LIEB BLOG

Legal Analysts

Thursday, July 03, 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

Wednesday, July 02, 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.

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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 01, 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