LIEB BLOG

Legal Analysts

Wednesday, October 31, 2012

I'm in contract of sale for real estate damaged by Hurricane Sandy, what's the result?

In answering this question, the first issue is if the damage is material to the contract or is instead merely ancillary. To illustrate, lost electric or a few shingle down is likely immaterial, whereas flooding with structural damage is typically material.

If material, the contract is unenforceable at the option of the purchaser (the seller has no option). In this scenario, if the purchaser does not want to pursue the contract and therefore does not want to close on the real estate transaction, the purchaser can have their deposit (Earnest Money) returned.

If immaterial, the contract is enforceable, but the purchaser has a right to an abatement (reduction) of the purchase price reflecting the damage.

Nonetheless, if there is a prepossession agreement and the purchaser is in possession, regardless if the damage is material, the contract is enforceable as is.

These are the default rules embodied in General Obligation Law 5-1311, but a contract of sale can be drafted to amend these rules however the parties agree. Therefore, it is imperative that you review your contract of sale before you act.

Tuesday, October 30, 2012

Home Repairs & the Law - Homeowners Insurance Policy Tips

First, homeowners policies are all unique and must be read in their entirety. If you have any questions about your policy, you should contact an attorney rather than taking the word of your insurance company because they are not in the business of advocating for you and instead seek to minimize their payments / exposure.

Its important that you don't assume that you do or don't have coverage for a specific loss. There are many gray areas of coverage.

An important item to review in your insurance policy is if it pays Replacement Value or Cash Value for your damaged property.

Replacement Value refers to the cost to replace the property on the same premises with property of comparable material & quality.

Cash Value refers to the cost to replace with new property of like kind & quality, less depreciation.

To be clear, Replacement Value is much better for the insured than Cash Value as there is no depreciation taken into account when evaluating the homeowner's claim.

Next, you should check your deductible, take pictures of your losses, make a list of everything damaged / lost and promptly contact your insurance carrier to provide them with adequate notice (there are generally notice requirements to obtain your insurance coverage, including the way you provide notice and to whom).

Home Repairs & the Law - License Requirement in local Town or Village

While there are statewide laws for home improvement contracts & County / City laws, do not forget to also check your local municipality for their laws as well. Pursuant to General Business Law 775, local laws are permissible regulating home improvement contractors provided their are not inconsistent with State laws. So, a contractor may need to also be licensed on the local level. Additionally, there may be required contract provisions for your job.

While we have substantial damage from the storm throughout the region & need repairs, its important to ensure that these consumer protection statutes are followed by contractors along the way.