Should You Sell Your Home by Owner in New York?

When you’re selling your house in the current New York market, you want to make sure that it’s a lucrative transaction. However, this goal comes with many challenges and decisions to make. One such choice is whether you want to sell your home without the assistance of a realtor. While some sellers think that it’s less stressful and will save you money, there are things to consider if you decide to go down the “for sale by owner” (FSBO) path. Read on to learn more information to help you decide if this is the way that you want to sell your New York home.  

Like several states, New York requires sellers to hire a real estate attorney. While the lawyer will help you with documentation and the legal requirements of the transactions, their role doesn’t include assisting you with finding a buyer or helping you negotiate a favorable deal. This is why some sellers choose to work with a realtor. However, you may want to explore the option of not using one.

Pricing Strategy 

This is a one critical aspect that you must deal with if contemplating a FSBO sale. It involves a delicate balancing act: If your listing is too low, you end up losing money. But if you price it too high, then the listing gets cold, and then you must drop the price, which can make buyers suspicious and reluctant to purchase. 

What Are the Advantages of a FSBO Sale?

One of the most positive aspects of a FSBO sale is the sense of control that comes with it. You don’t have to pay commission to a realtor when you work by yourself. This, of course may end up saving you lots of money. Additionally, when you have eliminated the middleman, you’re in the driver’s seat when it comes to exploring all of your options and choosing the way that you want to advertise and market your house.  

What Are the Disadvantages of FSBO Sale?

The sales process can be overwhelming because you have to do everything for yourself. That includes conducting research on how much your home is worth. After determining this, you then have to get your home ready for the market. When you’re ready to put it up, you will have to determine how to advertise and market your home. You will also have to conduct open houses. Finally, when you do get a buyer, you will have to negotiate and have to research their finances to ensure that they can actually purchase your home. Not only is this a lot to do, but everything may not go smoothly. For instance, if there are problems such as with the title search, you don’t have the realtor to assist with this, and you must resolve it yourself. 

Connect With a NY Real Estate Lawyer

There are a lot of things to consider when you’re selling your home. Whether you decide to go with the FSBO route or not, you will need a reliable New York real estate lawyer to complete your home sale. You can connect with an experienced MOWK Law attorney to handle the legal aspects of the transaction. Don’t hesitate to contact us right away to get started.   

What You Need to Know Before Purchasing a NY Multi-Family

If you’re considering investing in multi-family properties, then you want to be informed before making this major purchase. You’re likely going into this endeavor with the intention of renting the units to generate revenue, but being a landlord isn’t for everyone. Read on to learn what you need to know before purchasing a New York multi-family.   

General Questions to Ask 

Before you zero in on potential properties, there are some general considerations to make. Ask these questions. 

  • What is your available capital? – Prepare to buy a multi-family property to reduce the purchase price by at least 20 percent. You should also overestimate the closing costs and reserve requirements.  
  • How much are you willing to participate? – Even if you’re less hands on and you employ a property manager, the time and commitment needed (especially initially) is considerable. 
  •  What are the revenue requirements? – If you intend to base any part of your decision on how much money you can make, you must consider your revenue investment.
  • What are the risks? – Always be mindful of your risk tolerance. For example, crowdfunding may carry numerous risks including fraud and questionable returns, while other means may produce more consistency and continual appreciation.

When you’ve narrowed down your search after considering things like location, layout and size, here are important things to know about the specific properties:

  • Current Rental Rates: You want to stay current with existing rent prices in the area because your cash flow from the property will be based on how much rent you can receive. By being aware of the current rents, you can help to ensure that your rental rates are in sync with comparable parties and can adjust accordingly. 
  • Current Occupancy Rates: It’s important to know this before you make an offer. The occupancy rate directly affects the rental income that the property produces, so this information will help to ensure that the property will actually generate the income you need. 
  • Current Leases: You want to be able to know about the agreement of terms that are in effect for current tenants. As a potential buyer, you can request a copy from the owner; owners generally are required to keep them on file.    
  • Turnover Rates: If there’s a constant back and forth, this means more wear and tear, as opposed to more consistency with long-term tenants and stability, which means easier maintenance. 
  • Recent Maintenance: As a future landlord, consider hiring a home inspector to uncover any possible hazards (such as lead, asbestos) before proceeding with the purchase. 
  • Legal Disputes: It is essential to discover any legal disputes between current tenants and the owner. By inquiring about this, you can gain more understanding about the potential legal risks you could face if you buy the property. 
  • Utility Bills: Water, electric, and gas are all necessary expenses that will have to be paid every month; this information will help to assess the potential income of the property. 
  • Commission Rebate: A commission rebate allows a buyer’s agent to give them a part of the commission that the agent gets for representation. Be sure to find a broker who offers them before you hire one to represent you on a multi-family purchase. It can make the purchase more affordable and allows you to use the saved money on other things.  

Talk to a NY Real Estate Lawyer Today

If you’re considering getting into real estate investments with a multi-family property, you will want to ensure that it’s a smooth process. Get in touch with one of our MOWK Law lawyers who can help you navigate through the New York market. Just contact us today to learn more.

How to Finance Your Commercial Real Estate Purchase

If you’re ready to take the important step of making a major commercial real estate purchase, you’ve got to figure out the best way to make it happen. While loans for residential real estate are generally assigned to an individual borrower, a commercial loan is generally placed with a business entity. With transactions of this kind, certain legal issues need to be resolved to set up for a successful result. Read on to learn about information about how to finance your New York commercial real estate purchase. 

What are Commercial Property Loans?

The commercial property loan agreement is basically just a contract between the borrower and the lender. While that may seem simple, the loan terms can actually be complicated with the documentation consisting of various clauses with complex language.   

There are various alternatives, but typically the loans can be broken into a few key categories. The first concerns the type of lender.  

Conventional Bank Loans

Most commercial real estate loans are made by traditional banks. Things to know:

  • Usually requires a strong credit history
  • Offer competitive interest rates
  • Likely requires at least 20 percent down
  • Doesn’t require the property to be owner-occupied
  • A penalty may be charged if the loan is paid off early

Small Business Administration (SBA) Loans

The federal and state governments have programs for eligible borrowers who can’t meet standard commercial loan requirements. The U.S. Small Business Administration (SBA) offers some of the least expensive loans for investing in commercial real estate. Things to know:

  • Assists the commercial borrower through increasing their creditability and 
  • Makes borrower more favorable by guaranteeing the loan 
  • Reduces risks for the lender

Hard Money Loans (aka Bridge Loans)

These are short-term loans with high interest rates and are based on the perceived value of the real estate and not the borrower’s credit history. They are usually short term (for example, for a year or less) and are used temporarily while an investor works to secure a longer-term bank loan.  

Other Types of Loans

Here are some other solutions to commercial real estate financing

  • Commercial Mortgage-Backed Securities (CMBS): These loans (aka conduit loan) are commercial real estate loans secured by a first mortgage on a commercial property. 
  • Acquisition and Development Loans: This type of loan covers the cost of acquiring the land and the expenses associated with developing it, in addition to interest and sales commissions.  
  • Mezzanine Financing: These loans can be used to provide additional money that helps a developer complete a project where a short-term loan is provided to a developer in return for a partial interest in the company as collateral. 
  • Construction Loans: A straight forward loan for the financing of construction on a commercial property.

Help for Financing your NY Commercial Real Estate

There are many financing options available for your New York commercial property. You can navigate the complexity of this type of transaction with the helping hand of an attorney familiar with real estate, finance, and securities law. Our experienced MOWK Law lawyers can give you guidance as to your best bets, given your situation. Contact us today for more insight.

Should NY Co-op Boards Give Permission for Reverse Mortgages?

You can always expect the unexpected when it comes to the NY co-op landscape. There are constant changes to the laws, so it’s important for co-op board of directors to be up to date with the evolving environment. A recent significant shift deals with reverse mortgages. Up until recently, reverse mortgages were only available to owners of one to four family homes and condominium apartments. However, the law in New York for reverse mortgages has changed to include owners of shares in a co-op. 

What is a Reverse Mortgage?

Before diving into the way that this affects co-op boards, let’s review the specifics of reverse mortgages. Unlike a traditional mortgage, no payments are due for the reverse mortgage until the end of the mortgage term or until the property is sold or until the borrower is deceased. 

The property owner is able to use their real estate interest as collateral for the loan. Prior to the recent legal changes, shareholders in co-ops weren’t allowed to take out reverse mortgages because they weren’t considered as true legal owners of the property by deed. Since they didn’t own a real property interest that could be considered as collateral for the loan, they were ineligible. Now that the law has changed, residents can use their shares or membership interest in a co-op for security for reverse mortgages. 

How it Works 

In addition to some other basic rules, including parameters about maturity events and circumstances for foreclosure defenses, there are key differences between a co-op reverse mortgage and a traditional reverse mortgage:

  • Here, the reverse mortgage is secured by either shares or membership in the cooperative unit.
  • The minimum age of the tenant who gets the reverse mortgage secured by the co-op apartment is 62, compared to 60 for real property ownership.  
  • The co-op unit must be the shareholder’s primary residence. 
  • If a reverse mortgage is secured by a co-op apartment, the resident must get it approved by the co-op’s board of directors. 

Co-op Board Approval

Just because the board of directors’ approval is necessary for a resident to secure a co-op reverse mortgage doesn’t mean that the board should necessarily honor the request. While the co-op has priority lien for the monthly maintenance, co-op boards still need to really think about granting permission for a shareholder to obtain a reverse mortgage. 

Cautious contemplation is critical, especially if the shareholder can’t afford the monthly maintenance for the apartment without the loan proceeds. For instance, suppose the shareholder does indeed blow the loan proceeds and isn’t able to pay the monthly maintenance. Then the co-op is in a tough scenario of having to foreclose on a senior who has little or no equity in their unit and probably has limited options for their living situation. 

Ask an Attorney About Reverse Mortgages

The changes in the law that allow co-op shareholders to obtain reverse mortgages may be considered a cause for celebration. However, it’s important for boards to weigh the possible risks of any request. You can discuss this with a lawyer before going forward. Feel free to contact us at MOWK Law to have your questions addressed by an experienced attorney.

What You Need to Know About Estoppel Certificates in Commercial Leases

Estoppel certificates (also known as estoppel letters) are important documents used for due diligence in many real estate activities. Read on to learn how this impacts your New York commercial lease

What is an Estoppel Certificate?

An estoppel certificate is a statement, which acknowledges that a commercial lease agreement exists. The tenant’s signature on this will confirm the current status of their lease and confirm that certain details of the lease are valid, including the absence of defaults and the agreement to pay rent (on a specific date) to the landlord. 

It basically lays out the make-up of the landlord and tenant relationship and when the landlord needs to negotiate with a third party when selling the property. Because they are evidence of cash flow, the agreements are of a particular importance to lenders or potential buyers. 

Landlords generally require tenants to sign estoppel certificates as part of due diligence items because they show evidence of cash flow. In these cases, the landlord might have to prove to the lender or potential buyer that the tenant is current in the financial obligations. Then the lenders, and would-be investor/buyers rely on this to show what the landlord said about the monthly deposits is valid and that the term of the lease will be in place. When the tenant signs this document, they are verifying the conditions and status of the lease.   

Must Tenants Sign the Estoppel Certificate? 

Generally, the certificates usually don’t pose any risks for tenants. However, the document isn’t intended to be used in place of a lease, and the tenant should read it thoroughly to note differences. 

If the original lease states that a tenant is required to complete an estoppel certificate, then they are legally required to do so. If tenant doesn’t sign, they can be in breach of the lease and face eviction. In the context of commercial real estate, it’s typically a good idea for the tenant to complete the certificate because it may include details not in the original lease.   

What Are the Benefits to Involved Parties?

The estoppel certificate provides assurance to landlords and lenders that the tenant’s promises are kept. When the landlord and the potential buyer are negotiating, this acts as the purchaser’s due diligence for ongoing cash flow and assists with dodging unexpected expenses.   

For tenants, the certificate provides confirmation that the landlord won’t alter the terms of the lease. It also keeps them in compliance with the lease if the lease requires them to sign an estoppel certificate.

Additionally, the contract has information about upcoming lease extensions and renewals. Estoppel certificates also reveal issues that can indicate if either party has breached any duties over the course of the lease. 

Get Your Estoppel Certificate Questions Answered by an Attorney

Typically speaking, estoppel certificates are a straight-forward feature of commercial leases. However, there are times when they can cause certain issues to spring up that you may need an attorney’s help with. If you have problems in this area, don’t hesitate to get a lawyer involved to answer your questions. Contact us here at MOWK Law for assistance with this and all your New York real estate concerns.

What is Time of the Essence in a Real Estate Contract?

If you’re involved in a home purchase, then you might find yourself coming across with a “time is of the essence” provision. You might have heard of this term before but weren’t sure what to make of it. What exactly, is time of the essence and why is it important in your New York real estate contract?

Definition of Time of the Essence

The term “time of the essence” is a legal term of art that is used to state the timeline in which one party must complete their contractual duties. Completing the time is not only a priority but also a necessary part of the completion. If they fail to meet the deadlines agreed to with regard to “time of the essence,” it is considered a breach of the contract. 

Time of the Essence Letters

While this provision can be used in various types of contracts, it is very common in real estate transactions. In this context, it is sometimes applied in a time of the essence letter, instead of explicitly stated in the contract. 

For the court to view the time of the essence letter as valid, it should include the following:

  • A reasonable timeline
  • Clear conditions
  • Information about the consequences if the party doesn’t meet the stated timeline

What Types of Acts Can Be Subject to “Time of the Essence” Deadlines?

Basically, anything that should be completed within a given amount of time in a real estate transaction is ripe for a “time of the essence” provision. For example, this can include notices, document delivery, termination procedures, and the closing date of the transaction. A real estate agreement should include specific completion dates for the tasks that have time contingencies.

What Happens if Time of the Essence Deadlines are Not Met?

If there is a “time is of the essence” clause in the contract, there are consequences for the failure to meet the timeline. For instance, suppose the contract requires you to provide an inspection report in 5 days. If you don’t provide the report to the other party within the 5 days, you would be subject to the consequences, such as facing potential termination of the contract.   

Time is of the Essence Principles 

While the details will differ for each contract, there are certain conditions that should be present: 

  • All parties must be aware of its existence: If any party is unaware of their obligations, then it will not be enforceable; everyone involved in the transaction needs to know the deadlines and the consequences of missing them.
  • All parties may request a reasonable postponement of closing day: The parties are entitled to ask to postpone the closing day. However, it must be reasonable, and the other party must agree. 
  • Amendments are available: If someone breaches, it is still possible to remedy by amending the original clause. If both parties don’t agree to amend the breached provision, the missed time frame can end with major consequences.

Let an Attorney Help with Your “Time is of the Essence” Real Estate Transactions

The purpose of a “time of the essence” clause is to maintain accountability during the real estate transaction. If you want to include this in your agreement, you can work with an experienced MOWK Law real estate attorney. When the deadlines and consequences are determined, both buyer and seller can advance to a satisfying closing day. Contact us today to get started.

5 Tips for NY HOAs Rule Enforcement

Homeowners’ associations (HOAs) in New York and elsewhere exist to maintain home values, make amenities available that enhance the living situation and must establish policies that apply to all of the properties in the association. When a homeowner doesn’t follow this, the Board should act. Read on to learn about helpful tips to enforce HOA rules. 

1. Act Quickly: Once you’re aware of a violation, you should act quickly. For example, instead of waiting for an owner to complete construction on a project that breaks HOA rules, you should nip this in the bud. You would lessen the amount of time that the property is in violation and could also possibly save the homeowner money as well.   

2. Deliver a Written Warning: This is a good beginning course of action. The warning will include the specific details of the incident. In many cases, this is enough to dissuade many homeowners from breaking any further rules. 

3. Levy Monetary Penalties and/or Take Away Privileges: Breaking the rules should bring penalties and hitting a homeowner in the pocketbook with fines is something that can help to discourage rule-breaking. But the HOA must ensure that they don’t impose an unreasonable amount and must strive to strike a balance between the offense and trying to make a major difference in behavior. While a homeowner may resent being hit with a fine, the longer the fines remain unpaid, the more penalties they incur; the HOA may have to take legal action. Because amenities like clubhouses, terraces, and other perks are part of HOA living, another alternative is to suspend the violator’s privileges. 

4. Place Liens on the Property: If there is a serious rule violation, the HOA can place a lien on the homeowner’s property. However, placing the lien doesn’t necessarily equal compensation. A lawsuit could ensue. Also, if the homeowner chooses to sell their property, the new owner may need to pay the lien settlement as part of the purchase.  

5. Use a Standard Procedure/Don’t Engage in Selective Enforcement: While enforcing rules can sometimes be difficult, you can make it easier to follow through by incorporating a standard procedure. That way when a violation comes up, you know exactly how to handle it and are less likely to deviate from the practice. 

You may feel compelled to deal with an HOA rule violation with leniency if you know the reason why an individual committed the violation. However, this is not a good approach because inconsistent rule enforcement may lead to allegations of discrimination even if this was not the intent.  

Contact an HOA Attorney about Rule Enforcement

It’s critical for HOAs boards to set out rules and to enforce discipline when owners break them. The governing documents should contain specific instructions for dealing with violations. If they don’t, you will want to correct this. This is where an experienced attorney can assist you. Fortunately, the lawyers at MOWK Law are well-versed in this area and will work hard to come up with viable solutions for your rule enforcement issues. Contact us today for further information.

What Are Some Contingencies in New York Real Estate Contracts?

When you purchase or sell a home or other real estate, you will typically make an offer that may have some contingencies. A contingency is a condition that the parties may put into their real estate contract. Their presence is a way to protect the investment and to get out of the situation, depending on whether particular situations arise (as they often do). Read on to learn about some contingences you should be aware of if you’re purchasing a home in New York. 

Some common contingencies are:

  • Home Inspection Contingency: This contingency requires a certified home inspector to inspect the property within a specified time period. It’s up to the buyer to select the inspector and to schedule the inspection. Generally, the contract will contain language that provides for the termination of the contract if the inspection unearths issues that the seller isn’t willing to fix or negotiate. If the inspector does find problems, then you can request repairs or a lower price. This should be contemplated in the contract and should include how long it can take to remedy. If the seller refuses, then you can either allow the contingency to expire or terminate the contract and recover your deposit.
  • Appraisal Contingency: This contingency is based on the property being appraised to confirm its value for your mortgage lender. Before your mortgage is set, the lender wants to make sure that the purchase price syncs up with the fair market value. The lender usually determines appraisal values based on comparable recent home sales, tax records, and an in-person evaluation of the property by a third-party appraiser. If the appraisal is in line with the purchase price, the sale will go on, but if the appraisal comes in lower than the purchase price, you should discuss options with your loan officer. If you can’t work out a loan restructure, the appraisal contingency allows you to rescind your offer without losing money.    
  • Financing Contingency: This contingency (aka mortgage contingency) is a provision that allows you to back out of the purchase if you can’t secure financing within a certain timeframe. You can cancel the transaction and recoup your earnest money. 
  • Sale Contingency: If you’re already a homeowner, and you want to buy a new one, there’s the issue of whether you sell your existing home first. This contingency provides a specific timeframe for you to sell your current home. If you can’t sell it in by the deadline, you can withdraw your offer and recoup your earnest money deposit.  

Get Legal Help with Contingencies

Sometimes you may not want to have a contingency. Perhaps, you’re trying to make an offer more attractive to the seller. But if you need it, it’s something that a skilled attorney can help you with. Get in touch with one of our knowledgeable MOWK Law attorneys who can help tailor your contract to meet your needs and expectations. Contact us right away to get started.

How Long is Probate in New York?

When your loved one dies, the probate process might be a necessary avenue to manage and distribute their estate. Even if you don’t know much about probate, you’ve probably heard that it’s something to avoid if possible and that the time to take to complete it is something people often worry about. Typically, most estates are probated in about a year. However, various factors can prolong the process or can make it go even quicker. Read on to learn about how long the probate process can take in New York.

What is the Probate Process?

Let’s clarify what probate is before beginning a discussion about how long you should expect it to take. Probate refers to the legal process in which a deceased person’s affairs are handled; the resolution of this includes obtaining their assets, paying off debts and expenses, and distributing any of the decedent’s remaining assets to their named beneficiaries and heirs.

Appointment of the Executor

A starting point in the process is the appointing of an executor (or administrator). This is the individual in charge of managing the issues of the estate and probate process. Although the executor/administrator has been chosen by the decedent in their will, the executor must still be appointed by the court. Beneficiaries of the estate can challenge the appointment of an executor, in addition to the validity of the will.

Settlement of the Estate

Once the executor is approved, they act on the estate’s behalf and begin the work of settling the estate. This includes:

Finding assets and safeguarding them
Paying debts and expenses
Paying taxes

Closing the Estate

For this, there is a summary of assets and liabilities, or a final accounting of the estate, that must be approved by the court or signed off by the beneficiaries. Any funds that remain are distributed to the named beneficiaries.

Length of Time it Takes for Completing Probate Steps

Appointment of Executor/Administrator: Approximately 4-6 months
Settling the Estate: Approximately 6-9 months
Closing the Estate: Approximately 1-3 months

The Timing of the Probate Process

This sound simple and most cases take an average about 12- 15 months but can range from several months to up to 3 years. Considerations that may impact the length of process include:

Accounting costs
Beneficiaries try to remove the executor/administrator
Creditors’ claims against the estate
Difficulty with locating assets
Substantial assets in the estate
The complexity of the specific estate
Will contests

Is Probate Required in New York?

Probate is generally necessary, regardless of whether or not an individual had a will. However, New York law does not require it for small estates (estates with less than $50,000 in assets). In these instances, the court will either appoint an executor named in the decedent’s will, or an heir of the descendant if they left no will, as a voluntary administrator. Then the court will issue a certificate for each asset that is collected and distributed by the administrator.

Understand Probate in NY with an Attorney’s Help

With proper estate planning, it’s possible to have your loved ones avoid unnecessary problems inheriting your property after probate is complete. An experienced attorney understands the pros and cons of ways to transfer property and can help navigate the system and use several estate planning tools to take away certain assets away from the probate estate. You can contact one of our skilled MOWK New York estate planning lawyer to help you get started.

Should You Sell Your Home to a House Flipper?

When you’re getting ready to sell your house, there are many things to consider. And it takes a lot of work to get it ready for the market. Depending on your situation, you might wonder whether you should sell to a house flipper, and if house flippers are worth it? There’s no quick answer to this; you will have to look at your specific situation to see if this is a good fit for you. Read on to see what questions you should ask before you decide to sell your New York home to a house flipper. 

Are you Facing a Crisis/Emergency and/or Need to Relocate? 

Maybe you are in the middle of a family emergency, such as the kind where you need to relocate in a hurry. Or you’re in a financial crisis, which means that you need money quickly and aren’t as concerned about a typical drawn-out sale. If any of this applies to you, you might be fine selling to a house flipper.

Is Your Home Falling Apart? Severely Damaged?

Has your home fallen apart? Is it in a state of major disrepair? If your home has fallen on hard times and is in a state of major disrepair, you need to contemplate how this figures into selling it. It will take a lot to bring it up to snuff and to make it marketable. If the structure must be taken down to the bare bones, it’s not the best scenario for a traditional sale and a house flipper might be an attractive option. A cash buyer may be in a much better position to purchase it than someone with a conventional or government-sponsored loan. Of course, even flippers might avoid certain things and may be leery of foundation problems or the need for termite treatment.

Are You Intimidated by the Listing Process?

If you sell to a flipper, you don’t have to do the type of work to get the property ready for market that you normally would have to do, such as staging and making videos and photos available. You won’t have to deal with the process of arranging showings and having people walking through your home. If you are intimidated or overwhelmed by these things, selling to a house flipper can ease this load.  

Are You Aware of the Flipper Pricing Model?

Do you know about the flipping industry standard 70 percent rule, which states that an investor will offer no more than 70 percent of a property’s after-repair value, (AVR), for a house they plan to flip? If a property needs repairs, those estimated costs would be subtracted from that 70 percent.

While this doesn’t assure a flipper a profit, it does allow for a prompt calculation with flexibility for expenses such as taxes, utilities, and other costs that can tear away an expected profit while the property is on the market. But if your home is such that the ARV is so low in comparison to the repairs that are need, then it’s not worth the investment.  

Will your Home Appeal to House Flippers in the Area?

Is the location in a place where buyers want to be? Not being a historic property is also important. Is it capable of rehab possibilities fairly quickly?

How Soon Do You Need to Close?

One of the greatest advantages to selling your home to a flipper is the benefit of getting a quicker closing. If you need to go it fast, consider a flipper.

Talk to a New York Real Estate Attorney

If you’re considered selling your home, your next step should be to contact a skilled NY real estate attorney. Regardless of whether you decide to sell to a flipper or not, consulting with an attorney will help to ensure a smooth transition. Contact an experienced MOWK Law attorney for help with this and your real estate law needs.