As you probably know, when tenants do not pay their rent, you should give thema 3-day rent demand, after which time if the rent is not paid, you may bring a nonpayment proceeding to recover the money owed to you. If the court finds that the tenant willfully or unjustifiably withheld rent, the court will grant the landlord a money judgment for the rent arrears, legal fees and court costs owed. Some tenants will pay the judgment amount and not cause any future problems to the landlord. Other tenants will soon fall behind in rent again, starting the litigation process and related costs all over again.

There is a solution to the problem for landlords of tenants that repeatedly fail to pay their rent. Courts have found that landlords who have gone through the nonpayment proceeding court process multiple times in a short time frame for the same tenant (usually three or four nonpayments within a 12-month period, depending on the circumstances), may be able to terminate the tenancy based on a breach of a fundamental obligation of the lease. The landlord would be able to forgo the need to serve the tenant a 10-day notice to cure and proceed directly to serving a 30-day notice to vacate followed by the commencement of a holdover proceeding, if the tenant fails to vacate by the 30-day notice deadline.

At the holdover proceeding, if the court finds that the tenant’s chronic nonpayments were willful, unjustified or accompanied by an intent to harass the landlord, the court may issue a judgment and warrant of eviction for the landlord ordering the removal of the tenant and thus putting an end to the vicious cycle.

MCI stands for Major Capital Improvement. As the owner of a rent controlled or rent stabilized building, when you make certain improvements (or installations) to your building, you may be able to increase your tenants’ rents based on your cost of making the improvements/installations.

What types of improvements are considered eligible for the rent increase?

To qualify for a rent adjustment, the improvement/installation must be new and not simply a repair to old equipment. For example, a new boiler, new roof or new windows in the entire building may justify an MCI rent adjustment, whereas a repaired or rebuilt roof or boiler and repaired windows would not.

There is also a four-part test used to determine the eligibility of MCI rent increases. The improvement must meet all four of the following qualifications:

1) It must be considered depreciable by the IRS and not just an ordinary repair;

2) It must be for the operation, preservation and maintenance of the building;

3) It must benefit all tenants, either directly or indirectly; and

4) It must meet the requirements of the Useful Life Schedule set forth by the Division of Housing and Community Renewal (DHCR).

How can I obtain an MCI rent increase?

In order to increase your tenants’ rents based on an MCI, you have to make an application to DHCR after the work is completed and paid for. The application must be made no more than two years after the improvement/installation is complete.

As part of the landlord’s application, you must provide DHCR with proof of payment for the improvement/installation, such as cancelled checks and invoices. The landlord must also provide a list of work performed and copies of all permits, etc. for same.

After reviewing the landlord’s application, DHCR will notify the tenants to advise them of the landlord’s intentions and tenants will have the right to submit responses. After considering all information, DHCR may deny the application or grant it in whole or in part. If granted, DHCR will issue an order approving the MCI rent increase. No adjustment to rent may be made without the DHCR order approving same.

How much is the MCI rent increase?

The rent may not be increased by more than 6% of the tenant’s rent in any given year, however increases above the 6% cap may be spread forward to future years.

With increasing property maintenance costs such as oil, taxes and insurance, why not take advantage of rent increases sanctioned under the law?

Other important considerations

DHCR may not grant the MCI increase, if the building owner is not maintaining the building properly and there are violations for the building.

The facts and circumstances of each case impact whether DHCR will grant the MCI rent increase. Sometimes it is not clear whether a particular improvement/installation will qualify as an MCI or whether the owner’s application will be granted.

Certainty is the mother of quiet and repose, and uncertainty the cause of variance and contentions. - Edward Coke

New York State’s Constitution grants the state legislature the broad authority to regulate land use if it is in the public interest. Although the state retains some authority, much of the power to plan communities and provide for and enforce zoning regulations has been delegated to local municipalities. This means that the reason your house is a certain height and a certain distance from the road, or the reason that it is a house at all and not a retail store or warehouse has to do with your city or town’s zoning code.

Let’s start with the basic premise that every city, town and village is divided into districts. Cities, towns and villages have zoning ordinances (laws) in place which dictate what type of uses are permitted for properties in each district. The zoning ordinances also dictate how large buildings can be in each district, how far from the road and neighboring property lines the buildings or other structures must be setback, what percentage of the lots may be covered with buildings, the use of the properties and much more.

A zoning variance is essentially an exception from the strict application of the zoning ordinances which affect your property.

Here are some instances where you should consider contacting your zoning board:

• Are you seeking to develop a piece of property and the local zoning code does not permit the use or size of your planned structure?
• Do your plans to expand your house or other structure violate setback requirements necessitating one or more area variances?
• Would you like to convert a retail store or other space that has not been leased for some time to a better use such as an apartment or vise-versa?
• Have you been served with a notice from the local municipality advising that your property is in violation of the local zoning code (i.e. improper use or illegal basement apartment)?

Additionally, is your neighbor seeking a variance from the local zoning board that will negatively affect your property (i.e. changing the use of the property resulting in more traffic or noise to the neighborhood or other harm to the local environment)?

You need to  protect your rights as a property owner to prevent a reduction in the value of your property resulting from a zoning board’s approval of a neighbor’s variance.

Everything that is tall and long is composed of short and small pieces.

For real estate owners who can no longer afford to keep current on their mortgage payments, a short sale is an alternative to foreclosure that can help preserve their credit and avoid bankruptcy.

A short sale is when a distressed seller finds a purchaser who is willing to buy their property for less than what is owed to the lender (bank) and the bank accepts less than what is owed on the mortgage in full settlement of the seller’s obligations to avoid having to foreclose on the property.

It may seem counterintuitive, but a lender may not want to foreclose on a property because the foreclosure process is expensive and time-consuming for the lender. In today’s market with foreclosures on the rise, lenders are becoming more and more willing to negotiate short sales.

Real estate agents may be enlisted by sellers who are at risk of being foreclosed to help market their properties and find potential purchasers. And just as in any sale, brokers are entitled to commissions on the short sales of properties.

Considerations in determining the short sale price

Finding a competent attorney with experience in short sales is important because there are many ramifications of short sales that people may not immediately consider. For example, debt forgiveness may be considered income which would be taxed at the seller’s ordinary income tax rate. Also, in addition to paying off the lender, there are various closing costs which will need to be paid as part of the sale such as transfer taxes, real estate agent commissions, legal fees and any judgments and/or liens against the sellers.

All of these closing costs need to be considered in determining the short sale price.

]]> http://dibbinilaw.com/blog/2009/11/05/what-is-a-short-sale/feed/ http://dibbinilaw.com/blog/2009/10/28/closing-costs-for-real-estate-buyers/ http://dibbinilaw.com/blog/2009/10/28/closing-costs-for-real-estate-buyers/#comments Wed, 28 Oct 2009 14:52:29 +0000 admin http://dibbinilaw.com/blog/?p=24

Owning a home is a keystone of wealth, both financial affluence and emotional security. - Suze Orman

I recently posted about the closing costs sellers should expect to pay in a real estate sale - these costs can range from 1% to 8% of the sales price, depending on if a real estate broker is involved. For buyers, closing costs in our region typically run about 2-3% of the purchase price.

Here’s a breakdown of what buyers can expect to lay out at the closing table:

PURCHASER’S CLOSING COSTS

Lender Fees: (if applicable)
Fees vary depending on the lender.
Typically lenders deduct the following (and possibly other fees) from your mortgage proceeds:

• Underwriting fee - approx $400
• Processing fee - approx $400
• Application fee - approx $400
• Points/Mortgage Broker fee - varies
• Lender’s attorney fee - $550-$900
• Short term interest - varies

Please note: You should review your lender’s good faith estimate and consult your mortgage broker and attorney regarding specific bank fees.

Taxes: (if applicable)

• Mansion Tax - 1% of purchase price if over $1,000,000
• Mortgage Recording Tax - 1.05% of the loan amount (except in Yonkers which imposes a tax of 1.55% of the loan amount).

Please note: Mortgage recording tax does not apply for cooperative apartment purchases.

Homeowner’s Insurance: (if applicable)
Varies depending on required coverage and purchase price: $700 - $3,000.

Legal Fees:
Varies

Title Insurance Fees: (if applicable)
Title fees vary, but typically include:

• Owner & Lender title policies - (see chart below)
• Title and municipal search fees - $300-$450
• Recording fees - approx $250\
• Any real estate taxes due within 60 days of closing

Note: Purchasers of cooperatives do not need title insurance, but should get personal property insurance. They also pay for a lien search (rather than a title search) which is approx. $400.

Miscellaneous Fees: (if applicable)

• Reimbursement of Seller’s Fuel Oil Reading - usually $50 - $1000.
• Survey or survey inspection - A new survey is approximately $750 - $1,500, a survey inspection, if possible, is $200 - $400.

Title Insurance Premiums (Paid by Purchaser)
Title Insurance premiums vary depending on the purchase price.

Below are different typical premiums based on four different purchase prices.

The only difference between death and taxes is that death doesn’t get worse every time Congress meets. - Will Rogers

In the current economic climate, more than ever commercial and multifamily properties are considerably over assessed and consequently paying more than their fair share of taxes. Commercial and multifamily property owners are facing problems with high vacancy rates and lower than usual rental income.  Many owners have been forced to renegotiate leases to keep existing tenants.

As a property owner, your real estate taxes are based on your property’s assessment.  Your property’s assessment is set annually by the local municipality where your property is located and is supposed to be based on your property’s fair market value.  Sometimes properties are fairly assessed, but oftentimes properties are over-assessed in which case property owners are paying more than their equitable share of real estate taxes.

It’s possible to protest your property’s assessment. The first step in this process entails filing a formal complaint (also known as a grievance) with your local municipality within a specified time called the “grievance period.”  (If your commercial property is in Yonkers, a prerequisite to filing a grievance is to have filed an annual income and expense statement by June 1st of each year.)

Every municipality sets its own grievance period. Here is a list of grievance periods in our local region:

November 1 - November 15, 2009:

• City of Yonkers

January 1 - January 21, 2010

• City of White Plains

February 2010

Villages of:

• Ardsley
• Bronxville
• Croton-on Hudson
• Dobbs Ferry
• Elmsford
• Hastings-on Hudson
• Irvington
• Larchmont
• Mamaroneck
• Pleasantville
• Port Chester
• Sleepy Hollow
• Tarrytown
• Tuckahoe

June 2010

Towns and Cities of:

• Bedford
• Cortlandt
• Eastchester
• Greenburgh
• Harrison (village and town)
• Lewisboro
• Mamaroneck
• Mt. Kisco
• Mt. Pleasant
• Mt. Vernon
• New Castle
• New Rochelle
• North Castle
• North Salem
• Ossining
• Peekskill
• Pelham
• Pound Ridge
• Rye
• Scarsdale
• Somers
• Yorktown

NOTE: The actual grievance period should be verified through your local assessor’s office.

Each year, you will have a new opportunity to file a grievance for the current and future years, but you cannot go back in time and file for past years.  Remember the Yonkers deadline is November 15, 2009, so act now.

Click here for a free Property Tax Assessment Information Sheet you can download and fill out >>

“Selling your apartment in New York is like dating a manic-depressive.. you get used to cycles of elation and despondency. Every time someone would come to see the apartment, there was the thrill of the date. You want to be presentable, so you clean the place up, make sure it smells good, put on some mood lighting and mellow music.” -Anderson Cooper

After all the work you put in to selling your property, nobody wants any surprises at the closing table, so it’s important for sellers to know what to expect in closing costs when selling real estate.

In general, Sellers typically spend about 5-8% of the sales price in closing costs if the sale was brought about by a real estate broker; if no broker is involved, the costs usually run about 1-2% of the sales price.

Here’s a schedule we put together that shows estimated closing costs when selling real estate. Remember, these are just estimates and they focus on our local area - be sure to review your costs with your attorney to find out what they’ll be in your area.

SELLER’S REAL ESTATE CLOSING COSTS:

Transfer Taxes:

NY State - 0.4% of the sales price
Local - some municipalities impose local transfer tax in addition to NY state tax:

• Mt. Vernon - 1% of sales price
• Yonkers - 1.5% of sales price
• NY City - 1% of the sales price (if price is less than $500,000; or 1.425% of the sales price (if price is $500,000 or more)
• Warwick and Peconic Bay


Please note: Local transfer taxes do not apply to cooperative apartment sales.

Property Condition Disclosure: (if applicable)

$500 credit to the Purchaser(s)

Please note: The Property Condition Disclosure Credit does not apply for cooperative sales.

Loan Payoff Fees: (if applicable)

• Pick-up/payoff fee - $150-$250 each
• Recording Satisfaction - $100-$300 each

Varies - discuss with your real estate attorney.

Real Estate Broker Fee(s): (if applicable)

Usually 4%- 6% of the sales price

Miscellaneous Fees: (if applicable)

• Final Water Bill - usually $50 - $300
• Tax Withholding - if seller is a foreign person or corporation, or seller is not a NY resident, additional amounts are due.