yellow-garbage-bagsSuffolk Supreme Court Justice has upheld Southold Town’s “yellow bag” law which requires residents to place refuse in Town issued yellow garbage bags.   Proceeds from the sale of the yellow bags is used to operate a transfer station located in Cutchogue.

In March, 2012, Go-Green Sanitation, a garbage carter, was hauled into Justice Court by the Town for operating without the proper permit and for failing to comply with the yellow bag law. The Town also obtained a short-lived restraining order from Suffolk County Supreme Court prohibiting the private carter from collecting trash from its residents not contained in the required yellow bags.

In response to the Town’s claims,  and without opposition from the Town, in July 2012, Go-Green removed the state court action to federal court alleging five counterclaims, including: (1) that the Town violated its due-process rights by effectively barring it from conducting business in the Town; (2) that Go-Green did not dispose of its trash at the Cutchogue transfer station, as such, it should not be subject to the yellow bag fees and (3) the yellow bag fees constituted  an illegal user fee or tax and as a result thereof,  Go-Green sought to add an additional Southold Town resident defendant in an effort to establish a taxpayer claim against the Town.

On June 12, 2015, in a well-reasoned fifteen (15) page opinion, Eastern District Court Judge Arthur Spatt,  declined to exercise federal jurisdiction over Go-Green’s  counterclaims holding (1) that Go-Green failed to plead and/or establish a federal claim and (2) although Go-Green alleged that it envisioned filing an amended pleading to asset a proper party and proper taxpayer claim;  the Court noted that the pleading before the court, did not, in fact, contain a proper party or a properly pled taxpayer claim.   As such, the federal court lacked subject matter jurisdiction and the matter was remanded back to State Supreme Court for a final determination.

On remand, in a recent July 2016 decision,  Supreme Court Justice Paul Baisley, Jr., found that the Town’s controversial law bears a reasonable relation to the public good as it was enacted to promote recycling.   Judge Baisley further found that the Town did not exceed its authority because the yellow bag law is not an illegal tax.  So, for now, and perhaps until a properly pled taxpayer action is asserted, residents and carters alike should refer to the Town of Southold’s website to determine what their respective yellow bags fees will be.

 

On July 11, 2016, I began a short blog series on how to successfully prepare and record a deed in New York State.  In that post, we reviewed the various types of deeds available such as warranty deeds, bargain and sale deeds and executors deeds.  We also discussed the importance of securing a copy of the last deed of record and ensuring that when preparing a new deed, you do not deviate from name spellings and owner capacities, such as tenants by the entirety, joint tenants and tenants in common.   The newly prepared deed should reflect the name of the owner/seller as it exactly appears, and in the capacity that the owner/seller received title to the property.

voidable-contractsGiven that my practice areas are land use development and transactional real estate, today’s post will discuss deed transfers where no consideration is paid by the buyer.  You may have occasion to provide no consideration deed transfer preparation when, for example, clients are transferring a real estate asset from their individual capacity to a corporate or LLC capacity.  In other words, the seller is not receiving any money for the transfer because in most instances, the seller is retaining some beneficial ownership in the property.  For instance, if John Smith is transferring a real estate asset to No # Main Street LLC, where John Smith is the sole member of the LLC; No # Main Street LLC may elect not to pay any money for the real estate asset because the transfer is done for liability purposes, and John Smith will continue to remain in possession and control of the asset.  Similar types of no consideration transfers are also popular when a marital asset is being transferred as the result of a divorce or newly married couple.

The examples set forth above are usually undertaken in good faith and with the intent to manage a real estate asset in the manner desired by the owner/seller.  However, attorneys should be careful to ask the right questions to determine the owner/seller’s actual intent in transferring a real estate asset, because no consideration transfers can raise additional title insurance exceptions in the future.   Likewise, no consideration deed transfers can bring unwanted liability, such as existing judgments and liens, upon the new owner and potential state and federal tax consequences to both the seller and no consideration buyer.

So how does a real estate practitioner properly transfer an asset for no consideration, while at the same time, ensuring that the parties involved are protected from any negative consequences?  The answer is simple; due diligence and disclosure.  The reasons are abundant as to why It is  not sufficient to secure a copy of the existing deed and then simply prepare a new deed.   First, when a real estate asset is transferred for no consideration, the existing judgments, liens and mortgages transfer with the asset.  Although the new buyer does not become personally liable for the debts, the new buyer cannot transfer the asset without paying off the debts.  In the example above, assume that John Smith transferred his real estate asset to No # Main Street LLC, but John Smith failed to advise his attorney that he has a number of judgments and liens against him.  Because the transfer is for no consideration, the judgments and liens against John Smith will continue to run with the land.  Now, assume that John Smith is not the only member of No #  Main Street LLC, but instead, John Smith has a partner, Mary Jones, who has no idea that John Smith has existing debts.  Those debts will now potentially affect Mary Jones’ interest in the real estate asset owned by No # Main Street LLC.

In addition, no consideration deed transfers raise questions with respect to the intent of the seller.  In the above example, perhaps John Smith intended to transfer the real estate asset in an attempt to avoid his existing creditors.  Because No # Main Street LLC did not pay any consideration for the transfer, a title exception will be raised when No # Main Street LLC sells the asset requiring proof that John Smith did not transfer the asset to avoid the existing creditors.  If No # Main Street LLC had paid value for the asset, it is less likely that a title insurance exception would be raised.

Other impacts of no consideration deed transfers include acceleration of existing mortgages.  Most mortgages contain an acceleration provision if the asset is transferred to someone other than the mortgage borrower.  Although in practice it is less likely that the lender will accelerate a mortgage that is not in default, nonetheless, the no consideration parties to the deed must be advised that this risk exists.

Likewise, when transferring real estate assets that arise from a divorce or a new marriage, the attorney preparer should take care to determine whether value is actually being paid or received for the transfer.  If John and Mary get divorced, and as part of his settlement, Mary transfers her interest in the real estate asset to John, that asset should be valued; and, unless it is specifically defined otherwise, consideration should be paid on the value of Mary’s one-half interest in the asset.  This is where accountants and tax attorneys should be consulted, to ensure that negative tax consequences do not arise from the no consideration transfer.

Finally, the way to avoid the pitfalls discussed above is to secure, at a minimum, a real estate asset last owner with judgment and lien search from your preferred title insurance provider.   Review the report to determine whether a no consideration deed transfer will raise more questions than it might solve.  Also, discuss the intentions of all parties to a no consideration deed transfer, as negative consequences can arise for all parties involved.

th2WTV7493 A recent appellate court case, Matter of Lazarus v Board of Trustees of the Village of Malverne, 31 NYS3d 207 [2d Dept 2016], involves the approval of a special use and the denial of a special exception for the same residential premises. Here are the facts of the case.

The house in question is a two-story single-family Cape Cod style home located in a Residence B district in the Village of Malverne (“Village”).  The owner and her husband live on the second floor and her adult son rents the first floor.   The owner installed a second kitchen on the second floor and constructed a deck and attached exterior staircase without any building permits.  The second-story deck and exterior staircase were initially constructed in 1981.  At the time, a special exception permit was not needed for this structure.  The deck was removed in 2007 and was rebuilt in 2010 with the exterior staircase going from ground level to an entrance on the second floor.

In 2011, the owner sought a special use permit for the existing kitchen on the second floor. She also sought a special exception permit to approve the “mother/daughter” occupancy and to maintain the second-story deck and exterior staircase.  In October 2013, after three public hearings, the Village Board of Trustees (“Village Board”) granted the mother/daughter status and the special use permit to maintain the second-floor kitchen.  However, the Village Board denied the special exception to legalize the second-story deck and exterior staircase.  The owner commenced an Article 78 proceeding against the Village, challenging the decision.

In July 2014, the trial court granted the petition and annulled the determination of the Village Board. The trial court reasoned that by approving the mother/daughter status and the special use permit for the kitchen, the Village Board should have also approved the secondary access point. Otherwise, access to the second story would encroach upon the privacy of the parents and their adult son.  The trial court also noted that the Village could impose appropriate safeguards for the second-story entrance.

The Village appealed and in July 2016, the appellate court reversed and dismissed the proceeding.   The appellate court explained that a use variance allows the property to be used in a manner that is “inconsistent with a local zoning ordinance” and a special exception allows the property to be used in a manner “that is consistent with the zoning ordinance, although not necessarily allowed as of right.”  The owner did not seek a use variance in this instance, but instead, sought a special exception.

The appellate court determined that the Village Zoning Code prohibits decks above the first floor grade of a dwelling and requires a special exception from the Village Board for any deck constructed above the first floor. But in this case, the home owner wasn’t merely asking approval for an above-grade deck.  She was asking for approval of the deck and staircase, deemed a structure by the court.  However, the Village Zoning Code does not explicitly allow for a structure under this special exception provision.  As a result, the appellate court agreed with the Village Board’s determination that the deck/staircase structure was inconsistent with the surrounding single-family neighborhood and, thus, not entitled to a special exception.  Bottom line, the owner was allowed to keep her second-story kitchen but not the second-story deck, staircase and separate entrance.

welcome_bayville_signIn a determination dated June 30, 2016, the Honorable Jerome C. Murphy, Supreme Court, Nassau County, annulled and vacated the Village of Bayville’s local laws amending its zoning code based on the Village’s failure to comply with the New York State Environmental Quality Review Act (“SEQRA”).  See Save Bayville Now, Inc., v Incorporated Village of Bayville.  The challenged local laws, adopted on June 22, 2015, authorized the occupancy of ground floor units with residential apartments in business districts, reduced the required setback from 250 feet to 50 feet for the distance that a combined business/residential use could be from a residentially-zoned parcel and defined a “residential building” as containing five units or more. Previously, residential apartments in this zoning district were only permitted on the second floor, and this type of combined business/residential use was not permitted within 250 feet of residentially-zoned property.

Petitioner, a civic association with at least two of its members residing within 100 and 150 feet of the business district, challenged the adoption of the local laws pursuant to SEQRA. The Court first explained standing in zoning cases. Relying on Matter of Sun-Brite Car Wash v Board of Zoning and Appeals of Town of N. Hempstead, 69 NY2d 406 [1987], which held that “standing principles, which are in the end matters of policy, should not be heavy-handed; in zoning litigation in particular, it is desirable that land use disputes be resolved on their own merits rather than by preclusive, restrictive standing rules.” The Bayville Court first determined that Petitioner had the requisite standing to bring the proceeding, and then went on to determine that SEQRA had not been complied with by the Village when it enacted the local laws.

The Court noted that SEQRA requires local governments to consider environmental impacts of the adoption of local laws by identifying the environmental impacts reasonably anticipated from the proposed action, taking a “hard look” at those areas of environmental concern and providing a reasoned elaboration in connection with the basis of its determination. The civic association alleged that the Village failed to sufficiently review potential impacts from the zoning amendments including traffic and parking issues, septic issues, flooding and flood plain issues, population concentration and the impact on the value of surrounding properties. The Village adopted a negative declaration in connection with the adopted local laws and determined that it would conduct specific SEQRA review in the future upon the application of specific sites within the district. Petitioner argued that this constituted segmentation of the SEQRA process and was unlawful. Segmentation is defined as the “division of the environmental review of an action such that various activities or stages are addressed under this Part as though they were independent, unrelated activities, needing individual determinations of significance.” 6 NYCRR Part 617.2(ag). SEQRA states the following with regard to segmentation:

Considering only a part or segment of an action is contrary to the intent of SEQR. If a lead agency believes that circumstances warrant a segmented review, it must clearly state in its determination of significance, and any subsequent EIS, the supporting reasons and must demonstrate that such review is clearly no less protective of the environment. Related action should be identified and discussed to the fullest extent possible. 6 NYCRR Part 617.3(g)(1). Id.


The Court determined that the Village acknowledged the potential for “environmental damage” but failed to prepare an Environmental Impact Statement (“EIS”). An EIS provides “a means for agencies, project sponsors and the public to systematically consider significant adverse environmental impacts, alternatives and mitigation.” 6 NYCRR Part 617.2(n). An EIS is required when the lead agency (in this case the Village) determines that “the action may include the potential for at least one significant adverse environmental impact.” 6 NYCRR Part 617.7(a)(1) (emphasis added). As a result, the Court found that “the Village’s deferred consideration of recognized potential environmental damage” rendered the Village’s adoption of the local laws amending the zoning ordinance “arbitrary, capricious, and not undertaken with regard to the applicable provisions of SEQRA.” The Court annulled and vacated the local laws.

Although not cited by the Court, it bears reminding that courts have long determined the threshold for requiring an EIS is low. See, H.O.M.E.S. v New York State Urban Dev. Corp., 69 AD2d 222, 232 [4th Dept. 1979]; Barrett v Dutchess County Legislature, 38 AD3d 651[2d Dept. 2007].) Therefore, once the Village identified “environmental damage” in connection with the proposed local laws, the preparation of an EIS was required pursuant to SEQRA.

This ruling is consistent with other recent SEQRA segmentation cases involving the adoption of local laws. In Citizens Concerned for Harlem Valley Environment v Town Board of Town of Amenia, 264 AD2d 394 [2d Dept. 1999], leave to appeal denied, 94 NY2d 759 [2000], local laws rezoning property were annulled based upon segmented SEQRA review. In that case, the appellate court determined that “the rezoning at issue was an integral part of a mining proposal that would have obvious potential environmental impacts. The Town Board was obligated to consider these environmental concerns at the time of the rezoning and it failed to do so.” See also, Scenic Hudson, Inc. v Town of Fishkill Town Bd., 258 AD2d 654 [2d Dept. 1999].

 

beeWhen people think of beekeeping on Long Island, they think of vast open space and the farms and apiaries they travel past out east where a jar of local honey can be picked up on the side of the road during the summer season. What most people are not aware of is that, not only are there hundreds of beekeepers caring for several hundred honeybee hives all across Long Island, but also, many municipalities across Long Island have land use controls in place to regulate beekeeping.

Backyard beekeepers, or novice beekeepers as we are sometimes called, have become vital in Long Island’s efforts to reestablish lost colonies of bees and offset the natural decrease in pollination by wild bees over the last few years. Keeping bees dramatically improves pollination, and the honey you can harvest is not the only reward. Today, the value of keeping bees goes well beyond the obvious. Without bees, Long Island would not be able to grow apples, pumpkins, strawberries, tomatoes, onions, carrots and eggplant, just to name a few.

Although mostly permitted in Suffolk County, in recent years, the practice of beekeeping has become more and more popular in Nassau County. Despite being expressly prohibited in Glen Cove, Long Beach, North Hempstead and Oyster Bay, the Town of Hempstead, where most of the County’s population resides, and which serves as a model for many of its incorporated villages, permits beekeeping via special exception from its Board of Appeals.

It is the hope of many backyard beekeepers that with increased education for our local officials, and greater awareness by those non-beekeepers, that favorable  beekeeper land use regulations can be implemented across all Long Island Towns, Cities and Villages.

If you do get the go ahead from your local municipality, the Long Island Beekeeper’s Club, which was created in 1949, and today boasts more than sixty members with ten master beekeepers, is a great place to get started. It provides meetings and classes educating beekeepers on what, where and how to become a successful beekeeper.  The Club’s website provides membership information and a schedule of upcoming meetings and classes.

Honeybees are amazing, gentle creatures. They nurture the beauty and fertility of the earth with their gift of pollination.  For Long Island, the good news this season is that our honeybees are making a comeback, a comeback my husband and I are very proud to be a part of.

JeanMarie Killeen is a paralegal in the Land Use & Municipal practice group at Farrell Fritz.

In our July 18th post, we discussed the North Shore Helicopter Route and its fast-approaching expiration date.  In that post, we noted that the Federal Aviation Administration (the “FAA”) had not yet decided what to do about the route and told you we would keep you apprised of future developments.  Here’s that update.  In the Monday July 25, 2016 edition of the Federal Register, the FAA announced a final rule that extends the North Shore Helicopter Route for four more years.  The new expiration date is August 6, 2020.

th3MRVYBS8In the Federal Register notice, the FAA notes that the original purpose of the route was to ameliorate noise from helicopters operating over Long Island.  When it originally adopted the rule in 2012, the FAA gave the rule a two-year duration to obtain data on pilot compliance and whether the route improved the noise situation.  The FAA extended the rule in 2014 for another two years to allow it more time to consider whether to make the rule permanent.  Since the 2014 extension, the FAA has undertaken a variety of helicopter research initiatives that will allow it to model helicopter noise and identify noise-abatement procedures.  These research projects are on-going and some aspects of the research are not expected to be completed until 2017.

The FAA will need time to consider the results of the research projects and thereafter determine the appropriate action to take.  As a result, the FAA determined that extending the North Shore Helicopter Route rule for another four years is the best way to “avoid disruption of the current operating environment.”

So for at least the next four years, helicopters will continue to fly over Long Island Sound, about a mile off-shore, before they cross over land at Riverhead, Southold and Shelter Island to head south to the Hamptons.

 

 

 

rezoning-imageIf you own property in the Moriches and Eastport area, now is a good time to check your zoning.  On July 12, 2016, the Town  Board of Brookhaven, on its own motion, rezoned approximately 1400 parcels,  which  included about 1,200 acres in Moriches, Center Moriches, East Moriches and Eastport (the “Greater Moriches Area”).   Spearheaded by Councilman Daniel Panico, this is part of a larger plan to “preserve” areas along Montauk Highway from Moriches to Eastport in an effort to retain the area’s rural character.  Essentially  this was a “downzoning” of the area.

 The rezonings were a result of the Town’s planning study known as the Greater Moriches Zoning Re-Evaluation Study,  (“Study”) which again sought to resolve zoning issues plaguing the Greater Moriches area and  identified in a multitude of planning and civic studies performed over the past 20 years.   Many of those recommendations had not been implemented for various reasons.  Aimed at reducing “sprawl”, the Study sought to address incompatible land use mixes and limit potential sites for “big box stores” along Montauk Highway and the Frowein Road corridors.  Pursuant to the State Environmental Quality Review Act (“SEQRA”), the Study was also the subject of a DGEIS, known as, Draft Generic Environmental Impact Statement (DEGIS) for the Draft Comprehensive Zoning Re-Evaluation of the Montauk Highway Corridor for Moriches, Center Moriches, East Moriches and Eastport, which studied the impacts and provided a land use rational for the proposed rezoning.    On June 9, 2016, a findings statement was adopted by the Town Board which paved the way for the rezonings to proceed.

Although characterized as a rezoning affecting large swaths of land along Montauk Highway in the Great Moriches Area, the actual rezoned properties resemble a patchwork of parcels located in business districts and along waterways in the area.  In fact, sizable amounts of the rezoned parcel are municipal or State-owned properties that in many cases had already been preserved as open space.

Opponents of the rezoning, as one would guess, were property owners who had invested in the area and were concerned that property values would fall.  As a rule of thumb, removing commercial zoning in an area prevents further development and decreases the tax base which generally helps to off-set the cost of community services.

What no one can know is whether the Town’s latest approach will preserve the charm of “the Moriches” or stagnate the area.  In September, the Town Board plans to hold more public hearings on similar rezoning proposals in Eastport and Center Moriches.  For a complete viewing of the public hearings regarding the rezoning please visit the Town of Brookhaven webcast.

 

thECI3BDWXPicture it – another hot and humid summer afternoon on Long Island. There you are, you master of the universe, sipping a margarita or perhaps a frozen daiquiri, or both, as you lounge on the patio of your beachfront home enjoying another weekend in the Hamptons. Not a care in the world. And then you hear that the Federal Aviation Administration (the “FAA”) has not extended the North Shore Helicopter Route rule, which will expire on August 6th. You start to tremble. What will happen on August 7th with no North Shore Helicopter Route rule? Will you be forced to travel in bumper-to-bumper traffic on the Long Island Expressway, take a bus or the Long Island Rail Road? Yikes. Take another sip of your frozen concoction and relax. Commuting by helicopter to and from the East End will not end even if the rule is not extended. Moreover, the FAA is actively involved with stakeholders on this issue and is considering various actions.

20140527__-Long-Island-Helo-offshore-route-map-by-NewsdayPrior to 2008, helicopters transporting folks between New York City and the Hamptons used three common flight paths: (1) the northern route, flying along the northern coast of Long Island; (2) the southern route, flying along the southern coast of Long Island; and (3) the LIE route, flying above that famous highway. Helicopter pilots preferred the northern route because it was faster and was less prone to weather delays than the southern route. Residents on the north shore were less enthusiastic as the summer helicopter traffic over their homes rapidly expanded as did the level of noise they incurred at all hours of the day and night.

As a result, in 2008, the FAA added the North Shore Helicopter Route to its flight charts as a voluntary means of diverting helicopter traffic flying overhead along the northern coast line, placing the route about a mile off the coast over the Long Island Sound. The North Shore Helicopter Route starts off of Huntington, (about 20 miles east of New York City) and continues to the end of Orient Point on the North Fork.

The North Shore Helicopter Route was made mandatory in 2012 by the FAA. The rule mandating the off-shore northern route was initially enacted for a two-year period. It was extended for an additional two years in 2014 and will expire on August 6, 2016, absent a further extension.

The North Shore Helicopter Route rule is codified at 14 CFR Part 93 and requires helicopters to fly at least 2,500 feet above sea level along the route over the Long Island Sound. The rule does not contain “waypoints,” which means that helicopters do not have to pass over specific points along the route. Also, there are no specific transiting points along the route, meaning that helicopter pilots are free to choose where they turn toward the south. In addition, a helicopter pilot can deviate from the route at any point for safety reasons or because of weather conditions or when transitioning to or from a point of landing. Typically, helicopters cross over land at Riverhead, Southold and Shelter Island to head south to the Hamptons.

There has been some talk about changes to the North Shore Helicopter Route, such as requiring helicopters to fly around Orient Point and Plum Island before heading south. An off-shore South Shore Helicopter Route is also a possibility. We’ll keep you posted of further developments.

 


As any New York State attorney would most likely agree, ownership and title to real property can play an integral role in the practice of not only transactional real estate law, but also, land use development (our specialty area), matrimonial law, trusts and estates law, elder law, corporate law, and numerous other practice areas.  In fact, no matter what your practice area is, it is quite likely that you will routinely be called upon to review a deed, transfer a real estate asset, set up a trust or life estate, confirm ownership or simply review a deed to insure it accurately reflects the property owners, the property owners’ interests and identifies the correct property as stated on the deed.

title deedAlthough this sounds simple enough, from my experience, many an attorney has not only improperly prepared a deed, but also, he has encountered multiple hurdles in successfully recording a deed.  Suffice it to say that prior to becoming a member of the Bar, my career began in the Title Insurance Industry, which by all accounts provides me with some insider expertise to share with you today!

The Do’s and Dont’s to successfully drafting and recording a deed will greatly exceed the attention span of a single blog post.  As such, continue to read our weekly post’s for additional do’s and dont’s tips.  For today, we start at the beginning:  How to prepare a deed insuring that the seller (grantor) and purchaser (grantee) are properly reflected.  

In New York State, there are multiple kinds of deeds, but in general, those most commonly used to transfer title are Warranty Deeds, Bargain and Sale Deeds without Covenants, Bargain and Sale Deeds with Covenants and Quitclaim Deeds.  Prior to the advent of title insurance, the type of deed carried specific warranties which protected a purchaser from claims against their ownership.  Given that title insurance is common practice today, the type of deed is less significant, and under most circumstances a Bargain and  Sale  Deed with Covenants is the generally preferred deed type.   However, this rule is not always preferred, particularly if the real estate transfer is undertaken for estate planning purposes, is the result of a death, involves a no consideration transfer between husband and wife or relatives or related business entities.  Further blog posts will address these exceptions.

For today,  Don’t Number 1– when asked to transfer a real estate asset, do not assume that your client owns the property!  It is incumbent upon an attorney to secure a copy of the last deed of record from the County Clerk’s Office or City Register’s office.  Only after the last deed of record has been produced and reviewed with the client should the process of drafting a new deed begin.

Don’t Number 2 when preparing the deed, do not deviate from the proper names on the last deed of record or deviate from the legal property description.  If the owner’s name on the deed is Mary S. Smith and Mary is transferring to John J. Jones, do not drop Mary’s middle initial.  Likewise, if Mary S. Smith is now known as Mary S. Adams, the deed should be prepared as such: “Mary S. Smith, now known as Mary S. Adams.”  The deed drafter must take care to insure that the chain of title accurately reflects ownership interests.  If the drafter were to prepare the deed with Mary S. Adams as the owner, because that is what Mary S. Adams advised the drafter, the deed would contain a defect causing potential problems for future buyers and sellers.

thHDTT01CE

Similar to the types of deeds available for use   in New York, there are multiple types of interests that a seller or buyer can utilize when purchasing property.  Title to real estate is held typically in one of three ways: (1) Tenants by the Entirety, reserved only to married persons; (2) Joint Tenants, reserved to persons who hold equal shares of the real estate asset, with rights of survivorship; and (3) Tenants in Common, reserved to persons and business entities holding fractional ownership interests, with no rights of survivorship.

Do Number 1 ask a lot of questions.  Although deed preparation is typically assigned to the seller/grantor, if you represent the buyer/grantee, be sure that your clients understand their ownership interests.  Not every married couple prefers to hold title as tenants by the entirety.  There may be financial concerns, prior marital commitments or some other personal reason why a married couple would not want to hold title to real property as tenants by the entirety.

Do Number 2 if the property is owned by any number of business organizations such as Limited Liability Companies, Joint Ventures or Limited Partnerships, insure that all interests are accounted for and that no fractional share of the real estate asset has already been transferred, sold or conveyed.  Likewise, insure that the the person signing the deed has capacity to transfer the asset.

And to wrap up this first blog post respecting the Do’s and Don’t of deed preparation, for those of you practicing in the world of land use, take a minute to secure the last deed of record before you make a land development application to a municipality or government agency.  Many times your client is not the property owner, but instead, your client may be the tenant, co-tenant or sub-lessee/or.  Only the actual landowner has capacity to make a land development application, as such, stay one step ahead of the curve and insure that your client is the real estate asset owner, and if not, secure the property owner’s consent before you begin the process.

DADPIC1On June 23, 2016, Governor Andrew Cuomo signed the Abandoned Property Neighborhood Relief Act of 2016, a bill to combat the blight that vacant, neglected and abandoned properties – referred to as “zombie properties” – have on New York communities.  See, pg. 27, Part Q.   The sweeping legislation includes several measures designed to reduce the number of foreclosures, assist homeowners who are facing foreclosure, and protect property values by ensuring that properties in foreclosure are properly maintained during the foreclosure process.  Specifically, the new legislation:                       

  • Imposes a pre-foreclosure duty on banks and other lenders to maintain a residential property during the foreclosure process.
  • Creates a toll-free hotline for people to report potentially vacant or abandoned sites, and an electronic database to provide streamlined access to information for affected communities.
  • Provides for an expedited foreclosure process for vacant and abandoned properties and requires the foreclosing party to move to auction within 90 days of obtaining a foreclosure judgment.
  • Establishes a Consumer Bill of Rights to inform property owners of their rights in foreclosure proceedings and protect them from predatory and deceptive foreclosure practices.
  • Creates a Community Restoration Fund that will allow the State of New York Mortgage Agency (SONYMA) to purchase defaulted mortgage notes and offer partial loan forgiveness to help families afford and keep their homes.

“Zombie Properties”

Zombie properties are properties that have been abandoned by their owners – often after they have received a foreclosure notice – which then languish, unmaintained, until the foreclosure process has been completed.  These vacant properties create a blight on the neighborhood because they sit neglected for years on end while the lengthy foreclosure process runs its course.  During this time, many of these properties fall into significant disrepair, which then drags down the values and appearance of other properties in the neighborhood.  Last year, New York Attorney General Eric Schneiderman estimated that there were as many as 16,700 zombie properties in New York.

New Lender Obligations

To curb the threat that zombie properties pose to communities, the law imposes a pre-foreclosure duty on those who hold a mortgage on a vacant or abandoned residential property to maintain and secure it during the foreclosure process.  This obligation is triggered when the mortgagee becomes aware of the vacancy, or there is a reasonable basis for the lender to believe the property is vacant and abandoned.  Lenders that fail to properly maintain and secure a property face civil penalties up to $500 per violation, per property, per day.  Prior to the legislation, there was no legal obligation to maintain a property in foreclosure until there was a judgment of foreclosure and sale.

Town of Hempstead’s Approach

In the wake of the State’s zombie properties law, the Town Board of the Town of Hempstead recently adopted Local Law No. 46-2016 – modeled after similar laws adopted in several upstate New York communities – that will ensure that banks and other lenders will fulfill their maintenance obligations under the new State law.  The Town’s law requires mortgagees to post a $25,000 security deposit each time a house in the Town of Hempstead goes into foreclosure.  This money can be used by the Town for lawn care, graffiti removal, snow removal and other home maintenance in the event that the lender fails to maintain the property.

After years of tolerating the scourge of zombie properties, State and local governments have acted to give regulators and law enforcement the tools they need to tackle the problems associated with vacant and abandoned properties.  These measures should help revitalize communities that have suffered the consequences of zombie properties by improving conditions, both aesthetically and economically.