The Home Equity Theft Prevention Act

Have you ever heard of the term “short sale”? If you are a lawyer, did you ever represent a buyer purchasing from a seller who was either in default on his mortgage or against whom a foreclosure action had already been commenced?
If you are buying from a homeowner whose property is in foreclosure or has defaulted on her loan, or as a lawyer you represent such a buyer, then you need to be aware that New York has passed a strict and somewhat draconian notice requirement to effectuate a sale.

This law can be found in the Real Property Law 265-a, and is known as the Home Equity Theft Prevention Act. It governs sales of homes that are in foreclosure or default. If the sale is protected by the Act, and the buyer fails to fulfill any of the requirements listed below including attaching a notice of rescission, a seller may be able to legally cancel the contract; even years after the house was sold. A seller may also be able to sue the buyer for triple damages.

WHY DON’T MANY REAL ESTATE LAWYERS CARE OR KNOW ABOUT THE STATUTE?

DISCOVERY IN BETH DIN AND OTHER ARBITRATION TRIBUNALS

Obtaining discovery in a Beth Din is quite a lot different than in court or in the more national, secular, arbitration tribunals. The Federal and State judiciary forums have developed extensive and comprehensive rules of exchanging documents in discovery and obtaining pretrial depositions in order to avoid trial by ambush before jury or the bench. This discovery process is subject to abuse and adds many months, if not years, onto a process before there can be a final resolution of the dispute.

Arbitration is often chosen to avoid the rigors of discovery in an effort to obtain some rough justice in a relatively short period of time. To that means, many arbitration tribunals like AAA, JAMS and FINRA discourage or outright prohibit pretrial depositions, yet at the same time they are open to a more broad scope exchange of documents. This is not to say that one cannot get pretrial depositions at the AAA, but it is more uncommon.

NJSLAW CLE: Mortgage Contingency Clause and Ethical Issues in NJ Real Estate Contracts

Live Webinar on April 3, 2017 @ 3:00 PM. Register Here!

The mortgage contingency clause is one of the most important clauses in real estate contracts. However, many attorneys don’t bother to read it. This is a mistake since the terms of the clause, which may differ from contract to contract, can have an immense impact on your client.  

In this program, Alexander Novak and Kim Juhase, will provide an overview of this clause and will discuss the problems that could arise if the wrong language is used. In the second half of the program, they will discuss possible ethical problems that might arise in real estate transactions. They will also provide a brief overview of NY law for those who are dually admitted.

By the program’s end, Juhase and Novak will aim to answer the following questions:

• What are the best terms for the Buyer or the Seller?
• To whom must the Buyer apply for a mortgage loan and in what time period?
• Do conditional commitments satisfy the contract?
• What happens when a mortgage commitment is revoked by the lender?
• How can one avoid malpractice or a grievance complaint in real estate transactions?

Learning Objectives:

1. Understand how different terms on a mortgage contingency clause affect your client
2. Learn how to avoid ethical problems in real estate transactions

Click here to register!

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A Dog, a Cow and a Cyclist Ride into a Bar

       People get injured and they look to blame someone and if that someone has an insurance policy, a lawyer may be there to help.  Not every injury is awarded compensation.  For instance if you trip over a inch difference in the grade of a sidewalk, the courts will not likely award you anything. 

       What happens if you let you cow roam around the neighborhood?   In 2013 in a decision by the Court of Appealsin Albany, the highest court in the State, a woman was allowed to sue the owner of a cow she crashed into with her van. 
Sounded like the Court of Appeals felt people have to keep their animals on a leash or be liable for mishaps.  Or so that it is what two lower courts ruled.   The names of those cases were  Doerr v. Goldsmith and Dobinski v. Lockhart. The cases involved Wolfgang Doerr, who was injured in 2009 after crashing into a 45-pound shepherd mix on Central Park’s bicycle loop road, and Cheryl Dobinski, who fell from her bike in 2012 when she tried to avoid two German shepherds that ran onto the road near their rural home south of Buffalo.  In the New York City  case the lower court awarded significant damages to a cyclist who collided with a dog.  After a trial  the jury awarded the plaintiff $1,000,000.  On appeal the next highest court reduced that to $600,000.  I can only assume there was an insurance company funding the defense because this case was taken to the Court of Appeals.
 
       Just this June that Court ruled a cyclist cannot sue a dog’s owners, saying riders should be careful not to cross paths with animals that are a constant public presence.  To distinguish this decision from the 2013 cow case Judge Sheila Abdus-Salaam wrote, “In public parks, one regularly encounters dog owners with their unrestrained canine companions … whereas one ... certainly never expects to see someone taking his or her cow for a walk in the neighborhood.”  The court said the cyclists could not sue the dog owners because they had not shown that the dogs had a history of biting or attacking people.  A lower appeals court cited the cow case when it revived Doerr’s lawsuit, but the Court of Appeals last week  reversed the decision.

      I like this decision.  Dogs running after bikes is something I grew up with, it is common and that is just life.  Oh yea this has nothing to do with a bar, but I did think an award of $1,000,000 to the Central Park cyclist was a joke.



Alexander Novak, 

Partner, Novak Juhase & Stern

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School Interns Slaves No More: Harassment and Rights of an Unpaid Internship

SCHOOL INTERNS SLAVES NO MORE

            In 1865 the 13^th Amendment to the US Constitution outlawed slavery.  In 1938   the Federal Fair Labor Standards Act set a minimum wage for all employees.  In 1964 Title VII and New York’s Human Rights Law protected paid employees from   harassment and discrimination based on age, religion, sex, among others and with the passage of ADA law from discrimination based on disabilities including pregnancies.  Employers were cautious about blatantly violating these laws and lawsuits abound where discrimination is discovered.  That is except for student interns.

            Student interns have been unable to seek any such protection since they are not technically employees because they work for free.  Many college masters programs in speech, PT or social work require their students to participate in internships.  These are our children who believed they are so lucky to get unpaid internships in their fields of employment.  Yet at times, those internships are not so ideal.  When an unpaid intern in New York sued a Chinese news company, Phoenix Satellite Television, because, she said, a supervisor had groped and assaulted her; a federal judge dismissed her case.  Since she was not paid for her work, the law did not view her as an employee under Title VII.  The same thing happened in 1997, when an intern at a psychiatric hospital claimed that she was urged to join an orgy and to strip naked before meeting with a doctor.  The courts threw out her sexual harassment claim because she was not paid.  The same was true for minimum wage rules; students were not deemed employees in the eyes of the law.

NEW PROTECTION FOR INTERNS

Hey Get Your Fence Off My Land

     Sometimes it happens when you buy land, you get a new survey taken of the property, and it shows that a neighbor’s fence or hedges encroaches on your land.  You want that fence or hedge removed and set on the property line.  You go to the neighbor and ask real politely, and it is like talking to the wall (pun intended).  Hopefully your first reaction is to call Alexander Novak, your lawyer, to start a lawsuit, but that is not such great advice.  Here is why:

   

   Old encroachments on your land call into play the law of adverse possession.  If the adverse possession lasted 10 years, you lose your land.  However, in 2008 the New York Legislature changed that law to make it much easier for you, the landowner, to win and get that fence taken down. The new legislation changed the common law rule of adverse possession. Under common law, things like erecting a shed, digging a trench, mowing, planting and raking grass, constructing underground dog wire fence, installing post for birdhouse, cultivating garden, and erecting fences were all winning arguments for adverse possession, but not any more. These actions are now called “permissive and non-adverse” actions. 

   

   But do not run to court so fast!  If your neighbor had already done those things for 10 years before the new 2008 law came into effect, she or he could still win despite the new law.  The courts in New York have ruled that the neighbor is entitled to the application of the old version in effect when her claim to the disputed property allegedly ripened into title.  The NY Court of Appeals said, “although a statute is not invalid merely because it reaches back to establish the legal significance of events occurring before its enactment, . . . the Legislature is not free to impair vested or property rights.” So if the neighbor could have won in 2008, then she or he could still win today.  This lawsuit will be very fact oriented.

Structuring Deposits: The IRS Apologizes...Again

      Last week, the United States IRS Commissioner John Koskinen made a startling apology in Congress. He apologized for the IRS seizing the bank accounts of businesses merely because they deposited a lot of cash. In most of these cases legitimate small business owners were depositing say $8000 cash every other day. Most of these stores were small grocery stores or candy stores which did a lot of cash business. Sometimes they were restaurants which did not take credit cards. The IRS used a well-known, but slightly obscure, rule that actually allows the IRS to seize assets from US citizens it believes – get it, that the IRS believes – violated Federal Cash Transaction Reporting requirements. You have seen those signs at banks: If you deposit more than $10,000 cash you must fill out a Currency Transaction Report (CTR). Who wants the hassle? So business owners would deposit less than $10,000 every other day. Banks must snitch on their customers who deposit so much cash.

      But if you deposit less than $10,000 where did go wrong? Ever heard of “structuring” deposits? That means you purposely divided your deposits below $10,000 to fly under the radar. The IRS was seizing bank accounts without ever bringing charges against the business owners. No due process.

Can One Word in a Contract Cost Over a $200,000?

Yes, sometimes a word or two,  even in a forty page contract can make a tremendous difference, and change the entire outcome of the case.  

We had a client's case that went up to the highest Federal court in New York and was then sent over to New York’s highest court in Albany, the Court of Appeals,  and a half of million dollar award was thrown out because of a few words.  In a case called Israel v Chabra (537 F.3d 86) the court held that the words  'provided that' "suggests a condition, and our conclusion in that regard is consistent with the punctuation and grammatical construction of the Guaranty's first paragraph.”   The entire argument the defense raised was the lack of notice of  default. Meaning,  the plaintiff, OUR CLIENT, who did not give the notice argued that the notice was not a big deal because the defendant knew about the default.  The lower court agreed with the plaintiff and awarded him over $330,000 and legal fees of $299,000.
This was all reversed on the two appeals.  This case wandered through three courts for as many years and each sides’ legal fees were well over $300,000.

In another matter, an employee was able to get his $150,000 bonus paid each year  of his three year employment  contract as apposed his employers offer of just one bonus for the first year.  Again, that was because of a change of just one word. 

Lawyers are not usually slow readers, we just have to think about how slight grammatical nuances can turn around a whole contract.  So that is how a word or two can cost or save you hundreds of thousands of dollars.

Alexander Novak, ESQ.
Partner, Novak Juhase & Stern

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