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Over the years there have been a multitude of lawsuits filed involving whether a valid contract was entered into between purchasers and sellers of real property. Recently, in Cohen v. Holder, the Appellate Division, Second Department, issued an opinion dealing with this issue once again. The Statute of Frauds is a common law concept that has been codified which requires written contracts for certain agreements to be binding. In New York, all contracts involving the sale of real property and leases for more than one year in length must be in writing. This article will review the decision in Cohen v. Holder, and review the specific statute of frauds requirements under New York’s General Obligations Law.

Continue reading “LEGAL CORNER: Real Estate Contracts, Leases and the Statute of Frauds”

The legislative and judicial landscape continues to change for New York real estate licensees and the entire real estate industry. New developments are taking place each day and now, more than ever, it is important for real estate licensees and real estate professionals to keep up to date with all of the changes.

As discussed in previous columns, new decisions (DOS Decisions) issued by the New York State Department of State Office of Administrative Hearings relating to the fair housing complaints filed by the Department of State Division of Licensing Services (DLS) as a result of the Newsday Investigation (see https://bit.ly/38HiXog) continue to come down and it is important to review these decisions as they offer important guidance.

Continue reading “Recent DOS Decisions and New Legislation Affecting New York Real Estate Licensees and the Industry”

It’s that time of the year again—tax season! It is an important time of the year to revisit some of the tax deductions and benefits available to real estate owners and real estate agents. Even with all the negative issues (e.g., inflation, increasing interest rates, higher energy and food prices, and much more) affecting the overall economy in 2021, the real estate industry had yet another record-breaking year. It is important for real estate professionals to be aware of some of the tax breaks available so that they may inform their clients about them and take advantage of them as well.

Tax Deductions Available to Sellers

Selling Costs and Improvements Made Within 90 Days of A Closing

Sellers are permitted to deduct certain expenses incurred in connection with the sale of their residence [see Realtor.com at https://bit.ly/3Jaoxgo]. Some of these expenses include legal fees, title fees, mortgage payoff fees, real estate commissions, advertising costs and staging fees incurred to prepare the home for sale. These deductions are permitted provided they are incurred directly as a result of selling the home. According to Realtor.com in order to take advantage of these deductions, a homeowner must have “lived in the home for at least two of the five years preceding the sale. Another caveat: The home must be a principal residence and not an investment property.” These costs are deducted from the gross proceeds received at closing thereby reducing the gain realized on the sale. In turn, this will ultimately affect the amount of capital gains tax paid, if any, by the seller.

Continue reading “LEGAL CORNER: Oh No, It’s Tax Season Again! A Review of Important Tax Deductions in Real Estate”

In a recent decision, 14 East 4th Street Unit 509 LLC v. Toporek [see https://bit.ly/339BzL5], the Appellate Division, First Department discusses the requirements contained in the Housing Stability and Tenant Protection Act of 2019 relating to the landlord’s duty regarding security deposits and landlord’s duty to mitigate damages upon a tenant breach of the lease. This case involved a tenant who breached his lease and vacated an apartment six months prior to the lease’s expiration.

The court in Toporek addressed two specific areas of the 2019 HSTPA: (1) Real Property Law § 227-e [see https://bit.ly/3sO37yH] relating to whether the landlord complied with the new requirements under the law regarding mitigation of damages, and (2) the General Obligations Law § 7-108[1-a][b] [see https://bit.ly/3uFg54b] which deals with the requirements of the landlord regarding releasing of the security back to the tenant and a landlord’s right to retain all or part of the security deposit for repairs and/or restoration of the apartment to its original condition.

Continue reading “LEGAL CORNER: The Security Deposit and Landlord’s Obligation to Mitigate Damages Under the 2019 HSTPA”

On Dec. 21, 2021, Gov. Kathy Hochul signed expansive new legislation contained in nine bills aimed to combat housing discrimination in New York State [see https://on.ny.gov/3FfcBXJ]. The legislation was passed as a direct result of Newsday’s investigative report entitled “Long Island Divided” [see https://bit.ly/3zKUQP0] and addresses many of the concerns and issues uncovered in the investigation.

Some critical elements of the legislation deal with the added requirements of brokers, as well as associate brokers, relating to their duty to supervise and the implementation of standardized operating procedures for all brokerage firms. The new legislation also implements additional anti-discrimination, anti-bias, cultural competency training requirements, as well as increasing the amount of maximum fines and licensing and renewal fees for all licensees.

Continue reading “LEGAL CORNER: Broker’s Duty to Supervise: Changes in Light of the New Housing Discrimination Legislation”

It has been over two years, Nov. 17, 2019, since Newsday published its comprehensive and devastating investigative report entitled “Long Island Divided” [see https://bit.ly/3yq9Elz]. The article sent shock waves through the entire real estate industry. Newsday’s article became the catalyst that launched a major movement, led by state and local governmental officials and agencies, such as the New York State Department of State Division of Licensing Services and the New York State Division of Human Rights, to combat all forms of discrimination in the real estate industry and to prosecute those licensees found to be violating federal, state and local human rights and anti-discrimination laws.

Continue reading “LEGAL CORNER: Discrimination Cases from Newsday’s ‘LI Divided’ Finally Making Their Way Through the System”

In connection with every real estate transaction in New York, real estate attorneys and real estate agents discuss with their clients, whether they are sellers or buyers, what the “closing date” will be and how it is to be determined, often utilizing terms such as “on or about closing date,” “reasonable time” and “time of the essence.” Most real estate contracts provide for an “on or about” closing date, which basically means an “estimated” closing date. The key takeaway is that an “on or about” closing date is not set in stone and is subject to reasonable extensions and adjournments depending on issues which may arise.

The ‘On or About’ Closing Date

In an attempt to explain to their clients what is meant by an “on or about” closing date, many agents and attorneys tell clients that this means the parties automatically have a 30-day extension beyond that date to close. Unfortunately, this is not the case. Others fail to explain to clients that an “on or about” date is just an estimated target and should not be relied on to make moving plans, schedule other closings, etc. Often, the parties do not end up closing “on or about” the date contained in the contract and it is imperative that both seller and buyer clients are made aware of this. Buyers and sellers should know that if any issues arise, the closing date could be pushed back by days, weeks or months.

The ‘Time of the Essence’ Closing Date

While most transactions and contracts in New York contain an “on or about” closing date, some contracts, although a rarer occurrence, provide for a “time of the essence” closing date. In this instance, a contract does set a specific date, and if either party fails to close by that date it would lead to a default. In the case of a buyer, it could mean the loss of the down payment. For sellers, it could lead to a lawsuit against the seller for specific performance (i.e., an action filed in seeking a judgment requiring the seller to close).
Continue reading “LEGAL CORNER: Court Decisions Regarding ‘Time of the Essence,’ ‘Reasonable Time,’ Retaining the Down Payment in Transactions”

The real estate industry has certainly been through a lot during the COVID-19 pandemic. At the start of the pandemic, many real estate agents and brokerage firms faced the real concern that the entire real estate market was on the brink of collapse. The panic that had set in quickly subsided and, surprisingly, the real estate market took off in many markets following the initial lockdown orders issued in March in New York and surrounding states. Many left the densely populated urban areas for a more rural setting and employees began working remotely. As a result, the New York City market was hit particularly hard and has lagged in the recovery in comparison to other areas.

As a result of the market conditions, many real estate brokerage firms have effectuated key mergers and acquisitions, and entered into strategic partnerships. The pandemic caused companies to seriously consider consolidation with other firms to solidify established market share or to simply sell their assets to or merge with other companies to firm up operations that were impacted by the pandemic. This article will focus on key aspects to be considered when contemplating a merger or acquisition.
Continue reading “Important Considerations with Mergers & Acquisitions of Real Estate Brokerage Firms”

On Sept. 1, 2021, our area was hit particularly hard from the remnants of Hurricane Ida. Record-setting levels of rain fell in just a few hours causing unprecedented flash flooding leaving horrific death and destruction in its wake. Our thoughts and prayers go out to all of those who lost their lives and to their loved ones. The flooding caused by Ida took the lives of 29 people in New Jersey, 16 people in New York City and one person in Connecticut. Of those who died in New York City, 11 perished  in illegal basement apartments (see https://nyti.ms/3kcfq4y).

New York City has long had problems with illegal basement apartments which number in the tens of thousands. Unfortunately, it is at times like this when the real danger of these illegal apartments is brought to the forefront. Homeowners, real estate agents, real estate attorneys and other real estate professionals need to be aware of the dangers and the potential liability that exist in connection with illegal apartments.
Continue reading “The Loss of Life Caused by Hurricane Ida and Its Impact on the New York Real Estate Market”

On June 24th, 2021, our nation witnessed one of the deadliest and most tragic building collapses in its history. It sadly claimed the lives of 98 unsuspecting and innocent residents. Our thoughts and prayers go out to the victims and their families.

Since that sad day, information has continued to come to light in the news regarding the horrific structural conditions of the condominium and the documented history of the complaints relating to those conditions. A tragic event such as this serves as a reminder to all real estate professionals (attorneys, real estate agents, management agents, etc.), and to those individuals who are interested in purchasing a condominium unit or cooperative apartment (the “unit”), of the critical importance of conducting all of the necessary due diligence and physical inspections even when purchasing a condominium or cooperative apartment.
Continue reading “A Heightened Focus on Inspections, Due Diligence After the Tragic Condominium Collapse in Florida”