How current events impact your business and real estate holdings

Showing posts with label tips. Show all posts
Showing posts with label tips. Show all posts

Thursday, August 27, 2015

Real Estate Contract Originals Must be Retained

A New York Appellate Court, in Stathis v. Estate of Karas, recently addressed a lawsuit against an estate to enforce a real estate contract of sale that was entered into by the decedent pre-death. However, the Plaintiff could not produce the original contract of sale so he submitted a copy to the Court. The Court refused to accept the copy as evidence when hearing the case.

The Court explained that when a plaintiff wants to submit a copy, pursuant to the Best Evidence Rule of CPLR Rule 4539, they must establish:

  1. Why the original document could not be produced;
  2. That person’s attempts to find the original contract; and
  3. That the copy was a reliable and accurate depiction of the original contract.

In Stathis v. Estate of Karas, the Plaintiff failed to show why he could not produce the original contract, and what efforts he undertook to try and find such original contract. Also and most importantly, the Plaintiff failed to show that the copied contract of sale was a reliable and accurate portrayal of the original contract. As a result, the Plaintiff was not allowed to produce the copied contract of sale, the Appellate Court reversed a verdict in the Plaintiff’s favor, and a new trial was ordered. 

It is always safe to keep your original real estate contracts of sale because the burden of proof to submit a copy is hard to satisfy.

Beware of Form Contracts – Why Your Business Needs a Tailored Agreement

As an attorney that regularly practices commercial litigation, I read a lot of contracts. Some good, most bad. One disturbing trend that I have noticed is the willingness of businesses – both small and large – to use form contracts or contracts created for other companies. The justification I hear is the belief that the contract must be good enough because a larger or older company is using it. The thinking is simple – “if it works for them, why wouldn’t it work for me?”

This isn’t a knock on Blumberg forms or other form contracts. They have their purpose and may work for some people. I do, however, take exception to the thought that because it’s good enough for someone else, it is good enough for your business. It’s not, and the fact that I just finished a trial on a ten year old breach of contract litigation confirms that every business needs its own tailored contract.

Form contracts and contracts written for other businesses do not take into account the traits that make your business unique. Every business has a differentiator, especially in highly regulated fields. When you use a form contract, you are failing to include language that accounts for and takes advantage of the differentiator that makes your business successful.

Form contracts typically are overbroad and are not sufficiently specific. Blumberg doesn’t know the nuances of the agreement between your business and your clients, so their contracts are intentionally drafted using vague, ambiguous and broad terms and topics. In a breach of contract litigation, ambiguities are the death of your contract. Not only are ambiguities construed against the drafter of the contract (yes, you are considered the drafter of the contract if you choose a form contract[1]), but once a court finds an ambiguity, the door is open to parole (extrinsic) evidence which can potentially modify the written contract.[2] If you are fighting about what the parties “thought” the contract meant, you have already lost the battle.

My ten year old breach of contract case likely never would have gone to trial if the business had used a contract tailored to their specific business instead of using a generic contract used for their industry in general. Because the form contract included services and methods of payment that were inapplicable to the business, following a motion for Summary Judgment (asking for a pre-trial decision by the Court as a matter of law), the Court held that the contract was ambiguous. Once it was determined that the contract was ambiguous, the defendant was allowed to introduce a slew of evidence of oral representations allegedly made by the business which made the defendant misunderstand the written terms of the contract. If the business had retained an attorney to draft a contract specifically for the services that they provided instead of using a form contract shared between multiple businesses in the industry, there likely would have never been a lawsuit in the first place, let alone a trial.  

If you have the ability to control the contents of your contract and you take a shortcut or the cheap way out, you are being penny-wise but pound-foolish. A rock solid contract decreases litigation costs and increases the chances that you will be compensated for your goods or services. A defaulting party is less likely to challenge a contract in Court if the language is straightforward and tailored specifically to address the dispute in question. Finally, in the event that you are forced to go to Court to enforce your contract, a tailored agreement decreases the chances that there will be a trial[3] to resolve what the parties were really agreeing to when they entered into a written contract that was supposed to memorialize their understanding and agreement.

Be wary of forms.  

[1] Interested Underwriters at Lloyds v. Ducor’s Inc., 103 A.D.2d 76 (1st Dept. 1984)
[2] Hartford Accident & Indemnity Co. v. Wesolwski, 33 N.Y.2d 169 (1973).
[3] The interpretation and application of an unambiguous contract is a matter of law that may be disposed of in a motion for Summary Judgment, obviating the need for a trial. Hartford Accident & Indemnity Co. v. Wesolwski, 33 N.Y.2d 169 (1973).

Tuesday, July 28, 2015

Here’s Why to Secure Your Original Will

Having an Attorney prepare your Will allows you to control the way your assets are distributed upon death. If you have a Will prepared, it is imperative that you secure your original Will in a safe location so that it may be produced for the Court following your death. Failing to do so may result in a Court making the rebuttable presumption that your Will has been revoked or terminated. See In re Fox’s Will. In other words, unless it is proven otherwise, the Court may conclude that you intentionally destroyed your Will while you were alive so that the Will could no longer be enforced.

Recently, the Courts reminded us why this principle is important in the Matter of the Estate of Robyn R. Lewis. In that case, the decedent (i.e. the person who passed away) had more than one original Will but not all of the original Wills were produced for the Court. As a result, the Court found that the decedent may have revoked the Will, even though that may not have been the decedent’s intent.  

Therefore, it is wise to only have one original Will, so that you only have to worry about securing that one Will for later production in Court. Options to secure a Will include, but are not limited to, leaving your Will at your Attorney’s Office, keeping your Will at your home, or filing the Will with the Court pursuant to Surrogate’s Court Procedure Act §2507. Do not keep your Will in a safety deposit box because it may be difficult or even impossible to access it after your death.

A person spends time and money to have a Will prepared, and all of that work may be undone due to a simple mistake, such as neglecting to tell someone where the original Will is located. If you want your friend to get that piece of jewelry you promised her in your Will, then you need to make sure you secure your original Will so that it may be enforced upon your death.