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Real Estate Law Blog

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COVID-19 UPDATE

Posted on March 21, 2020 at 6:52 PM Comments comments ()
COVID-19 Update:

At the Law Office of Jeanne Reardon, the health and safety of our staff and clients is our top priority.  Since you rely on us for your legal needs, we remain ready to help you in this difficult time as we face many health and financial challenges.  Accordingly, we are taking a number of steps to minimize health risks during this health crises while serving our current clients as well as new clients coming on board.

Our law firm will be adhering to the guidelines presented by the Centers for Disease Control and our local health officials, and we continue to monitor them for updates as they are released. We have implemented a plan to protect the safety of our work environment while allowing us to continue to service all of our clients.

We are taking precautions with respect to non-essential meetings and face-to-face interactions. That includes telephone consultations and conference calls whenever possible. With respect to our real estate practice, we will endeavor to utilize Powers of Attorney, pre-signed deeds, and Escrow Closings, where available, in order to close title when the transaction permits us to do so.

Do not hesitate to contact us if you have any questions or concerns regarding your current real estate transaction or if you are just getting started and are looking to hire a real estate attorney for an upcoming sale or purchase of a home.  As always, we are committed to handling our clients' matters with the utmost care and respect, and are available to assist both current and new clients.

We hope that you and your family remain safe and healthy!

Jeanne Reardon, Esq.

What does the "on or about" closing date in my contract to purchase a home mean?

Posted on October 30, 2018 at 12:24 AM Comments comments ()
The standard residential contract of sale used by attorneys in the New York Metropolitan area will often state that the closing will take place, for example, “on or about December 1, 2018.”  In New York, unlike many other states, the “Closing Date” contained in the contract, especially if the words “on or about” precede it, is a fluid date.  It is rare that a closing actually occurs on the date specified in the contract. The phrase “on or about” has been interpreted by the New York courts to mean that either side has a reasonable period beyond the “on or about” date in which to close.

If all progresses on schedule, a closing can usually occur within 60 days after the contract has been fully executed by the seller and purchaser. However, not all real estate transactions proceed as planned.  While many of the transactions do eventually close (unless a buyer is unable to obtain financing or an appraisal comes in too low), there are some that do end up in a dispute or litigation.  If a party is unwilling to close within a “reasonable” time after the closing date, many times, before litigation is commenced, the attorney for the party wishing to close can send what is referred to as a Time of the Essence Letter (“TOE Letter”) to the other party.  That letter will set forth a new closing date stating that “time is of the essence.” If the party receiving the letter does not close by that date they can be declared in default under the terms of the contract of sale.

It is important to note that the “time of the essence” standard is not a statutory standard but rather one established by the courts and case law, and is constantly changing depending on each case that is decided by the courts.  While the courts are silent as to what constitutes a “reasonable” time, many real estate attorneys practicing in the New York Metropolitan area have come to a consensus that “reasonable” is generally about 30 days.  However, the case law has explained that the other party must be given a reasonable time in which to act and what amounts to a reasonable time to perform depends on the circumstances of the case.

Whether dealing with a TOE Letter or an “on or about” closing date, the closing date and closing time frames can quickly change and extend far beyond the “on or about” closing date depending on the circumstances.


Real Estate Contract Mortgage Contingency Clause

Posted on September 30, 2018 at 5:50 PM Comments comments ()

Most people obtain financing when purchasing a house, condo, or co-op.  In that case, the contract of sale will contain a mortgage contingency clause making the sale contingent upon the buyer obtaining a mortgage in a certain amount.  If the buyer's loan application is denied by the lending institution, the buyer can then cancel the contract and get the down payment back.

In order to benefit from the protections allowed by the mortgage contingency clause the buyer must strictly abide by all its terms, i.e. the buyer must only apply for a loan in the amount stated in the clause (or such lesser sum as buyer shall be willing to accept), and obtain the mortgage within the time frame given in the clause.  If the buyer applies for a loan greater than the amount stated in the clause and is then denied a loan, the buyer will have forfeited the protection afforded by the clause and will not be able to cancel the contract.  If the buyer is then unable to obtain other funds to complete the purchase the buyer will be in default under the terms of the contract and more than likely lose their down payment.  On the other hand, if the buyer is approved for a loan greater than stated in the mortgage clause, then no problem.  Nonetheless, I  would never advise a client to take such a risk and put their down payment in jeopardy.  There are many reasons why the loan may be denied that have nothing to do with the financial qualifications of the buyer and are beyond the buyer's control.  An experienced real estate attorney will help you navigate through this process.

The mortgage contingency clause is there to protect your down payment should your loan be denied.  To best protect yourself when purchasing a home with a mortgage, hire an experienced real estate attorney who fully understands all aspects of the mortgage contingency clause and will guide you through the entire closing process.

To speak with an experienced real estate attorney, call us at (516) 314-8433.  To learn more about our services and how we can assist you, visit us at www.jreardonlaw.com

Why a Home Buyer Needs Title Insurance

Posted on June 3, 2018 at 8:36 PM Comments comments ()
Title insurance is crucial for a home buyer because it protects you and the lender from the possibility that your seller doesn't -- or previous sellers didn't -- have free and clear ownership of the house and property and, therefore, can't rightfully transfer full ownership to you. Problems with the title can limit your use and enjoyment of the property, as well as cause you financial loss.  This is why you need title insurance.  

Your real estate attorney will arrange the process of getting you title insurance soon after your Contract of Sale is signed.



What Could Happen If You Don't Get Title Insurance?

Title insurance protects against the following common hidden risks just to name a few:

  • Errors or omissions in deeds
  • Mistakes in examining records
  • Forgery
  • Undisclosed or missing heirs
  • False impersonation of the true owner of the property
  • Instruments executed under invalid or expired power of attorney
  • Mistakes in recording legal documents
  • Misinterpretations of wills Deeds by persons of unsound mind
  • Deeds by minors
  • Deeds by persons supposedly single, but in fact married
  • Fraud
  • Liens for unpaid estate, inheritance, income or gift taxes


Title Insurance: Lender's Policies and Buyer's Policies

Title insurance is typically a combination of two policies: a lender's policy and a borrower's policy. Your lender -- assuming you're taking out a mortgage, will require that you buy a lender's policy (also called a "mortgagee's policy") to pay for its legal defense costs and reimburse any mortgage payments you can't make because you've lost the house to someone else's claim on it.

The lender may also require you to buy an "owner's policy," covering your own legal fees and other losses, as yet another step toward protecting the lender's collateral. Your title insurance policy remains in effect as long as you, or your heirs, retain an interest in the property.  Title insurance will give you the peace of mind in knowing that the investment that you have made in your home is a safe one.

The Law Office of Jeanne M. Reardon assists New York property owners with title insurance matters. To speak with an experienced New Yorkreal estate attorney, call us at (516) 314-8433 or e-mail us.


Joint Ownership of Real Property in New York

Posted on May 13, 2018 at 6:21 PM Comments comments ()
Joint property ownership can be a great solution for people who want to own a home, especially for first-time buyers. But joint ownership can limit your rights and options -- not only while you own the property, but also when you want to transfer ownership to an heir or another buyer. There are three major forms of joint property ownership (or "concurrent ownership") -- tenancy in common, joint tenancy, and tenancy by the entirety.


Tenancy in Common (TIC)

Tenancy in common (sometimes called a "TIC") is the most popular form of concurrent property ownership. Tenants in common (or co-tenants) each own an equal share of a piece of property -- whether it's a house, an apartment building, or other type of real estate. This generally means that each co-tenant has an equal right to possess or use the entire property, and that the rent or maintenance costs of the property are shared among the co-tenants according to their ownership interest. Each co-tenant also possesses a share in the value of the property as it appreciates.

Real estate owned by one or more persons as tenants in common gives a percentage ownership to each person, and upon that owner’s death, their percentage share goes to their estate. If they have a will, it goes to the persons named in their will. If they die without a will, then it goes to their legal heirs-at-law. With this type of ownership, each owner has the right to transfer their share during their lifetime, without obtaining the permission of the co-owner. If the deed is silent as to form of ownership, then there is a presumption in the law that the parties own as tenants in common.   Any co-tenant has the right to live in the premises without paying rent to the other owners, and every co-tenant may be entitled to credits for items such as taxes, maintenance and repairs. If the premises are rented to a non-owner, all co-tenants would be entitled to share in the rent. 

A co-tenant can transfer interest in a tenancy in common to another buyer or to an heir -- via a will, for example. A co-tenant can also mortgage a share in the property. What a co-tenant cannot do is transfer or sell the other co-tenants' interests in the property. Once a co-tenant's interest in a tenancy in common is transferred, the new owner steps into the shoes of the co-tenant seller and becomes a tenant in common with the other co-tenants.


Joint Tenancy

Joint tenancy is sometimes called "joint tenancy with right of survivorship." Joint tenancy ownership implied that a joint tenant lost all interest in their property when they died. The deceased person's interest was automatically transferred to the other joint tenant.  Thus, in a joint tenancy, the last surviving joint tenant owned all the property outright.

If you want to create a joint tenancy or take possession of property as joint tenants, make sure that your lawyer or real estate agent is very careful about the phrasing in the deed or will. In general, courts prefer very specific wording that shows the desire to create a joint tenancy and the right of survivorship and not a tenancy in common. For example, a deed or will might include instructions that read "to A and B, as joint tenants with a right of survivorship, and not as tenants in common."

Sometimes, under state law, a joint tenancy will automatically convert to a tenancy in common. For example, if joint tenants die simultaneously, their property is treated as a tenancy in common by the courts, for purposes of inheritance and estate distribution. And if two or more people inherit property from a last surviving joint tenant, they do so as tenants in common instead of as joint tenants.


Tenancy by the Entirety

The third form of ownership -- tenancy by the entirety -- is only available to a married couple who owns a piece of property together.   The couple must be married at the time they acquire the property and must remain married in order for the tenancy by the entirety to be valid.  If a married couple divorce after taking title to the property as tenants in entirety, they then become tenants in common.

The deed should recite the names as follows: “John Doe and Jane Doe, husband and wife” or John Doe and Jane Doe, his wife.” If silent, it is presumed that a married couple has taken as tenants by the entirety. Not all states recognize tenancies in entirety -- but those that do often presume that a grant of property to a husband and wife automatically creates a tenancy by the entirety, unless some other type of ownership is specified.  If a different form of ownership is desired between a husband and wife, then it must be specified as either tenants in common or joint tenancy with right of survivorship.

Under a tenancy by the entirety in New York State, upon the death of one spouse, the other spouse owns the property free and clear of any encumbrances that may have been caused by the other spouse. Thus, if one spouse sells or mortgages the survivorship interest to a third party, the third party will get only a contingent interest.  For example, where the husband conveys or grants a mortgage to a third party, the third party will get nothing if the husband predeceases the wife.  It the wife dies before the husband, the third party will own the property outright, or will have an enforceable mortgage on the husband’s full fee interest.  Neither spouse can disinherit the other spouse by leaving the property to someone else in their will.

The Law Office of Jeanne M. Reardon assists New York property owners with strategies to protect and pass on their homes and real estate investments. To speak with an experienced New York deed attorney, call us at (516) 314-8433 or e-mail us. To learn more about our deed transfer services visit us at:  www.jreardonlaw.com/Deed-Transfer.html

Home Mortgage Refinance

Posted on February 11, 2018 at 4:23 PM Comments comments ()
Standard Refinance

A standard refinance paying off an existing mortgage with the proceeds from a new loan.  In order to decide whether this is worthwhile, the savings in interest must be weighed against the fees associated with refinancing. Other reasons to refinance include reducing the term of a longer mortgage, or switching between an adjustable-rate and a fixed-rate mortgage.

A cash-out refinance is taking a loan for more than you owe on your existing mortgage. Your existing mortgage is paid off from the new loan proceeds and you receive the balance of the new loan. You might do this if you want to make home improvements or pay for a child's education. Cash-out refinancing removes some of the equity you have built up in your home.

Closing costs are the fees paid when you close on a refinance loan. These fees may include application fees; title examination, abstract of title, title insurance, and property survey fees; fees for preparing deeds, mortgages, and settlement documents; attorneys' fees; mortgage recording tax; recording fees; estimated costs of taxes and insurance; and origination, appraisal, and credit report fees. Under the Real Estate Settlement Procedures Act (RESPA), the borrower receives a "good faith estimate" of closing costs within three days of application.


What is a New York CEMA?

“CEMA” stands for Consolidation, Extension and Modification Agreement.  A CEMA allows borrowers to save on the amount of the mortgage recording tax associated with the refinance. 

CEMA is a tool that can help a borrower save thousands of dollars in mortgage recording tax on the new loan amount.  In reality, rather than having the original mortgage satisfied and discharged of record, the original mortgage is assigned to the new lender. The parties execute a new mortgage for refinance closing costs and for additional funds if it's a cash-out refinance, and an agreement which assigns the original mortgage to the new lender and consolidates the original and new mortgage into one mortgage. The borrower would only have to pay taxes on the amount of the new loan that exceeds the unpaid balance of the original loan, such as closing costs or cash out.  Although it can be a lengthy process, a CEMA is well worth the additional time as it can save a borrower thousands of dollars in mortgage recording taxes which would otherwise be payable at closing.

Contact our expert Long Island mortgage refinance attorneys today to find out how we can help you save thousands of dollars in closing costs, specifically mortgage recording tax, by refinancing your mortgage with a Consolidation, Extension and Modification Agreement (CEMA). 

Our mortgage lawyers represent clients in all areas of New York , including all 5 boroughs of NYC (Manhattan, Brooklyn, Queens, Bronx and Staten Island), Long Island (Nassau and Suffolk Counties), and Westchester County.  We look forward to helping you.  Call us today at (516) 314-8433 or e-mail us.

Will I Pay Capital Gains Taxes on the Sale of My Home

Posted on November 26, 2017 at 5:50 PM Comments comments ()
Will you pay tax on the sale of your home? Likely not, unless you have gains that are more than $250,000 or more than $500,000 for married couples.

Old Rule:
Until 1997, once you reached the age of 55, you had the one-time option of excluding up to $125,000 of gain on the sale of your home providing it was your primary residence.

New Rule:
Now, anyone, regardless of age, can exclude up to $250,000 of gain or $500,000 for a married couple filing jointly on the sale of a home.

That means most people will pay no tax unless they have lived there for less than 2 out of the last 5 years
Who Qualifies for Tax-free Gains When They Sell Their Home?

To qualify for the capital gain tax exclusion on your home sale, you must meet the following IRS requirements.

  • Owned the home for at least 2 years. (the ownership test)
  • Lived in the home as your main home for at least 2 years. This is the use test. If you plan on renting your home for part of the year, study this use test carefully. The amount of gain you can exclude from taxes may be proportional to how much you use it vs. rent it.
  • During the 2-year period ending on the date of sale, you did not exclude gain from the sale of another home.

You can use this capital gain exclusion to avoid tax on a home sale over and over.


The Law Office of Jeanne M. Reardon assists New York property owners with strategies to protect and pass on their homes and real estate investments. To speak with an experienced New York real estate attorney, call us at (516) 314-8433 or e-mail us. To learn more about our deed transfer services visit us at:  www.jreardonlaw.com

How to Add Someone to the Deed of My New York Home as a Joint Owner

Posted on November 26, 2017 at 5:04 PM Comments comments ()

There are many reasons you may want to add someone to the title of your home. Maybe you just got married and would like your new spouse listed as part owner of your home. Or you may want to add an adult child to your title for estate planning purposes.

Whatever the reason, you will need to retain an attorney, experienced in real estate, to draft a new deed conveying  your home  to yourself and the person you wish to add to your title. In addition to the deed, your attorney will also need to prepare transfer tax returns. While there is no transfer tax due on conveyances which are considered gifts, (i.e. no money given for the conveyance) the returns must still be prepared and filed with the county clerk when the deed is recorded.

Review your mortgage documents or contact your lender before initiating the process to change your deed. If you transfer your interest in the property, or a share of it, to someone else without the lender's permission, it may exercise the loan's due-on-sale clause. Even if the person you're adding doesn't give you money for ownership in your property, the lender still may view the transfer of ownership as a sale and can demand payment in full. Depending on your financial situation, this issue may cause you to reconsider making the addition. If your mortgage contains a due upon sale clause, talk to your lender about adding someone to your deed. Some financial institutions give consent, allowing you to add another person to your property deed without requiring you pay off your loan.

How your new deed is drafted will determine your type of joint ownership. There are three ways to take title to the deed in New York depending on the language used in your deed, and they are as follows: (1) joint tenants with rights of survivorship, (2) tenants in common, or (3) tenants by the entirety. Your attorney can advise you as to which type of joint ownership is appropriate in your case.

The Law Office of Jeanne M. Reardon assists New York property owners with strategies to protect and pass on their homes and real estate investments. To speak with an experienced New York deed attorney, call us at (516) 314-8433 or e-mail us. To learn more about our deed transfer services visit us at:  www.jreardonlaw.com/Deed-Transfer.html
 

New TRID Rules

Posted on April 2, 2017 at 10:30 PM Comments comments ()
On October 3, 2015, the Consumer Financial Protection Bureau’s (CFPB) new mortgage disclosure law, also known as the TRID went into effect. TRID will help consumers be more informed regarding the closing cost.

Here are 11 things you should know about the new law:

1. Initial Good Faith Estimate (GFE) and Truth in Lending disclosure (TIL) are now combined into one new form called the Loan Estimate (LE).

2. Instead of the old forms such as the HUD-1 and Final TIL we now have the Closing Disclosure (CD). Most major lenders will prepare the CD for the borrower; some however may rely on settlement agents. The new form will describe the loan terms, projected loan payments, closing cost at closing, loan features such as assumption, escrow details, borrower’s liability at foreclosure and others. The Sellers will also have a CD statement.

3. The CD will be provided by the Lender to the consumer/borrower at least three days prior to the scheduled closing date but can be waived if consumer has a “bona fide emergency”.

4. The Lender will now provide the borrower with list of closing service providers so that they can shop for services.

5. If the following changes occur then a new CD must be issued with an additional 3 day waiting period:
  • APR changes 1/8 of a percent
  • Pre-payment penalty added to your Note
  • Loan is changed from fixed to variable, negative amortization

6. Closing fees subject to zero tolerance unless otherwise excepted.
  • 10% tolerance for charges paid to third parties-charges cannot increase by more than 10%
  • no tolerance-charges can increase without limits if originally disclosed
  • 0% tolerance- charges cannot increase at all

7. How do you determine what category you fall in?
  • Does lender allow borrower to shop for the third party services? If third party provider is on the bank list, there is a 10% tolerance, if not on the list there is no tolerance.

8. Fees that can’t increase:
  • fees to brokers or creditor
  • charges to an affiliate of broker or creditor
  • charges to an unaffiliated third party – if consumer not allowed to shop
  • transfer taxes

9. Any variation of the above must be refunded no later than 60 days after closing.

10. Seller will receive CD by or at closing. This will be prepared by the bank attorney in addition to the statement provided by the Seller’s lawyer.

11. TRID will not apply to: HELOCS, Reverse Mortgages, Commercial Loans and lenders who make 5 or less loans per year.

The Closing process will be more organized, with all the numbers worked out about a week prior to closing so there are no surprises on the closing day.
 

Using a Quitclaim Deed to Transfer Property

Posted on February 18, 2017 at 3:55 PM Comments comments ()

I am often asked by clients looking to transfer property whether I will be using a quitclaim deed to complete the transfer.  I tell my clients that in the New York Metropolitan area, the type of deed customarily used to convey real property, whether to a third party in an arm’s length transaction or to a family member, is a “Bargain and Sale Deed with Covenants Against Grantor’s Acts.”

A quitclaim deed must to used with caution and can be dangerous or beneficial depending upon whether you are the grantor or grantee.  This type of deed conveys the interest you have in a property without providing any warranties or guarantees about the interest you are conveying.  A quitclaim deed means you are only transferring whatever interest and title you MAY have in the property, subject to any claims which exist or may arise.  It does not ensure good title as a Bargain and Sale Deed with Covenants Against Grantor's Acts would. 

The New York State Real Property Law Sec. 258 recognizes several types of deeds to be used to convey real property. A quitclaim deed is among the recognized forms.  Nevertheless, the customary practice among local attorneys in New York will determine the appropriate deed to be used.  While there is no case law or statute prohibiting the use of a quitclaim deed to convey a home in the New York Metropolitan area, its use would be unusual and could raise questions down the road and therefore should be used only in very limited circumstances.

Transferring title by a deed whether by a quitclaim deed or any other type of deed is a serious matter with numerous legal and financial consequences and should not be attempted without an attorney.  A deed may not be effective if not prepared properly or executed properly. A New York real estate attorney can ensure that the legal formalities required for deeds are met, and that you thoroughly understand what the conveyance process entails. Once the deed is properly executed, it must then be recorded in the public records of the county where the property is located.

The Law Office of Jeanne M. Reardon assists New York property owners with strategies to protect and pass on their homes and real estate investments. To speak with an experienced New York deed attorney, call us at (516) 314-8433 or e-mail us. To learn more about our deed transfer services visit us at:  www.jreardonlaw.com/Deed-Transfer.html







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