separately deeded right for the ownership of the driveway, in addition to both neighbors’ ownership of their individual properties, and as such, the driveway is titled in the neighbors as tenants-in-common or joint tenants. In this situation the driveway can be thought about in the same terms that one would view a lobby of a condominium with respect to ownership responsibilities and permissive use.

The typical shared driveway is not generally owned by both neighbors jointly, as previously described, but, instead, one neighbor usually owns the driveway while the other neighbor will hold an easement to use the driveway, or a right of way over such driveway. Here, the owner of the driveway is considered to have the servient estate whereas the easement-holder is considered to have the dominant estate. The dominant estate has rights that exist on top of that of the property owner who must, in turn, moderate his own rights for the purpose of serving the dominant’s intended use. In consequence to the owner’s subordinated rights, and as New York’s highest court has explained, “[o]rdinarily, a servient owner has no duty to maintain an easement to which its property is subject”. Instead, the servient landowner only has a passive duty not to interfere with the rights of the dominant easement-holder. As a result, maintenance and snow removal would typically fall on the shoulders of the easement-holder (a/k/a dominant estate), by default, who has a corresponding duty to keep the easement in sufficiently good repair so as to avoid harm to the servient landowner’s property.

A properly drafted deed should obviate the need to understand these default rules because such a deed should spell out the respective duties and limitations of the parties’ rights with respect to the driveway. The deed should go so far as to speak in terms of the specific maintenance obligations of each neighbor by explaining if the dominant estate-holder’s rights are just to use the easement as a passageway, or, instead, if the dominant estate-holder can maintain the easement with such things as plantings, fencing, paving, etc. A properly drafted deed should allocate the costs and decision-making powers of the neighbors so that there is no ambiguity as to the neighbors’ ability to co-exist into the future. More particularly, the deed should unequivocally state if the servient landowner is completely excluded from use of the driveway existing for the benefit of the easement-holder, or if both the servient and the dominant estate can use the driveway in a shared manner. The latter being the default rule if the deed is silent as to this issue. In such a situation and absent an express agreement to the contrary, all persons benefited by an easement must share ratably in costs of its maintenance and repair.

Assuming that both the servient and dominant estates actually utilize the driveway, the ownership rights will be looked at as an easement-in-common by a court when allocating the costs of maintenance. As a consequence either neighbor can take initiative to maintain the driveway. However, a neighbor can only look to the other to share ratably in its repair if that neighbor, who is undertaking the repair, gave the other neighbor both adequate notice of the repair issue sought to be addressed and a reasonable opportunity to participate in deciding how the repair is made. Thereafter, the neighbor, who is undertaking the repair, must ensure that the repairs were performed adequately, properly and at a reasonable price. Failure by the neighbor, who is undertaking the repair, to satisfy any of these obligations will prove fatal in any subsequent claim upon the other neighbor to share in the cost of maintenance of their shared driveway.


If you don’t have an agreement concerning the maintenance of a shared driveway with your neighbor, before going to court, you should invite your neighbor to enter into such a private agreement and thereafter file it with the deed, at the county clerk’s office, as a covenant and restriction that runs with the land. This type of agreement will not only avoid your instant conflict with your neighbor, but it will also prevent future neighbors who are living at your properties from existing with the same type of ambiguity, as to the rights and responsibilities for driveway maintenance, that created your conflict in the first place. As a consequence, it will enhance your property’s value.  

An Eruv in the Village of Westhampton Beach May Bring in More Real Estate Sales and Rentals

A public utility company is permitted to enter into an agreement with a private Jewish group to erect displays of religious significance on the utility poles said the courts on January 6, 2015. 

In 2008, there was discussion of putting up an eruv in the Village of Westhampton Beach. An eruv is a religious boundary that permits observant Jews within the enclosed space to carry and push items on the Sabbath, which, under ordinary circumstances, is forbidden. This boundary is usually established by attaching strips of woods to telephone poles around the community, thereby requiring private contracts with telephone companies.

A religious group called the Jewish People for the Betterment of Westhampton Beach (or JPOE) sued the Village of Westhampton Beach to oppose the erection of the eruv, arguing that it was a wrongful exception to Jewish practices on the Sabbath and that the government, which was contracting with private parties to establish the eruv, was overtly endorsing one sect of religion over another.

Courts said on January 6, 2015 that it is lawful for public utility companies to erect eruvs as part of a contract with a private party. LIPA’s contract to erect an eruv using its telephone poles was neutral and did not establish a noticeable and overt display of religion throughout the town. In fact, no reasonable observer would conclude from the strips of wood on the utility poles that the government was endorsing one religion over another. Furthermore, since private parties had agreed to finance, install and maintain the strips on the utility poles, there was no excessive government entanglement with religion.

This decision is a victory for religious freedom as a fundamental First Amendment right but is also a victory for real estate in the area. As the strips of woods on the telephone poles are not very noticeable, they will not in any way diminish the appearance of the community. In fact, real estate sales and rentals may skyrocket in the Village of Westhampton Beach now since observant Jews will seek out the community for its eruv. 

Tuesday, January 27, 2015

What Affluent Renters Consider Before Securing a High-End Summer Home in the Hamptons

It's imperative to realize that the east end of Long Island is a massive place. It's over 30 miles from Westhampton to East Hampton on the south fork and not that much shorter on the north fork between Riverhead and Orient. As a result, the experience of summering on Shelter Island as opposed to staying in Southampton is drastically different. The fact is that each community on the east end has its own unique offering of features that are "fabulous" to some and that represent "shortcomings" to others.

Read the full article in the Huffington Post.

Top 5 New Real Estate Laws Affecting NYers in 2015

Now that 2015 is here, NYers should know the top changes from the past year in real estate laws that affect property owners and tenants in our community. This is not a list about the best events from 2014, but, instead, a list that highlights the new legal landscape that you face in 2015.

Read the full article in The Huffington Post.

Monday, January 26, 2015

10 Questions to Ask Yourself About a Summer Rental

Andrew Lieb's latest article is now available on Dan's Papers.

Keep these tips handy when planning your seasonal rental search.

Wednesday, January 21, 2015

Ocwen Financial May Lose its Mortgage License

By the end of this year, Ocwen Financial, one of the largest mortgage servicers in the U.S., may lose its mortgage license in California.

Ocwen has been subjected to numerous investigations over the years regarding improper foreclosures, misplaced and mislabeled borrower documentation, billing issues, and overall failure to comply with federal and state laws and regulations. In December, Ocwen settled an ongoing investigation by the NYS Department of Financial Services (DFS) by agreeing to pay $100 million, which was to be used to support foreclosure defense programs and other relief and $50 million to Ocwen borrowers who reside in New York. As a result, not only did the company’s chairman step down from his position, but DFS will continue to monitor Ocwen in the upcoming years for further unlawful conduct. Although this settlement greatly impacted borrowers in New York, it was held as a victory for borrowers all over the country because it was supposed to put Ocwen in check and to stop it from continuing its cycle of financial abuse.

Unfortunately, the story does not end there. California now wants to suspend Ocwen’s mortgage license in the state as a result of Ocwen’s failure to provide mandatory documentation to the Department of Business Oversight, which is responsible for determining whether Ocwen is complying with state regulations in California. Ocwen issued a press release on January 13, stating that it is committed to resolving the issues in California, especially since its shares are crashing as a result of the news. It is crucial that Ocwen turns its business practices around and finally provide high quality assistance to its borrowers. Otherwise, it will surely fail.

Settlement conferences will begin in February. If nothing is resolved, Ocwen will not be able to do business in California for at least a year. If that happens, Ocwen may not be able to survive such a huge blow.

Tuesday, January 20, 2015

Enrollment is Now Open for Property Manager Liability: Requirements, Responsibilities and Fair Housing on 2/6/15 in Plainview



Property Manager Liability: Requirements, Responsibilities and Fair Housing


Instructor: Andrew Lieb, Esq., MPH

CE Credits: 3

Price: Free

Date: 02/06/2015 at 1:30pm in

Maximize your client's investment while minimizing your exposure to great liability. Be cautious, property management is a serious business that has many liability landmines for the weary. Do not just dabble in property management. Do not just help out a landlord brokerage client in dealing with their tenants. Learn why the Department of State considers property management to be a licensed activity in this State. Understand how to mitigate exposure to license law liability, premises liability, and fair housing liability. Get real life examples of what can go wrong. Most importantly, learn what must go into your Property Management Agreement and why a top property manager should get paid.
*** THIS COURSE SATISFIES THE ONLY MANDATORY CLASS REQUIREMENT FROM THE DEPARTMENT OF STATE (DOS) FOR AT LEAST 3 HOURS OF INSTRUCTION PERTAINING TO FAIR HOUSING AND / OR DISCRIMINATION ***

Wednesday, January 14, 2015

Lieb School is Back in NYC with Estate Deals CE on 2/12/15




Estate Deals

Instructor: Andrew Lieb, Esq., MPH

CE Credits: 3

Price: Free

Date: February 12th, 2015 at 12:30pm on 51st (between 5th and 6th)

Estate sales offer a unique opportunity to help the grieving by doing your job professionally. Starting with speaking the language of the Surrogate’s Court, this course will empower the real estate broker / salesperson to assist the Executor / Administrator in liquidating real property in order to satisfy debts of the estate. Additionally, disputes between beneficiaries and with the fiduciary, sales forced by the court, and foreclosures incident to the probate process will be discussed. Lastly, the student will be exposed to the overlay of brokerage and executor’s commissions where an Executor / Administrator is expressly exempt from the Real Estate License Law for Brokerage.

Register For This Class Here

Monday, January 12, 2015

New NYS Foreclosure Prevention Program is Closing its First Loans

Yesterday, the New York Attorney General, Eric Schneiderman, announced in a press release that the first loans have closed in the New York State Mortgage Assistance Program (NYSMAP) to help homeowners across the state pay off their mortgage arrears and/or liens in order to avoid foreclosure.

This program was launched on Long Island in September and was opened to the rest of the state in mid-October to provide funds to homeowners so that they may apply and be approved for loan modifications. Since one of the most common reasons for loan modification denial is the inability to pay off mortgage arrears, unpaid property taxes, and liens on properties in foreclosure, these NYSMAP loans are specifically designed to help homeowners pay off these types of debt up to $40,000. The program has already received 41 loan applications and approved 9 loans from Long Island alone. Mr. Schneiderman is predicting that hundreds of loans across the state will be approved over the next year, helping homeowners obtain loan modifications and keep their homes into the future.

Click here at nysmap.org or call 855-466-3456 to see if you are eligible for a loan through NYSMAP.

Friday, January 9, 2015

Real Estate Agent Successfully Obtains Permission to Use Drone for Aerial Photography

Want to use a drone to capture aerial photos of your listings? Douglas Trudeau of Tierra Antigua Realty in Tuscon Arizona has become the first Real Estate Agent permitted by the Federal Aviation Administration (FAA) to use a drone in connection with real estate brokerage.

As you may recall, a previous Lieb at Law Blog discussed the FAA rules which requires all sorts of licenses, certificates and flight plans in connection with "commercial" drone flights.  In that blog, we explained that the FAA specifically targeted real estate agents using drones to take aerial photos as an example of regulated commercial flight.  Remember, we are talking about two to three pound quadcopters, not full sized aircraft here.

Douglas Trudeau has waded through the tiresome process of obtaining the necessary approvals for such a commercial flight and amount of red tape is undeniably absurd. First, Mr. Trudeau had to petition the FAA for an exemption.  The FAA's response is a daunting twenty-six page analysis of the various rules, statutes and regulations which much be examined and excused prior to permitting Mr. Trudeau to use his drone.  Read the FAA's response for yourself here.

In granting Mr. Trudeau an exemption, the FAA analyzed each of the following factors:
  1. The type of aircraft used, including: size, speed, payload and weight;
  2. The qualifications of the pilot (Mr. Trudeau has a private pilot's certificate, but not a commercial license);
  3. The operating parameters of the anticipated flights, including: height, duration, range, tracking, interference with regulated airspace, and emergency contingency planning; and
  4. Public Interest
After deciding that it was as basically harmless for Mr. Trudeau to fly a toy, the FAA granted the exemption with a measly thirty-three conditions and limitations on his flights, including the following:
  1. The drone must remain in Mr. Trudeau's unassisted vision at all times;
  2. Mr. Trudeau must utilize a visual observer who also must maintain unassisted vision of the drone at all time;
  3. Mr. Trudeau, as the pilot, must maintain a private pilot certificate and at least a third-class medical certificate;
  4. Mr. Trudeau, before operating the drone to take photos, must log a minimum of twenty-five hours of flight time with a drone and at least five hours with the specific drone he is going to use for the flight.
  5. Prior to any commercial operation, Mr. Trudeau must have successfully executed at least three take-off and landings with the drone within the past ninety days;
  6. No night flights;
  7. Not within 500 feet below or 2,000 feet horizontally from a cloud;
  8. Mr. Trudeau must obtain an Air Traffic Organization issued Certificate of Waiver or Authorization prior to any operation and must request a Notice of Airman not more than seventy-two hours in advance, but not less than forty-eight hours prior to any operation; and
  9. Flights cannot take place within 500 feet of non-participating persons, vessels, vehicle or structures unless it will be "safe" for those non-participants;
Here's to hoping that the FAA changes its stance on small drone operations because the current process is cumbersome, to say the least. 

Wednesday, January 7, 2015

Important Decision on Right of First Refusal in Foreclosure Sale

An important decision came out on December 23, 2014 regarding the right of first refusal—the requirement that a property owner, if and when he is offered to sell his property to a third party, must first present that offer to the party who previously entered into a contract which gave that party the right to purchase the property before others. The right of first refusal is easy to understand if we use a basic example. Let’s say Allison wanted to sell her real estate to Bobby but Carrie had a written right of first refusal for the property in question. Allison would first get an offer from Bobby and then, offer that to Carrie. If Carrie accepts the terms set by Bobby, she can purchase the property. If not, Bobby has a deal to buy the property.

Here, in the case, Centech LLC v. Yippie Holdings LLC, the issue was whether a party who had a right of first refusal could exercise it based upon a foreclosure sale. The Court found that the right of first refusal was not applicable in the foreclosure sale because the language of the right of first refusal did not clearly provide for a foreclosure sale as a trigger to the right of first refusal.

The takeaway is that when you have a right of first refusal, make sure that it clearly sets forth the trigger to our ability to exercise your right. Vagueness can prevent you from having a right that you otherwise believe to be yours. 

Disclosures in Crowdfunding Projects

Crowdfunding, a way of funding a project from a large number of individual contributions, has become very popular in the commercial real estate world as a result of the JOBS Act of 2012, which eased securities regulations to give small businesses better access to funding. For example, Fundrise, a leading crowdfunding website, allows individuals to invest in commercial real estate projects, such as hotel or restaurant construction, for a low amount of money, opening up investment opportunities to everyone and not just wealthy accredited investors.

Now that crowdfunding is on the rise, it is important that everyone who is looking to invest in a project knows that they are entitled to certain disclosures under law. Rule 506(b) of Regulation D under the Securities Act is a new rule as of 2013 which established specific requirements to determine whether or not a transaction or project is exempt from Securities Act registration. When securities (i.e. investments) are registered, they provide important disclosure information to investors, such as a description of the company’s properties/businesses, a description of the securities, the company’s management information, and the company’s financials. Under Rule 506(b), some companies do not need to register their securities if they do not advertise their securities to the general public and do not sell the securities to more than 35 non-accredited investors. Therefore, it should be noted that if companies on Fundrise want certain transactions or projects exempt from registration, they must be careful not to sell securities to more than 35 non-accredited investors. However, these companies, despite being exempt from registration, must still give the same important disclosure documents and financial information to non-accredited investors and must answer questions from non-accredited investors. This rule is in place to protect individuals, who are not as knowledgeable or savvy as accredited investors, from being victims of fraud or misrepresentation.

If you are thinking of investing in a real estate project in the near future, remember that you are entitled under law to certain disclosures about the project and company in question. Regardless of any exemption, this information must be given to you as long as you are a non-accredited investor.

Click here if you would like to know the top 60 real estate crowdfunding platforms.

Friday, January 2, 2015

TAX RELIEF GRANTED FOR UNDERWATER HOMEOWNERS

Terrific news is here with a tax break for those who sold or lost their underwater homes to foreclosure in 2014.

The Mortgage Forgiveness Debt Relief Act (MFDRA) was extended through 2014 by the Tax Increase Prevention Act of 2014 on December 19, 2014.

Homeowners who were forgiven debt a/k/a “cancellation of debt income” (difference between the total amount of the mortgage still owed at closing and the sale price or fair market value of the property) resulting from a short sale, deed in lieu of foreclosure or foreclosure sale, will have the forgiven debt excluded from their taxable income for transactions completed through 12/31/2014. 
             
The MDFA previously expired on December 31, 2013.

So, for those who lost a home to foreclosure or a short sale in 2014, you will receive a nice holiday tax break when you file your taxes in the new year.  

Thursday, January 1, 2015

Real Estate Brokers are statutorily permitted to give rebates

A new line of negotiating brokerage commission is now available in the State of New York.

Buyers can now ask for a rebate of the seller's agent's brokerage commission in exchange for buying the property.

So, buyers should inquire of their prospective agents if the agent is offering a rebate on the transaction in consideration for being hired by the buyer. Alternatively, unrepresented buyers should inquire of the seller's agent if they offer a rebate in consideration of the buyer's offer to consummate a transaction.

At the least, it never hurts to ask.

Think about it ... a buyer's broker can now promote their services by incentivising prospective buyers to work with them by offering a rebate of the co-brokerage commission offered by the seller's agent.

To illustrate, a seller offers his seller's agent 6% on a deal whereby the seller's agent offers a buyer's agent a 3% share of that commission, in turn, for procuring a buyer, under a co-brokerage agreement. Now, that buyer's agent can motivate buyers to come to that deal by offering prospective buyers 1% of that 3%, or an alternative discount on the deal, for working with that buyer's agent.

Before the enactment of this statutory amendment, brokers did rebate commissions, but they have done so under a gray legal framework where there was no express authority for the practice (beyond a No Action Opinion Letter by the Department of State dated February 2008) and consequently it never became an overt marketing tactic by buyer's agents. Look for that to change.  


Real Property Law 442 was amended as 2014 came to a close. It now reads as follows (capitals represent additions to the statute):

Splitting commissions.
1. No real estate broker shall pay any part of a fee, commission or other compensation received by the broker to any person for any service, help or aid rendered in any place in which this article is applicable, by such person to the broker in buying, selling, exchanging, leasing, renting or negotiating a loan upon any real estate including the resale of a condominium OR COOPERATIVE APARTMENT unless such a person be a duly licensed real estate salesman regularly associated with such broker or a duly licensed real estate broker or a person regularly engaged in the real estate brokerage business in a state outside of New York; provided, however, that notwithstanding any other provision of this section, it shall be permissible for a real estate broker to pay any part of a fee, commission, or other compensation received to an unlicensed corporation or an unlicensed limited liability company if each of its shareholders or members, respectively, is associated as an individual with the broker as a duly licensed associate broker or salesman.

2. Furthermore, notwithstanding any other provision of law, it shall be permissible for a broker properly registered pursuant to the provisions of article twenty-three-A of the general business law who earns a commission on the original sale of a cooperative or homeowners association interest in real estate, including condominium units to pay any part of a fee, commission or other compensation received for bringing about such sale to a person whose [prinicipal] PRINCIPAL business is not  the sale or offering of cooperatives or homeowners association interests in real property, including condominium units in this state but who is either: (i) a real estate salesman duly licensed under this article who is regularly associated with such broker; (ii) a broker duly licensed under this article; or a person regularly engaged in  the  real estate brokerage business in a state outside of New York.
Except when permitted pursuant to the foregoing provisions of this section no real estate broker shall pay or agree to pay any part of a fee, commission, or other compensation received by the broker, or due, or to become due to the broker to any person, firm or corporation who or which is or is to be a party to the transaction in which such fee, commission or other compensation shall be or become due to the broker; PROVIDED, HOWEVER, THAT NOTHING IN THIS SECTION SHALL PROHIBIT A REAL ESTATE BROKER FROM OFFERING ANY PART OF A FEE, COMMISSION, OR OTHER COMPENSATION RECEIVED BY THE BROKER TO THE SELLER, BUYER, LANDLORD OR TENANT WHO IS BUYING, SELLING, EXCHANGING, LEASING, RENTING OR NEGOTIATING A LOAN UPON ANY REAL ESTATE INCLUDING THE RESALE OF A CONDOMINIUM OR COOPERATIVE  APARTMENT. SUCH FEE, COMMISSION, OR OTHER COMPENSATION MUST NOT BE MADE TO THE SELLER, BUYER, LANDLORD OR TENANT FOR PERFORMING ANY ACTIVITY REQUIRING A LICENSE UNDER THIS ARTICLE.


Read NYSAR's Memorandum in Support of this legislation, which quotes a 2008 opinion letter of the Department of State speaking specifically about using these rebates "to attract a new customer or client".  

At the least, this legislation represents a job well done by Zeldin and Lavine, the sponsors of this legislation, to clarify a gray area of real estate brokerage license law.