Practical Skills— Purchases and Sales of Homes

Practical Skillsmdash Purchases and Sales of Homes

900 am ndash 415 pm

(T) April 29 2014 Long Island (Melville)

(Th) May 1 2014 Albany

New York City Rochester Syracuse

Westchester (White Plains)

(T) May 6 2014 Buffalo

CLE NotePadcopy

Complete course materials distributed in electronic format online in advance of the program

Co-sponsored by the Real Property Law Section and the Committee on Continuing Legal Education of the New York State Bar Association

This program is offered for educational purposes The views and opinions of the faculty expressed during this program are those of the presenters and authors of the materials Further the

statements made by the faculty during this program do not constitute legal advice

New York State Bar Association

ACCESSING THE ONLINE ELECTRONIC COURSE MATERIALS

All program materials will be distributed exclusively online in searchable PDF format allowing attendees more flexibility in storing this information and allowing you to copy and paste relevant portions of the materials for specific use in your practice It is strongly recommended that you save the course materials in advance in the event that you will be bringing a computer or tablet with you to the program

Prior to a scheduled program date all registrants will receive an email message containing a hyperlink that when clicked will provide you with access to the complete course materials in a searchable PDF format which can be downloaded to your computer using the ldquoSave Asrdquo option under your ldquoFilerdquo tab Printing the complete materials is not required for attending the program Online materials are updated periodically to reflect last minute submissions from program faculty guaranteeing that you will always have the latest version of the materials

To access the complete set of course materials please insert the following link into your browserrsquos address bar and click lsquoenterrsquo

wwwnysbaorg2014HomesECM

A CLE NotePadcopy (paper) will be provided to all attendees at the live program site The CLE NotePadcopy includes lined pages for taking notes on each topic as well as any PowerPoint presentations submitted prior to printing

Traditional printed course books may be ordered at the program site for a discounted price and will be shipped subsequent to the program date

Please note You must have Adobe Acrobat on your computer in order to view save andor print the files

If you do not already have this software you can download a free copy of Adobe Acrobat Reader at this link httpgetadobecomreader

In the event that you are bringing a laptop tablet or other mobile device with you to the program please be sure that your batteries are fully charged in advance as additional electrical outlets may not be available at your program location

NYSBA cannot guarantee that free or paid WI-FI access will be available for your use at your program location even if you can see a connection

ATTENDANCE VERIFICATION FOR NEW YORK MCLE CREDIT AND PROGRAM EVALUATION PROCESS

Attendance Verifications In order to receive your New York MCLE credit you are required to complete and return the Verification of Attendance form If you are attending a two-day program you will receive a separate form on each day of the program

The bottom half of the form should be filled out and returned to the Registration Staff after the morning session has ended The top half should be filled out and returned to the Registration

Staff at the end of the program Please be sure to turn in your form at the appropriate times ndash we cannot issue your New York MCLE credit without it Your MCLE Certificate will be emailed to you a few weeks after the program

Please note Partial credit for program segments not allowed Under the New York State Continuing Legal Education Board Regulations and Guidelines attendees at CLE programs cannot receive MCLE credit for a program segment unless they are present for the entire segment Persons who arrive late depart early or are absent for any portion of the segment will not receive credit for that segment

The New York State Bar Association is committed to providing high quality continuing legal education courses and your feedback regarding speakers and program accommodations is important to us Please be sure to fill out the evaluation form after the program Thank you for choosing NYSBA CLE programs

Important Notice All Course Materials for this program are copyrighted by the New York State Bar Association and are distributed to program attendees for their use only

Any other manner of distribution including electronic transmission for use by persons other than program attendees is not allowed without prior written permission from the New York State Bar Association Continuing Legal Education (CLE) Department

This program is offered for educational purposes The views and opinions of the faculty expressed during this program are those of the presenters and authors of the materials including all materials that may have been updated since the books were printed Further the statements made by the faculty during this program do not constitute legal advice

Lawyer Assistance Program

Q What is LAP A The Lawyer Assistance Program is a program of the New York State Bar Association established to help attorneys judges and law

students in New York State (NYSBA members and non-members) who are affected by alcoholism drug abuse gambling depression other mental health issues or debilitating stress

Q What services does LAP provideA Services are free and include

bull Early identification of impairmentbull Intervention and motivation to seek helpbull Assessment evaluation and development of an appropriate treatment planbull Referral to community resources self-help groups inpatient treatment outpatient counseling and rehabilitation servicesbull Referral to a trained peer assistant ndash attorneys who have faced their own difficulties and volunteer to assist a struggling

colleague by providing support understanding guidance and good listeningbull Information and consultation for those (family firm and judges) concerned about an attorneybull Training programs on recognizing preventing and dealing with addiction stress depression and other mental

health issues

Q Are LAP services confidentialA Absolutely this wouldnrsquot work any other way In fact your confidentiality is guaranteed and protected under Section 499 of

the Judiciary Law Confidentiality is the hallmark of the program and the reason it has remained viable for almost 20 years

Judiciary Law Section 499 Lawyer Assistance Committees Chapter 327 of the Laws of 1993

Confidential information privileged The confidential relations and communications between a member or authorized agent of a lawyer assistance committee sponsored by a state or local bar association and any person firm or corporation communicating with such a committee its members or authorized agents shall be deemed to be privileged on the same basis as those provided by law between attorney and client Such privileges may be waived only by the person firm or corporation who has furnished information to the committee

Q How do I access LAP servicesA LAP services are accessed voluntarily by calling 8002550569 or connecting to our website wwwnysbaorglap

Q What can I expect when I contact LAPA You can expect to speak to a Lawyer Assistance professional who has extensive experience with the issues and with the

lawyer population You can expect the undivided attention you deserve to share whatrsquos on your mind and to explore options for addressing your concerns You will receive referrals suggestions and support The LAP professional will ask your permission to check in with you in the weeks following your initial call to the LAP office

Q Can I expect resolution of my problemA The LAP instills hope through the peer assistant volunteers many of whom have triumphed over their own significant

personal problems Also there is evidence that appropriate treatment and support is effective in most cases of mental health problems For example a combination of medication and therapy effectively treats depression in 85 of the cases

18002550569

Personal Inventory

Personal problems such as alcoholism substance abuse depression and stress affect onersquos ability to practice law Take time to review the following questions and consider whether you or a colleague would benefit from the available Lawyer Assistance Program services If you answer ldquoyesrdquo to any of these questions you may need help

1 Are my associates clients or family saying that my behavior has changed or that Idonrsquot seem myself

2 Is it difficult for me to maintain a routine and stay on top of responsibilities

3 Have I experienced memory problems or an inability to concentrate

4 Am I having difficulty managing emotions such as anger and sadness

5 Have I missed appointments or appearances or failed to return phone callsAm I keeping up with correspondence

6 Have my sleeping and eating habits changed

7 Am I experiencing a pattern of relationship problems with significant people in my life(spouseparent children partnersassociates)

8 Does my family have a history of alcoholism substance abuse or depression

9 Do I drink or take drugs to deal with my problems

10 In the last few months have I had more drinks or drugs than I intended or felt thatI should cut back or quit but could not

11 Is gambling making me careless of my financial responsibilities

12 Do I feel so stressed burned out and depressed that I have thoughts of suicide

CONTACT LAP TODAY FOR FREE CONFIDENTIAL ASSISTANCE AND SUPPORT

The sooner the better

Patricia Spataro LAP Director

18002550569

There Is Hope

PROGRAM AGENDA

830-900 REGISTRATION

900-910 1 OVERVIEW

910-935 2 PRE-CONTRACT CONSIDERATIONS

935-1025 3 CONTRACT DRAFTING AND NEGOTIATION

1025-1035 BREAK

1035-1100 4 CONTRACT NEGOTIATING (CONTINUED)

1100-1150 5 MORTGAGE FINANCING

1150-1200 QUESTIONS AND ANSWERS

1200-100 LUNCH (ON YOUR OWN)

100-150 6 TITLE EXAMINATION AND DISPOSITION OF OBJECTIONS

150-215 7 SURVEY EXAMINATION

215-225 BREAK

225-315 8 ETHICS AND PROFESSIONALISM

315-405 9 PREPARATION FOR CLOSING CLOSING POST-CLOSING MATTERS

415 ADJOURNMENT

IMPORTANT NOTICE PARTIAL CREDIT FOR PROGRAM SEGMENTS NOT ALLOWED

Under the New York State Continuing Legal Education Board Regulations and Guidelines attendees

at CLE programs cannot receive MCLE credit for a program segment unless they are present for the

entire segment Persons who arrive late depart early or are absent for any portion of the segment will

not receive credit for that segment

MCLE CREDITS

70 TOTAL CREDITS (25 professional practice 35 skills 10 ethics) This course has been

approved for MCLE credit in New York for all attorneys including newly admitted (less than 24

months)

CREDIT BREAKDOWN

25 Professional Practice (Topic 1 2 5 6 7 8)

35 Skills (Topic 3 4 6)

10 Ethics (Topic 8)

Program Faculty Overall Planning Co-Chairs Scott A Sydelnik Esq Davidson Fink LLP Rochester NY Karl B Holtzschue Esq Law Office of Karl B Holtzschue New York NY Local Panels (listed in order of appearance) Tuesday April 29 2014 | Long Island (Melville) Chair Benjamin Weinstock Esq Ruskin Moscou Faltischek PC Uniondale NY Panel Benjamin Weinstock Esq Ruskin Moscou Faltischek PC Uniondale NY Abraham Krieger Esq Meyer Suozzi English amp Klein PC Garden City NY Gary C Hisiger Esq Moritt Hock amp Hamroff LLP Garden City NY John M Martin Esq Vice President and General Counsel All New York Title Agency Inc White Plains NY (tentative) Ariel Weinstock Esq Katsky Korins LLP New York NY Richard E Grayson Esq Law Office of Richard E Grayson White Plains NY Chava Eva Klein Esq Ruskin Moscou Faltischek PC Uniondale NY Thursday May 1 2014 | Albany Chair Frank C Sarratori Esq Senior Vice President General Counsel and CCO Pioneer Bank Troy NY Panel Frank C Sarratori Esq Senior Vice President General Counsel and CCO Pioneer Bank Troy NY Jessica A Desany Esq Carter Conboy Case Blackmore Maloney amp Laird PC Albany NY Michelle H Wildgrube Esq Cioffi Slezak Wildgrube PC Niskayuna NY James M Whalen Esq Pioneer Bank Troy NY Jared P Yaffee Esq Lemery Greisler LLC Albany NY Peter V Coffey Esq Englert Coffey McHugh amp Fantauzzi LLP Schenectady NY (tentative) Thursday May 1 2014 | New York City Chair Mindy H Stern Esq Schoeman Updike Kaufman Stern amp Ascher LLP New York NY Panel Mindy H Stern Esq Schoeman Updike Kaufman Stern amp Ascher LLP New York NY Karl B Holtzschue Esq Law Office of Karl B Holtzschue New York NY Kristin V Bellouny Esq Title Associates New York NY Ariel Weinstock Esq Katsky Korins LLP New York NY J Richard Supple Jr Esq Hinshaw amp Culbertson LLP New York NY Nancy A Connery Esq Schoeman Updike Kaufman Stern amp Ascher LLP New York NY Thursday May 1 2014 | Rochester Chair Scott A Sydelnik Esq Davidson Fink LLP Rochester NY Panel Scott A Sydelnik Esq Davidson Fink LLP Rochester NY Trisha L Kirsch Esq Davidson Fink LLP Rochester NY Blake T Webber Esq Brown Gruttadaro Gauhean amp Prato LLC Rochester John I Menard Esq Van Loon Menard Attorneys At Law Rochester NY Maureen Garvey Esq Vice President Director of Title Operations First American Title Insurance Company Rochester NY George A Schell Jr Esq Schell Law PC Fairport NY Kevin E Brzezinski Esq Dollinger Associates PC Rochester NY Zachary Pike Esq Rochester NY Thursday May 1 2014 | Syracuse Chair Rocco J Mangano Esq Mangano Lucchesi amp Collins Syracuse NY Panel Rocco J Mangano Esq Mangano Lucchesi amp Collins Syracuse NY Francis D Stinziano Jr Esq Gilberti Stinziano Heintz amp Smith Syracuse NY Virginia A Leasure Esq Syracuse NY William H Bradt Esq Counsel Bradt-Luciani Real Property Services Syracuse NY Jeffrey B Davis Esq Camillus Anthony Gigliotti Esq Principal Counsel Attorney Grievance Committee Appellate Division 4th Department 5th Judicial District Syracuse NY

Thursday May 1 2014 | Westchester (Mt Kisco) Chair Denise P Ward Esq Grean amp Ward Port Chester NY Panel Denise P Ward Esq Grean amp Ward Port Chester NY Robert J Zaccagnino Esq Law Offices Robert J Zaccagnino Rye NY Alfred T Renauto Esq White Plains NY Jean M Partridge Esq Benchmark Title Agency White Plains NY Richard E Grayson Esq Law Offices of Richard E Grayson White Plains NY Tuesday May 6 2014 | Buffalo Chair Harry G Meyer Esq Hodgson Russ LLP Buffalo NY Panel Harry G Meyer Esq Hodgson Russ LLP Buffalo NY Michael A Piette Esq Jaeckle Fleischmann amp Mugel LLP Buffalo NY Michael J Lombardo Esq Duke Holzman Photiadis amp Gresens LLP Buffalo NY Nancy W Saia Esq Law Offices of Nancy W Saia Buffalo NY Keri Callocchia Buffalo NY Mark E Burhans Esq Chicago Title Insurance Company Lockport NY Michael M Blinkoff Esq Michael M Blinkoff amp Associates Buffalo NY Margaret C Callanan Esq Attorney Grievance Committee Eighth Judicial District Buffalo NY Paul T Nesper Esq Nesper Ferber amp DiGiacomo LLP Amherst NY

PRACTICE SKILLS PURCHASES AND SALE OF HOMES ndash SPRING 2014

CLE NotePadcopy

TABLE OF CONTENTS

1 Introduction and Program Overview001

Topic Overview 003

Lined Paper 005

2 Pre-Contract Considerations 011

Topic Overview 013

Good Faith Estimate (HUD-GFE) 017

Property Condition Disclosure Statement 021

Recent Broker and Pre-Contract Developments 025

Lined Paper 031

3 Contract Drafting and Negotiation 037

Topic Overview 039

Recent Contract Developments 047

Recent Financing Contingency Developments 071

Lined Paper 077

4 Mortgage Financing 083

Topic Overview 085

Mortgage Note (State Form 3233 Fannie MaeFreddie Mac Uniform

Instrument ndash New York Fixed Rate) 095

Adjustable Rate Note 099

Recent Financing Developments 105

Lined Paper 112

5 Title Examination and Disposition of Objections 117

Topic Overview 119

Recent Title Insurance Developments 123

Lined Paper 129

6 Surveys 135

Topic Overview 137

Recent Survey Developments 145

Lined Paper 147

7 Ethics and Professionalism 153

Topic Overview 155

NY Rules of Professional Conduct Rule 115 (Client Funds) 161

Sample Retainer Agreement 167

Recent Ethics Developments 173

Lined Paper 181

8 Preparation for Closing Closing Post-Closing Matters 187

House Closing (Downstate) ndash Nancy A Connery Esq 189

Pre-Closing and Closing (Monroe County) ndash A Adjutori S Crane 199

Closing a Western New York Real Estate Matter ndash Paul A Nesper Esq 211

TP-584 Combined Real Estate Transfer Tax Return 219

HUD-1 Settlement Statement (RESPA) 223

Recent Closing Developments 227

Recent Tax Developments (2010) 231

Lined Paper 233

9 Table of Contents of ONLINE MATERIALS 239

10 Table of Contents of SUPPLEMENTAL HANDOUT MATERIALS 243

11 Faculty Biographies 245

1 INTRODUCTION AND PROGRAM OVERVIEW

Practical Skills

Purchases and Sales of Homes

Course Book Editor Karl B Holtzschue New York NY

1 Introduction and Course Overview

Representing the purchaser or seller of a home is one of the most basic and personal services

an attorney may be called upon to provide The purchase of a home is often the most significant

financial transaction that the client has ever undertaken and often the first time a client will have been

represented personally by an attorney

This program provides a step-by-step guide as well as practical tips to attorneys in purchases

and sales of homes covering pre-contract issues such as dealing with brokers and property

inspection clause-by-clause review of contract drafting and negotiation including mortgage

contingency clause issues mortgage financing issues title and survey examination and insurance

pulling it all together at the closing and ethical issues related to sales of homes

The practice as to home sales varies between downstate (New York City Long Island and

Westchester) and upstate (Albany Syracuse Rochester and Buffalo) Nearly all sales use bar

association-approved forms Downstate attorneys for sellers usually prepare the contract form

upstate brokers usually fill in the bar association-approved contract form subject to the approval of

one or both attorneys The form usually used downstate is the one approved by the NYSBA Real

Property Law Section (and other bar associations) the forms used upstate are different for each

location The program at each location will emphasize regional customs and practice

This course is appropriate for all attorneys seeking a fundamental but practical overview of

handling a residential home sale or purchase including attorneys practicing in the areas of real

property law general practice trusts and estates banking and contracts It would also be of interest to

real estate brokers mortgage brokers mortgage bankers mortgage loan originators and title insurers

and agents

Real Property Law Section

The Real Property Law Section (RPLS) is one of the three largest sections in the New York

State Bar Association It is run by an Executive Committee of about 80 members with

representatives from every Judicial District in the state It has over 20 committees and several task

forces each chaired by a member from downstate and one from upstate The committees include

those on Commercial Leasing Condominiums amp Cooperatives Green Real Estate Land Use and

Environmental Law Landlord and Tenant Proceedings Legislation Low Income and Affordable

Housing Not-for-Profit Entities and Concerns Real Estate Construction Real Estate Financing Real

Estate Workouts and Bankruptcy Title and Transfer and Unlawful Practice of Law You are invited

to join one or more of the committees

The RPLS has a comprehensive website (see below) with links to its Blog and its Forum Of

particular interest for this program is the link to the Sectionrsquos NY Real Property Law Journal which

has many articles on the subject of this program There is a link to NYSBArsquos Residential Real Estate

Forms on HotDocs which provides contract forms and related documents that can be filled in and

printed electronically

httpwwwnysbaorgAMTemplatecfmSection=Real_Property_Law_HomeampTemplate=CustomS

ourceSectionHomecfmampSec=REAL

IITai NEW YORK STATE BAR ASSOCIATION N V S SA Serving the legal profession and the community since 1876

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2 PRE-CONTRACT CONSIDERATIONS

2 Pre-Contract Considerations

by Karl B Holtzschue New York NY

A Seller

1 Client interview

Consider giving the client an engagement letter explaining the scope and terms of your

engagement (though one is not required if the attorneyrsquos fee will be less than $3000) NY

Comp Codes Rules amp Regulations title 22 pt 1215 Clarifying these matters in writing is

advisable in all cases

Obtain basic information from the client listed on the checklist parties property brokers

price personal property closing date mortgage commitment contingency special features

(such as swimming pool) property condition disclosure encumbrances made by seller smoke

and co detectors

Obtain copies of sellerrsquos deed title insurance policy survey certificate of occupancy and tax

Ask whether any improvements have been made since the last survey and whether permits or

certificates of occupancy or compliance have been obtained for them (for decks pools

gazebo etc)

In Western NY obtain the sellerrsquos abstract of title and survey or information where they are

stored (title company)

2 Broker listings and commissions agency disclosure

Most homes are offered by brokers through multiple listings (except NYC)

Obtain a copy of any listing agreement Is it an exclusive right to sell or exclusive agency

Does it have an expiration date (and a tail period)

The broker must be licensed to collect a commission but an agreement to pay compensation

for the sale of real estate is not required to be in writing to be enforceable GOL sect 5-701(a)

Rates of commissions vary but there is usually a customary rate in an area such as 6 for

ordinary sales

Note that unless a written brokerage agreement provides otherwise a commission is earned

when a licensed broker produces a purchaser who is ready willing and able to purchase on

terms set by the seller Any brokerage agreement must be conditioned on closing the sale and

payment of the price

Brokers are required to disclose whom they represent as an agent brokers can be dual agents

representing both parties RPL sect 443

3 Property Condition

Advise the sellers of their right to give a $500 credit at the closing in lieu of delivering a

Property Condition Disclosure Statement (PCDS) Holtzschue With a PCDS the Purchaser

has More than A Ghost of a Chance 41 NY Real Prop LJ 25 (Winter 2013) (see online

materials)

If a PCDS is to be given consider adding an explanation of any ambiguities in the questions

Remind the seller that the sellerrsquos broker has a duty under the agency disclosure statute form

(RPL sect 443) to disclose to the purchaser any defects known to the broker

The ldquoas isrdquo clause in the contract of sale will protect the seller against claims based on oral

representations but probably not if the seller makes a fraudulent misrepresentation

RPL sect 443-a provides that it is not a material defect that an owner or occupant had HIV or

AIDS of the property was the site of a homicide death or felony Inquire whether any

underground fuel oil tank has leaked

For homes built before 1978 federal law requires giving the purchaser an informational

pamphlet and a lead-based paint disclosure (allowing the purchaser 10 days to inspect and

cancel which may be waived or shortened)

Advise that an inspection should be completed before the contract of sale is signed to prevent

renegotiation of the price after the inspection report is received If the contract is to be

conditioned on an inspection consider adding that the seller has the option to cure defects

costing up to an agreed amount (say 1 of the price)

RPL sect 242 requires the seller to provide written notice to a purchaser of (1) a lack of electric

service and (2) any electric of gas utility surcharges for line extensions prior to accepting a

purchaser offer

4 Estimate of closing costs it is advisable to provide the seller with a written estimate of closing

costs such as city county and state transfer taxes mortgage satisfaction charges brokerage

commission existing mortgage payoff costs and sellerrsquos attorneyrsquos fee

5 Tax planning advise the seller to consult with his or her accountant as to any capital gains tax due

on the sale

B Purchaser

1 Client interview

(such as swimming pool) property condition disclosure smoke and co detectors

Ask about the purchasersrsquo current living situation and what they will do if the closing is

delayed

2 Broker agency disclosure brokers are required to disclose whom they represent as an agent

brokers can be dual agents representing both parties RPL sect 443

3 Inspection of property

Advise the purchasers of their right to receive a Property Condition Disclosure Statement

(PCDS) or a $500 credit at the closing in lieu of delivering a PCDS Cases place a heavy duty

on the purchaser to have an inspection make inquiries and check records Holtzschue With a

PCDS the Purchaser has More than A Ghost of a Chance 41 NY Real Prop LJ 25

(Winter 2013) (see online materials)

Downstate sellersrsquo attorneys usually advise giving the $500 credit upstate a PCDS is usually

given (usually obtained by the broker as or before the contract is signed

Advise the purchaser that the sellerrsquos broker has a duty under the agency disclosure statute

form (RPL sect 443) to disclose to the purchaser any defects known to the broker

The ldquoas isrdquo clause will protect the seller against claims based on oral representations but

probably not if the seller makes a fraudulent misrepresentation Consequently the purchaser

should have any crucial oral representations repeated in writing in the contract of sale

specifying whether they are to survive the closing

AIDS or the property was the site of a homicide death or felony so a purchaser concerned

about these matters should inquire about them

The purchaser should inquire whether there is an underground fuel oil tank and if so if it has

leaked

Advise that an inspection as to structural defects wood-destroying organisms septic system

well water flow and quality radon and other matters should be completed before the contract

of sale is signed and that the purchaser should accompany the inspector on the inspection If

the contract is conditioned on an inspection consider asking for a reduction in the purchase

price to remedy any defects

purchaser offer

Energy Law sect 17-103(a) allows a purchaser to request disclosure of heating and cooling bills

for 2 years and information concerning insulation

3 Financing

Most purchasers need financing to buy a new home Mortgage brokers may assist in finding

loans Consequently the contract of sale is usually conditioned upon obtaining a commitment

for a new loan by a certain date (it is advisable for the attorneys to calendar this date)

Federal law required lenders to residential borrowers to provide a Good Faith Estimate (GFE)

disclosure form upon application which the purchaser should review carefully

When a mortgage commitment is received it should be reviewed before acceptance to make

sure that the terms and any expiration date are acceptable

Financing may be provided by the purchaser taking over an existing mortgage to the seller

Financing may be provided by a mortgage loan from the seller to the purchaser

4 Estimate of closing costs it is advisable to provide the purchaser with a written estimate of closing

costs such as mortgage loan origination fee appraisal credit report lenderrsquos attorneyrsquos fee mortgage

recording tax mortgagee title insurance fee title insurance mortgage recording fee deed recording

fee departmental searches survey inspection escrow for future taxes and casualty insurance

mortgage interest until first payment casualty insurance inspection cost NYS Mansion Tax (sales

of $1000000 or more) and purchaserrsquos attorneyrsquos fee

C Binders (statute of frauds) warn each client but especially the seller not to enter into an informal

agreement of sale often called a ldquobinderrdquo as it is usually difficult to determine if a ldquobinderrdquo will be

enforceable Sometimes a purchaser may try to bind the seller to prevent losing the property

D Good Faith Estimate (HUD-GFE)

E Property Condition Disclosure Statement

F Checklists

1 Seller (see online materials)

2 Purchaser (see online materials)

G Note any Recent Broker and Pre-Contract Developments (see following)

Good Faith Estimate (GFE)

This GFE gives you an estimate of your settlement charges and loan terms if you are approved for this loan For more information see HUDrsquos Special Information Booklet on settlement charges your Truth-in-Lending Disclosures and other consumer information at wwwhudgovrespa If you decide you would like to proceed with this loan contact us

Purpose

Summary of your settlement charges A

Your Charges for All Other Settlement Services (See page 2) $ B

Your Adjusted Origination Charges (See page 2) $

Summary of your loan

Important dates

Total Estimated Settlement Charges $

OMB Approval No 2502-0265

Only you can shop for the best loan for you Compare this GFE with other loan offers so you can find the best loan Use the shopping chart on page 3 to compare all the offers you receive

Shopping for your loan

Your initial loan amount is

Your loan term is

Your initial interest rate is

Your initial monthly amount owed for principal interest and any mortgage insurance is

$ per month

Can your interest rate rise

Even if you make payments on time can your loan balance rise

Even if you make payments on time can your monthly amount owed for principal interest and any mortgage insurance rise

Does your loan have a prepayment penalty

Does your loan have a balloon payment

c No c Yes it can rise to a maximum of The first change will be in

c No c Yes it can rise to a maximum of $

c No c Yes the first increase can be in and the monthly amount owed can rise to $ The maximum it can ever rise to is $ c No c Yes your maximum prepayment penalty is $

c No c Yes you have a balloon payment of $ due in years

Some lenders require an escrow account to hold funds for paying property taxes or other property-related charges in addition to your monthly amount owed of $ Do we require you to have an escrow account for your loan c No you do not have an escrow account You must pay these charges directly when due c Yes you have an escrow account It may or may not cover all of these charges Ask us

Escrow account information

Borrower

Property Address

Date of GFE

Name of Originator

Originator Address

Originator Phone Number

Originator Email

1 The interest rate for this GFE is available through After this time the interest rate some of your loan Origination Charges and the monthly payment shown below can change until you lock your interest rate

2 This estimate for all other settlement charges is available through

3 After you lock your interest rate you must go to settlement within days (your rate lock period) to receive the locked interest rate

4 You must lock the interest rate at least days before settlement

Understanding your estimated settlement charges

Your Adjusted Origination Charges

Your Adjusted Origination Charges $

Total Estimated Settlement Charges $A B+

3 Required services that we selectThese charges are for services we require to complete your settlement We will choose the providers of these servicesService Charge

4 Title services and lenderrsquos title insuranceThis charge includes the services of a title or settlement agent for example and title insurance to protect the lender if required

5 Ownerrsquos title insurance You may purchase an ownerrsquos title insurance policy to protect your interest in the property

6 Required services that you can shop forThese charges are for other services that are required to complete your settlement We can identify providers of these services or you can shop for them yourself Our estimates for providing these services are belowService Charge

7 Government recording chargesThese charges are for state and local fees to record your loan and title documents

8 Transfer taxes These charges are for state and local fees on mortgages and home sales

9 Initial deposit for your escrow accountThis charge is held in an escrow account to pay future recurring charges on your property and includes c all property taxes c all insurance and c other

10 Daily interest chargesThis charge is for the daily interest on your loan from the day of your settlement until the first day of the next month or the first day of your normal mortgage payment cycle This amount is $ per day for days (if your settlement is )

11 Homeownerrsquos insuranceThis charge is for the insurance you must buy for the property to protect from a loss such as firePolicy Charge

B Your Charges for All Other Settlement Services $

Your Charges for All Other Settlement Services

1 Our origination charge This charge is for getting this loan for you

2 Your credit or charge (points) for the specific interest rate chosen c The credit or charge for the interest rate of is included in

ldquoOur origination chargerdquo (See item 1 above) c You receive a credit of $ for this interest rate of

This credit reduces your settlement charges c You pay a charge of $ for this interest rate of

This charge (points) increases your total settlement charges The tradeoff table on page 3 shows that you can change your total settlement charges by choosing a different interest rate for this loan

Some of these charges can change at settlement See the top of page 3 for more information

These charges cannot increase at settlement

g Our origination charge

g Your credit or charge (points) for the specific interest rate chosen (after you lock in your interest rate)

g Your adjusted origination charges (after you lock in your interest rate)

g Transfer taxes

The total of these charges can increase up to 10 at settlement

g Required services that we select

g Title services and lenderrsquos title insurance (if we select them or you use companies we identify)

g Ownerrsquos title insurance (if you use companies we identify)

g Required services that you can shop for (if you use companies we identify)

g Government recording charges

These charges can change at settlement

g Required services that you can shop for (if you do not use companies we identify)

g Title services and lenderrsquos title insurance (if you do not use companies we identify)

g Ownerrsquos title insurance (if you do not use companies we identify)

g Initial deposit for your escrow account

g Daily interest charges

g Homeownerrsquos insurance

Using the tradeoff table

InstructionsThis GFE estimates your settlement charges At your settlement you will receive a HUD-1 a form that lists your actual costs Compare the charges on the HUD-1 with the charges on this GFE Charges can change if you select your own provider and do not use the companies we identify (See below for details)

Understanding which charges can change at settlement

In this GFE we offered you this loan with a particular interest rate and estimated settlement charges However

g If you want to choose this same loan with lower settlement charges then you will have a higher interest rateg If you want to choose this same loan with a lower interest rate then you will have higher settlement charges

If you would like to choose an available option you must ask us for a new GFE

Loan originators have the option to complete this table Please ask for additional information if the table is not completed

Your initial loan amount

Your initial interest rate1

Your initial monthly amount owed

Change in the monthly amount owed from this GFE

Change in the amount you will pay at settlement with this interest rate

How much your total estimated settlement charges will be

The loan in this GFE

You will pay $ less every month

Your settlement charges will increase by $

You will pay $ more every month

Your settlement charges will be reduced by $

The same loan with lower settlement charges

The same loan with a lower interest rate

No change

1 For an adjustable rate loan the comparisons above are for the initial interest rate before adjustments are made

Use this chart to compare GFEs from different loan originators Fill in the information by using a different column for each GFE you receive By comparing loan offers you can shop for the best loan

Using the shopping chart

This loan Loan 2 Loan 3 Loan 4

Loan originator name

Initial loan amount

Loan term

Initial interest rate

Initial monthly amount owed

Rate lock period

Can interest rate rise

Can loan balance rise

Can monthly amount owed rise

Prepayment penalty

Balloon payment

Total Estimated Settlement Charges

Some lenders may sell your loan after settlement Any fees lenders receive in the future cannot change the loan you receive or the charges you paid at settlement

If your loan is sold in the future

Properly Condition Disclosure Statement

Name of Seller or Sellers Property Address

The Propcrty Condition Disclosure Act requires the seller of residential real propeny to cause this disclosure statement or a copy thereof to be delivered to a buyer or buyers agent prior to the signing by the buyer of a binding contract of sale

Purpose of Statement This is a statement of certain conditions and information concerning the property known to the seller

This disclosure statement is not a warranty of any kind by the seller or by any agent representing the seller in this transaction It is not a substitute for any inspections or tesLlt and the buyer is encouraged to obtain his or her own indcpendclll professional inspections and environmental tests and also is encouraged to check public records pertaining to the property

A knowingly fal se or incomplete statement by the seller on this form may subj ect the seller to claims by the buyer prior to or after the transfer of title In the event a seller fails to pcrfonn the duty prescribed in this article to deliver a disclosure s tatement prior to the signing by the buyer of a binding contract of sale the buyer shall receive upon the transfer of title a credit of live hundred dollars ($50000) aga inst the agreed upon purchase price of the residential feal property

Residential Real Property means real property improved by a one to four fa mily dwelling used or occupied or intended to be used or occupied wholly or partly as the home or residence of one or more persons but sha ll not refer to (a) unimproved real property upon which such dwellings are to be constructed or (b) condominium units or cooperative apanments or (c) property on a homeowners association that is not owned in fee simple by the seHer

Ins tructions to the Seller (a) Answer a ll questions based upon your actual knowledge (b) Attach additional pages with your signature if additional space is required (c) Complete this fonn yourself (d) Ifsome items do not apply to your property check NA (Non~Applicab l e) If you do not know the

answer check Unkn (Unknown)

Seller s Statement The seller makes the following representations to the buyer based upon the sellers actual knowledge at the time of s igning this document The seller authorizes his or her agent if any to

provide a copy of this sta tement to a prospective buyer of the residential rea l properly T he following are representations made by the seller and are not the representations of the sellers agent

General Information I How long have you owned the property 2 How long have you occupied the property

3 What is the agc of the struc lUre or structures _-c--===-c-~ Note 10 Buyer ~ If the structure was buill before 1978 yOll are olcouraged to investigate for the presence o f lead based paint

4 Does anybody other than yourself have a lease easement or any other right to use or occupy any part of your property other than those staled in documents avai lable in the public record such as rights to use a road or path or cut trees or crops

Yes No Unkn NA ( If yes explain below) 5 Does anybody else claim to own any part of your property

Yes No Unkn NA (Jfyes explain below)

NYSBAs RClidenlla Reul FSllIte Forms 0201) Mnllhew Bender amp Co a member of the LexisNclIis Group 21

6 Has anyone denied you access fO the property or made a formal legal claim challenging your title to the property Yes No Unkn NA (If yes explain below)

7 Are there any features of the property shared in common with adjoining land owners or a homeowners association such as walis fences or driveways

Yes No Unkn NA (1fyes describe below) 8 Are there any electric or gas utility surcharges for line extensions special assessments or homeowner

or other association fees that apply to the property Yes No Unkn NA (If yes explain below)

9 Are there certificates of occupancy related to the property Yes No Unkn NA (If no explain below)

Environmental Note to Seller - I n this section you will be asked questions regarding petroleum products and

hazardous or toxic substances that you know to have been spilled leaked or otherwise been released on tbe property or from the property onto any other property Petroleum products may include but are not limited to gasoline diesel fuel home heating fuel and lubricants Hazardous or toxic substances are products that could pose short- or long-term danger to personal health or the environment if they are not properly disposed of applied or stored These include but are not limited to fertili zers pesticides and insecticides paint including paint thinner varnish remover and wood preservatives treated wood construction material s such as asphalt and roofing materials antifreeze and other automotive products batteries cleaning solvents including septic tank cleaners household cleaners and pool chemicals and products containing mercury and lead

Note to Buyer - I f contamination of this property from pc-1roleum products andor hazardous or toxic substances is a concem to you you are urged to consider soil and groundwater testing of this property

10 Is any or all of the property located in a designated floodplain Yes No Unkn NA (1fyes explain below)

11 Is any or all of the properly located in a designated wetlaJld Yes No Unkn NA (rfyes explain below)

12 Is the property located in an agricultural district Yes No Unkn NA (If yes explain below)

13 Was the property ever the s ite of a landfill Yes No Unkn NA (If yes explain below)

14 Are there or have there ever been fuel storage tanks above or below the ground on the property Yes No Unkn NA

lf yes are they currently in use Yes No Unkn NA

Location(s) Are they leaking or bave they ever leaked

Yes No Unkn NA (If yes explain below) 15 Is there asbestos in the structure

Yes No Unkn NA (If yes state location or locations below) 16 Is lead plumbing present

Yes No Unkn NA (If yes state location or locations below) 17 Has a radon test been done

Yes No Unkn NA (J fyes attach a copy ofthe report) 18 Has motor fuel motor oil home heating fuel lubricating oil or any other petroleum product

methane gas or any hazardous or toxic substance spilled leaked or otherwise been released on the property or from the property onto any other property

Yes No Unkn NA (1f yes describe below)

2 NYSBAs Reidential Real Estate Forms 0 2013 Matthew Bender amp Co bull a memberofthc LexisNexis Group

19 Has the property been tested for the presence of motor fuel motor oi l home heating fuel lubricating oil or any other petroleum product methane gas or any hazardous or toxic substance

Yes No Unkn NA (If yes attach report(s))

Structurd 20 Is there any rot or water damage to the structure or structures

Yes No Unkn NA (If yes explain below) 21 Is there any fire or smoke damage to the structure or structures

Yes No Unkn NA (If yes explain below) 22 Is there any tennite insect rodent or pest infestat ion or damage

Yes No Unkn NA (If yes explain below) 23 Has the property been tested for termite insect rodent or pest infestation or damage

Yes No Unkn NA (If yes please attach report(s)) 24 What is the type of roofroof covering (slate asphalt other)

Any known material defects Yes No Unkn NA (If yes explain below)

How old is the roof Is there a transferable- w--rr--n-tee- o- n-oth-e- r-oo-of in effect now

Yes No Unkn NA (If yes explain below) 25 Are there any known material deFects in any of the following structural systems Footings beams

girders lintels columns or partitions Yes No Unkn NA (If yes explain below)

Mechanical Systems amp Services 26 What is the water source (Circle all that apply - weU private municipal other)

I f municipal is it metered Yes No Unkn NA

27 Has the water quality andor flow rate been tested Yes No Unkn NA (If yes describe below)

28 What is the type of sewage system (Circle all that apply - public sewer private sewer septic or cesspool) Lf septic or cesspool age Date last pumped Frequency of pumping Any known material defects

Yes No Unkn NA (If yes explain below) 29 Who is your electric service provider

What is the amperage Does it have circuit breakers or fuses Private or public poles Any known material defects

Yes No Unkn NA (If yes explain below) 30 Are there any flooding drainage or grading problems that resulted in standing water on any portion

of the property Yes No Unkn NA (If yes state locations and exp lain below) 31 Does the basement have seepage that resu lts in standing water

Yes No Unkn NA (ff yes explain below)

3 NYSBAs Residential Real Estate Fonns 2013 Matthew Bendcr amp Co a member ofthc LexisNcxis Group

Are there any known mater ial defects in any of the followi ng (If yes explain below Use additional sheets if necessary)

32 Pl umbing System 33 Security System 34 Carbon Monoxide Detector 35 Smoke Detector 36 Fire Sprinkler System 37 Sump Pump 38 FoundationSlab 39 Interior WallsCeilings 40 Exterior Walls Or S iding 41 Floors 42 ChimneyFireplace or Stove 43 PatioDeck 44 Driveway 45 Air Conditioner 46 Healing System 47 Hot Water Heater

Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

No No No No No No No No No No No No No No No No

Unkn Unkn Unkn Unkn Unkn Unkn Unkn Unkn Unkn Unkn Unkn Unkn Unkn Unkn Unkn Unkn

NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA

48 The Property is located in the following School District ___________ Unkn

Note Buyer is encouraged to check public records concerning the property (eg lax records and wetland and nood pla in maps)

The seller should use this a rea to funher explain any item above If necessary attach additional pages and indicate here the number of additional pages attached

Sellers Certification Seller certifies that the information in this property condition disclosure statement is true and complete to the seller s actual knowledge as of the date signed by the seller IF a seller of residentia l real property acquires knowledge which rCllders materially inaccurate a property condition disclosure statement provided previously the seller shall deliver a revised property condi tion disclosure statement to the buyer as soon as practicable In no event however shall a seller be required to provide a revised property condition disclosure statement after the transfer of title from the seller to the buyer or occupancy by the buyer whichever is earlier

Seller ____ _______ _ Date _______ _

SelJer __________ _ Date _______ _

Buyers Acknowledgment Buyer acknowledges receipt of a copy of this statement and buyer understands that this informat ion is a statement of certain conditions and infonnation concerning the property known to the seller It is not a warranty of any kind by the seller or sellers agent and is not a substitute for any home pest radon or other inspections or testing of the property or inspection of the public records

Buy~ ______________________ __ Date ________ __

Buyer ________________________ __ Date _________ __

4 NYSSAs Residential Real Estate Forms 0 2013 Matthew Iknder amp Coo a member of the LcxisNeJltls Group

RECENT BROKER AND PRE-CONTRACT DEVELOPMENTS copy Karl B Holtzschue 2014 [most recent material in italics] A BROKERS 1 Written Brokerage Agreement Not Required New York does not require a brokerage agreement with a licensed real estate broker or salesman (or an attorney at law) to be in writing GOL sect 5-701(10) By contrast New Jersey and Connecticut do require a written agreement NJ Stat Ann sect 25-1-16 CampJ Colonial Realty Inc v Poughkeepsie Savings Bank 355 NJ Super 444 810 A2d 1086 (App Div 2002) (writing must specify amount of commission) Conn Gen Stat Ann sect 20-325a 2 Exclusive AgencyExclusive Right of Sale Language The rules of the NY Secretary of State applicable to brokers require the use of express language in an exclusive agency or an exclusive right of sale 19 NYCRR sect 17524(b) 3 Only Licensed Broker May Recover Commission Klein v Antebi 15 Misc3d 901 832 NYS2d 904 (Supreme Court Kings County 2007) (under Pennsylvania law brokers unlicensed there could not recover commission for sale of Pennsylvania property where brokerage activities occurred in Pennsylvania) City Center Real Estate Inc v Berger 39 AD3d 267 833 NYS2d 75 (1st Deprsquot 2007) (attorney acting as real estate broker could not recover commission based on agreement with unlicensed co-broker) Lingrsquos Properties LLC v Bode 94 AD 3d 951 942 NYS2d 194 (2d Deprsquot 2012) (unlicensed provider of real estate brokerage services not entitled to compensation for brokerage services and liable for damages under RPL sect 442-e) 4 Broker entitled to commission from seller Di Stefano v Rosetti-Falvey Real Estate Inc 704 NYS2d 344 (3d Deprsquot 2000) (allegations that owner frustrated brokerrsquos efforts and waited until exclusive listing expired held sufficient) Friedland Realty Inc v Piazza 710 NYS2d 97 (2d Deprsquot 2000) (broker established lessorrsquos conscious appropriation of brokerrsquos efforts and existence of implied agreement between them) Korin Group v Emar Bldg Corp 737 NYS2d 367 (1st Deprsquot 2002) (not necessary for transaction to close for broker to earn commission purchaserrsquos brokerage account sufficient proof of financial ability to purchase) A J Clarke Real Estate Corp v Meyers 27 AD3d 230 810 NYS2d 186 (1st Deprsquot 2006) (broker entitled to commission upon producing purchaser ready willing and able to close on sellerrsquos terms even where commission agreement was oral and seller delayed signing contract of sale) Coldwell Banker Village Green Realty v Pillsworth 32 AD3d 568 818 NYS2d 868 (3d Deprsquot 2006) (where listing agreement did not condition commission on sale and buyer rescinded due to destruction by fire broker entitled to commission) But see Gumley Haft Kleier Inc v Bildirici 753 NYS2d 81 (1st Deprsquot 2002) (commission conditioned on closing not due where purchaser refused to close) Far Realty Assocs Inc v RKO Delaware Corp 823 NYS2d 403 (1st Deprsquot 2006) (broker not entitled to commission on sale by owner where brokerage agreement did not provide for exclusive right) Norma Reynolds Realty Inc v Edelman 29 AD3d 969 817 NYS2d 85 (2d Deprsquot 2006) (where commission agreement provided for no commission even if seller retained down payment as liquidated damages broker not entitled to commission where title did not close) Posson v Hayes 37 AD3d 936 829 NYS2d 286 (3d Deprsquot 2007) (broker did not earn commission for obtaining offer contingent upon obtaining financing) Pyramid

Brokerage Company of Buffalo Inc v Atlas Auto Glass Inc 39 AD3d 1176 838 NYS2d 276 (4th Deprsquot 2007) (broker entitled to commission where purchasers name was listed on tail letter naming prospects even though purchaser was known to seller before brokerage agreement signed) Devine Real Estate Inc v Brennan 37 AD3d 759 830 NYS2d 581 (3d Deprsquot 2007) (broker not entitled to commission where there was no meeting of the minds as to as is condition where agreement did not create exclusive right to sell sellers sale to another did not breach implied duty of good faith and fair dealing) Hentze-Dor Real Estate Inc v DAllessio 40 AD3d 813 836 NYS2d 265 (2d Deprsquot 2007) (fact issues whether broker created amicable atmosphere and generated chain of circumstances which proximately led to sale) BP Vance Real Estate Inc v Tamir 42 AD3d 343 839 NYS2d 494 (1st Deprsquot 2007) (broker could not recover commission when sale not consummated where agreement so required) RWSP Realty LLC v Agusta 42 AD3d 490 840 NYS2d 608 (2d Deprsquot 2007) (buyers agent could not recover commission from sellers when it had no contract express or implied with sellers) Posson v Hayes 37 AD3d 936 829 NYS2d 286 (3d Deprsquot 2007) (broker did not earn commission for obtaining offer contingent upon obtaining financing) Central City Brokerage Corp v Elyachar 40 AD3d 452 837 NYS2d 30 (1st Deprsquot 2007) (broker had burden to show that purchaser was financially able) Granger v Schachenmayr 49 AD3d 1079 857 NYS2d 239 (3d Deprsquot 2008) (broker not entitled to commission where letter of intent for sale of inn named price but listed other terms not yet agreed) Security Mortgage Group LLC v Oak Hill Family Park LLC 49 AD3d 1302 854 NYS2d 606 (4th Deprsquot 2008) (mortgage broker earned a commission when it obtained a commitment letter from a lender on all the terms borrower set in agreement with the broker) F Richard Wolff and Son Inc v Tutora 50 AD3d 950 856 NYS2d 241 (2d Deprsquot 2008) (brokers did not procure purchaser ready willing and able to purchase where purchaser could not obtain financing) Robert Cohen Assocs Inc v Kosich 881 NYS2d 235 (3d Deprsquot 2009) (broker entitled to commission under exclusive listing agreement where property sold by new broker after seller sent letter purporting to cancel listing agreement) Byron v Haas 64 AD3d 740 883 NYS2d 583 (2d Deprsquot 2009) (unlicensed broker cannot recover commission Nothnagle Inc v Chiariello 887 NYS2d 411 (4th Deprsquot 2009) (absent express agreement brokerrsquos right to commission not contingent on closing) Douglas Elliman LLC v Corcoran Group Marketing 93 AD 3d 539 940 NYS2d 595 (1st Deprsquot 2012) (cooperating broker not entitled to commission where after purchaser defaulted purchaserrsquos father purchased apartment a year later and after listing agreement expired) 5 Seller not in default for refusing to enter into contract with brokerrsquos purchaser and accepting a higher offer Eastern Consolidated Properties Inc v Adelaide Realty Corp 261 AD2d 225 691 NYS2d 45 (1st Deprsquot 1999) (lengthy concurring opinion cited the dissent in Graf v Billet 64 NY2d 899 (1985) as the better rule) Hayes amp Assocs LLC v Island Jeep Eagle Inc 266 AD2d 386 698 NYS2d 161 (2d Deprsquot 1999) 6 Seller who frustrates sale liable to broker Eastern Consol Properties Inc v Lucas 729 NYS2d 11 (1st Deprsquot 2001) Eastern Consolidated Properties Inc v Morrie Golick Living Trust 83 AD3d 534 922 NYS2d 301 (1st Deprsquot 2011) (sellers had no obligation to pay brokerage commission where brokerage agreement was subject to signing of contract of sale and there was no evidence sellers deliberately attempted to destroy potential transaction to avoid commission)

7 Broker not procuring cause when he merely called property to attention of purchaser and then was fired purchaser later instigated contract Finley v Amyot 728 NYS2d 832 (3d Deprsquot 2001) Jagarnauth v Massey Knakal Realty Services Inc 104 AD3d 564 961 NYS2d 415 (1st Dept 2013) (broker not procuring cause of second contract of sale two years later though he assisted with negotiation of first contract that was properly cancelled by seller) Talk of the Town Realty Inc v Geneve 971 NYS2d 550 (2d Dept 2013) (issues of fact as to whether broker generated chain of circumstances that proximately led to sale where broker showed the property to purchasers but refused to transmit offer of $699000 for $799000 asking price and sale was for $730000) 8 Commission due from purchaser Comvest Consulting Inc v WRSB Dev Co 698 NYS2d 807 (4th Deprsquot 1999) (broker who procured sellers entitled to reasonable commission from the purchaser even without express agreement regarding commission) Abrams Realty Corp v Elo 717 NYS2d 603 (1st Deprsquot 2001) (broker hired by purchaser entitled to commission at prevailing normal and accepted rates despite failure of agreement to specify rate of commission) But see Ormond Park Realty Inc v Round Hill Dev Corp 699 NYS2d 116 (2d Deprsquot 1999) (purchasers not liable for commission on purchase of subdivided parcel after being previously shown main residence) 9 Brokerrsquos affidavit of entitlement A broker who has recorded an affidavit of entitlement to a commission with a copy of the written brokerage agreement with respect to residential property (1-4 family dwellings and individual cooperative apartments and condominium units) may require that the seller place the commission in an escrow account with the recording officer if the broker does not receive the compensation at or prior to delivery of the deed or cooperative apartment stock certificate provided that the brokerage agreement contains a notice that an escrow deposit may be required and that the seller or its attorney is notified of the filing RPL sect 294-b(4) and (5) The monies so deposited shall be held pursuant to CPLR sect 2601(b) until the rights have been determined by order of a court If neither the broker nor the seller commences an action or proceeding to do so within 60 days from the day of deposit of the monies the seller is entitled to an order directing the payment thereof to the seller Any action based on the contractual obligation to pay a commission must be commence by the broker within six months of the deposit If the seller does not make the required deposit the broker may recover attorneys fees The seller has the right to request the broker to waive the benefits of the statute (specific waiver language is specified) and the seller would be well advised to do so in the brokerage agreement 10 Brokerrsquos fiduciary duty Dubbs v Stribling amp Assocs 712 NYS2d 19 (1st Deprsquot 2000) (3-2) affrsquod 96 NY2d 337 728 NYS2d 413 (2001) (brokerrsquos fiduciary obligations terminated when she contracted to purchase coop apartment from client and broker had no ongoing duty that precluded her from acting on information that neighboring apartment could be combined with sellerrsquos apartment dissent by Judge Saxe argued on policy grounds that special protections should be applied until the closing when a broker purchases the clientrsquos property) Sonnenschein v Douglas Elliman-Gibbons amp Ives 713 NYS2d 9 (1st Deprsquot 2000) affrsquod 96 NY2d 369 729 NYS2d 62 (2001) (cooperating broker did not breach fiduciary duty to seller by showing purchaser another apartment in the same building after purchaser and seller had reached oral

agreement on sale) Reiser Inc v Roberts Real Estate 739 NYS2d 753 (3d Deprsquot 2002) (developerrsquos broker did not breach fiduciary duty when it steered buyers away from unlisted lots) Queens Structure Corp v Jay Lawrence Assocs 758 NYS2d 664 (2d Deprsquot 2003) (brokers breached fiduciary duty to sellers by secretly contracting for a ldquoconsulting feerdquo of 2 from purchasers) Dube-Forman v DrsquoAgostino 61 AD3d 1255 877 NYS2d 740 (3d Deprsquot 2009) (purchaserrsquos agent owed fiduciary duty to purchaser on date of inspection of property at which mold was discovered) Walker v Insignia Douglas Elliman LLC 79 AD3d 511 913 NYS2d 186 (1st Deprsquot 2010) (broker did not breach her fiduciary duty by failing to inform purchaser that building was designated an SRO where broker did not know that and conveyed all information she had and purchaser had ample opportunity to find out and knew building had not been issued a certificate of occupancy) Douglas Elliman LLC v Tretter 20 NY3d 875 979 NE2d 1178 955 NYS2d 851 (2012) (agent had no duty to refrain from offering to show other properties to buyers while at open house for agentrsquos clients) 11 No liability of broker to purchaser Marcy v Roser 703 NYS2d 339 (4th Deprsquot 2000) (listing real estate agency not liable to purchaser for defects in well and septic systems of which it had no knowledge) Mosca v Kiner 716 NYS2d 543 (4th Deprsquot 2000) (purchaser had means to discover absence of deeded lake rights a matter of public record ldquoas isrdquo was specific disclaimer broker not liable) Goldman v Strough Real Estate Inc 2 AD3d 677 770 NYS2d 94 (2d Deprsquot 2003) (landowners not justified in relying on representations of brokers that adjacent owner would not develop property to interfere with view because landowners were experienced business persons and could have discovered from public records) Bradbury v Woller Cope-Schwarz 20 AD3d 657 798 NYS2d 207 (3d Deprsquot 2005) (broker did not tortiously interfere with purchaserrsquos contract by finding new buyer after seller declared contract canceled) Misra v Tedid 37 AD3d 284 831 NYS2d 40 (1st Deprsquot 2007) (fact issues existed whether brokers actively concealed noise of ventilation system located directly above cooperative apartment by tampering with fan speed precluding summary judgment for active concealment) Joseph v NRT Incorporated 43 AD3d 312 841 NYS2d 38 (1st Deprsquot 2007) (issues of fact whether brokers individually and as agents for seller misrepresented number of legal bedrooms in the condo unit and whether purchasers justifiably relied general disclaimer clause did not bar parole evidence evidence did not establish that purchasers had means available to discover illegality of two added bedrooms with unlawful lot line windows) Friedler v Palyompis 44 AD3d 611 845 NYS2d 347 (2d Deprsquot 2007) (purchasersrsquo reliance on alleged misrepresentations by brokers as to structural integrity and qualifications of home inspector was unreasonable where brokers knew of no structural defects and had no reason to doubt qualifications) Killough v Shiels 45 AD3d 1159 845 NYS2d 575 (3d Deprsquot 2007) (though agent had affirmative duty to disclose all material information agent never represented that house was free from termite damage and was not liable for delivering four year old termite inspection report) Eichelbaum v Douglas Elliman LLC 52 AD3d 210 859 NYS2d 145 (1st Deprsquot 2008) (brokers owed no duty to prospective purchaser to make house safe smoothness of slippery floor was as apparent to purchaser as to sellers) Colasacco v Robert E Lawrence Real Estate 890 NYS2d 114 (2d Deprsquot 2009) (error in location of boundary lines that could have been ascertained by the purchasers was not fraudulent misrepresentation by broker) Laxer v Edelman 75 AD3d 584 905 NYS2d 649 (2d Deprsquot 2010) (purchasers who were aware of flooding and mold issues revealed by inspection report could not recover from real estate agents for fraudulent inducement specific disclaimer barred reliance on oral representations)

12 Agentrsquos misrepresentation imputed to owner Dyke v Peck 719 NYS2d 391 (3d Deprsquot 2001) (purchaser did not justifiably rely on misrepresentations of owner or agent as to slab floor crawl space not inaccessible agentrsquos misrepresentation imputable to owner under agency-principal doctrine) 13 Like-kind (1031) Exchange A brokerage agreement has been held not to be contingent on the sellerrsquos ability to consummate a like-kind exchange Brown Harris Stevens Residential Sales LLC v Safari Dev Co Limited 721 NYS2d 648 (1st Deprsquot 2001) 14 Prohibition of Referral Fee A NY statute prohibits brokers from demanding or receiving a referral fee for finding a seller buyer or property after a bona fide listing agreement has been signed unless reasonable cause for payment exists RPL sect 442-l 15 Finder A ldquofinderrdquo is a person who only brings the parties together the parties themselves negotiate the terms By contrast a broker is obligated to bring the parties to an agreement on his principalrsquos terms See Warrens Weed New York Real Property ldquoBrokersrdquo sect 102[3] (Matthew Bender) Transaction Advisory Services LLC v Silver Bar Holding LLC 38 AD3d 241 831 NYS2d 159 (1st Deprsquot 2007) (investment advisory service hired to find investors to participate in real estate purchases did not by finding such an investor become a real estate broker with respect to the ensuing purchase) Stiefvater Real Estate Inc v Himbaugh 840 NYS2d 119 (2d Deprsquot 2007) (agency disclosure requirements did not apply to broker who acted in limited role of finder) Futersack v Perl 923 NYS2d 728 (2d Deprsquot 2011) (plaintiff who was not duly licensed broker statutorily prohibited from action to recover finderrsquos fee) Kopelowitz amp Co Inc v Mann 83 AD3d 793 921 NYS2d 108 (2d Deprsquot 2011) (real estate financing company could seek damages for unjust enrichment and in quantum meruit although it was not licensed as a broker but acting as a potential principal or a finder) 16 Broker as Third Party Beneficiary The broker has been held not to be a third-party beneficiary of indemnity provisions in a lease between the main parties Joseph P Day Realty Corp v Chera 762 NYS2d 373 (1st Deprsquot 2003) (broker not third-party beneficiary of indemnity provisions in lease that did not include a promise to pay) But see Holiday Management Assocs Inc v Albanese 570 NYS2d 643 (2d Deprsquot 1991) (contract of sale requiring seller to pay commission entitled broker to summary judgment) Helmsley-Spear Inc v New York Blood Center Inc 687 NYS2d 353 (1st Deprsquot 1999) (contract of sale requiring seller to indemnify and to pay brokerage commission held to be admission of liability to broker) Condren Walker amp Co Inc v Wolf 19 AD3d 151 796 NYS2d 596 (1st Deprsquot 2005) (whether broker was intended third-party beneficiary of note purchase agreement was fact issue) Fischer v RWSP Realty LLC 19 AD3d 540 798 NYS2d 72 (2d Deprsquot 2005) (broker not entitled to commission from sellers with whom he had no contract and who paid listing broker nor was broker third-party beneficiary of listing agreement) 17 Agency Disclosure Statute Amended In 2007 the agency disclosure statute (RPL sect 243) was amended to allow dual agents and ldquodesignated sales agentsrdquo in one brokerage to represent both sellers and buyers and to revise the disclosure forms providing separate forms for sales and leases The disclosure form states that when a broker represents both parties as a dual agent the

broker may designate one sales associate to represent the buyer and another to represent the seller With a dual agent the parties give up their right to undivided loyalty Rivkin v Century 21 Teran Realty LLC 10 NY3d 344 887 NE2d 1113 858 NYS2d 55 (2008) (agents of brokerage firm could separately represent multiple bidders on same property without disclosure and consent) Douglas Elliman LLC v Tretter 922 NYS2d 74 (1st Deprsquot 2011) (sellerrsquos agent did not act as dual agent by showing other properties to prospective purchaser who ultimately bought sellerrsquos apartment) 18 Termination Date on Brokerage Agreement See Timeless Realty Corp v Connecticut Diversified Holdings LLC 843 NYS2d 411 (2d Deprsquot 2007) (where brokerage agreement did not fix termination date seller entitled to terminate agreement when broker had not generated any activity for two years agreement provided that it could not be changed orally) 19 Broker Referral to Attorney Hefter v Citi Habitats Inc 81 AD3d 459 916 NYS2d 87 (1st Deprsquot 2011) (purchaserrsquos claim that attorney had potential conflict of interest because he was recommended by broker insufficient to state claim for legal malpractice) NYSBA Ethics Op 845 (101410) (lawyer who is broker may ethically offer to share brokerrsquos commission with attorneys who refer buyer or seller if either (a) referring lawyer is not representing buyer or seller or (b) referring lawyer is representing buyer or seller but credits referral fee to client and obtains clientrsquos informed consent) B PRE-CONTRACT CONSIDERATIONS 1 Letters of Intent Homburger amp Schueller Letters of Intent - A Trap for the Unwary 37 Real Prop Prob amp TrJ 509 (Fall 2002) 2 ldquoBindersrdquo See ldquoStatute of Fraudsrdquo in ldquoRecent Contract Developments 3 Licensing of Home Inspectors Home inspectors must be licensed RPL sect 444-a et seq Excluded from the requirement are persons regulated as architects or engineers or persons employed as code enforcement officials by the state or a political subdivision thereof when acting within the scope of that government employment and persons making home inspections for the purpose of meeting the requirements of RPL sect 444-e to qualify for licensure as a home inspector Upon request every home inspector must provide official proof of licensure No later than five business days after completion of a home inspection the home inspector must provide the client with a written report of the finding of such inspection clearly identifying the systems and components observed Referral fees and kickbacks are prohibited RPL sect 444-g Every licensed home inspector must secure proof of a certificate of liability coverage

3 CONTRACT DRAFTING AND NEGOTIATION

3 Contract Drafting and Negotiation

A Contract of sale forms

Downstate (NYC LI and Westchester) (NLW) Residential Contract of Sale - RPLS of

NYSBA NYSLTA ABCNY and NYCLA (see online materials) See Holtzschue 2000

NYSBA Residential Contract of Sale Mortgage Commitment Contingency Clause and Other

Changes 28 NY Real Prop LJ 107 (Fall 2000) (online materials) Rockland County uses a

form with similar provisions

Capital Region (CR) Standard Form Contract for Purchase and Sale of Real Estate - Capital

Region Multiple Listing Service Inc (see online materials)

Syracuse (S) Contract to Purchase - Central New York Information Service Inc

Rochester (R) Purchase and Sale Contract for Residential Property - Greater Rochester

Association of Realtors Inc and Monroe County Bar Association (see online materials)

Buffalo (B) Residential Contract and Additional Terms and Conditions (ATC) - Buffalo

Niagara Association of Realtors and Bar Association of Erie County (online materials)

Some other approved forms are used in other areas

NYSBArsquos Residential Real Estate Forms on HotDocs has forms and related documents that

can be prepared electronically

Nassau Co Ethics Opinion 01-01 states that an attorney may not use an altered bar

association form without notice to the opposing attorney

For electronically prepared contracts add a rider that any deviation from the bar association-

approved form shall be deemed replaced by the approved form

B Preparation of contract

Downstate the sellerrsquos attorney usually prepares the contract and the purchaserrsquos attorney

negotiates changes

Upstate the brokers usually fill in the blanks in a bar association-approved contact (doing

more may constitute the unauthorized practice of law) and the attorneys for one or both

parties have a short time to review and approve the contract or negotiate changes

C Contract issues (SA sellerrsquos attorney PA purchaserrsquos attorney)

1 Date of contract note that most contracts contain references to the date of the contract in

provisions such as ldquoas isrdquo clause sellerrsquos representations and permitted exceptions

2 Parties

SA should insert the names on the deed to the sellers

PA should confirm names to be used on deed (eg ldquoHampW as husband and wiferdquo)

3 Real property (premises) description

SA insert street address tax map designation and approximate lot size if required

SA copy and attach Schedule A from sellerrsquos title insurance policy

SA add easements etc from prior deed

4 Personal property

SA and PA carefully review list with clients

SA and PA add or deleteexclude items as necessary to avoid misunderstandings

5 Price and down payment (deposit)

SA insert purchase price and down payment (deposit)

Any ldquosellerrsquos concessionrdquo to the price must be stated in the contract (CR para 8B) (S para 2) (R para

3a) (B para 4A)

Downstate down payment is usually 10 in ordinary sales upstate usually less

The Capital Region contract allows for an additional deposit (CR para 5B)

PA advise purchaser of risk of forfeiture if purchaser defaults

6 Take over of sellerrsquos existing mortgage

All contracts have provisions if purchaser takes over sellerrsquos existing mortgage (NLW para 4)

(CR addendum) (S para 2) (R para3c addendum) (B para 10C rider)

7 Purchase money mortgage from seller

all contracts have provisions for purchase money mortgage from seller (NLW para 5) (A

addendum) (S para 2) (R para 3d addendum) (B para 10D rider)

8 Escrow of down payment (deposit)

Downstate contract provides for sellerrsquos attorney to be the escrow agent (NLW para6)

Some upstate contracts provide for the listing broker to be the escrow agent (CR para 16) (R para

15) If there are no brokers the sellerrsquos attorney is the escrow agent

SA and PA ask clients if account is to be interest-bearing

If the account is not interest-bearing interest goes to the IOLA fund

If there is a dispute release of the down payment requires consent of both parties

The Buffalo Contract has several mechanisms to force release of the deposit (B ATC10

ATC11(D))

9 Acceptable funds

All contracts specify how closing payments are to be made (NLW para7) (CR para 5) (S para 3) (R para 3)

(B para 7 ATC9)

10 MortgageFinancing commitment contingency

All contracts condition the sale on issuance of a mortgage commitment (not on funding of the

mortgage loan at the closing) (NLW para 8) (CR para8) (S para 2) (R para 4a) (B para 10B)

The downstate and Albany contracts expressly allow application to a mortgage broker (NLW

para 8c) (CR para 6A)

All contracts allow the purchaser to cancel if the commitment is not issued by a stated date

(the attorneys must calendar this date)

Some courts have allowed purchasers to cancel even when the contract did not Holtzschue

Mortgage Contingency Clauses 26 NY Real Prop LJ 53 (Spring 1998) (see online

materials) Holtzschue Responses of the Legislature and the Bar Associations to Court

Decisions on Sales of Residences 33 NY Real Prop LJ 78 (Spring 2005) (discussing

amendment of the contract language by the bar associations in reaction to the decisions as

well as the reluctance of judges to require forfeiture of the purchaserrsquos downpayment the

ldquoMaxton effectrdquo) (see online materials)

The downstate Buffalo and Syracuse contracts also allow the seller to cancel

The Syracuse contract requires the purchaser to furnish a credit report to the seller and allows

the seller to cancel if it is not satisfied (S para 2)

The Syracuse contract has a Home Equity Theft Prevention Act disclosure (S para 29)

11 Title and exceptions to title

Downstate contract requires the seller to deliver insurable and fee simple title (NLWpara 13 and

Upstate most contracts require the seller to deliver marketable title ( S para 7) (R para 8) (B

ATC5(A) marketable or ATC5(B) insurable)

The downstate contract provides that title is subject to listed ldquopermitted exceptionsrdquo (NLW para

The downstate contract requires the purchaser to take title subject to any facts shown on a

named survey (NLW para 9e) (PA should insist on seeing and carefully reviewing it see the

survey reading in the title report)

Most upstate contracts call for the seller to deliver a title abstract a tax search and an up-to-

date survey (S para 6) (R para 7B) (B ATC2)

The Capital Region contract calls for a title abstract or a fee title insurance policy at the

expense of the purchaser or seller as indicated (CR para 9)

The downstate and Albany contracts require the purchaser to accept the property subject to

all covenants conditions restriction and easements of record so long as the property is not in

violation and they do not prevent the intended use (NLW para 9a) (CR para 10)

The Syracuse contract requires that Indian Land Claims may not be raised as an objection to

title (S para 7)

12 Compliance with law

Many contracts provide that the sale is subject to zoning (and similar) laws provided they are

not violated by existing building and use (NLW para 9a) (CR para 10) (B para 12)

The downstate contract states that the seller is responsible for governmental violations issued

as of the date of the contract (NLW para 10) the Buffalo contract extends that to the date of the

closing (B para 12)

Some contracts require delivery of a certificate of occupancy (NLW para 16b) (R para 11) (B para 12B

for other than a one or two family dwelling)

13 Property condition (ldquoas isrdquo)

The downstate contract provides that the purchaser is relying solely on its own inspection of

the premises (NLW para 12) so the purchaser must have the property inspected PA should

advise the purchaser to be present at the inspection Cases place a heavy duty on the purchaser

to have an inspection make inquiries and check records

Many contracts expressly provide for the purchaser to take the premises ldquoas isrdquo at the time of

the contract subject to reasonable use wear tear and natural deterioration to the closing

(NLW para 12) (CR para 20) (R para 13) The Buffalo Contract makes the date that of the Property

Inspection or if none the date of the Contract (B para 5)

The downstate and Buffalo contracts also provide that the purchaser is not relying on prior

oral or written representations (NLW para 12) (B para 5B) If the purchaser wants to rely on such

they must be added to the contract If they are to survive the closing the contract must so

Some upstate contracts provide for the seller to deliver to the purchaser a Property Condition

Disclosure Statement or a $500 credit (S para 20) (R para 21) (B para 5B)

14 Inspection and other contingencies

Many contracts give the purchaser the right to inspect the condition of the premises (CR para 14)

(R addendum) (B para 9A) and to inspect again before the closing (NLW para 12) (S para 12) (B

PA should encourage the purchaser to have a professional inspection before the contract is

signed If not the contract should be conditioned on obtaining an inspection S para 21

(satisfactory to P) R para 4e Property Inspection Addendum (satisfactory to P) B para 9

(satisfactory to P) B PINA2 (if unsatisfactory S to pay $___ to cure or cancel) As every

inspection finds defects the test of ldquosatisfactory to Prdquo in effect gives P an option to

renegotiate the price unless the seller is required to spend up to a stated amount to cure any

defects if S refuses to spend more S may cancel

Some contracts such as the Capital Region contract substitute objective standards for judging

the inspection results as to structure wood destroying organisms septic system well water

flow andor quality and radon (CR para 21) (S para 22 radon para 23 wellseptic)

Most upstate contractsriders are made contingent on the purchaser entering into a contract to

sell the purchaserrsquos existing property (CR addendum) (S para 24 future contract para 25 existing

contract) (R para 4b addendum ldquoBump Periodrdquo) (B para 7B and Sale Contingency Rider para 7C

Closing Contingency)

15 Deed

The downstate contract calls for the type of deed to be inserted (usually a bargain and sale

deed with covenant against grantorrsquos acts) (NLW para 14)

All upstate contracts often call for a full warranty deed (CR para 11) (S para 9) (R para 7A) (B ATC6

for individuals bargain and sale deed for those who are not natural persons and fiduciary

deeds for fiduciaries)

16 Closing date and place

An estimated date and time of closing should be inserted (NLW para 15)

Time is not of the essence unless that is so stated in the contract

Either party may make time of the essence by sending a proper notice giving the other party a

reasonable time to perform (B para 14B)

Downstate and in the Capital Region and Syracuse the closing is usually as the office of SA or

Prsquos lender (NLW para 15) (CR para 15) (S para 8)

In western New York the closing may be specified as at the office of SA or the county clerk

(R para 5) (B para 14A county clerk) (In Monroe Wayne and Livingston Counties the closing is

usually held at the office of the attorney that represents Prsquos lender or PArsquos office for a cash

17 Sellerrsquos representationsdisclosuresconditions to closing

Many contracts contain some representations or disclosures by the seller (NLW para 11 has 5

representations) (S para 5 has 6) The Buffalo contract has 23 disclosures (B para 6)

Downstate contract also has 7 conditions to closing (NLW para 16)

Some contracts provide that they do not survive the closing (NLW para 28a)(S para 16d) Specified

provisions survive closing in the Buffalo Contract (B ATC14(G))

The downstate and Rochester contracts require delivery of systems and equipment in

ldquoworking orderrdquo at the closing (NLW para 16e) (R para 6a)

18 Smoke and carbon monoxide (co) detectors some contracts or riders provide for the seller to

deliver smoke and co detectors required by law (NLW para 16f) (S para 9)

19 Transfer taxes all contracts require the seller to pay all transfer taxes except for the 1 Mansion

Tax (NLW para 17) (CR para 12) (S para 11) (R para 10) (B ATC3)

20 FIRPTA some contracts require delivery of a non-foreign status affidavit (NLW para 16c) (S para 2

withholding) (B para 6W)

21 Apportionments (adjustments)

Taxes water charges sewer charges fuel assessments and other on-going expenses are to be

apportioned between the parties at the closing (NLW para 18) (CR para 13) (S para 10) (R para 10) (B para

In the downstate contract the duty to correct errors in apportionments survives the closing

In Buffalo errors greater than $100 survive (B para 15(E))

22 Lead paint For homes built before 1978 federal law requires giving the purchaser an

informational pamphlet and a lead-based paint disclosure (allowing the purchaser 10 days to inspect

and cancel which may be waived or shortened) (NLW para 28i) (CR addendum) (S para 22) (R addendum)

(B para 8)

23 Broker

The broker(s) who brought about the sale are usually named in the contract with the seller

obligated to pay the commission(s) (NLW para 27) (CR para 18A) (S para 4) (R para 16) (B para 19)

The Capital Region contract provides for a cooperating broker (CR para 18B)

The Buffalo contract lists the listing and selling brokers (B para 19)

24 Statutory disclosures

service and (2) any electric or gas utility surcharges for line extensions prior to accepting a

purchaser offer (S para 19) (B para 6C)

RPL sect 333-c requires delivery of notice of farming activity in an agricultural district (CR

addendum) (S para 17) (B ADR1)

25 Federal Housing Administration (FHA) and Veterans Administration (VA) clauses

For an FHA or VA mortgage deal the contract may provide that the purchaser is not obligated

unless given an official statement setting forth an appraised value of not less than a specified

amount (CR addendum) (S para 16e repair costs allocated addendum) (R addendum) (B

FHAVA Option Clause Rider)

For an FHA mortgage deal the purchaser may not legally pay ldquopointsrdquo charges expressed as

a percentage of the loan

26 Offer

The Capital Region and Rochester contracts are styled as an offer by the purchaser that must

be accepted by the seller by a stated date (CR para 17) (R para 17) and Buffalo has that option (B para

27 No assignment of contract

Many contracts expressly prohibit assignment by the purchaser (NLW para 26) (S para 14) (R para 18)

28 Risk of loss a few contracts address the issue GOL sect 5-1311 applies if there is no provision

made But see the Syracuse contract (S para 15) Rochester contract (R para 12) and Buffalo contract (B sect

12(D))

29 Possession at closing before or after closing

Some contracts expressly require the seller to deliver possession at the closing (NLW para 16d

ldquovacantrsquo with keys) (S para 12 or within 24 hours) (B para 13 and ATC8)

Most contracts expressly require deliver of possession in a broom clean condition (NLW para

16d) (S para 13) (R para 6a) (B para 5D)

SA and PA should discourage giving possession to the purchaser before the closing or by the

seller after the closing

If the purchaser is to take possession before the closing a rider must be added to require

payment of an amount to cover the sellerrsquos carrying costs and provide for insurance among

other things (R para 6c)

If the seller is to retain possession after the closing a rider must be added to require payment

of an amount to cover the purchaserrsquos carrying costs and provide for insurance among other

things (R para 6b)

The Rochester contract has provisions for seller to retain possession or the buyer to take early

possession requiring use of a written possession agreement (R para 6)

30 Breach of contract and remedies

Some contracts expressly provide that the seller may cure title or legal objections (R para 9) (B para

12D and ATC5) The downstate contract provides that the seller may adjourn the closing for

up to 60 days to cure defects (NLW para 21)

The downstate contract provides that the sellerrsquos sole remedy for default by the purchaser is to

retain the down payment (but note that release of the down payment from escrow probably

requires consent of both parties) (NLW para 23)

The downstate contract provides that the purchaser has all remedies but if the seller is unable

to transfer title as required the seller may refund the down payment unless the purchaser

elects to take title without reduction of the price (NLW para 23)

31 Tenants The Buffalo contract has provisions relating to tenants (B rider)

32 Subject to Attorney Approval

Most upstate contracts having been filled in by brokers are subject to approval by one or

both attorneys (CR para19) (S last para) (R para 4c) (B ATC1)

The Court of Appeals has held that the attorney may disapprove for any or no reason which

will not be subject to review Moran v Erk 11 NY3d 452 (2008) See discussion in Recent

Contract Developments para 13 (following)

D Contract ridersaddenda

Downstate attorneys draft their own riders to the approved form contract

1 Seller (see handout)

2 Purchaser (see handout)

All upstate contracts have approved standard ridersaddenda (see handouts)

E Checklists

F Note any Recent Contract Developments (see following)

G Note any Recent Financing Contingency Developments (see following)

RECENT CONTRACT DEVELOPMENTS copy Karl B Holtzschue 2014 [most recent material in italics] A GENERAL CONTRACT ISSUES 1 Caveat Emptor Duty of Seller to Disclose A rare case holding that seller had a duty to disclose a hidden defect Cetnar v Kinowski 263 AD2d 842 693 NYS2d 730 (3d Deprsquot 1999) (seller had duty to disclose faulty sewer system seller also made misrepresentation) More typical is a case holding that the seller had no duty to disclose contamination of groundwater even where the seller was a plaintiff in a class action against the polluter Venezia v Coldwell Banker Sammis Realty 270 AD2d 480 704 NYS2d 663 (2d Deprsquot 2000) Jablonski v Rapalje 14 AD3d 484 788 NYS2d 158 (2d Deprsquot 2005) (3-2) (no duty on seller or sellerrsquos agent to disclose bat infestation but issues of fact as to active concealment fraudulent misrepresentation and thwarting of purchaserrsquos ability to discover preclude summary judgment for the seller building inspector had no duty to inspect for bat infestation) (Dissent no issue of fact as to active concealment no justifiable reliance on misrepresentation purchaser had ample opportunity to inspect summary judgment should have been granted to the seller) Matos v Crimmins 40 AD3d 1053 837 NYS2d 234 (2d Deprsquot 2007) (where contract subject to covenants restrictions and easements of record seller had no duty to disclose conservation and shade tree easements easily ascertainable from the public record) Wild West Ventures LLC v 703 Washington Corp 95 AD3d 740 945 NYS2d 89 (1st Deprsquot 2012) (sellersrsquo failure to disclose pending slip and fall action prior to closing date was not material breach of obligation to disclose actions or proceedings in sale for $34000000 as action was well within liability insurance limits and insurance premium to increase by only $582) Circle Associates LP v Starlight Properties Inc 98 AD3d 596 949 NYS2d 750 (2d Deprsquot 2012) (seller did not make any material misrepresentation about amount of excess material on site to induce purchaser to agree to pay for excess material removed) Rojas v Paine 101 AD3d 843 956 NYS2d 81 (2d Dept 2012) (claim that sellers intentionally concealed that subdivision lot had been illegally subdivided by two deeds was insufficient to support fraud claim because seller had no duty to disclose any information because deeds were recorded failure to disclose was not active concealment specific performance denied to purchasers on claim that deed delivered only described the property described in one of the deeds because contract claims extinguished by merger in deed) [but delivered deed described it as the same property transferred by two recorded deeds while schedule A only contained description of one][] Schottland v Brown Harris Stevens Brooklyn LLC 968 NYS2d 90 (2d Dept 2013) (sellers and their brokers had no duty under caveat emptor to disclose to purchasers of residential property a conservation easement granted by sellers to National Architectural Trust as to facade and exterior but easement did breach deed covenant against grantorrsquos acts) Up to 1999 sellers won 83 caveat emptor cases purchasers won 47 From 1999 through 2012 sellers have won 405 cases purchasers have won only 115 Holtzschue With a PCDS the Purchaser Has More than a Ghost of a Chance An Update on PCDS and Caveat Emptor Cases 41 NY Real Prop LJ 25 (Winter 2013) See below for cases under the Property Condition Disclosure Act

2 Seller misrepresentation Means available to purchaser test Where the seller is accused of making a misrepresentation most courts have held that the purchaser had the means available to know the truth a few courts have held that the purchaser did not have the means and several courts have held that the issue was a question of fact for the jury See Holtzschue ldquoCaveat Emptorrdquo Warrens Weed New York Real Property (analyzing 130 recent cases) 3 Purchaser had means to discover defect In re Hickey 252 AD2d 763 676 NYS2d 277 (3d Deprsquot 1998) (purchaser should have conducted a water flow test) McManus v Moise 262 AD2d 370 691 NYS2d 166 (2d Deprsquot 1999) (after report advised further inspection for termite damage behind sheet rock wall purchaser failed to do so) Mosca v Kiner 716 NYS2d 543 (4th Deprsquot 2000) (purchaser had means to discover absence of deeded lake rights a matter of public record ldquoas isrdquo was specific disclaimer broker not liable) Glazer v LoPreste717 NYS2d 256 (2d Deprsquot 2000) (seller and broker not liable for failure to disclose sex offender across the street offender status publicized in local newspapers) Dyke v Peck 719 NYS2d 391 (3d Deprsquot 2001) (purchaser did not justifiably rely on misrepresentations of owner or agent as to slab floor crawl space not inaccessible standard ldquoas isrdquo clause not sufficiently specific to bar fraud claim) Platzman v Morris 724 NYS2d 502 (2d Deprsquot 2001) (illegal second floor kitchen not peculiarly within knowledge of sellers and purchaser made no effort to investigate no active concealment ldquoas isrdquo clause) Berger-Vespa v Rondack Building Inspectors Inc 740 NYS2d 504 (3d Deprsquot 2002) purchasers had adequate opportunity to observe wet condition of basement and did not justifiably rely on alleged misrepresentations no active concealment by sellers) Duane Thomas LLC v 62 Thomas Partners LLC 751 NYS2d 441 (1st Deprsquot 2002) (purchasers could have discovered misrepresentations and non-compliance of skylights and fire doors mentioned in notice of violation by making additional relevant inquiries) Kay v Pollak 761 NYS2d 664 (2d Deprsquot 2003) (re taxes could have been discovered by purchaser specific disclaimer barred other fraud claims re HVAC and collapsed dry wells) Micciche v Homes by the Timbers Inc 1 AD3d 326 767 NYS2d 56 (2d Deprsquot 2003) (purchaser not entitled to rescind because he could easily have ascertained truth of misrepresentation as to location of lots identified on map) Bennett v Citicorp Mortg Inc 8 AD3d 1050 778 NYS2d 806 (4th Deprsquot 2004) (reliance by purchasers on listing agentrsquos alleged misrepresentation as to acreage was not reasonable and purchasers had means available to know the truth) Jablonski v Rapalje 14 AD3d 484 788 NYS2d 158 (2d Deprsquot 2005) (3-2) (no duty on seller or sellerrsquos agent to disclose bat infestation but issues of fact as to active concealment fraudulent misrepresentation and thwarting of purchaserrsquos ability to discover preclude summary judgment for the seller) (Dissent no issue of fact as to active concealment no justifiable reliance on misrepresentation purchaser had ample opportunity to inspect summary judgment should have been granted to the seller) Richardson v United Funding Inc 16 AD3d 570 792 NYS2d 511 (2d Deprsquot 2005) (purchaserrsquos failure to have house inspected precluded fraud claim against seller) Huron Street Realty Corp v Lorenzo 19 AD3d 450 798 NYS2d 438 (2d Deprsquot 2005) (misrepresentation that tenant was using apartment for commercial purposes did not support fraud in the inducement claim where purchaser had means available of obtaining truth by visiting the building) Helfand v Sessler 8 Misc3d 96 799 NYS2d 347 (1st Deprsquot 2005) (purchaser could not obtain equitable relief for implied indemnification to recover rent overcharges where purchaser had opportunity to investigate) Boyle v McGlynn 28 AD3d 994 814 NYS2d 312 (3d Deprsquot 2006) (issues of fact as to whether sellers knew and made material misrepresentations about wind turbine project on neighboring property and whether purchasers could have discovered

plans to construct project published in local paper) Marsh v Hasbrouck 37 AD3d 1010 831 NYS2d 554 (3d Deprsquot 2007) (purchaser could have discovered true perimeters of property contract conditioned on environmental inspection and purchaser did not prove seller knew of underground storage tanks on adjacent state land) Rivietz vWolohojian 38 AD3d 301 832 NYS2d 505 (1st Deprsquot 2007) (because condominium purchasers had opportunity to inspect had detailed report by their architect and there was no evidence of false representations there was no justifiable reliance to support a claim of false representation) Camarada Dev Co Inc v Willow Ridge at Carmel Inc 39 AD3d 566 830 NYS2d 721 (2d Deprsquot 2007) (triable issue of fact whether seller breached representation in contract that it had received no notice of any pending or threatened condemnation proceeding which representation was to survive closing) FASA Construction Corporation v Degenshein 47 AD3d 877 850 NYS2d 612 (2d Deprsquot 2008) (sellerrsquos representation that subdivision maps had been filed was not representation as to validity of filed map purchasers could not show justifiable reliance on alleged misrepresentations about zoning ordinances as change in them was a matter of public knowledge) Joseph v NRT Inc 18 Misc3d 296 853 NYS2d 481 (Civil Court NY County 2007) (purchasers not reasonable in relying on brokerrsquos representations as to number of bedrooms in apartment purchasers had means to discover in offering plan floor plan and certificate of occupancy) Fishberger v Voss 51 AD3d 627 858 NYS2 d 257 (2d Deprsquot 2008) (purchasers did not have fraud claim where condition was reasonably discoverable) East End Cement amp Stone Inc v Carnevale 73 AD3d 974 903 NYS2d 420 (2d Deprsquot 2010) (reliance on sellerrsquos alleged misrepresentations was unreasonable as purchaserrsquos attorney had actual knowledge that lease inaccurately described property as including 23-foot strip owned by village) Beach 104 St Realty Inc v Kisslev-Mazel Realty LLC 76 AD3d 661 906 NYS2d 614 (2d Deprsquot 2010) (any failure of seller to disclose proposed condemnation proceeding did not amount to actionable fraud condemnation plans were a matter of public record which purchasers could have reasonably discovered with due diligence and were not within the peculiar knowledge of the sellers) Stollsteimer v Kohler 77 AD3d 1259 910 NYS2d 581 (3d Deprsquot 2010) (contract merged with deed which did not include four acre parcel fraud claim that sellerrsquos son orally indicated that parcel was included was not justifiable as facts were contained in survey and public record and not exclusively within sellersrsquo knowledge) Miller v Icon Group LLC 77 AD3d 586 911 NYS2d 3 (1st Deprsquot 2010) (sophisticated real estate entity purchaser could not have justifiably relied on sellerrsquos alleged misrepresentation that it would be able to purchase adjacent building at a reasonable price and that it should not contact adjacent owner until after the closing purchaser had means to discover summary judgment granted to seller) 85-87 Pitt Street LLC v 85-87 Pitt Street Realty Corporation 83 AD3d 446 921 NYS2d 40 (1st Dept 2011) (bedbug infestation not a matter peculiarly with a sellerrsquos knowledge and could be discovered by purchaser with diligence and inspection) Ravina v Hsing Hsung Chuang 95 AD3d 1288 945 NYS2d 411 (2d Deprsquot 2012) (where contract gave purchasers 45 days to inspect for hazardous substances and purchasers failed to do so they were held to have waived their right to cancel on the ground that there were hazardous substances and they lost their down payment) Dolansky v Frisillo 92 AD 3d 186 939 NYS2d 210 (4th Deprsquot 2012) (where PCDS stated that garage had water and rot damage and seller did not know whether there were structural defects purchaser could not show justifiable reliance to support fraud claim ldquoas isrdquo clause was specific disclaimer) Revell v Guido 101 AD3d 1454 956 NYS2d 343 (3d Dept 2012) (fact issue existed whether purchasers reasonably relied on sellersrsquo alleged misrepresentations as to septic system on commercial rental property where contract contained

septic system contingency but purchasers chose not to have the system tested or inspected) B amp C Realty Co v 159 Emmut Properties LLC 106 AD3d 653 966 NYS2d 402 (1st Dept 2013) (purchaserrsquos claim of fraud as to number of floors in rental building dismissed due to ldquoas isrdquo clause and because purchaser should have been alerted by comparing temporary C of Os to the ldquoas-built plans) Estrada v Metropolitan Property Group Inc 973 NYS2d 147 (1st Dept 2013) (purchaser of residential coop apartment did not act reasonably in relying on brokerrsquos alleged misstatement about unitrsquos square footage as discrepancy in various advertisements should have alerted purchaser to possibility that advertisements were not accurate but mere puffery purchaser should have inspected before buying) 4 Property Condition Disclosure Act (RPL sectsect 460-467) Effective March 1 2002 The Act was proposed by the New York State Association of REALTORSreg Inc(NYSAR) The NYSBA Real Property Section criticized the bill for various enumerated flaws and urging a veto by the Governor which he did in December of 2000 A compromise bill was passed the next summer The Act requires delivery of a 48 question Property Condition Disclosure Statement (PCDS) in sales of residential homes (not cooperatives or condominiums) prior to the signing by the purchaser of a binding contract and provides for actual damages for willful failure to provide truthful answers based on actual knowledge or a credit of $500 at closing for failure to deliver the Statement Bernardi v Spyratos 79 AD3d 684 912 NYS2d 627 (2d Deprsquot 2010) (purchasers entitled to $500 for sellerrsquos failure to deliver PCDS fact issues as to active concealment and fraudulent misrepresentations as to defects and adverse claims) ldquoKnowledgerdquo is actual knowledge See Holtzschue Property Condition Disclosure Act Enacted 30 NY Real Prop LJ 15 (Winter 2002) Some of the questions in the PCDS are vague and some have ldquocatch-allrdquo provisions that could become traps for the unwary and expose the seller to second-guessing Holtzschue Property Condition Disclosure Act Implications of the $500 Credit 30 NY Real Prop LJ 100 (Summer 2002) Purchasers have lost most of the suits brought after enactment of the PCDA either because they could not show justifiable reliance on their part or that the sellers know of the defect Malach v Chuang 754 NYS2d 835 (Civil Court Richmond County 2003) (seller who answered ldquounknownrdquo on PCDS as to rot in structures (Q20) not liable under PCDA or for common law fraud where seller did not have actual knowledge of rot in swimming pool many faulty dicta as to PCDA) Holtzschue Property Condition Disclosure Act First Case has Right Result for Wrong Reasons 31 NY Real Prop LJ 5 (WinterSpring 2003) Korik v Gallo (Small Claims Court Richmond County 2004) NYLJ March 3 2004 (purchasers did not show their attorney or his abstract company could have discovered lack of permit for patio) Conanan v Daversa Index No 1028403 (Supreme Court Richmond County 2005) (purchaser who did not read PCDS before signing the contract but did at closing could not show reliance necessary to support fraud claim about termite infestation and damage and denial in PCDS) Gabberty v Pisarz 10 Misc3d 1010 810 NYS2d 624 (Supreme Court Nassau County 2005) (sellersrsquo failure to answer PCDS questions as to flooding or drainage problems and basement seepage entitled purchasers to $500 credit but put purchasers on notice of missing information precluding claim under PCDA for chronic basement flooding or under common law fraud where there was no proof of active concealment) Bishop v Graziano 804 NYS2d 236 (Dist Court Suffolk County 2005) (sellerrsquos election to opt out by giving $500 credit inherently vitiated

purchaserrsquos fraud claim under PCDA no fraud claim under common law where no representations were made) Renkas v Sweers 10 Misc3d 1076A 814 NYS2d 892 (Supreme Court Monroe County 2005) (PCDS incorporated in the contract purchasers lost suit for fraudulent misrepresentation as to water in basement by failing to show justifiable reliance on oral or PCDA reps PCDA did not create cause of action beyond common law PDCA did not create cause of action for breach of contract or negligence) Adrien v Estate of Zurita 814 NYS2d 709 (2d Deprsquot 2006) (purchaser could not justifiably rely on alleged misrepresentations of sellerrsquos attorney regarding status of tenants and future outcome of holdover proceeding) Middleton v Calhoun 821 NYS2d 444 (County Court Rensselaer County 2006) (PCDA did not create statutory cause of action purchaser failed to prove fraud in the inducement or that PCDS answer as to septic system was false purchaser failed to inspect) Meyers v Rosen 69 AD3d 1095 893 NYS2d 354 (3d Deprsquot 2010) (seller won summary judgment dismissing complaint as to four defects not disclosed in PCDS purchaser won as to mice infestation no remedy for sellerrsquos failure to complete one answer claim of constructive knowledge rejected) Klafehn v Morrison 75 AD3d 808 906 NYS2d 347 (3d Deprsquot 2010) (sellerrsquos failure to disclose condition of waste water discharge lines in basement apartment was not fraudulent PCDS disclosed seasonal dampness toilet leak thought to have been repaired did not give sellers actual notice of deteriorated pipes under floor purchaserrsquos own observations and inspectorrsquos report prevented reasonable reliance on representations) Pettis v Haag 923 NYS2d 745 (3d Deprsquot 2011) (purchasers did not justifiably rely on sellerrsquos representations in PCDS of no material defects in roof and breaker box wiring as inspection report put them on notice factual issues as to sellersrsquo knowledge of flooding and concealed electrical conditions allegations based on PCDS survive general ldquoas isrdquo disclaimer) Dolansky v Frisillo 92 AD 3d 1286 939 NYS2d 210 (4th Deprsquot 2012) (where PCDS stated that garage had water and rot damage and seller did not know whether there were structural defects purchaser could not show justifiable reliance to support fraud claim) Sample v Yokel 94 AD3d 1413 943 NYS2d 694 (4th Deprsquot 2012) (seller providing PCDS did not knowingly fail to disclose any defects precluding purchasersrsquo fraud claim) Purchasers have won only a few PCDS cases Fleischer v Morreale 11 Misc3d 1004 810 NYS2d 624 (District Court Suffolk County 2006) (where PCDS disclaimed defects purchasers recovered costs to repair roof and basement flooding but not for security system purchasers knew was inoperable) Calvente v Levy 12 Misc3d 38 816 NYS2d 828 (Supreme Court App Term 2d Deprsquot 2006) (purchaser entitled to actual damages for sellerrsquos willful failure to disclose prior basement flooding problem in PCDS) McMullen v Propester 13 Misc3d 1232A 2006 NY Misc LEXIS 3171 (Supreme Court Yates County 2006) (complaint that sellers knew septic system was faulty despite disclaimer in PCDS and actively concealed defect and odor survived motion to dismiss) Ayres v Pressman 14 Misc3d 145A 836 NYS2d 496 (Supreme Court App Term 2d Deprsquot 2007) (because seller knew septic system was defective and located partially on neighborrsquos property buyer won damages of cost of title search and mortgage application fees Simone v Homecheck Real Estate Services Inc 2007 NY Slip Op 06224 2007 WL 21227261 (2d Deprsquot 2007) (upheld denial of motion to dismiss cause of action for fraudulent misrepresentation statements as to rear deck sinking due to excessive water when seller makes a false representation in a PCDS that may be proof of active concealment) Anderson v Meador 56 AD3d 1030 869 NYS2d 233 (3d Deprsquot 2008) (sellersrsquo nondisclosure of easement agreement and drainage settlement agreement and negative responses on PCDS

constituted affirmative misrepresentation and partial disclosure many issues of fact precluded summary judgment) Kurtz v Foy 65 AD3d 741 884 NYS2d 498 (3d Deprsquot 2009) (complaint stated a cause of action for fraud alleging that sellers assured purchasers that road was private and PCDS stated that one else had a right to use any portion of the property but road was public and sellers had unsuccessfully petitioned the town to abandon it) From 2003 through June 2013 purchasers have won 79 PCDS cases sellers have won 171 The analysis in Malach was rejected in most of the cases See Holtzschue The Purchaser Hasnrsquot a Ghost of a Chance Update on PCDA Cases and PCDA Revision 35 NY Real Prop LJ 7 (Winter 2007) Holtzschue With a PCDS the Purchaser Has More than a Ghost of a Chance An Update on PCDS and Caveat Emptor Cases 41 NY Real Prop LJ 25 (Winter 2013) The seller may want to add a rider to the contract of sale in which the purchaser acknowledges either receipt of the PCDS before signing the contract or agreement to accept a $500 credit at the closing The purchaser may want to add a rider providing that the seller is required to fix any defects disclosed in a revised PCDS (the seller may want to add a right to cancel if the cost exceeds a stated amount) The purchaser should deliver a copy of the PCDS to its title insurance company if it reveals any title defects to put the insurer on notice of the defects Some have argued that the purchaser can waive the PCDS but it would seem safer to pay the $500 It is only proper to waive the credit as the price is being agreed upon 5 Active Concealment Connelly v Bova Index No 96-2589 (Sup Ct Schenectady County 1999) (installation of basement paneling 15 years earlier not active concealment by seller) Mancuso v Rubin 52 AD3d 580 861 NYS2d 79 (2d Deprsquot 2008) (failed to state cause of action for fraudulent concealment by sellers as to termites) Sentlowitz v Cardinal Development LLC 63 AD3d 1137 882 NYS2d 267 (2d Deprsquot 2009) (purchasers stated cause of action for fraudulently concealing that property contained land designated as wetlands by US Army Corps of Engineers) Daly v Kochanowicz 884 NYS2d 144 (2d Deprsquot 2009) (sellers did not have affirmative duty to disclose propertyrsquos history of severe flooding purchaserrsquos reliance on any representation by sellers that property had no history of water problems was not reasonable in view of several warnings and did not amount to active concealment not within peculiar knowledge of sellers) 1225 Realty Owner LLC v Mocal Enterprises Inc 887 NYS2d 97 (1st Deprsquot 2009) (seller did not fraudulently conceal tenantsrsquo lease extensions from purchaser as they were disclosed in rent roll attached to email) Stoian v Reed 66 AD3d 1278 888 NYS2d 639 (3d Deprsquot 2009) (conclusory allegations that sellers must have been aware of defects insufficient to raise triable issue of fact whether sellers actively concealed defects) Margolin v I M KAPCO INC 932 NYS2d 122 (2d Deprsquot 120) (2d Deprsquot 2011) (buyer stated cause of action for fraud where seller actively concealed water leaks by placing pans above drop ceiling tiles) Devine v Meili 89 AD3d 1255 932 NYS2d 581 (3d Deprsquot 2011) (conclusory allegations in affidavit by purchaser of commercial property failed to establish question of fact whether seller fraudulently concealed structural defects seller granted summary judgment) Camisa v Papaleo 93 AD 3d 623 939 NYS2d 559 (2d Deprsquot 2012) (complaint sufficiently stated cause of action

for fraud that sellers actively concealed that extensive alterations had been made illegally by proffering allegedly forged letter from building inspector that no certificate of occupancy was required for residence constructed in 1925 and there were no violations to date) Pesca v Barbera Homes Inc 942 NYS2d 313 (Supreme Court Albany County 2012) (new home purchasersrsquo allegations of fraud against seller premised on alleged failure to disclose certain deviations from master plan for subdivision barred by caveat emptor absent any claim or proof of active concealment) Perez-Faringer v Heilman 944 NYS2d 170 (2d Deprsquot 2012) (seller did not actively conceal or fraudulently misrepresent purportedly defective conditions where problems were discoverable upon inspection and were matters of public record claims merged in deed) 6 Statutory Protection against Non-disclosure of AIDS Death or Felony Real Prop Law Sec 443-a effective Sept 7 1995 absolves sellers and brokers from any duty to disclose some facts that might discourage purchasers The statute states that it is not a material defect and no cause of action shall arise for failure to disclose that (1) an owner or occupant had or was suspected to have AIDS or any other disease determined by medical evidence to be highly unlikely to be transmitted through occupancy of a dwelling place or (2) that the property was or was suspected to be the site of a death or a felony It further provides that the purchaser may submit a written inquiry for such information and the seller may choose whether or not to respond The statute is not expressly limited to residential property 7 Statutory Disclosure of Electric ServiceUtility Surcharges and Uncapped Natural Gas Wells The seller is required to disclose lack of electric service any utility surcharges for line extensions and the presence of uncapped natural gas wells prior to accepting an offer to purchase NY Real Prop Law sect 242 Effective July 1 1999 contracts of sale relating to farms must include a disclosure notice that ldquofarming activities may include but not be limited to activities that cause noise dust and odorsrdquo NY Real Prop Law sect 333-c Effective July 1 2000 prospective residents must also be informed that the location of property within an agricultural district ldquomay impact the ability to access water andor sewer services for such property under certain circumstancesrdquo 8 ldquoAs Isrdquo Merger Clause and Merger by Deed Fehling v Wicks 179 Misc2d 1041 687 NYS2d 868 (Sup Ct App Term 2d Deprsquot 1999) (merger by deed not applicable to defect discoverable only after occupancy - seller replaced bathroom faucets with ones that didnrsquot fit purchaser lost as to failure to remove manure which purchaser should have known about) Dourountoudakis v Alesi 706 NYS2d 476 (2nd Deprsquot 2000) (contract provisions allegedly entitling purchasers to prepaid rents were merged in the deed) Platzman v Morris 724 NYS2d 502 (2d Deprsquot 2001) (illegal second floor kitchen not peculiarly within knowledge of sellers and purchaser made no attempt to investigate as is clause [standard Multibar clause] was specific disclaimer [author disagrees] Crowley Marine Assocs v NYCONN Assocs 738 NYS2d 681 (2d Deprsquot 2002) (misrepresentation of real estate taxes in contract did not state fraud claim and was merged in deed) DiPrima v Croce 842 NYS2d 173 (Supreme Court App Term 9th amp 10th Jud Dist 2007) (claims by purchaser under contract provision requiring repair of ceiling extinguished by delivery of deed) Kasten v Golden 50 AD3d 1098 857 NYS2d 228 (2d Deprsquot 2008) (where purchaser agreed to purchase abandoned house ldquoas isrdquo purchaser had no claim for breach of contract or fraud where post closing inspection showed basement flooded due to frozen pipes) Kagan v Freedman 55 AD3d 558 866 NYS2d 216 (2d Deprsquot 2008) (breach

of contract claim due to toxic mold and sellerrsquos dissuading purchasers from conducting professional mold inspection barred by specific ldquoas isrdquo disclaimer in contract and doctrine of merger purchasers failed to raise issue of fact as to concealment) Lieberman v Greens at Half Hollow LLC 54 AD3d 908 864 NYS2d 539 (2d Deprsquot 2008) (general language of merger clause did not preclude purchasersrsquo claim of fraud in the inducement or their use of parol evidence to establish reliance upon representations by defendantrsquos employee about location of unit and view of golf course) Rigney v McCabe 43 AD3d 896 842 NYS2d 34 (2d Deprsquot 2007) (specific disclaimer clause barred fraud claim that house was exposed to flooding could have been discovered by purchaser[] Novelty Crystal Corp v PSA Institutional Partners 49 AD3d 113 850 NYS2d 497 (2d Deprsquot 2008) (provision obligating seller to deliver premises vacant and clean was not collateral to the transfer and did not survive closing ldquocollateralrdquo discussed) Daly v Kochanowicz 884 NYS2d 144 (2d Deprsquot 2009) (no PCDS seller had no duty to disclose water intrusion history purchaser did not justifiably rely on alleged misrepresentations where inspector discovered evidence as is clause [standard Multibar clause] was specific disclaimer[author disagrees]) HB Singer LLC v Thor Realty LLC 57 AD3d 613 869 NYS2d 203 (2d Deprsquot 2008) (sellerrsquos right to funds placed in escrow to satisfy liens and other docketed obligations not extinguished by merger upon closing of title seller entitled to damages for conversion of funds) Cerand v Burstein 72 AD3d 1262 897 NYS2d 789 (3d Deprsquot 2010) (contract requiring proof of ldquono open code violations casesrdquo did not merge into deed where contract silent but subsequent conduct indicated intent) 85-87 Pitt Street LLC v 85-87 Pitt Street Realty Corporation 921 NYS2d 40 (1st Dept 2011) (specific disclaimer as to physical condition in ldquoas isrdquo merger clause extinguished any claims based on alleged misrepresentations as to bedbugs) Pettis v Haag 923 NYS2d 745 (3d Deprsquot 2011) (allegations based on PCDS survive general ldquoas isrdquo disclaimer) Tarantul v Cherkassky 923 NYS2d 133 (2d Deprsquot 2011) (contractrsquos specific disclaimer [sounds like Multibar] barred claim of fraudulent inducement citing Bedowitz and Cohan purchasers had means to determine condition) Stollsteimer v Kohler 77 AD3d 1259 910 NYS2d 581 (3d Deprsquot 2010) (contract merged with deed which did not include four acre parcel Lunal Realty LLC v DiSanto Realty LLC 930 NYS2d 619 (2d Deprsquot 2011) (where no intent shown that representation that rents charged to residential tenants were set at maximum legal amounts would survive the closing representation was integral not collateral and breach of contract claim barred by doctrine of merger by deed) Princes Point LLC v AKRF Engineering PC 90 AD3d 459 936 NYS2d 1 (1st Deprsquot 2011) (purchaser failed to establish promissory estoppel or fraud against sellers for negligent misrepresentation as to shoreline revetment seawall as property was purchased ldquoAS IShellipAND WITH ALL FAULTSrdquo and contract represented the entire understanding) Dolansky v Frisillo 92 AD 3d 186 939 NYS2d 210 (4th Deprsquot 2012) (where PCDS stated that garage had water and rot damage and seller did not know whether there were structural defects purchaser could not show justifiable reliance to support fraud claim ldquoas isrdquo clause was specific disclaimer) Rosenblum v Glogoff 96 AD3d 514 946 NYS2d 167 (1st Deprsquot 2012) (alleged misrepresentations by sellerrsquos agent as to existence of thru-wall air conditioning in coop unit did not excuse purchasersrsquo failure to close where contract disavowed representations as to air-conditioning had merger clause and purchasers had inspected express disclaimer barred fraud claim purchaser failed to use means to discover) Natoli v NYC Partnership Housing Development Fund Company Inc 103 AD3d 611 960 NYS2d 137 (2d Dept 2013) (specific disclaimer provisions in contract to sell three-family house prevented fraud claim)

The rule often stated by the courts is that a ldquospecificrdquo disclaimer in the contract will prevent a fraud claim (see eg Tarantul above) but some courts have found that the general bar association printed form ldquoas isrdquo clause is sufficiently specific (see eg Daly Tarantul above) This author disagrees A ldquospecificrdquo disclaimer should be one that identifies a specific condition and is added to the bar association printed form contract Printed form boilerplate should not bar a valid fraud claim (see Lieberman Pettis above) 9 Contract Closing Date Unless the contract expressly or impliedly state that time is of the essence it is not and either party will be allowed a reasonable adjournment Prime Income Asset Management Inc v American Real Estate Holdings LP 41 AD3d 176 839 NYS2d 12 (1st Deprsquot 2007) (contract automatically terminated where it made time of the essence and purchaser failed to pay price by last written extension despite informal efforts to work toward closing) Sherman v Real Source Charities Inc 41 AD3d 946 837 NYS2d 432 (3d Deprsquot 2007) (time of the essence clause in the commission paragraph applied to entire agreement) No1 Funding Center Inc v H amp G Operating Corp 48 AD3d 908 853 NYS2d 178 (3d Deprsquot 2008) (where contract to sell business assets and real property had time of the essence closing date alleged oral modification was barred by statute of frauds) Plotch v 375 Riverside Drive Owners Inc 92 AD 3d 478 938 NYS2d 524 (1st Deprsquot 2012) (contract for sale of cooperative apartment providing that balance to be paid within 30 business days from date of sale with time of the essence was enforceable)

Inserting ldquoon or aboutrdquo in the contract before the closing date merely reflects the case law that allows either party reasonable adjournments Inserting ldquoon or beforerdquo or ldquono later thanrdquo has been held not to imply that time is of the essence Whitney v Perry 208 AD2d 1025 617 NYS2d 395 (3d Deprsquot 1994) (provision for closing ldquono later thanrdquo 60 days after scheduled date did not make time of the essence) DeCicco v Staehle 11 AD3d 425 783 NYS2d 380 (2d Deprsquot 2004) (ldquoon or beforerdquo closing date did not make time of the essence) Lightle v Becker 794 NYS2d 415 (2d Deprsquot 2005) (closing ldquoon or about 710 but not later than 810rdquo did not make time of the essence sellers entitled to cure title two weeks later) ADC Orange Inc v Coyote Acres Inc 7 NY3d 484 (2006) (phrase ldquoin no event later thanrdquo insufficient to make time of the essence) The parties should say ldquotime of the essencerdquo if that is what they mean but it is not customary to do so

After the contract is signed the parties may make time of the essence by giving a proper

notice See section 7 ldquoMaking Time of the Essence under Recent Closing Developments 10 Statute of Frauds New York Raj Acquisition Corp v Atamanuk 710 NYS2d 21 (1st Deprsquot 2000) (purchaserrsquos obtaining mortgage commitment and ordering title report not unequivocally referable to agreement and did not satisfy statute of frauds) Checkla v Stone Meadow Homes Inc 720 NYS2d 533 (2d Deprsquot 2001) (binder subject to execution of formal contract of sale was unenforceable preliminary ldquoagreement to agreerdquo) Pattelli v Bell 721 NYS2d 734 (Sup Ct Richmond County 2001) (making repairs and improvements not unequivocally referable to alleged oral agreement as to right of survivorship) Urgo v Patel 746 NYS2d 733 (2d Deprsquot 2002) (letter of intent to enter into joint venture that was not signed by party or authorized agent

did not satisfy statute of frauds) Clark Constr Corp v BLF Realty Holding Corp 751 NYS2d 19 (1st Deprsquot 2002) (landlordrsquos retaining of experts to prepare condominium conversion and tenantrsquos payment of $200000 down payment adequate to show partial performance) Gora v Drizin 752 NYS2d 297 (1st Deprsquot 2002) (oral agreement to convey a 50 interest in an LLC owning real property barred by the statute of frauds) Elizabeth Street Inc v 217 Elizabeth Street Corp 755 NYS2d 33 (1st Deprsquot 2003) (mere intention to commit agreement to writing does not prevent contract formation prior to execution) Carlton Center LLC v Carlton Nursing Home Inc 757 NYS2d 568 (2d Deprsquot 2003) (substantial down payment did not take draft contract of sale out of statute of frauds) But see Bowling v Pedzik 754 NYS2d 653 (2d Deprsquot 2002) (memorandum of sale signed only by broker not enforceable against seller) Pisciotto v Dries 760 NYS2d 526 (2d Deprsquot 2003) (statute of frauds not applicable to oral partnership agreement re real property) Rosenfeld v Zerneck 4 Misc3d 193 776 NYS2d 458 (Supreme Court Kings County 2004) (ldquosignaturerdquo typed on e-mail was valid under statute of frauds but messages exchanged lacked essential terms of amount of contract deposit and how to treat commercial lease) Prospect Street Ventures I LLC v Eclipsys Solutions Corp 21 AD3d 256 800 NYS2d 131 (1st Deprsquot 2005) (letter agreement was mere agreement to agree because conditioned on execution of definitive agreement satisfactory to both sides) Ross v Wu 27 AD3d 237 811 NYS2d 26 (1st Deprsquot 2006) (binder that failed to identify corporate seller was not sufficient memorandum under statute of frauds) Cole v Macklowe 40 AD3d 396 836 NYS2d 568 (1st Deprsquot 2007) (agreement to sell an apartment at cost and grant a bonus to purchaser was enforceable) Nesbitt v Penalver 40 AD3d 596 835 NYS2d 426 (2d Deprsquot 2007) (letters between purchaser and sellers attorney failed to satisfy statute of frauds) Pantoja vUniversal Church of Truth 40 AD3d 344 835 NYS2d 550 (1st Deprsquot 2007) (issue of fact whether $5000 deposit to churchs attorney and remaining in possession for three years following alleged agreement to sell satisfied statute of frauds) Tikvah Realty LLC v Schwartz 841 NYS2d 616 (2d Deprsquot 2007) (purchaserrsquos tender of down payment on signing of contract did not constitute part performance of oral agreement) Pino v Harnischfeger 42 AD3d 980 840 NYS2d 504 (4th Deprsquot 2007) (failure to include methodology in contract to provide for payment of the full contract price at some ascertainable date rendered contract unenforceable) Benedict Realty Co v City of New York 45 AD3d 713 846 NYS2d 294 (2d Deprsquot 2007) (mere agreement to agree is unenforceable Vista Developers Corp v VFP Realty LLC 17 Misc3d 914 847 NYS2d 416 (Supreme Court Queens County 2007) (e-mail exchanges did not satisfy statute of fraudsrsquo requirement of a ldquosigned writingrdquo cases and articles discussed) Marshall v Khan 53 AD3d 765 860 NYS2d 693 (3d Deprsquot 2008) (purchase price could be determined by partiesrsquo agreement) Behrends v White Acre Acquisitions LLC 54 AD3d 700 865 NYS2d 227 (2d Deprsquot 2008) (formula for determining sale price referring to ldquostabilizedrdquo ldquogross annual incomerdquo and ldquoexpensesrdquo not sufficiently definite to be enforceable) Omar v Rozen 55 AD3d 705 867 NYS2d 458 (2d Deprsquot 2008) (repurchase option in contract to purchase satisfied statute of frauds as law would fill in such missing terms as closing date and quality of title) Pinkava v Yurkiw 882 NYS2d 687 (2d Deprsquot 2009) (triable issues of fact as to whether plaintiffs had partially performed in manner unequivocally referable ldquothe purpose of the Statute of Frauds is to prevent frauds not to enable a party to perpetrate a fraud by using the statute as a sword rather than a shieldrdquo) FCOF UB Securities LLC v Morequity Inc 663 F Supp 2d (SDNY 2009) (purchasersrsquo complaint alleged sufficient facts to claim that initial commitment was either a binding preliminary agreement or a preliminary agreement under which seller was bound to negotiate in good faith) McCormick v

Bechtol 68 AD3d 1376 891 NYS2d 188 (3d Deprsquot 2009) (right of first refusal lacked essential term to calculate price of adjoining parcels and did not satisfy statute of frauds) Plumitallo v Hudson Atlantic Land Co LLC 74 AD3d 1038 903 NYS2d 127 (2d Deprsquot 2010) (interest of partner in oral joint venture agreement is personalty not governed by statute of frauds) In re Licata 76 AD3d 1076 908 NYS2d 441 (2d Deprsquot 2010) (terms of mortgage subject to which purchaser is to take title are essential elements of the contract triable issue of fact prevented summary judgment for specific performance) Venetis v Stone 81 AD3d 503 916 NYS2d 586 (1st Deprsquot 2011) (agreement in which plaintiff sought compensation for negotiating loan or real estate or business transaction sufficiently definite to be enforced) Pollak v Moore 85 AD3d 578 926 NYS2d 434 (1st Deprsquot 2011) (purchaserrsquos breach of contract claim barred by statute of frauds where parties had opportunity to execute purchaserrsquos marked-up contract but did not elect to do so and other writings did no more than reflect interest in effecting a sale upon appropriate terms) Malaty v Malaty 944 NYS2d 591 (2d Deprsquot 2012) (claims not barred by statute of frauds since plaintiff was not seeking to acquire interest in real property but rather was seeking interest in joint venture) Triple A Supplies Inc v WPS Acquisition Corp 95 AD3d 1301 944 NYS2d 757 (2d Deprsquot 2012) (letter agreement signed by sellerrsquos president identifying the parties and the property stating that monthly installments of price to be made over 15 years and that letter ldquowill suffice until a formal agreement is signedrdquo was enforceable agreement for sale of real property) Del Pozo v Impressive Homes Inc 95 AD3d 1268 945 NYS2d 368 (2d Deprsquot 2012) (street address tax map designation and size of lot in contract sufficiently definite to satisfy statute of frauds) TR-One Inc v Lazz Development Co Inc 95 AD3d 1303 945 NYS2d 416 (2d Deprsquot 2012) (description as 48 acres of vacant land at 89 Mount Tom Road Pawling New York with exact size to be determined by survey map to be obtained by optionee did not satisfy statute of frauds) Sparks Associates LLC v North Hills Holding Co II LLC 94 AD 3d 864 941 NYS2d 695 (2d Deprsquot 2012) (agreement to extend closing date for sale of real estate void under statute of frauds part performance only available in action for specific performance) Emails In New York emails may satisfy the statute of frauds Stevens v Publicis SA 50 AD3d 253 (1st Deprsquot 2008) (typing onersquos name at the end of an email referencing the partiesrsquo agreement did constitute a signing) Mark Bruce International Inc v Blank Rome LLP 19 Misc3d 1140[A] (Sup Ct NY County 2008) (automatic imprinting by fax machine of senderrsquos name at top of page did not constitute a signing as it lacked specific intent to be bound by content) affrsquod 60 AD3d 550 (1st Deprsquot 2009) Naldi v Grunberg 908 NYS2d 639 (1st Deprsquot 2010) (e-mail will satisfy the statute of frauds so long as its contents and subscription meet all requirements) Newmark amp Co Real Estate Inc v 2615 East 17 Street Realty LLC 80 AD3d 476 914 NYS2d 162 (2d Deprsquot 2011) (e-mail correspondence between broker and landlord under which sending partyrsquos name is typed was a writing for purposes of the statute of frauds where broker e-mailed draft brokerage agreement landlord sent back revisions broker incorporated those revisions and landlord never objected but the final agreement was never signed) Bayerische Landesbank v 45 John Street LLC 102 AD3d 587 960 NYS2d 64 (1st Dept 2013) (email that contained pre-printed signature not sufficient writing under statute of frauds where the loan documents had no oral modification and no waiver provisions) New Jersey The statute of frauds was amended to allow oral agreements to be enforceable if the parties so intended Morton v 4 Orchard Landtrust 180 NJ 118 849 A2d 164 (2003) (parties

intended to be bound only by a written contract) McBarron v Kipling Woods LLC 365 NJSuper 114 838 A2d 490 (AppDiv 2004) (oral agreement may be binding) 11 Attorney Escrow Accounts Attorneys must handle escrow accounts carefully in accordance with the Model Rules court rules and the Judiciary Law For guidance see Coffey and Copps Attorney Escrow Accounts - Rules Regulations and Related Topics Second Edition (NYSBA 2006) (handling of escrow funds conflicts of interest of attorney as escrow agent sample escrow agreements IOLA and Lawyers Fund for Client Protection) The NY Lawyers Fund for Client Protections (wwwnylawfundorg) has drafted a Model Down Payment Escrow Agreement (797) which might be useful where contracts do not cover the subject (as the NY Multibar form does) An escrow agent holding a buyerrsquos down payment in the purchase of a 1-2 family residence has a fiduciary obligation to segregate and safeguard the down payment in a special bank account Gen Bus Law sect 778-a The escrow account must be denominated an ldquoAttorney Special Accountrdquo ldquoAttorney Trust Accountrdquo or ldquoAttorney Escrow Accountrdquo 22 NYCRR sect 120000 NY Rules of Prof Conduct Rule 115 Unless the contract provides otherwise the escrow agent is not required to deposit the down payment in an interest-bearing account An attorney may deposit funds in a non-interest bearing ldquoIOLArdquo account Jud Law sect 497 21 NYCRR Part 7000 An out-of-state bank may be used if it has agreed to provide dishonored check reports 22 NYCRR sect 13001(a) Where the down payment is very large the attorney should consider depositing the funds in more than one banking institution so that the full amount will be insured by the FDIC See RPLS Task Force on Attorney Escrows Current Practice Alternatives and Improvements 34 NY Real Prop LJ 93 (Fall 2006) (concluding that attorneys should continue to hold escrows despite a few thefts) The principal ethics rule as to handling escrow accounts is Rule 115 (formerly DR 9-102) covering prohibition against commingling and misappropriation keeping separate accounts notification bookkeeping records authorized signatories and other matters See also Recent Ethics Developments sections 9 (Discipline re Escrow Accounts) and 10 (Liability re Escrow Accounts) It is risky for a sellerrsquos attorney as escrow agent to agree not to deposit the down payment until further notice from the purchaser Torres v DrsquoAlesso 80 AD3d 46 910 NYS2d 1 (1st Deprsquot 2010) (contract not avoided by alleged prior oral agreement by sellerrsquos attorney not to deposit down payment check until notice by purchaser judgment awarded for liquidated damages in the amount of the down payment) (3-2) (lengthy dissent argued that oral agreement was enforceable condition precedent to written contract) Under most contracts the attorney escrow agent is not liable except for gross negligence or willful disregard of the contract Greenapple v Capital One NA 92 AD3d 548 939 NYS2d 351 (1st Deprsquot 2012) (complaint sufficiently alleged that attorney escrow agent aided seller in scheme to convert purchaserrsquos deposit without valid purchaserrsquos signature and was grossly negligent) 390 Kings Highway LLC v Maylov 944 NYS2d 261 (2d Deprsquot 2012) (in action to recover proceeds of escrow account summary judgment denied where plaintiff seller failed to demonstrate that defendant escrow agent acted in bad faith willful disregard of contract or with gross negligence under commercial contract sect 205(b) by failing to remit down payment funds to plaintiff as liquidated damages)

12 Contracts Drafted by Brokers In upstate New York (including Erie Monroe and Rockland Counties) and southern New Jersey brokers often prepare contracts of sale and purchasers sign them before consulting a lawyer but the contracts are subject to the approval of an attorney As part of a litigation settlement the Westchester County Bar Association has agreed (until June 2000) to allow brokers to fill in the blanks on term sheets attached to the NY Residential Contract of Sale (approved by the NYSBA ABCNY NCLA and NYSLTA)(Blumberg form 125) making the contract subject to the approval of the attorneys for the parties The Long Island Board of Realtors has promoted a similar idea and the local bar associations have threatened to sue The brokers have reportedly not pursued either initiative further In New York a broker who filled in a brokers association contract and drafted detailed terms of a purchase-money mortgage and other legal terms beyond a general description of the property the price and the mortgage to be assumed or given has been held to have engaged in the unauthorized practice of law Duncan amp Hill Realty Inc v Deprsquot Of State 62 AD2d 690 405 NYS2d 339 (4th Deprsquot 1978) The New York Attorney General in Formal Opinion No F 96-11 issued Nov 14 1996 upheld the principles of Duncan amp Hill stating that brokers could avoid that result by either (1) making the contract subject to approval of the partiesrsquo attorneys or (2) merely filling the non-legal blanks in a bar association form Some brokers saw this as encouragement for brokers to prepare contracts for clients to sign prompting a request for clarification from lawyers Lee ldquoOpen Letter to Attorney General Dennis C Vacco re Preparation of Purchaser and Sale Contracts by Real Estate Brokersrdquo 25 NY Real Prop LJ 100 (Summer 1997) The Attorney General responded with a one page restatement of the principles involved ldquoResponse of Attorney General Dennis C Vaccordquo 26 NY Real Prop LJ 3 (Winter 1998) (attaching the text of Formal Opinion F 96-11) But see Gjonaj v Sines 69 AD3d 1188 896 NYS2d 176 (3d Deprsquot 2010) (brokerrsquos standard contract enforceable against seller where broker did not exceed customary role form warned of legal effect and recommended consulting an attorney attorney approval clause contingency not selected)

In New York a person who violates a prohibition against unauthorized practice of law and causes monetary loss or damages exceeding $1000 of other material damage resulting from impairment of a legal right may be guilty of a Class E felony NY Judiciary Law sect 485-a On the other hand the New Jersey Supreme Court has held that the public interest does not require prohibition of the practice in South Jersey of brokers and title company officers handling all aspects or residential real estate transactions where neither the seller not the purchaser is represented by counsel provided that a specified notice of risks is given and the use of attorneys is not discouraged In re Opinion No 26 of the Committee on the Unauthorized Practice of Law 139 NJ 323 654 A2d 1344 (1995) 13 Attorney Approval Contingency Where a contract of sale was contingent on approval by the attorneys of both parties ldquoas to all matters contained thereinrdquo and also contained a mortgage contingency clause and the sellersrsquo attorney disapproved due to the absence of a mortgage contingency in another offer (and earlier closing date and better purchase price) the Appellate Division Third Department reversed the Supreme Court and granted dismissal of a suit for specific performance Ulrich v Daly 225 AD2d 229 650 NYS2d 496 (3d Dept 1996) The

court held that the attorney had disapproved the contingency clause closing date and price all matters contained in the contract adding that there is nothing in the clause which prohibits the attorney from considering matters extrinsic to the contract Any such limitation on the attorney would severely limit his ability to advise his client and should be expressly stated Consideration of the other offer did not in itself establish bad faith of the attorney or his clients The Court of Appeals has settled this issue allowing the attorney to disapprove for any or no reason Moran v Erk 11 NY3d 452(2008) (reversing the App Div 4th Deprsquot the Court of Appeals held that the attorney may disapprove for any or no reason which will not be subject to review)

A New Jersey court has held that delivery of a contract to the sellerrsquos broker is not delivery to the seller for the purpose of beginning the three-day attorney review period Peterson v Estate of Pursell 771 A2d 666 (NJ AppDiv 2001) A New Jersey court has held that once an attorney has reviewed and approved the contract the attorney cannot thereafter disapprove it even within the three-day period Romano v Chapman 358 NJSuper 48 816 A2d 1080 (App Div 2003)

See also Debra Pogrund Stark Navigating Residential Attorney Approvals Finding a

Better Judicial North Star 39 J Marshall LRev 171 (2006) (clause should be treated as condition subsequent) Ferguson Subject to the Approval of My Attorney Clauses 35 NY Real Prop LJ 35 (SprSum 2007) 14 NYSBA Residential Real Estate Forms on HotDocs The NYSBA has published an automated computer-generated package of over 200 forms for nearly every residential real estate transaction including contracts of sale contingency clauses riders deeds notes mortgages escrow documents and closing statements Karl Holtzschue was the Editor and Commentator on the forms When a computer-generated contract of sale is offered that purports to be an approved form the purchaser should add in a rider that any deviation from the approved form is deemed replaced by the approved form 15 Fence AffidavitAgreement Ahl v Jackson 702 NYS2d 778 (4th Deprsquot 2000) (statement by adverse possessor in ldquofence affidavitrdquo after statutory period had run was insufficient to divest him of title only deed would suffice) This opinion has called into question long-standing reliance on fence affidavits The Monroe County Bar Association has promulgated a draft two-party fence agreement in response to the courtrsquos refusal in Ahl to give effect to the customary fence affidavit including a license for the fence to remain until rebuilt The standard Monroe County residential contract of sale is also being changed so that there is a title exception only for fences that are off by one foot or more See Morin The Demise of the Fence Affidavit or When Saying No Means I Do at p I-53 in NYSBArsquos Hot Topics in Real Property Law and Practice - Spring 2002) (with copy of proposed fence agreement) 16 Housing Merchant Warranty Latiuk v Faber Constr Co Inc 703 NYS2d 645 (4th Deprsquot 2000) (builderrsquos limited housing merchant implied warranty failed to meet standards of GBL sect 777-b) Duncan v Minick 737 NYS2d 440 (3d Deprsquot 2002) (new home builder denied summary judgment where it failed to show foundation problems not caused by deficient

construction) Rothstein v Equity Ventures LLC 750 NYS2d 625 (2d Deprsquot 2002) (seller of new house with allegedly defective drainage and septic systems not liable for fraud or breach of limited warranty due to failure to provide required written notice of claim) Gorsky v Trioursquos Custom Homes Inc 755 NYS2d 197 (Sup Court Wayne County 2002) (statutory warranty applied to building of custom home on land owned by purchasers six year statute of limitations applied as to breach of express provision of contract) McDonough v Monaco 37 AD3d 560 829 NYS2d 673 (2d Deprsquot 2007) (sellers who bought from builder but did not move into house not liable to their buyer for breach of housing merchant implied warranty but were liable for failure to complete items on punch list agreed to with purchasers) 17 Certificate of Occupancy Costello v Casale 723 NYS2d 44 (2d Deprsquot 2001) (seller breached contract obligation to supply CO for home at date of closing where home built before CO required but later had substantial renovation and seller provided no proof that CO was not required) Hensen v Mitchell 733 NYS2d 449 (2d Deprsquot 2001) (seller liable for failure to procure certificate of occupancy for use as dental office as required by contract of sale) Piano 230 North Corp v 230 North Realty LLC 758 NYS2d 339 (2d Deprsquot 2003) (nothing in contract required seller to obtain certificates of occupancy for all residential units) Correnti v Allstate Properties LLC 38 AD3d 588 832 NYS2d 594 (2d Deprsquot 2007) (issue of fact as to whether seller fulfilled contract obligation to provide proof that building built prior to requirement of certificate of occupancy and certificate of completion for addition) Rufeh v Schwartz 50 AD3d 1000 858 NYS2d 192 (2d Deprsquot 2008) (sellers breached contract by failing to provide certificate of occupancy on time of the essence closing date) Malik v Beal 54 AD3d 910 864 NYS2d 153 (2d Deprsquot 2008) (purchaserrsquos complaint against his attorney held to state claim for malpractice contract for multi-use commercial property required seller to deliver copies of all ldquoexistingrdquo COs seller later said COs did not exist and retained downpayment) Shafran v Piniero 82 AD3d 954 918 NYS2d 780 (2d Deprsquot 2011) (sellers satisfied contract by providing proof that no certificate of occupancy was required) Skyline Restoration Inc v Roslyn Jane Holdings LLC 944 NYS2d 643 (2d Deprsquot 2012) (sellerrsquos failure to cure defects as to certificate of occupancy and zoning violations prior to date of closing excused purchaserrsquos performance and entitled purchaser to return of down payment) 18 Installment Land Contract Murray v Breski 716 NYS2d 810 (3d Deprsquot 2000) (vendor suit for breach of installment land contract by failing to make payments stated claim but success required resolution of disputed factual issues in light of purchaserrsquos equitable defenses) Johnson v Phelan 721 NYS2d 378 (2d Deprsquot 2001) (purchasers under installment contract who defaulted in annual payments not entitled to specific performance) Kilmer v Miller 96 AD3d 1133 946 NYS2d 288 (3d Deprsquot 2012) (under installment contract by exercising their option to accelerate the balance owed at time of purchasersrsquo default sellers relinquished right to bring claim for expenses) 19 Working Order A system or appliance is in working order if it works when turned on (ie operates to some extent in the intended manner) Compare Padovano v Vivian 217 AD2d 868 629 NYS2d 844 (3d Deprsquot 1995) (holding that the replacement of a septic system was a proper remedy for restoring a septic system to ldquogood working orderrdquo for breach of a one-year warranty) See also Fisher v Baronti 761 NYS2d 820 (City Court City of White Plains 2003) (hose and attachments for central vacuum system were a fixture needed for system to be in working order

like a garage door opener and should have been left with the property) Tarantul v Cherkassky 923 NYS2d 133 (2d Deprsquot 2011) (contract did not call for sale of newly constructed home claims that plumbing and electrical systems were not in working order after the closing dismissed) 20 Broom Clean Paragraph 16(d) of the New York Multibar form requires the seller to deliver the premises at the closing ldquobroom cleanrdquo In re Furniture-In-The-Raw Inc 1977 US Dist LEXIS 13993 (SDNY 1977) (debtor in possession liable for cost of removal of debris under normal ldquobroom cleanrdquo clause in lease) Lerner v Perry 61 AD2d 754 401 NYS2d 819 (1st Deprsquot 1978) (seller could not recover damages for removing personal property prior to breach by purchaser sole remedy was retention of down payment) Samuel Z Karp Inc v S E amp K Corp 67 AD2d 635 412 NYS2d 147 (1st Deprsquot 1979) (purchaser recovered damages for removal of salvage goods left by seller) Akivis v Sixty Four Reade Corporation 111 AD2d 97 489 NYS2d 229 (1st Deprsquot 1985) (purchaser recovered damages caused by sellerrsquos movers) Guan Tou Market Inc v 373 Wythe Ave Realty Inc 975 NYS2d 111 (2d Dept 2013) (jury verdict that tenant surrendered premises in ldquobroom cleanrdquo condition was not contrary to weight of evidence) 21 Inspection Contingency Standards and Cases Note that paragraph 21 of the Capital Region form below provides for objective standards for all the inspections (structural septic system well water flow andor quality and radon) Substitution of these objective standards for the subjective ldquosatisfactoryrdquo inspection in other contracts would go a long way to avoiding price negotiations after the contract has been signed and deficiencies are later identified during the inspection period Capital Region Contract of Sale 21 This agreement is contingent upon all of the following provisions marked with the partiesrsquo initials All those provisions marked ldquoNArdquo shall not apply Structural Inspection A determination by a New York State licensed home inspector registered architect or licensed engineer or a third party who is _______ or other qualified person that the premises are free from any substantial structural mechanical electrical plumbing roof covering water or sewer defects The term substantial to refer to any individual repair which will reasonably cost over $1500 to correct The following buildings or items on the premises are excluded from this inspection ____________ Wood Destroying Organisms (Pest Termite Inspection) a determination by a Certified Exterminator or other qualified professional that the premises are free from infestation or damage by wood destroying organisms Septic System Inspection A test of the septic system by a licensed professional engineer licensed plumber septic system contractor County Health Department or other qualified person indicating that the system is in working order Well Water Flow andor Quality Tests (1) a potability water quality test to meet the standards of the New York State Department of Health to be performed by a New York State approved laboratory (2) any chemical metal inorganic or other tests as the Purchaser may request and (3) a flow test to be performed indicating a minimum flow of sufficient quantity to (a) ___obtain

mortgage financing on subject property andor (b) ___to produce ___gallons per minute for ___hours Radon Inspection The Purchaser may have the dwelling located on the property tested by a reputable service for the presence of radon gas The seller agrees to maintain a ldquoclosed house conditionrdquo during the test ldquoClosed-house conditionrdquo shall mean that the Seller shall keep the windows closed and minimize the number of times the exterior doors are opened and the lime that they are left open The Seller agrees to comply with all reasonable requirements of the testing service in connection with the test provided such compliance shall be at no cost to the Seller If the test reveals that the level of radon gas is four (4) picocuries per liter or higher the presence of radon gas shall be deemed grounds for cancellation of the contract All tests andor inspections contemplated pursuant to this paragraph ldquo21rdquo shall be complete on or before ____ and at Purchaserrsquos expense and shall be deemed waived unless Purchaser shall notify ______ pursuant to paragraph ldquo23rdquo ot this agreement no later than ____ of failure of any of these tests andor inspections If Purchaser so notifies and further supplies written confirmation by a copy of the test results andor inspection report(s) or letter(s) from inspector then this entire agreement shall be deemed cancelled null and void and all deposits made hereunder shall be returned to Purchaser or at Purchaserrsquos option said cancellation may be deferred for a period of ten (10) days in order to provide the parties an opportunity to otherwise agree in writing Cases on Inspections Whether cancellation pursuant to a due diligence contingency required statement of a reason related to the right of inspection has been questioned Schwartz v Cilmi amp Assocs PLLC 41 AD3d 317 839 NYS2d 55 (1st Deprsquot 2007) (issue of fact whether provision giving purchaser right to cancel for any reason during due diligence contingency period allowed purchaser to not state a reason could be interpreted as requiring purchaser to state a reason rationally related to right of inspection) Capece v Robbins 46 AD3d 589 847 NYS2d 243 (2d Deprsquot 2007) (sellerrsquos initial rejection of termite infestation report and delayed treatment did not constitute cancellation of contract purchaserrsquos failure to close was default) Kabro PM LLC v WGB Main Street LLC 52 AD3d 659 860 NYS2d 199 (2d Deprsquot 2008) (purchaser waived satisfaction of any unsatisfied condition when it exercised its right to ldquooverriderdquo sellerrsquos termination of the contract) McPartlan v Basile 63 AD3d 1122 883 NYS2d 82 (2d Deprsquot 2009) (purchaser entitled to refund of down payment due to good faith termination of contract for unacceptable engineerrsquos report) Waldman v LDK Realty Inc 880 NYS2d 354 (2d Deprsquot 2009) (where contract provided right to conduct environmental inspection and to terminate for any reason purchaser not entitled on discovery of hazardous substances to specific performance with abatement as contract did not provide that relief) 22 Liability of Professional Inspector Peluso v Tauscher Cronacher Professional Engineers PC 704 NYS2d 289 (2d Deprsquot 2000) (limitation of liability to fee paid in home inspection contract held enforceable) Berger-Vespa v Rondack Building Inspectors Inc 740 NYS2d 504 (3d Deprsquot 2002) (inspectorrsquos limitation of two years to make a claim held effective) Kogan v Fenster 191 Misc 525 744 NYS2d 628 (Sup Ct App Term 2d Deprsquot 2002) (inspector whose contract limited inspection to visual observations of readily accessible areas not liable for failing to discover condition leading to water damage six months later) Herner v Housemaster of America Inc 793 A2d 55 (NJ SuperAppDiv 2002) (inspection service that tailors inspection reports to satisfy its real estate broker referral sources violated Consumer Fraud Act and was

liable for attorneyrsquos fees as well as damages for faulty inspection) Netti v Le Frois 758 NYS2d 442 (4th Deprsquot 2003) (home buyer precluded from asserting that inspection agreement verbally modified by inspector where agreement expressly prohibited oral expansion of scope or change of terms) Schardt v Posson 41 AD3d 1135 838 NYS2d 725 (3d Deprsquot 2007) (well service liable for damages for misreporting flow capacity of water produced by well and failing to report recovery rate owner adequately attempted to mitigate damage) Clement v Delaney Realty Corp 45 AD3d 519 845 NYS2d 423 (2d Deprsquot 2007) (action for active concealment of mold against home inspector limited by contract to $440 absent proof of gross negligence) 23 Sellerrsquos Concessions An agreement by the seller to a credit to reduce the purchase price by making payments ordinarily paid by the purchaser or otherwise (ldquosellerrsquos concessionrdquo) must be disclosed to the parties and to the purchaserrsquos lender (so that the lenderrsquos underwriting is based on the true price and the HUD-1 accurately states the true price) See Perez v Jordan 37 AD3d 200 829 NYS2d 480 (1st Deprsquot 2007) (trial ordered where seller refused to accept contract addendum at closing reflecting sellers concession purchasers argued that lender was aware of sellers concession and that it was within HUD guidelines) NYSBA Ethics Op 817 (2007) (participation in residential real estate transaction that includes sellerrsquos concession prohibited unless entirely lawful gross-up is disclosed and not parties misled to their detriment) LaSalle Bank NA v Shearon 23 Misc3d 959 881 NYS2d 599 (Sup Court Richmond County 2009) (lender violated Banking Law sect 6-l regarding maximum amount of total allowable points and fees paid by borrower for high-cost home loan phony rdquosellerrsquos concessionrdquo improperly inflated sale price with purchaser paying for any resulting increase in transfer taxes) Real Property Law Section The Need for Clarification of Opinion 817 39 NY Real Prop LJ 30 (SpringSummer 2011) (urging revision to provide a clear roadmap for the practitioner) NYSBA Ethics Opinion 882 (2011) (if sales price ldquogrossed-uprdquo in exchange for ldquosellerrsquos concessionrdquo all transaction documents must disclose both) NYSBA Ethics Opinion 993 (111313) (mere existence of sellerrsquos concession does not require statement that purchase price has been increased but when purchase price has in fact been grossed up by sellerrsquos concession lawyer is required to ensure that grossing up is disclosed) 24 Statutory Power of Attorney Form the New York statutory short form power of attorney was again revised effective September 1 2009 The statute introduces the concept of the Statutory Major Gifts Rider Powers executed prior to September 1 2009 may continue to be used For a detailed analysis of the statutory changes see Berey Statutory Short Form Power of Attorney Revised New Statutory Major Gifts Rider 37 NY Real Prop LJ 13 (Summer 2009) Bailey amp Treiman POA The Power of Information Overload 38 NY Real Prop LJ 10 (Winter 2010) (arguing that the new stature is riddled with problems endangering orderly transfer of real property) The new statute has been amended to eliminate most of the problems See Chapter 340 of the Laws of 2010 25 Violations FAC Continental LLC v Yickjing567 LLC 911 NYS2d 526 (4th Deprsquot 2010) (seller breached contract that required that seller warrant at time of

closing that it had not received notice of uncorrected violation where violation uncorrected at time of closing) 26 Truth in Heating Law Under Energy Law sect 17-103 a purchaser has the right to receive copies of heating and cooling bills for the last two years and a statement of the tyre and location of insulation installed in a residential structure including a one- or two-family house or a condominium or cooperative unit A seller who does not have a comlete set of the bills must request copies from the appropriate utility companies If the seller is unable to provide the purchaser with a complete set of bills the seller must nevertheless supply whatever records are available Note that the seller need not honor such requests after a contract is signed 27 Transfer Fee Covenants Transfer fee covenants have been used in some states to reserve to the original seller a future interest in the appreciation in the value of the real property being sold Real Property Law Section Report on The Federal Housing Finance Agencyrsquos Proposed Guidance on Private Transfer Fee Covenants 39 NY Real Prop LJ 41 (Winter 2011) (supporting the main objective of stopping developers from imposing transfer fees but objecting to prohibiting transfer fees imposed by HOAs cooperative corporations and similar entities) (the FHFA agreed and modified the Guidance) Berey Private Transfer Fee Obligations Banned in New York 40 NY Real Prop LJ 5 (Winter 2012) 28 Multibar Contract Analysis For a current analysis of provisions of the Multibar contract see John G Hall and Thomas J Hall The Practitionerrsquos Guide to Residential Real Estate Transactions The Joint Bar Association Residential Real Estate Contract 39 NY Real Prop LJ 8 (Fall 2011) 29 Best Efforts Maestro West Chelsea PRE LLC v Pradera Realty Inc 38 Misc3d 522 954 NYS2d 819 (Supreme Court New York County 2013) (whether seller breached best efforts clause re obtaining waiver from sellerrsquos mortgagee for sale of air rights could not be resolved on motion to dismiss discussion of cases on best efforts provisions) 30 Interstate Land Sales Full Disclosure Act (ILSA) ILSA requires disclosure of facts to enable a reasonably prudent purchaser to make an informed decision about purchasing of undeveloped or subdivided land by developers making offers through interstate commerce and the mails 15 USC sect 1701 et seq Failure to register can result in rescission Bacolitsas v 86th amp 3rd Owner LLC 702 F3d 673 (2d Cir NY 2012) (ILSA requires the lot description in a condominium not the agreement to be in recordable form the description at issue satisfied ILSA) [reversing SDNY decision that granted rescission] B ENVIRONMENTAL CONTRACT ISSUES 1 EPA Lead Paint Enforcement Policy The EPA has issued guidance documents to clarify the lead paint regulations including an enforcement policy that sets a

range of penalties for first-time and egregious violators Witkin ldquoEnvironmental Law Updaterdquo 12 Prob amp Prop 56 (JulAug 1998) 2 New York City Local Law on Lead Paint New York Cityrsquos Local Law 38 of 1999 creates numerous new requirements for owners of multiple dwellings with respect to scraping and sanding of lead-based paint inspection and repair when an apartment becomes vacant and annual inquiries as to children under six years old But see NYC Coalition to End Lead Poisoning Inc v Vallone 100 NY2d 337 763 NYS2d 530 (2003) (Local Law 38 void due to failure to comply with SEQRA) leaving lead paint regulation in limbo The NY City Council then enacted Local Law 1 of 2004 overriding the Mayorrsquos veto which is a compromise between Local Law 1 of 1982 and Local Law 38 of 1999 and becomes effective August 4 2004 3 Cases re Actual or Constructive Notice to Landlords re Lead Paint The Court of Appeals has held that the New York City Administrative Code creates a presumption of notice of lead paint from the presence of peeling paint in a pre-1960 building and imposes a specific duty on landlords to abate lead paint hazards to children under seven years old Juarez v Wavecrest Mgt Team 88 NY2d 628 649 NYS2d 115 672 NE2d (1996) The Court of Appeals has also held liable a landlord outside New York City who had a duty to make repairs and reserved the right to do so and was aware of the age of the building the presence of chipped or peeling paint the dangers of lead paint to children and the presence of a young child Otherwise landlords who deliberately refrained from testing for lead could shield themselves from liability Chapman v Silber 97 NY2d 9 760 NE2d 329 734 NYS2d 541 (2001) Sellers and agents who knowingly failed to deliver a copy of a lead-based paint report before the purchaser signed the contract even though existence of report was disclosed have been held liable for treble damages without a showing of bad faith or willfulness Smith v Coldwell Banker Real Estate Services Inc 122 F Supp2d 267 (D Conn 2000) Joyner v Durant 716 NYS2d 221 (4th Deprsquot 2000) (tenant did not prove landlords had actual or constructive notice of lead paint knowledge of chipped or peeling paint insufficient) Morales v Reyes 723 NYS2d 331 (Sup Court Kings County 2001) (lead paint presumption of NY City Admin Code applied to building converted to multiple dwelling after 1960) But see NYC Coalition to End Lead Poisoning Inc v Vallone 203 LEXIS 1744 (NY Ct Appeals 2003) (NY City Local Law 38 void due to failure to comply with SEQRA) leaving lead paint regulation in limbo in NY City Espinosa v Rand 24 AD3d 102 806 NYS2d 186 (1st Deprsquot 2005) (corporate officer held individually liable for tortious misrepresentation to tenant denying presence of lead paint) Department of Housing Preservation and Development v 537 Clinton LLC 11 Misc3d 327 809 NYS2d 430 (Civil Court Kings County 2005) (civil action by HPD against landlord for false certification of correction of lead paint violation did not require showing that landlord knew of falsity)

4 Treble Damages for Failure to deliver Report Lead Paint Smith v Coldwell Banker Real Estate Services Inc 122 F Supp2d 267 (D Conn 2000) (sellers and agents who knowingly failed to deliver a copy of a lead-based paint report before the purchaser signed the contract even though existence of report was disclosed have been held liable for statutory treble damages three times actual damages without a showing of bad faith or willfulness) 5 Environmental Assessment and CERCLA Liability Under the federal Small Business Liability Relief and Brownfields Revitalization Act (Public Law 107-118 signed January 11 2002) the ASTM Phase 1 Assessment Process (E1527-97) primarily used for non-residential purchases is deemed to satisfy the appropriate inquiry standard until the federal EPA issues new regulations The Act also provides immunity from CERCLA liability for prospective purchasers of contaminated property property owners whose land is contaminated from hazardous substances migrating from a contiguous property and for landowners who remediate property under a qualifying state cleanup program See Rigano Contract of Sale Environmental Provisions 37 NYSBA NY Real Prop LJ 23 (Fall 2009) An attorney may be liable for negligence for counseling a client to enter into an ldquoas isrdquo deal without conducting any due diligence as to the environmental condition of the property Barnett v Schwartz 47 AD3d 197 848 NYS2d 663 (2d Deprsquot 2007) (2-1) (court upheld jury verdict that attorney negligently counseled client to enter into ldquoas isrdquo lease the DEC classified the property as an inactive hazardous waste disposal site discussion of ldquobut forrdquo requirement) 6 Environmental Report Termination Clause Intell Williamsburgh LLC v Shapal Partners LP 703 NYS2d 443 (1st Deprsquot 2000) (clause allowed termination for any adverse condition revealed by environmental report possibility of buried fuel oil storage tank did not allow termination discarded oil storage tank on property held not material to purchase and did not allow termination removal of discarded tank raised issue of compliance with law preventing summary judgment) See also CFJ Assocs of New York Inc v Hanson Industries 711 NYS2d 232 (3d Deprsquot 2000) (purchaser did not reasonably rely on vendorrsquos representations regarding environmental remediation costs disclaimer as to remediation costs was specific) BDG Oceanside LLC v RAD Terminal Corp 14 AD3d 472 787 NYS2d 388 (2d Deprsquot 2005) (purchaserrsquos acts did not waive right to terminate contracts if any of four environmental clean up deadlines not met) Alternatives Federal Credit Union v Olbios LLC 14 AD3d 779 787 NYS2d 508 (3d Deprsquot 2005) (contract required seller to pay for cleaning up soil contaminated by gas tank removed in the past) AD 1 Great Neck LLC v Commander Oil Corp 81 AD3d 759 916 NYS2d 629 (2d Deprsquot 2011) (purchaser entitled to cancel contract where environmental conditions not satisfied within one-year period due to factors outside purchaserrsquos control and despite purchaserrsquos diligent efforts to reach agreement on remediation plan with DEC)

7 Environmental Liability Cases Loftus v Gero 724 NYS2d 547 (3d Deprsquot 2001) (neighbors who performed remedial measures once notified that their septic systems were source of contamination on landownerrsquos property did not have requisite actual or constructive notice to hold them liable for prior contamination) Hjerpe v Globerman 721 NYS2d 367 (3d Deprsquot 2001) (purchasers whose underground fuel oil storage tank continued to leak after purchase were petroleum ldquodischargersrdquo under Nav Law sect 181 and were precluded from recovering indemnification from sellers) Schreiber v Cimato 750 NYS2d 204 (4th Deprsquot 2002) (new trial ordered in action on cleanup cost indemnity agreement as to purchasersrsquo due diligence and preclusion of evidence that contamination may have migrated or resulted from purchasersrsquo conduct) Paraco Gas Corp v AGA Gas Inc 253 FSupp2d 563 (SDNY 2003) (failure to remove or cap UST pipe was breach of express warranty that UST was removed in accordance with law no waiver because purchaser had no knowledge) State v Speonk Fuel Inc 3 NY3d 720 819 NE2d 991 786 NYS2d 375 (2004) (purchaser liable as discharger under Nav Law sect 181 due to prior knowledge of discharge and need for cleanup and failure to act) Weber State v Speonk Fuel The Untold Story Behind the Court of Appeals Decision 25 NY Env Lawyer 16 (SprSum 2005) State v Dennin 17 AD3d 744 792 NYS2d 682 (3d Deprsquot 2005) (record owner liable for remediation costs under Nav Law sect 181) State v Passalacqua 19 AD3d 786 797 NYS2d 576 (3d Deprsquot 2005) (former owner contributed to petroleum discharge and was not entitled to indemnification from current owner) Kagan v Freedman 55 AD3d 558 866 NYS2d 216 (2d Deprsquot 2008) (breach of contract claim due to toxic mold and sellerrsquos dissuading purchasers from conducting professional mold inspection barred by specific ldquoas isrdquo disclaimer in contract and doctrine of merger purchasers failed to raise issue of fact as to concealment) RBP Ventures Ltd v Concord Electronics Inc 69 AD3d 535 895 NYS2d 36 (1st Deprsquot 2010) (Phase II environmental report dated October 2007 did not prove sellerrsquos knowledge as of June 2006 contract date) Commander Terminals LLC v Commander Oil Corp 897 NYS2d 151 (2d Deprsquot 2010) (seller of oil storage facility had no duty to disclose oil seepage from facility into adjacent navigable waters triable issues of fact whether oil seepage was something purchaser could have discovered) State of New York v CJ Burth Services Inc 79 AD3d 1298 915 NYS2d (3d Deprsquot 2010) (current owners liable under Nav Law sect 181 even though they did not control site when contamination occurred and had no knowledge of existence of storage tanks or contamination when they purchased) Veltri v NY State Office of the State Comptroller 81 AD3d 1050 916 NYS2d 315 (3d Deprsquot 2011) (there was rational basis for determination that landowners owned an orphan UST which had a discharge landowner was strictly liable) Murphy v Both 922 NYS2d 483 (2d Deprsquot 2011) (fact questions precluded summary judgment on landownerrsquos contamination claims in negligence and under Nav Law sect 181 against adjoining landowner for leaking fuel tank polluting underground waters) Seligson v Russo 91 AD 3d 462 937 NYS2d 10 (1st Deprsquot 2012) (neither ldquoas isrdquo clause in offering memorandum nor assumption agreement explicitly exculpated 50 owners of partnership property from liability for oil leak under Nav Law 181)

8 Toxic Mold A greenish-black mold known as stachybotrys atra or stachybotrys chartarum (ldquotoxic moldrdquo) has been found to cause health problems and law suits have begun primarily by tenants Del Gatto and Grande Black Mold Suits Yield Some Large Personal Injury Verdicts But Their Future Is Uncertain 74 NY State Bar J 23 (June 2002) See also Schnapf ldquoMoldsrdquo Ch 36C in Vol 5A Environmental Law Practice Guide (Gerrard ed) Searle v City of New Rochelle 2002 NYAppDiv LEXIS 4124 (2d Deprsquot 2002) (tenantrsquos claim against City as to toxic mold was time-barred period began when symptoms apparent not when cause identified) Ruskin Mold Corporate Prevention and Response 22 NY Env Lawyer 6 (Summer 2002) Klayman Toxic Mold A Growing Problem for the Real Estate Industry 31 Real Est LJ 211 (Winter 2002) Toxic mold can grow on material with a high cellulose and low nitrogen content such as fiberboard or gypsum board Growth occurs where there is constant moisture from water damage excessive humidity water leaks and flooding so the primary remedy is to remove the water source Health complaints include allergic symptoms and in severe cases pulmonary hemorrhage memory loss and death Various forms of mold are everywhere and it has been reported that perhaps 50 of all homes may have some level of toxic mold Id Del Gatto article The US Centers for Disease Control has addressed this issue but there are not yet any standards of what constitutes a dangerous level making it difficult to devise appropriate tests For questions and answers by the CDC see wwwcdcgovncehairpollutionmoldstachyhtm See also US EPA Mold Resources at wwwepagoviaqpubsmoldresourceshtml The NY City Department of Health has published ldquoGuidelines on Assessment and Remediation of Fungi in Indoor Environmentsrdquo for guidance of building engineers and managers See wwwnycgovhtmldohhtmlepimoldrpt1html California Deprsquot of Health Services Indoor Air Quality Info Sheet ldquoMold in My Home What Do I Dordquo Klayman Toxic Mold A Growing Problem for the Real Estate Industry 31 Real Est LJ 211 (Winter 2002) Kubasek The Pollution Exclusion A Potentially Underused Tool for Insurers in the Toxic Mold Morass 31 Real Est LJ 362 (Spring 2003) Wright amp Irby The Transactional Challenges Posed by Mold Risk Management and Allocation Issues 56 Ark LRev 295 (2003) Gifford v Matejka 107 Wash App 1014 (Div2 2001) (seller liable for concealing that bleach was used to remove mold) King and Barrett-Cuerta Moldy Misperceptions and Plummeting Property Values 18 Prob amp Prop 32 (JanFeb 2004) Schauf Got Mold 32 NY Real Prop LJ 60 (Spring 2004) (investigation and abatement) 9 Radon In New Jersey a purchaser was allowed to cancel under a clause allowing cancellation if radon was found to be present where any level of radon was found Kotkin v Aronson 175 NJ 453 815 A2d 962 (2003) But see Tanner v Adams 197 AD2d 785 602 NYS2d 710 (3d Deprsquot 1993) (presence of radon held not to be ldquosubstantial defectrdquo allowing cancellation of contract of sale under contingency for ldquosubstantial structural mechanical electrical plumbing roofing water or sewer defectsrdquo) See US EPA A Citizenrsquos Guide to Radon (Sep 2005)

US EPA Home Buyerrsquos and Sellerrsquos Guide to Radon (May 2005) US EPA Consumerrsquos Guide to Radon Reduction How to Reduce Radon Levels in Your Home (Feb 2003) 10 Carbon Monoxide Detector Installation of a carbon monoxide detector is required in every 1 or 2 family dwelling condominium or cooperative apartment and certain multiple dwellings having appliances devices or systems using combustible fuels or having an attached garage constructed or offered for sale in New York State after November 27 2002 Exec Law Sec 378(5-a) Unlike the smoke alarm an affidavit is not required by the statute As of November 5 2004 carbon monoxide detectors are required in New York City for Class A and Class B multiple dwellings and also for private one or two-family dwellings that are occupied by a person other than the owner or the ownerrsquos family an affidavit at closing is not required NY City Admin Code sectsect 27-20461 and 27-20462 The seller should make the installation requirement a condition of closing so that the obligation does not survive closing and offer to pay the cost of a battery-powered detector if one is not installed The purchaser should add the installation requirement to the contract 11 Wetlands Wetlands are also regulated at the state level Zaccaro v Cahill 100 NY2d 884 768 NYS2d 730 800 NE2d 1096 (2003) (due process does not require actual notice to owner before DEC designation of property as wetland) See also Rapanos v US 126 S Ct 2208 (2006) (wetlands must be of a semi-permanent nature and abut open water to qualify as ldquonavigablerdquo waterway) 12 Attorney Malpractice Attorneys have been sued for malpractice for advice concerning environmental liabilities in an acquisition Kram v Knarf LLC v Djonovic 74 AD3d 628 903 NYS2d 386 (1st Deprsquot 2010) (allegations that attorneys negligently gave incorrect explanation of acquisition documents sufficient to state malpractice claim while contract disclosed certain liabilities respecting contamination without proper due diligence and adequate legal counsel clients were unaware of full extent of liabilities) (dissent) 13 Hydraulic Fracturing Leasing rights to drill for oil particularly for horizontal hydraulic fracturing raises special problems Radow Homeowners and Gas Drilling Leases Boom or Bust 83 NYSBA Journal 10 (NovDec 2011) (with photos of drilling)

RECENT FINANCING CONTINGENCY DEVELOPMENTS copy Karl B Holtzschue 2014 [most recent material in italics] 1 Financing Contingencies The contract is contingent upon obtaining a mortgage commitment Krainin v McCusker 45 AD3d 738 846 NYS2d 312 (2d Deprsquot 2007) (printout of website underwriting report held not to be a commitment under mortgage commitment contingency clause) Dairo v Rockaway Blvd Properties LLC 44 AD3d 602 843 NYS2d 642 (2d Deprsquot 2007) (purchaser failed to submit evidence that seller frustrated her attempt to obtain a commitment by denying appraiser access to the property purchaser denied specific performance due to failure to show she had financial capacity to purchase) DiBlanda v ADC Pinebrook LLC 44 AD3d 702 843 NYS2d 429 (2d Deprsquot 2007 (sellers entitled to retain down payment where purchaser completely failed to apply for mortgage commitment) Watson v Gerace 175 Fed App 258 2006 WL 839055 (3d Cir 2006) (credit approval letter conditioned on appraisal and borrowerrsquos financial status satisfied commitment contingency in New Jersey contract where conditions likely to be fulfilled) Gorgoglione v Gillenson 47 AD3d 472 849 NYS2d 526 (1st Deprsquot 2008) (purchaser did not breach contract by obtaining commitment for higher amount than stated in contract contingency but within co-oprsquos guidelines seller waived right to cancel for conformance) Nambiar v Alexander 30 Misc2d 341 911 NYS2d 766 (County Court Suffolk County 2010) (purchasers applied for mortgage in good faith E-Trade Mortgage Corp was an ldquoinstitutional lenderrdquo purchasers were entitled to cancel when their application was denied for insufficient income) Mancuso v Silvey 2011 NY Misc LEXIS 2614 (Supreme Court Nassau County 2011) (where only one of two borrowers applied for the mortgage having insufficient income to pay the loan purchasers failed to act in good faith) Schramm v Mei Chu Solow 91 AD 3d 624 935 NYS2d 659 (2d Deprsquot 2011) (purchaser entitled to return of deposit where seller failed to establish that buyerrsquos inaccurate loan application [inflated income] was cause of failure to obtain the commitment in the required amount) 2 Use of Mortgage Brokers A purchaser of a condominium was not allowed to recover its downpayment pursuant to the printed form contract mortgage contingency clause upon failure to obtain a mortgage commitment from an institutional lender where the purchaser applied to a mortgage broker not to an institutional lender Delsack v Cumella 189 AD2d 640 593 NYS2d 2 (1st Deprsquot 1993) Vafa v Cramer 622 NYS2d 567 (2d Deprsquot 1995) But see Ratner v Elovitz 198 AD2d 184 604 NYS2d 82 (1st Deprsquot 1993) (requirement satisfied if mortgage broker employed to submit application to institutional lender and does so coop purchaser was jazz great Miles Davis) Fallah v Hix 702 NYS2d 352 (2d Deprsquot 2000) (purchaserrsquos use of mortgage broker to obtain loan did not violate contract where broker forwarded application to institutional lender citing Ratner cf Delsack) The NYS Banking Department and the Real Property Section of the NYS Bar Association proposed amendments to the standard form residential coop and condominium contracts of sale to respond to the Delsack decision by approving application to a registered mortgage broker The changes are incorporated in the 1196 and 112000 versions of the NY Multibar Residential Contract of Sale (Blumberg 125)

For cases on mortgage brokers earning a commission see section 12 of Recent Financing Developments 3 Purchaser allowed to cancel when loan commitment revoked Kapur v Stiefel 264 AD2d 602 695 NYS2d 330 (1st Deprsquot 1999) (lost job but lengthy dissent correctly states intent of contract that this risk is on purchaser) The majority stated that the purchaserrsquos cancellation was not governed by specific provisions of the contract and consequently the purchaserrsquos right to cancel turned on whether the commitment revocation was attributable to the purchaserrsquos bad faith The dissent correctly stated that the contract did not permit the purchaser to cancel when the commitment was revoked The contract contemplated conditions to the mortgage commitment and the contract allocated the risk of compliance to the purchaser Forfeiture of the deposit was not a windfall to the seller because the seller lost rental income and had carrying costs See also Garber v Giordano 16 AD3d 454 791 NYS2d 175 (2d Deprsquot 2005) (purchaser denied summary judgment when commitment revoked due to purchaserrsquos decision to curtail working hours due to illness fact issue as to bad faith) Anderson v Meador 56 AD3d 1030 869 NYS2d 233 (3d Deprsquot 2008) (issue of fact whether revocation of mortgage commitment letter due to title defects was attributable to any bad faith on part of purchaser) Zheng v Evans 63 AD3d 791 881 NYS2d 461 (2d Deprsquot 2009) (purchasers established that cancellation of contract pursuant to mortgage contingency clause was done in good faith) Heilig v Maron-Ames 885 NYS2d 563 (Civil Court City of New York Kings County 2009) (where coop purchaser obtained loan commitment but was later laid off from work and commitment was terminated by lender purchaser entitled to cancel under rider that gave purchaser the right to cancel if withdrawal of the commitment was not due to purchaserrsquos willful acts) Duryee v Kangesier 31 Misc3d 73 924 NYS2d 731 (Supreme Court App Term 9th and 10th Judicial Districts 2011) (there was no proof that purchasersrsquo mortgage commitment had been revoked that commitment was for single-family dwelling and that bank was going to change terms when it learned that premises was two-family dwelling or that purchasers acted in good faith when they identified the premises as single-family on their loan application so purchasers not entitled to cancel and seller awarded liquidated damages of 10 percent contingency clause is condition precedent[]) Blair v OrsquoDonnell 8 AD3d 954 925 NYS2d 639 (2d Deprsquot 2011) (purchasers entitled to rescind where mortgage commitment revoked due to encroachments on the property and purchasers acted in good faith clause is condition precedent [] citing Creighton and Kapur contract did not provide for seller to retain down payment when commitment revoked) Mendez v Abel 35 Misc3d 61 945 NYS2d 840 (Sup Ct App Term 9th amp 10th Judicial Districts 2012) (contract provision that after obtaining mortgage commitment purchaser would have no right to terminate irrespective of whether purchaser fails to satisfy any conditions in the commitment placed the risk of loss of the commitment on the purchaser citing Roga and Arnold) Decisions favoring the purchaser in disregard of the contract language have been criticized Holtzschue Responses of the Legislature and the Bar Associations to Court Decisions on Sales of Residences 33 NY Real Prop LJ 78 (Spring 2005) (discussing

amendment of the contract language by the bar associations in reaction to the decisions as well as the reluctance of judges to require forfeiture of the purchaserrsquos downpayment the ldquoMaxton effectrdquo) But see Morris v Hochman 745 NYS2d 549 (2d Deprsquot 2002) (summary judgment denied to purchaser whose mortgage commitment was revoked when purchaser accepted a new position and relocated because discovery was needed to establish claim of good faith) Applied Behavior Analysis Inc v Greater New Jersey Annual Conference of United Methodist Church 888 NYS2d 207 (2d Deprsquot 2009) (lenderrsquos rescission of commitment was due to fault of purchaser where purchaser notified lender that new lease extension would put significant strain on its budget) 4 Time to Cancel Big Apple Meat Market Inc v Frankel 714 NYS2d 333 (2d Deprsquot 2000) (where contingency clause did not specify when purchaser had to cancel he may do so within a reasonable time - 30 days triable issue of fact whether purchaser made diligent prompt and truthful application) Young v Leger 732 NYS2d 782 (4th Deprsquot 2001)(purchaser entitled to cancel under mortgage commitment clause permitting cancellation if not obtained by Sept 8 1998 when commitment obtained on the next day Sept 9 1998) 1550 Fifth Ave Bay Shore LLC v 150 Fifth Ave LLC 748 NYS2d 601 (2d Deprsquot 2002) (seller entitled to cancel where commercial contract allowed seller to cancel if ldquofirm commitmentrdquo not obtained and commitment was subject to environmental assessment not obtained in time) Combs v Lewis 767 NYS2d 425 (1st Deprsquot 2003) (where no stated time to cancel due to non-conforming commitment was provided for reasonable time for cancellation is implied written application by purchaser not required by contract) Yitzhaki v Sztaberek 38 AD3d 535 831 NYS2d 267 (2d Deprsquot 2007) (purchaser awarded specific performance where commitment obtained after time specified in contract stated to be of the essence and seller failed to respond to request for extension or to cancel) Yuen v Kwan Kam Cheng 69 AD3d 536 895 NYS2d 37 (1st Deprsquot 2010) (where contract contained no time limit for purchaser to cancel a reasonable time is implied) The purchaserrsquos attorney may be sued for malpractice for missing the date to cancel Bells v Foster 83 AD3d 876 922 NYS2d 124 (2d Deprsquot 2011) (summary judgment denied where purchaser failed to demonstrate that negligence on part of her attorney in failing to timely cancel contract for inability to obtain a mortgage was sole proximate cause of her damages and attorney alleged that purchaser was in breach of the contract and her own actions were the sole proximate cause of her damages) Humbert v Allen 932 NYS2d 155 (2d Deprsquot 2011) (purchasersrsquo attorneyrsquos alleged failure to give written notice of cancellation was not proximate cause of damages purchasers independently breached contract when they sought loan in far greater amount than specified in contingency clause) 5 Automatic Termination Hong Yun Cho v Franks 724 NYS2d 499 (2d Deprsquot 2001) (condo contract automatically terminated by its terms on failure of sellers to respond within 5 business days to purchaserrsquos notice requesting extension of mortgage contingency date) 6 Purchaserrsquos Right to Cancel Young v Leger 732 NYS2d 782 (4th Deprsquot 2001)

(purchaser entitled to cancel under mortgage commitment clause permitting cancellation if not obtained by Sept 8 1998 when commitment obtained on the next day Sept 9 1998) Markovitz v Kachian 28 AD3d 358 814 NYS2d 60 (1st Deprsquot 2006) (purchaser made good faith attempt to obtain mortgage where purchaser applied for acquisitionconstruction loan for more that twice the amount specified in the mortgage contingency clause but bank denied application because income would be unable to support debt and carrying costs for acquisition-only loan) Velazquez v Equity LLC 28 AD3d 473 814 NYS2d 182 (2d Deprsquot 2006) (purchaserrsquos notice of cancellation if extension not granted defective because not accompanied by required documentation entitled seller to treat it as an anticipatory repudiation and to rescind even though purchaser thereafter received commitment and attempted to revoke its notice) Smith v Tenshore Realty Ltd 820 NYS2d 292 (2d Deprsquot 2006) (seller entitled to consider purchasersrsquo notice of cancellation if mortgage contingency period not extended to be anticipatory repudiation because it was not accompanied by required documentation despite purchaserrsquos attempt to rescind cancellation upon obtaining commitment) Astrada v Archer 51 AD3d 954 858 NYS2d 796 (2d Deprsquot 2008) (purchaser entitled to return of down payment where contract provided for recovery if mortgage ldquonot in fact approved through no fault of their ownrdquo) Hoft v Frenkel 52 AD3d 779 860 NYS2d 209 (2d Deprsquot 2008) (purchaser entitled to return of down payment where loan application denied due to insufficient income sellerrsquos speculations as to reasons for denial failed to raise triable issue of fact) Balkhiyev v Sanders 896 NYS2d 147 (2d Deprsquot 2010) (triable issues of fact whether purchasers acted in good faith to secure mortgage financing where application denied for inablility to verify income income insufficient and excessive obligations in relation to income) Bildirici v Smartway Realty LLC 933 NYS2d 350 (2d Deprsquot 2011) (purchaser entitled to return of down payment where he made good-faith application that was denied because net income generated by property insufficient to support loan) Ettienne v Hochman 105 AD3d 805 962 NYS2d 652 (2d Dept 2012) (purchasers showed that they applied to an institutional lender that their application was denied through no fault of their own based on their credit history and that they gave sellerrsquos timely notice of cancellation their failure to apply for a no-income-check mortgage would have been futile) Hsieh v Pravader 964 NYS2d 243 (2d Dept 2013) (triable issue of fact existed whether purchaser made good-faith effort to secure mortgage financing where denial was for ldquoinsufficient cashrdquo) 7 Model Mortgage Commitment Contingency Clause In 1999 the Real Property Section of the New York State Bar Association approved a Model Mortgage Commitment Contingency Clause to replace Paragraph 8 in the NY Multibar Form The Model Clause essentially continues the approach of the prior clause that the contract is conditioned on issuance of a mortgage commitment but makes even more clear that the risk of loss of the commitment is on the purchaser (which some courts have failed to understand) The time to get the commitment is defined as a number of days (to be filled in) after the purchaser receives a fully executed copy of the contract make that delays by the seller do not reduce the contingency period The purchaser takes the risk of changes in the interest rate The seller has the right to cancel if a commitment is not issued by the specified date The clause is incorporated into the 112000 form of Residential Contract

of Sale See Holtzschue 2000 NYSBA Residential Contract of Sale Mortgage Commitment Contingency Clause and Other Changes 28 NY Real Prop LJ 107 (Fall 2000) 8 Registration and Licensing of Mortgage Brokers A person who engages in the business of soliciting processing placing or negotiating a residential mortgage loan on a one-to-four family home must be registered as a mortgage broker Banking Law sect 590(2)(b) A person who offers or attempts to negotiate a mortgage loan other than a residential mortgage loan must be licensed as a real estate broker or real estate salesman Real Prop Law sect 440-a For cases on liability to mortgage brokers for a commission see Recent Financing Developments 9 Registration of Mortgage Loan Originators A person employed by or affiliated with an entity originating residential mortgage loans who engages in mortgage loan originating must be registered as a mortgage loan originator Mortgage loan originating means assisting a customer of an originating entity by soliciting negotiating explaining or finalizing the terms of a mortgage loan Banking Law sect 599-c That section was repealed and replaced by a new version in 2009 to comply with the federal SAFE Mortgage Licensing Act 12 USC sectsect 5101-5116 The standards for MLO registration under the new statute are materially different in four major respects they (1) expand the role of the newly created nationwide Mortgage Licensing System and Registry to keep track of MLOs nationwide (2) require more stringent background checks (3) impose more stringent standards for pre-licensing and continuing education and a new pre-licensing testing requirement and (4) require each MLO to post a surety bond corresponding to the dollar amount of loans originated Braid Legislative Update Expanding Regulation of Mortgage Loan Originators Updating Article 12-E 38 NY Real Prop LJ 50 (Winter 2010) 10 Waiver by Purchaser 28 Properties Inc v Akleh Realty Corp 766 NYS2d 18 (1st Deprsquot 2003) (purchaser entitled to waive mortgage contingency clause inserted solely for its benefit) 11 Commitment Not ldquoFirmrdquo Some courts have allowed the purchaser to cancel on the ground the commitment was not ldquofirmrdquo (though the contract did not use that term) Severini v Wallace 13 AD3d 434 787 NYS2d 50 (2d Deprsquot 2004) (commitment conditioned on sale of cooperative apartment ldquodid not become firmrdquo so contract not binding on purchaser) Eves v Bureau 13 AD3d 1004 788 NYS2d 211 (3d Deprsquot 2005) (bankrsquos commitment letter conditioned on making repairs and appraisal greatly in excess of purchase price was not a firm commitment) Mauro v Collins 17 AD3d 549 793 NYS2d 186 (2d Deprsquot 2005) (contract providing that commitment would be considered firm even though conditioned on sale of purchasersrsquo home precluded purchasers from repudiating contract by relying on failure to sell their home) Zellner v Tarnell 65 AD3d 1335 885 NYS2d 745 (2d Deprsquot 2009) (letter issued by mortgagee that stated that commitment could be withdrawn if there was a change in facts stated in credit report was not a binding commitment within the meaning of rider to contract which provided that commitment would be deemed binding if it contained only

conditions within control of purchasers)

4 MORTGAGE FINANCING

4 Mortgage Financing

By Mindy Stern New York NY

A Sources of Financing

Institutional Lenders (savings banks commercial banks savings and loan associations credit

unions)

Most common

Mortgages securing 1-4 family residences are heavily regulated by consumer protection laws

requiring full written disclosure of loan terms and restrictions on lenders

Private Lenders

Typically the seller sometimes a friend relative or private investor

Assumption of Existing Debt

Existing Lender Must Consent

Saves mortgage recording tax some title insurance and other closing costs

Seller (original borrower) remains liable unless lender releases original borrower in writing

and unless purchaser expressly assumes mortgage debt through deed or by separate

agreement purchaser takes title subject to the mortgage but is not personally liable for it

Consolidation of Existing Debt with New Loan

Purpose to save mortgage recording tax

How it works the existing note and mortgage are assigned to the new lender the new lender

issues a note and mortgage (commonly referred to as a ldquogaprdquo note and a ldquogaprdquo mortgage) in a

principal amount equal to the difference between the current principal balance of the existing

mortgage and the total loan amount the two notes and mortgages are then consolidated into a

single loan pursuant to a consolidated loan note and a consolidation extension and

modification agreement (commonly referred to as a ldquoCEMArdquo) Mortgage recording tax is paid

only on the ldquonewrdquo loan proceeds (the amount of the ldquogaprdquo mortgagerdquo) because mortgage tax

has already been paid on the amount of the existing mortgage

CEMAs are common in commercial transactions but rare in residential transactions for

several reasons

- First New York law only requires lenders to deliver satisfactions of mortgage

when a loan is fully repaid RPL Section 275 They are not required to deliver

assignments of mortgage

- Second many residential loans are sold on the secondary market through Fannie

Mae and Freddie Mac programs where CEMAs are customary when the same

lender is refinancing an existing loan with the same borrower but usually not

permitted when the property is being sold to a new owner even when the

purchaser is obtaining financing from the same lender

- Third in the case of an assignment it is unlikely that the new lender will agree to

release the seller from liability under the existing debt and most residential sellers

are uncomfortable about retaining that continuing liability after the property is

- Fourth it is not always possible to locate the original note or notes being assigned

and some new lenders are uncomfortable taking an assignment of existing debt

without them even with a replacement note and indemnity from the existing

lender

- Finally the legal fees associated with an assignment typically are higher than those

associated with a satisfaction of mortgage so the CEMA is not cost effective

unless the mortgage tax savings outweigh the higher transaction costs

B Finding Those Sources Mortgage brokers and mortgage bankers

Mortgage Brokers

Mortgage brokers do not (and are not permitted to) originate loans They solicit loans from

lending sources

Reasons to Use Mortgage Brokers

- Mortgage brokers help borrowers compare loan products and direct borrowers to

lenders and loan products best suited to the borrowerrsquos needs and goals

- Mortgage brokers can help borrowers with credit history issues or those looking

for financing for property not all institutional lenders would embrace (such as a

coop or condo with less than 10 units or one with a high percentage of non owner-

occupied units)

- Mortgage brokers help clients challenged by paperwork to close a loan more

quickly

Caveats about Mortgage Brokers

- Not all institutional lenders work with mortgage brokers so the universe of loan

products available to mortgage brokers may be limited and a client may find a

better loan working directly with an institutional lender or mortgage banker

- Although mortgage brokers often advise clients that because their fees are paid by

the lender their services are ldquofreerdquo to the borrower in reality those fees are built

into the loan so a client might be able to save money working directly with an

institution with which the client has an existing relationship Shopping the loan is

prudent One way to do so HSH Associates wwwhshcom 800-873-2837

Mortgage Bankers

Mortgage lenders who make more than five residential loans per calendar year in New York

and who are not otherwise regulated by federal or state law (such as banks thrift institutions

and credit unions) are required to be licensed by the New York State Superintendent of Banks

as a mortgage lender Banking Law Article 12-D

Federal Law - The mortgage lenderrsquos charter often determines the disclosures required to be

made in the lending process Almost all institutional lenders are required by federal law (the

Truth in Lending Act and the Real Estate Settlement Procedures Act) to make various

disclosures to borrowers intended to ensure that the borrower understands the true cost of the

residential mortgage loan over the life of the loan as well as the up-front closing fees and

expenses

New York Law ndash The New York State Banking Department imposes additional disclosure

requirements fee restrictions and operational mandates on residential mortgage lenders

OCC ndash National banking associations with principal offices in New York State also must

comply with federal regulations promulgated by the Office of the Comptroller of the

Currency These regulations generally pre-empt state regulations or conflicting federal

regulations But given the relatively few regulations concerning residential mortgages issued

by OCC most such associations generally follow the federal and state requirements

C Representation of multiple parties (Borrower or Seller and Lender)

Under ethical guidelines an attorney may represent both the borrower and the lender in a real

estate transaction with express consent after full disclosure NYSBA Ethics Op 438 (1976)

However a lawyer generally should not represent the seller and the lender in the same

transaction except under unusual circumstances and unless the conditions of DR 5-105(C) are

met NYSBA Ethics Op 611

The borrower may (and typically does) pay the legal fee of lenderrsquos counsel in a mortgage

transaction In residential transactions the fee - typically a flat fee - is disclosed in the Good

Faith Estimate provided to the borrower when the loan application is submitted

D Loan application and qualification

Types of Loans

- Fixed Rate Interest rate doesnrsquot change Payments made in equal monthly

installments of principal and interest to completely amortize the principal over the

term of the loan

- Adjustable Interest rate varies over the loan term monthly payments increase or

decrease accordingly Some variable rates change annually other products have

change dates every 3 5 or 7 years others are a hybrid adjustable rate with an

option to convert to a fixed rate after a certain period of time Most have caps -

both as to each interest rate adjustment and the life of the loan Many also have a

floor - that the rate will never be less than a certain amount below the original rate

- Credit Line Extension of credit secured by real property permitting borrower to

borrow repay and borrow again up to a specified maximum amount Can be a

first mortgage but more commonly a second mortgage loan supplementing an

earlier or contemporaneous one secured by a first mortgage Often referred to in

residential transactions as a Home Equity Line of Credit (ldquoHELOCrdquo) Can be fixed

or adjustable rate Typically permits advances and re-advances during a finite

period up to the maximum amount allowed (not exceeding 20 years under New

York Tax Law Section 253-b and Real Property Law Section 281) after which no

further borrowing is permitted and the loan must be repaid

- Reverse A loan program authorized by New York Real Property Law Sections

280 and 280(a) and heavily regulated They are structured as an annuity which

permits a borrower age 60 or older (age 70 under mortgages created pursuant to

Section 280(a)) to tap into the equity of a home by receiving monthly payments

from a lender for a specified term and payable in full when the homeowner dies

sells or permanently vacates the home The loan must be prepayable without

penalty and the lender is permitted to look only to the value of the property for

repayment and not to the borrowerrsquos other assets In recent years these loans have

come under greater scrutiny as a result of abuses in loan disclosure and other

practices by some lenders and default rates higher than those for typical

mortgages See October 15 2012 New York Times article by Elizabeth Ecker

entitled ldquoAbuse Growing in Loan Option for the Elderlyrdquo in print version and ldquoA

Risky Lifeline for Seniors is Costing Some Their Homesrdquo in on-line version

- Government Loans The Federal Housing Administration (ldquoFHArdquo) does not issue

loans but has guaranteeinsurance programs intended to encourage lenders to

make loans secured by 1-4 family residences in certain geographic areas to people

who might not otherwise qualify The Veterans Administration (ldquoVArdquo) also does

not issue loans but has a similar guaranteeinsurance program intended to

encourage lenders to make loans to veterans who might not otherwise qualify for

them The State of New York Mortgage Agency (ldquoSONYMArdquo) was formed

pursuant to New York Public Authorities Law Section 2401 to provide ldquoa stable

supply of adequate funds for residential mortgagesrdquo in response to a housing

shortage for low income borrowers and to ldquospur new housing startshellipto reduce the

hazards of underemployment in the construction industryrdquo It offers an insurance

program similar to those of the FHA and VA

Loan Application Qualification and Costs

- Creditworthiness Suggest to your client that he or she establish his or her

creditworthiness before the contract is signed to the extent possible many can

obtain pre-contract credit clearance and some sellers require it before they will

consent to a contract financing contingency

- The Application

o Most banks use the same form- designed by Federal National Mortgage

Association (Fannie Mae) and the Federal Home Loan Mortgage

Corporation (Freddie Mac)

o Requires borrowers to state their assetsliabilities

o Lenders typically order a credit history to verify whatrsquos in it

- Loan Costs

Pre-Closing

o Application fee

o Credit check

o Appraisal

o Points

o Lock-in-Fee

Closing

o Escrows for Taxes Insurance - RESPA prohibits lenders

from escrowing more than 16 of the annual payments

o Various Underwriting Charges

o Mortgage Insurance through title company wextra endorsements (add-on

to title)

o Hazard Insurance w first year premium prepaid wlender as additional

named insured - required for houses proof of building insurance required

for condos and coops if itrsquos a condo wlender added as named insured for

the unit

o Mortgage Recording Tax - depending upon where the property is located

and the type of property rates range from 34 to close to 3

o Recording Fees (to record the mortgage and any other documents being

recorded such as a deed andor power of attorney)

E Ability-to-Repay and Qualified Mortgage Rule

The Consumer Financial Protection Bureau has issued a new Ability-to-Repay and Qualified

Mortgage Rule under Regulation Z of TILA effective January 10 2014 It requires creditors

to make a reasonable and good faith determination based on verified and documented

information that the borrower has a reasonable ability to repay the lo

an according to its terms It also establishes a presumption of compliance for ldquoqualified

mortgagesrdquo consumerfinancegovhellipability-to-repay-and-qualified-mortgage-standards-

under-the-truth-in-lending-hellip (See online materials)

At a minimum creditors must consider eight underwriting factors (1) current or reasonably

expected income or assets (2) current employment status (3) monthly payment on the

transaction (4) monthly payment on any simultaneous loan (5) monthly payment for

mortgage-related obligations (6) current debt obligations alimony and child support (7)

monthly debt-to-income ratio or residual income and (8) credit history

Creditors must use reasonably reliable third-party records to verify the information

For adjustable-rate mortgages the monthly payment must be calculated using the fully

indexed rate or an introductory rate whichever is higher

Special payment calculation rules apply for loans with balloon payments interest-only

payments or negative amortization

The rule also provides special rules to encourage creditors to refinance ldquonon-standard

mortgagesrdquo - which included various types of mortgages that can lead to payment shock and

result in default - into ldquostandard mortgagesrdquo with fixed rates for at least 5 years that reduce

borrowersrsquo monthly payments

As to Qualified Mortgages the line drawn has long been recognized as a rule of thumb to

separate prime loans from subprime loans

Under existing regulations only higher-priced mortgage loans are subject to an ability-to

repay requirement and a rebuttable presumption of compliance if creditors follow certain

requirements

The new rule strengthens the requirements needed to qualify for a rebuttable presumption for

subprime loans and defines with more particularity the grounds for rebutting the presumption

Specifically the final rule provides that borrowers may show a violation with regard to a

subprime qualified mortgage by showing that at the time the loan was originated the

borrowerrsquos income and debt obligations left insufficient residual income or assets to meet

living expenses The analysis would consider the consumerrsquos monthly payments on the loan

loan-related obligations and any simultaneous loans as well as any recurring material living

expenses

With respect to prime loans the rule will apply the new ability-repay requirement but creates

a strong presumption for those prime loans that constitute Qualified Mortgages

Qualified Mortgages The Dodd-Frank Act sets certain product-feature prerequisites and

affordability underwriting requirements for Qualified Mortgages The rule prohibits loans

with negative amortization interest-only payments balloon payments or terms exceeding 30

years So-called ldquono-docrdquo loans where the creditor does not verify income or assets cannot

be Qualified Mortgages

A loan generally cannot be a Qualified Mortgage if the points and fees paid by the borrower

exceed 3 percent of the total loan amount although certain ldquobona fide discount pointsrdquo are

excluded for prime loans The rule provides guidance of the calculation of point and fees and

thresholds for smaller loans

Monthly payments must be calculated based on the highest payment that will apply in the first

5 years of the loan and the borrower must have a total (or ldquoback-endrdquo) debt-to income ratio

that is less than or equal to 43 percent (using FHA guidelines for calculations)

The rule also prohibits prepayment penalties except for certain fixed-rate qualified mortgages

where the penalties satisfy certain restrictions and the creditor has offered the borrower an

alternative loan without such penalties

F Contract Contingency Clauses and Compliance

Standard Blumberg Forms (2000 NYSBA NYSLTA ABCNY NYCLA form)

- Commitment Contingency Clauses not Funding Contingency Clauses

o Most Risks After Commitment Obtained Assumed by Purchaser

o Satisfactory Appraisal Typical Exception

- Application to a Mortgage Broker (instead of directly to the Lender)

- Good Faith Application Required

- Compliance with Specified Time Frame to Apply and Obtain the Commitment

Letter

Other ldquoStandardrdquo Forms

- Vary from one jurisdiction to another Most usually state the amount of the loan

being sought a date by which the commitment must be obtained and the deadline

by which either just the purchaser or either party can cancel if the commitment

isnrsquot obtained Beyond that compare the clauses in your materials Some state

that the Purchaser must apply for the loan by a certain date others just say

immediately or promptly after the contract is signed Some specify what type

of lender is an acceptable source of financing (some say mortgage bankers are ok

others say VA or FHA loans are not ok others are silent) Some say itrsquos ok to

apply to a mortgage broker others donrsquot Some say the contingency extends to the

funding of the loan most do not Some permit the purchaser to cancel if certain

types of commitment conditions arenrsquot met (like a satisfactory appraisal) others

are silent or specifically state that all such risks are assumed by the Purchaser

Some include a requirement that the Purchaser act in good faith or use diligence to

apply for the loan and comply with commitment conditions others donrsquot

Typical Purchaser Concerns

- To Obtain Financing on Acceptable Terms

- To Ensure the Contract Downpayment is refundable if any Commitment

Conditions Cannot Be Met Some conditions relate to Purchaserrsquos credit some to

the property being purchased

- To Obtain Financing (both the written commitment letter and the funding) within

the times specified in the Contract to (1) apply for a loan (2) obtain a written

commitment letter and (3) close title If the Purchaser or the lender cannot meet

those deadlines the Purchaser technically is in default although without a time of

the essence obligation against the Purchaser he or she can extend the closing date

for a reasonable time

o Sometimes the Seller needs more time to cure title or lien problems and the

commitment expires before the Seller is ready to close in that case the

Purchaser needs the right to cancel the contract and get the downpayment

back unless the Purchaser can obtain an extension of the commitment or a

new one on the same terms without additional expense

- Cooperation from Seller in Loan Application Process

o Access to the premises for the lenderrsquos appraiser

o Access to the premises for a termite inspection

o Access to the premises to update an existing survey or if the lender

requires one to prepare a new survey

- To receive the Deposit Back if the Purchaser Doesnrsquot Get the Commitment or

Funding

- To Recover the Purchaserrsquos Financing Costs If the Seller Defaults

Typical Seller Concerns

- To know as soon as possible if the Purchaser can obtain financing

- To eliminate the contingency either entirely or as soon as possible after the

contract is signed

- To close within the time set in the contract

Practice Tips

- Read the contingency clause carefully Identify what is a deal breaker for your

client (whether seller or purchaser) keeping in mind the limitations of the

marketplace In a sellerrsquos market you cannot get a seller to carry all of the

financing risks If you represent the purchaser reduce them by having your

clientrsquos credit and the building pre-qualified and by having the bank issue a

commitment that does not have conditions other than the standard ones relating to

title surveys etc try to avoid commitments subject to appraisal or commitments

subject to the purchaser satisfying various underwriting criteria because if they are

not met and the contingency clause does not permit the purchaser to cancel the

contract in that situation the purchaser must proceed or risk losing the down

payment

- Good Faith is probably the single most critical factual issue in loan

contingency clause disputes because whether or not the contract expressly states

that the parties must act in good faith some courts will read that requirement into

residential contracts See Kapur v Stiefel (decided 91699) 264 AD2d 602 695

NYS2d 330 (1st Deprsquot 1999) See analysis in Recent Financing Contingency

Developments sect 3

G Loan Commitment

- Contains the bankrsquos approval of the borrowerrsquos application provides all the details

as to the loan amount type interest rate payments conditions to funding

requirements for title insurance surveys appraisals casualty insurance etc

- Read it before your client signs it

- Make sure it conforms to the terms of the contingency clause in the contract as to

loan amount interest rate maturity date and any other specified terms

- Make sure you check the deadline for returning the fully executed commitment to

the bank and the date it expires Coordinate with contract loan contingency

period and closing dates

H Loan Documentation

- Note - Fixed Rate or Adjustable Rate

- Mortgage (if itrsquos a condo expect one or two condo riders)

- RESPA Settlement Statement

- Miscellaneous Documents Inspired by Consumer Protection Laws

o Institutional lenders typically use standard documents either self created

like Citibank or Fannie MaeFreddie Mac forms like many savings banks

If yoursquore unfamiliar with them ask the lender to send you a set of blanks

documents before closing so that you can review them in advance then

check them at closing to make sure theyrsquore the same and that the business

terms conform to the terms of the commitment letter

o Explain the documents to your client donrsquot just have them sign Even the

most sophisticated clients need to know what theyrsquore signing so at least

highlight the most important provisions and make sure the clients

understand if theyrsquore personally liable for the mortgage debt which is the

case with most residential loans

o Also make sure the client knows that it typically takes between 30-45

minutes to sign all of the loan closing documents so theyrsquore prepared

o If your client will not be attending the closing make sure the lender

approves beforehand the Power of Attorney from your client you intend to

deliver

I Mortgage Note (State Form 3233 Fannie MaeFreddie Mac Uniform Instrument - New York Fixed

J Adjustable Rate Note

K Note any Recent Financing Developments (see following)

(State FOim 3233 Fannie MaeFreddie Mac Unifonn Instrument- New York Fixed Rate)

______ __ 20_

[Date]

[Property Address

1 BORROWERS PROMISE TO PAY

[City1 lState]

In return for a loan that I have received r promise to pay US $ (this amount is called Principal) plus interest to the order of the Lender The Lender is

c--o-c------c--C---c------------- -- I will make all payments under this Note in the fonn of cash check Of money order

I understand that the Lender may transfer this Note The Lender or anyone who takes this Note by transfer and who is entitled to receive payments under this Note is called the Note Holder

2 INTEREST

mterest will be charged on unpaid principal umil the full amount of Principal has been paid I will pay interest at a yearly rate of

The interest rate required by this Section 2 is the rate I will pay both before and after any default described in Section 6(B of this Note

3 PAYMENTS

(A) Time and Place of Payments

I will pay prinCipal and interest by making a payment every month

I will make my monthly payment on the __ day of each month beginning on --_ __ -_ ___ I will make these payments every month until 1 have paid all of the principal and interest and any other cbarges described below that I roay owe under this NOle Each monthly payment will be applied as of its scheduled due date and will be applied 10 interest before PrincipaL If OIl ---cc--c---c 20_ I sti ll owe amounts 1llder this Note 1 will pay those amounts in fult 00 (hat dare which is called the Maturity Date

I will make my monthly paymentsmiddot at --- _____________ _ ____ _

or at a different place if required by the Note Holder

(8) Amount of Monthly Payments

My monthly paymenl will be in the amount ofUS $ ________ ~

4 BORROWERS RIGHT 10 PREPAY

I have the right to make payments of Principal at any tirre before they are due A payment of Principal only is known as a Prepayment When I make a Prepayment I wil l tell the Note Holder in writing that I am doing so I may not designate a payment as a Prepayment if I have not made all the monlhly payments due under the Note

I may make a full PrepaytnCl1t or partial Prepayments without paying a Prepayment ch9Tge The Note Holder will use my Prepayments to reduce the amount of Principal that J owe under this Note However the Note Holder may apply my Prepayment to the accroed and unpaid interest on the

Prepayment amounl before applying my Prepayment to reduce the Principal amoUllt of the Note If I make a partial Prepaymem there will be no c hanges in the due date or in the amount of my IllOnlhly payment unless the Note Holder agrees in writing to those changes

5 LOAN CHARGES

If a law which applies to this loan and which sets maximum loan charges is finally interpreted so lhat the interest or other loan charges CQllected or to be collected in connection with this loan exceed the pennitfed limits then (a) any such loan charge shall be reduced by the amount necessary to reduce the charge to the pennitted limil and (b) any sums already col1tted from me which exceeded permiued limits will be refunded to me The Note Holder may choose to make this refund by reducing the Principal T owe under this Note or by making a direcr payment 10 me If a refund reduces Principal tbe reduction will be treated as a partial Prepayment

6 BORROWERS FAILURE TO PAY AS REQUIRED

(A) Late Charge for Overdue Payments

If the Note Holder bas not received the full amount of any IllOnthly payment by the end of c--c __ cnJendar days after the date it is due I will pay a late cbarge to the Note Holder The amount of the charge will be __ of my overoue payment of principal and interest r will pay this late charge promptly but only once on each late payment

(B) Default

If I do Dot pay the full amount of each monthly paymenl on the date it is due r wiJ( be in default

(C) Notice of Default

If I am in default the Note Holder may send me a written notice telling me timt if I do net pay tile overdue amount by a certain date the Note Holder may require me to p-ay immediately the full amount of Principal which has not been paid and all the interest that l owe on that amounL That date must be at least 30 days after the date on which the notice is mailed to me or delivered by other means

(D) No Waiver By Note Holder

Even if at a time when 1 am in default the Note Holder does not require me to pay immediately in full ltIS described above the Note Holder will still have the right to do so if j am in default at a later til1ll

(E) Payment of Note Holders Costs and Expenses

If the Note Holder has required me to pay immediately in full as described above the Note Haider will have the right to be paid back by me for ali of its costs and expenses in enforcing this Note to the extent nOI prohibited by applicable law Those expenses include for example reasonable attorneys fees

7 GIVING OF NOTICES

Unl~s applicable taw requires a different method any notice that must be given to me under this Note will be given by delivering it or by mailing it by first clas$ mail to me at the Property Address above or at a different address if 1 give the Nlte Holder a notice of my different address

Any notice that must be given to the Note Holder under this Note will be given by delivering it or by mailing it by first class mail to the Note Holder at the address stated in Section 3A) above or aJ a different address if I am given a notice of that different address

8 OBUGA TIONS m PERSONS UNDER TIIIS NOTE

If more than one pcrsln signs this Note each person is fully and perslnally lbligated to keep all of the promises made in this Note including the promise to pay the full amoun owed Any person who is a

guarantor surety or endorser of this Note is a lso obligated to do these things Any person who lakes over these Obligations including the obligations of a guarantor surety or endorser of this Note is also obligated to keep all of the promises made in this Note The Note Holder may enforce its rights under this Nott ilgainst each person individually or against all of us together This means that anyone of us may be required to pay all of the amounts owed under this Note

9 WAIVERS

I and any other person who has obligations unda this Note waive the rights of fresenunenl and Notice of Dishonor Presentment means the right to reqnire the Note Holder to demand payment of amounts due Notice of Dishonor means the righl to require the Note Holder to give notice to other persons that amounts due have not been paid

10 UNIFORM SECURED NOTE

This Note is II nnifonn instrument with limited variations in some jurisdictions_ In addition to the protections given to the Note Holder uoder this Note a Mortgage Deed of Trust or Security Deed (the Security Instrument ) dated the same date as Ihis Note protects the Note Holder from possible losses which might result if I do not keep the promises which 1 make in this Note That Security Instrument describes how and under what conditions I may be required 10 make immediate payment in full of all amounts I owe under this Note Some of those conditions nrc described as foUows

Lender may require immediate payment in full of all Sums Secured by this Security Instrument if all or any part of the Property or if any right in the Property is sold or transferred without Lenders prior written pennission If Borrower is not a natural person and a beneficial interest in Borrower is sold or transferred without Lenders prior written penmssion Lender also may require immediate payment in fu lt However this option shall not be exercised by Lender if such exercise is prohibited by Applicable Law

If Lender requires immediate payment in full under this Section 18 Lender will give me a notice which slates this requirement The notice will give me at least 30 days to make the required payment

The 3Ckiay period will begin on the date the notice is given to me in the manner required by Section 15 of this Security Instrument If I do not make the required payment during that period Lender may act to enforce its rights under this Security Instrument withQUt giving me any further notice or de~dforpayIDCnt

WITNESS TIlE HAND(S) AND SEAL(S) OF TIlE UNDERS IGNED ________________________ (S~)

-Borrower

_______________________ (S)

-Borrower

_______________________ (S)

-Borrower

[Sign Original Only]

ADroSTABLE RATE NOTE

(1 YEAR TREASURY INDEX - RATE CAPS)

THIS NOTE CONTAINS PROVISIONS ALLOWIlG FOR CHANGES IN MY INTEREST RATE AND MY MOlTHLY PAYMENT TIllS NOTE LIMITS THE AMOUNT MY INTEREST RATE CAN

CHANGE AT ANY ONH TIME AND TRE MAXIMUM RATE I MUST PAY

[Date] [City]

[Property Address I

[State]

In return for a loan hat I have received I promise to pay US $_----_------- (this amount is called Principal) plus inlerest to the order of the Lender The Lender is

I will make all payments under Ihis Note in the fonn of cash check or money order I understand thaI the Lender may transfer this Note The Lender or anyone who takes this Note by transfer and who is entitled to receive payments under this Note is called the Note Holder

2 INTEREST

[me rest will be charged on unpald principal until the fuli amOUnl of Principal has been paid j will pay interest 6t a yearly rate of The interest rate I wiU pay will change in accordance with Section 4 of this Note

The interest rate requircd by this Section 2 and Section 4 of this Note is the rate I will pay both before and after any default described in Section 7(B) of this Note

3 PAYMENTS

I will pay principal and interest by making a payment every month

will make my monthly payment on the first day of each month beginning on ----- __ -- ___ I will make these payments every month until I have paid all of the principal and interest and any other charges described below that I may owe under this Note Each monthly payment will be applied as of its scheduled d)le date and will be applied to interest before Principal If on bull 20~ I still owe amounts under this Note I will pay those amounts in fuJI on that date which is called the Maturi ty Date

I will make my monthly payment ___________________ Of at a

different place if required by the Note Holder

(B) Amount of My Initial Monthly Payments

Each of my initial monthly payments wil l be in the amount of US $ _______ This amount may change

(C) Monthly Payment Change

Changes in my monthly payment will reflect changes in the unpaid principal of my loan and in the interest rate that I must pay The Note Holder will detennine my new interest rate and the changed amount of my monthly payment in accordance with Section 4 of this Note

4 INTERESTRATEANDMONTHLYPAYMENTCHANGFS

(A) Change Dates

The interest rate 1 will pay may change on tlJe frrst day of ------C7--~ _7 and on that day every 12th month thereafter Each date on which my interest fale could change is called a Change Date

(8) Tbe Index

Beginning with the first Change Date my interest rate wilt be based on an Index The Index is the weeldy average yield on United States Treasury securities adjusted to a constant maturity of one year as made available by the Federal Reserve Board

The most recent Index figure available as of the date 45 days before each Change Date is caJled the Current Index

If the Index is no longer avai lable the Note Holder will choose a new index which is based upon compamble infonnation

The Note Holder will g ive me notice of this choice)

(C) Calculation of Changes

Before each Change Date the Note Holder will calculate my new interest rate by adding

------_---__ -- __ - percentage points ( ) to the Current Index The Note Holder wiU then round the result of this additioD to the nearest one-eighth of one percentage point (0125) Subjoct to the linrits slated in Section 4(D) below this rounded amount will be my new interest rate until the next Change Date

The Note Holder will then determine the amount of the monthly payment tbat would be sufficient to repay the unpaid principal that I am expected LO owe at the Change Date in full on the Matnrity Date at my new interest rate in substantially equal payments The result of this calculation will be the new amount of my monthly payment

(D) Limits on Interest Rate Changes

The interest rate I am required to pay at the 6rSI Change Date will not be greater than _--__ --_ or less than Thereafter my interest rate will never be increased or decreased on any single Change Date by more than two percentage points (20) from the rate of interest I have been paying for the preceding 12 months My interest rate will never be greater than

--~- (E) Effective Dare of Changes

My new interest rate will become effective on each Change Date I w il pay the amount of my new monthly payment beginning on the first monthly payment date after the Change Date until the amount of my monthly payment changes again

(F) Notice of Changes

The Note Holder will ~el iver or mail to me a notice of any changes in my interest rate and the amount of my monthly payment before the effective date of any change The notice will include infonnation required by law to be given to me and abo the title and telephonc number of a person who will an~wer any question I may have regarding the DOtiCC

S BOBROWERS RIGHT TO PREPAY

I have the right to make payments of Principal at any time before tbey are clue A payment of Principal only is known as a ltprepayment When I make a Prepayment I will tell the Null Holder in writing that I am doing so I may Dol designate a payment as a Prepayment if 1 bave not made all the monthly payments due under the Note

I rna) make a full Prepayment or partial Prepayments without paying a Prepayment charge The Note Holder will use my Prepayments 10 reduce the amount of Principal that I owe under this Note However the Note Holder may apply my Prepayment to the accrued and unpaid interest on the Prepayment amount before applying my Prepayment to reduce the Principal amount of the NOie Jf I make a partial Prepayment there will be no changes in the due dales of my monthly payment unless the Note Holder agrees in writing to those changes My partial Prepayment may reduce the amount of my monthly payments after the first Change Dale following my partial PrepaYlllenL However any redution due to my partial Prepayment may be offset by an intemst rate increase

6 LOAN CHARGES

If a law which applies to this loan and which sets maximum loan charges is final ly interpreted so that the interest or other loan charges collected or to be collected in connection with this loan exceed the pennitted limi~ then (a) any such loan charge shall be reduced by the amounlnecessary to reduce the charge to the permitted limit and (b) any sums already collected from me which exceeded pennitted limits will be refunded to me The Note Holder may choose to make this refund by reducing the Principal lowe under this Note or by making a direct payment to me If a refund reduces Principal the reduction will be treated as a partial Prepayment

(A) Late Charges for Overdue Payments

If the Note Holder bas not received the full amount of any monthly payment by the end of ___ -------- calendar days after the date it is due I will pay a late charge to the Note Holder The amount of the charge will be of my oVefdue payment of principal and interesL I will pay this late charge promptly but only once on each laIC paymen

(8) Default

lf I do not pay the full amount of each monthly payment on the date it is due I will be in default

If I am in default the Note Holder may send me a written notice telling me that if I do not pay the overdue amount by a certain date the Note Holder may require me to pay immediately the full amount of Principal which has not been paid and all the interest that lowe on that amount That date must be at least 30 days fter the dilte on which the notice is mailed to roe or delivered by othe means

(D) No Waiver By Note Holde

Even if at a time when I am in default the Note Holder does not require me to pay immediately in full as described above the Note Holder will still have the right to do so if I am in default at a later time

(E) Payment of Note HoLders Costs and Expenses

If the Note Holder has required me to pay immediately in full as described above the Note Holder will have the right to be paid back by me for all of i~ coslS and expenses in enforcing this Note 10 the extent not prohibited by applicable law Those expenses include for example reasonable attorneys fees

8 GIVING OF NOTICES

Unless applicable law requires a different method any notice that must be given to me WlCler this Note will be given by delivering it or by mailing it by first class mail to me at the Property Address above or at a d ifferent address if 1 give the Note Holder a notice of my different address

Any notice that must be g iven to the Note Holder under this Note wiU be given by del ivering it or by mailing it by fIrst class mail to the Note Holder at the address staled in Section 3(A) above or at a different address if I am given a notice of that different address

9 OBLIGATIONS OF PERSONS UNDER TIDS NOTE

If more than one person signs this Note each person is fully and personally obligated to keep all of the promises made in this Note including the promise to pay the full amount owed Any person who is a guarantor surety or endorser of this Note is also obligated to do these things Any person who takes over these obligations including the obligations of a guarantor surety or endorser of this Note is also obligated to keep all of the promises made in this Note TIle Note Hulder may enforce its rights under this Note against each person individually or against all of us together l11is means thaI any ooe of us TllIIy be required to pay all of the amounts owed under this Note

10 WAIVERS

l and any other person who has obligations under this Note wai ve the rights of Presentment and Notice of Dishonor Presentment means the right to require the Note Holder to demand payment of amounts due Notice of Dishonor means the right to require the Note Holder 0 give notice to other persons that amounts due have not been paid

Thj~ Note is a uniform instrumeot with limited variations in some jurisdictions In addition to the protections given [0 the Note Holder tinder this Note a Mortg~ Deed of Trust or Sccurity Deed (the Security Instrument) dated the same date as this Note protects the Note Holder from possible losses wbich might result if I do not keep the promises which 1 make in this Note That Security Instrument describes bow and under what condjfjom r may be required 10 make immediate payment in full of all amounts l owe under this Note Some of those conditions are described as follows

If all or any part of the Property or Rny Interest in the Property is sold or transferred (or if Borrower is not a natural person and a beneficial interest in Borrower is sold or transferred) without Lenders prior written consent Lender may require immediate payment in full of ali sums secured by this Security Instrument

However lhis option shall not be exercised by Lender if such exercise is prohibited by Applicable Law Lender also shall not exercise this option if (a) Borrower causes to be submilled to Lender information required by Lender to evaluate the intended transferee as if a new loan were being made to the transferee and (b) Lender reasonably determines that Lenders security will nOI be impaired by the loan assumption and that the risk of a breach of any covenant or agreement in this Security instrument is acceptable to Lender

To the extent permilted by Applicable Law Lender may charge a reasonable fee as a eondilion to Lenders consent to the loan assumption Lender may also require the transferee 0

sign an assumption agreement that is acceptable to Lender and that obligates the uansferee to keep al l the promises and agreements made in the Note and in this Security Instrument Borrower wiJI continue to be obligated under ttle Note and this Security Instrument unless Lender releases Borrower in writing

If Lender eercises tbe option to require immediate payment in fuji Lender shall give Borrowcr notice of acceleration The notice shall provide II period of oot less than 30 days from the date the notice is given in accordance with Section 15 within which Borrower must pay all sums secured by this Security Instrument If Borrower fails to pay these swns prior to the expiration of trus period Lender may invoke any remedies pennitted by this Security Instrument wi thout futther notice or demand on Borrower

WITNESS THE HAND(S) AND SEALS) OF THE UNDERSIGNED ______________________________ Campru)

-Borrower _______________________________ Campru)

-Borrower

______________________________ CSI)

-Borrower

[Sign Origulai Only)

RECENT FINANCING DEVELOPMENTS copy Karl B Holtzschue 2014 [most recent material in italics] 1 2001 FNMAFHLMC Mortgage Form For analysis of the 2001 FNMAFHLMC mortgage form see Baum FannieMaeFreddieMac Mortgage NY Real Prop LJ 26 (Winter 2002) 2 Truth in Lending Disclosure Federal law requires lenders to residential borrowers to provide a good faith estimate (GFE) disclosure form upon application to enable them to compare loan credit terms such as the annual percentage rate (APR) and costs TILA was amended in 2008 to require additional disclosures for loans secured by the dwelling of a consumer where the annual rate of interest is variable Mortgage Disclosure Improvement Act of 2008 (PL 110-289) Regulation Z was amended by final rule on July 30 2008 to add four key protections for a newly defined category of ldquohigher-priced mortgage loansrdquo secured by a consumerrsquos principal dwelling (1) prohibiting a lender from making a loan without regard to the borrowerrsquos ability to repay the loan from income and assets other than the homersquos value (2) requiring creditors to verify the borrowerrsquos income and assets (3) banning any prepayment penalty if the payment can change in the initial four years and (4) requiring creditors to establish escrow accounts for property taxes and insurance of all first-lien mortgage loans Fed Reg 44522 (July 30 2008) The new rules took effect on October 1 2009 except for the escrow requirement which will be phased in during 2010 The borrower should review the GFE carefully See Pechinski v Astoria Fed Savings and Loan Assn NYLJ Jan 14 2003 (SDNY) (charge for assignment of home mortgage was neither a finance charge nor a prepayment penalty and thus not required to be disclosed) JP Morgan Chase Bank v TECL 24 AD3d 1001 808 NYS2d 432 (3d Deprsquot 2005) (de minimis inaccuracies in disclosure statement did not violate TILA) 24 AD3d 1001 808 NYS2d 432 (3d Deprsquot 2005) (de minimis inaccuracies in disclosure statement did not violate TILA) La Salle Bank Nat Assrsquon v Kosarovich 820 NYS2d 144 (3d Deprsquot 2006) (fact issues as to counterclaim that lender misrepresented to borrower terms of refinancing of mortgage in violation of TILA) See Seaquist and Bramhandkar The Whole Truth The Problem with ldquoTruth in Lendingrdquo NYSBA Journal 30 (June 2006) (describing problems with TILA calculations) Effective January 30 2011 TILA was amended to require delivery of more detailed easier-to-read disclosures in spread-sheet style including estimates of escrows for taxes and insurance and maximum interest rates and monthly payments for adjustable rate loans The Consumer Financial Protection Bureau has issued a new Ability-to-Repay and Qualified Mortgage Rule under Regulation Z of TILA effective January 10 2014 It requires creditors to make a reasonable and good faith determination based on verified and documented information that the borrower has a reasonable ability to repay the loan according to its terms considering eight underwriting factors Qualified mortgages generally prohibit ldquono-docrdquo loans negative amortization interest-only payments balloon payments points and fees exceeding three percent of the loan amount and a debt-to-

income ratio greater that 43 percent See generally Di Lorenzo Qualified Mortgages New Regulatory Standards and Safe Harbor from Liability 42 NY Real Prop LJ 5 (Winter 2014) 3 RESPA Disclosure A final rule in 2008 made extensive amendments to the disclosure requirements of Regulation X 73 Fed Reg 68204 (Nov 17 2008) The amendments were designed to protect consumers from unnecessarily high settlement costs by taking steps to (1) improve and standardize the Good Faith Estimate (GFE) form (completely revised with a new third page of instructions tradeoff tale and shopping chart) to make it easier to use for shopping among settlement service providers (2) ensure that page 1 of the GFE provides a clear summary of the loan terms and total settlement charges (2) improve disclosure of yield spread premiums (YSPs) to help borrowers understand how YSPs can affect settlement charges (3) facilitate comparison of the GFE and the HUD-1HUD-1A Settlement Statements on page 2 of the HUD-HUD-1A forms (4) ensure that at settlement borrowers are aware of final costs (5) clarify HUD-1 instructions (6) expressly state that RESPA permits the listing of an average charge on the HUD-1HUD-1A and (7) strengthen the prohibition against requiring the use of affiliated businesses Among other things the HUD-1HUD-1A must state the agentrsquos and underwriterrsquos portion of the total title insurance premium The new third page of the HUD-1HUD-1A form includes a comparison of the GFE and HUD-1 charges and a summary of the loan terms The HUD-1HUD-1A specifies charges that cannot increase charges that in total cannot increase more than 10 and charges that can change Lenders and settlement service provides may correct potential violations of the new disclosure and tolerance requirement and will have 30 days from the closing to correct errors or violations and repay consumers any overcharges Compliance with the new requirements for the GFE and settlement statements is not required until January 1 2010 but certain other provisions are effective on January 16 2009 Mazzei v The Money Store 552 FSupp2d 408 (SDNY 2008) (lender did not violate RESPA requirements to respond to inquiry letters as to amounts claimed to be due) Shroder The Value of Sunshine The Efficacy of the Real Estate Settlement Procedures Act Disclosure Strategy 22 Prob amp Prop 19 (JulAug 2008) In re Young 56 AD3d 181 866 NYS2d 350 (2d Deprsquot 2008) (participating in mortgage fraud in closings and distributing funds differently than as stated on HUD-1s was criminal and warranted disbarment) In re Port 57 AD3d 139 867 NYS2d 500 (2d Deprsquot 2008) (attorney whose title abstract company prepared HUD-1 forms that contained materially false information on properties he owned and was selling to induce HUD to insure the mortgages and pleaded guilty to a federal felony was automatically disbarred) Dobroshi v Bank of America NA 65 AD3d 882 886 NYS2d 106 (1st Deprsquot 2009) (borrower stated claim for fraud against bank for alleged deliberate underestimation of loan closing costs to induce loan informed of significant increase between GFE and HUD-1 one day before closing) In re Davis 88 AD3d 314 928 NYS2d 684 (1st Deprsquot 2011) (convictions for conspiracy to commit bank fraud by participating in property flipping scheme using straw buyers inflating property values preparing fraudulent HUD-1 statements and disbursing monies to other scheme participants warranted acceptance of resignation) In re Moore 932 NYS2d 528 (2d Deprsquot 2011) (as closing attorney listing on HUD-1 sales price $9000 higher than price on contract and failing to deliver check to seller failure to pay escrow funds to seller on

buyerrsquos default and failure as title agent to record deeds issuing checks with insufficient funds warranted disbarment) In re Pellegrini 941 NYS2d 222 (2d Deprsquot 2012) (representing both purchaserborrower and lender falsely understating the amount of the sellerrsquos concession failure to disburse funds in accordance with the HUD-1 and providing a false HUD-1 to the lender and directing the borrower to sign it warranted a two-year suspension) 4 RESPA Overcharges and Mark-ups of Settlement Charges HUD has promulgated a Policy Statement 2001-1 (66 Fed Reg 53052 53057-58 (Oct 18 2001)) prohibiting overcharges and mark-ups of settlement services Federal Circuit Courts have refused to follow it as to overcharges and split at to mark-ups Kruse v Wells Fargo Home Mortgage Inc 383 F3d 49 (2d Cir 2004) (RESPA did not prohibit overcharges on settlement service fees HUD Policy Statement 2001-1 prohibiting mark-ups of third party fees without performing additional services entitled to deference agreeing with Sosa v Chase Manhattan Mortgage Corp 348 F3d 979 (11th Cir 2003) but not with Boulware v Crossland Mortgage Corp 291 F3d 261 (4th Cir 2002) Krzalic v Republic Title Co 314 F3d 875 (7th Cir 2002) cert den 539 US 958 (2003) and Haug v Bank of Am 317 F3d 832 (8th Cir 2003)) Cohen v JP Morgan Chase amp Co 498 F3d 111 (2d Cir 2007) (HUD reasonably resolved ambiguity in RESPA by construing it to apply to undivided $225 post-closing fee for refinancing for which bank allegedly provided no services disclosure of the fee before payment did not preclude a claim for deceptive business practice under NYGBL sect 349) Cohen v JP Morgan Chase amp Co 262 FRD (EDNY 2009) (class certified re lenderrsquos collection of post-closing fees in violation of RESPA) 5 Late Charges 1300 Ave P Realty Corp v Stratigakis 720 NYS2d 725 (2d Deprsquot 2000) (four percent late charge applied to balloon payment of $364370) 12 CFR sect 56033 permits a federal savings association to impose a late charge for a payment more than fifteen days late and the Office of Thrift Supervision takes the position that a late charge may not exceed five percent of the overdue payment On the federal preemption for federal lenders as to late charges see Hall ldquoFederal Preemption of Real Estate Lending Activities of OTS Regulated Lendersrdquo 30 NY Real Prop LJ 59 (Spring 2002) 6 Lendersrsquo Fees Fees charged by lenders have been challenged Dougherty v North Fork Bank 753 NYS2d 130 (2d Deprsquot 2003) (mortgagee prohibited from charging facsimile fee but not prohibited from charging attorney fee for preparation of satisfaction) Kidd v Delta Funding Corp 751 NYS2d 267 (2d Deprsquot 2002) fact issues existed whether lenderlsquos charging illegal processing fees was deceptive) Morgan Barrington Financial Services v Roman 27 AD3d 385 811 NYS2d 662 (1st Deprsquot 2006) (purchaser who unreasonably opted to challenge amount of its lenderrsquos attorneysrsquo fee at closing rather than pay under protest failed to show its ability to close at rescheduled time of essence closing) 7 Mandatory Disclosures Rochester Home Equity Inc v Upton 767 NYS2d 201 (Sup Court Monroe County 2003) (disclosures pursuant to federal law should have

preceded lock-in agreement) The federal Equal Credit Opportunity Act requires notification of approval or denial within thirty days 15 USC sect 1691(d)(1) See Titus v Mortgage Enterprises Ltd 760 NYS2d 66 (2d Deprsquot 2003) (mortgagor expressly waived right to assert reliance on alleged verbal assurances from mortgageersquos employee regarding loan approval date) 8 Prepayment A amp R Kaliminian LLC v Breger Gorin amp Leuzzi LLP 763 NYS2d 52 (1st Deprsquot 2003) (alleged failure to renegotiate prepayment penalty did not cause harm because client knew bank regarded it as non-negotiable) Schiff v Sokolow 48 AD3d 541 852 NYS2d 210 (2d Deprsquot 2008) mortgagor entitled under GOL sect 5-501(3)(b) to prepay mortgage without penalty more than one year after loan made) Cathedral Properties Corp v Blinbaum 55 AD3d 729 865 NYS2d 345 (2d Deprsquot 2008) (mortgagee not obligated to accept prepayment) 9 Federal Preemption of State Prepayment-Penalty Statutes A regulation of the Office of Thrift Supervision making its prepayment penalty and late-fee regulations inapplicable to state-chartered housing creditors as of July 1 2003 has been upheld Murray Federal Preemption of State Prepayment-Penalty Statutes The OTS Reverses Itself18 Prob amp Prop 63 (MayJune 2004) Natrsquol Home Equity Mortg Assrsquon v Office of Thrift Supervision 373 F3d 1355 (DC Cir 2004) Glukowsky v Equity One Inc 848 A2d 747 (NJ 2004) (OTS regulation valid to preempt NJ law when applied between 1996 and 2003) (4-3) 10 Yield Spread Premiums Klayman Yield Spread Premiums Illegal Referrals and the Real Estate Settlement Procedures Act Blurred Vision 32 Real Est LJ 207 (Winter 2003) Monroig v Washington Mutual Bank PA 18 AD3d 248 19 AD3d 563 800 NYS2d 416 (2d Deprsquot 2005) (HOLA preempted claims against federal savings association for paying yield spread premium to mortgage broker) Lum v New Century Mortgage Corp 19 AD3d 558 800 NYS2d 408 (2d Deprsquot 2005) (borrower failed to allege that payment of yield spread premium was motivated by malice and failed to establish fiduciary relationship with mortgage broker or that lender made a misleading statement) Wint v ABN AMRO Mortgage Group Inc 19 AD3d 588 800 NYS2d 411 (2d Deprsquot 2005) (borrower failed to sufficiently plead fraud against lender as to payment of yield spread premium did not have private right of action under commercial bribery statute and was denied class certification as illegality of YSP under RESPA raised fact issues) Fisher v Equicredit 19 AD3d 541 800 NYS2d 407 (2d Deprsquot 2005) (yield spread premium of 2 to mortgage broker was valid despite borrowerrsquos claim that interest rate was over the market) Jade Realty LLC v Citigroup Commercial Mortgage Trust 2005-EMG 20 NY3d 881 980 NE2d 945 957 NYS2d 280 (2012) (5-1) (mortgage note held not to require mortgagor to pay yield maintenance fee for voluntary prepayment of loan where note called for computation of fee as of date of ldquodefaultrdquo majority said result was not absurd) NOTE Loan originators can no longer be paid yield-spread premiums payments must be based solely on the loan amount and the originators can no longer collect payments from both the borrower and the lender Loan Originator Compensation amendment to

Regulation Z effective Apr 1 2011 11 Mortgage Insurance Residential loans with a loan-to-value ration above 80 are usually not available without government insurance (from the FHA) or government guarantees (from the VA) or private mortgage insurance which may enable the ratio to reach 95 See Nelson amp Whitman Real Estate Finance Law sect 112 (3d ed 1994) Johnstone Private Mortgage Insurance 39 Wake Forest LRev 783 (2004) (a critical evaluation) 12 Mortgage Broker Liability A mortgage broker does not generally owe fiduciary duties to a customer Wint v ABN Amro Mortgage Group Inc 19 AD3d 588 800 NYS2d 411 (2d Deprsquot 2005) But see Iannuzzi v Washington Mutual Bank 2008 USDist LEXIS 65541 (mortgagors sufficiently alleged conduct establishing fiduciary relationships where mortgage broker had taken control of application process and did not permit mortgagors to review their applications for reverse mortgage mortgage broker not subject to TILA) Shovak v Long Island Commercial Bank 50 AD3d 1118 858 NYS2d 660 (2d Deprsquot 2008) (borrower failed to establish that mortgage broker made materially misleading statement as to its receipt of yield spread premium of two points from mortgage lender premium not so flagrant as to support punitive damages) Deutsche Bank National Trust Company v Sinclair 68 AD3d 914 891 NYS2d 445 (2d Deprsquot 2009) (homeownersrsquo third party action against mortgage broker alleging that broker procured three refinancing loans in one year by misrepresenting their income failed to state fraud where homeowners were aware of the overstatement) 13 Commission Due to Mortgage Broker Borrowers often hire mortgage brokers to find financing The rules for mortgage brokers earning a commission are the same as for real estate brokers General Home Capital Corp v Campbell 9 Misc3d 1074 800 NYS2d 917 (Dist Court Nassau County 2005) (mortgage brokerrsquos right to fee extinguished when home owners rescinded refinancing) Garnett v Hudson Rent-A-Car 714 NYS2d 302 (2d Deprsquot 2000) (broker hired to obtain financing entitled to commission when borrower prevented loan by failing to make its books available) Preferred Mortgage Brokers Inc v Byfield 723 NYS2d 230 (2d Deprsquot 2001) (commission due on signing of acceptance of mortgage commitment not payable if commitment not accepted) Security Mortgage Group LLC v Oak Hill Family Park LLC 49 AD3d 1302 854 NYS2d 606 (4th Deprsquot 2008) (mortgage broker earned a commission when it obtained a commitment letter from a lender on all the terms borrower set in agreement with the broker) Lelin v Shrestha 24 Misc3d 9 882 NYS2d 811 (Sup Court App Term 9th amp 10th Jud Districts 2009) (clients who signed brokerrsquos fee commitment letter for mortgage required to pay mortgage brokerrsquos commission where commission agreement said fee was due whether or not loan closed) 14 Registration and Licensing of Mortgage Brokers A person who engages in the business of soliciting processing placing or negotiating a residential mortgage loan on a one-to-four family home must be registered as a mortgage broker Banking Law sect 590(2)(b) A person who offers or attempts to negotiate a mortgage loan other than a residential mortgage loan must be licensed as a real estate broker or real estate salesman

Real Prop Law sect 440-a Timofeyev v Paland and Shapiro PC 30 Misc3d 546 916 NYS2d 482 (Civil Court City of New York 2010) (mortgage refinancing assistance services held not incidental to legal practice so provider needed mortgage broker license compensation provision in retainer agreement based on balance of refinanced mortgage held unethical) 15 Registration of Mortgage Loan Originators A person employed by or affiliated with an entity originating residential mortgage loans who engages in mortgage loan originating must be registered as a mortgage loan originator Mortgage loan originating means assisting a customer of an originating entity by soliciting negotiating explaining or finalizing the terms of a mortgage loan Banking Law sect 599-c That section was repealed and replaced by a new version in 2009 to comply with the federal SAFE Mortgage Licensing Act 12 USC sectsect 5101-5116 The standards for MLO registration under the new statute are materially different in four major respects they (1) expand the role of the newly created nationwide Mortgage Licensing System and Registry to keep track of MLOs nationwide (2) require more stringent background checks (3) impose more stringent standards for pre-licensing and continuing education and a new pre-licensing testing requirement and (4) require each MLO to post a surety bond corresponding to the dollar amount of loans originated Braid Legislative Update Expanding Regulation of Mortgage Loan Originators Updating Article 12-E 38 NY Real Prop LJ 50 (Winter 2010) 16 Certificate of Mortgage Discharge Failure by a mortgagee to present a certificate of discharge for recording shall result in the mortgage being liable to the mortgage for $500 if he fails to present such certificate within 30 days or $1000 within 60 days or $1500 within 90 days Mortgagee does not include one who makes less than five mortgage loans in any calendar year See 2005 amendments to NY RPL sect 275(1)and NY RPAPL sect 1921(1) Dowd v Alliance Mortgage Co 32 AD3d 894 822 NYS2d 558 (2d Deprsquot 2006) (RPL sect 274-a(2) prohibits bank from charging borrower for providing payoff statement) 17 Assignment of Mortgage 767 Third Avenue LLC v Orix Capital Markets LLC 26 AD3d 216 812 NYS2d 8 (1st Deprsquot 2006) (owners of commercial properties prepaying mortgage not entitled under RPL sect 275 to an assignment rather than a satisfaction without payments of assignment fee from servicer) 18 Mortgage Electronic Recording System (MERS) A mortgage in the MERS registry will have MERS named as the mortgagee of record and MERS will electronically track servicing rights and beneficial ownership interests in registered loans without the need to publicly record a mortgage assignment each time Arnold MERS Becomes a Reality 25 NY Real Prop LJ 96 (Summer 1997) Merscorp Inc v Romaine 743 NYS2d 562 (2d Deprsquot 2002) (injunction required Nassau County Clerk to register mortgages under MERS name) affrsquod as modified 2005 NY App Div LEXIS 14360 (2d Deprsquot 2005) (assignments and discharges also acceptable for recording) affrsquod 2006 NY LEXIS 3699 (2006) (concurrence and dissent called for legislature to address disparity between state and electronic mortgage industry) Mortgage Electronic Registration System Inc v

Coakley 41 AD3d 674 838 NYS2d 622 (2d Deprsquot 2007) (MERS was lawful holder of note and mortgage and entitled to bring foreclosure action) Mortgage Electronic Registration Systems Inc v Maniscalco 46 AD3d 1279 848 NYS2d 766 (3d Deprsquot 2007) (mortgagor failed to establish existence of valid escrow agreement to enable negotiation of judgment liens alleged breach not substantial enough to warrant rescission) Landmark National Bank v Kessler 216 P3d 158 (Kansas 2009) (although MERS recorded as mortgagee it is not entitled to be served or joined as a party to foreclosure of senior mortgage because it is a mere nominee and not a true obligee under the debt or holder of rights under the mortgage) US Bank NA v Flynn 897 NYS2d 855 (Supreme Court Suffolk County 2010) (mortgagee as assignee of mortgage and note had standing to foreclose pursuant to valid assignment by nominee MERS) (long analysis) Bank of New York v Alderazi 900 NYS2d 821 (Supreme Court Kings County 2010) (no evidence that nominee MERS was authorized by mortgagee to assign loan to bank as necessary for bank to foreclose Bank of New York v Silverberg 86 AD3d 274 926 NYS2d 532 (2d Deprsquot 2011) (assignee of MERS which was listed as nominee and mortgagee for recording but was never actual holder lacked standing to commence foreclosure) Deutsche Bank National Trust Company v Pietranico 33 Misc3d 528 928 NYS2d 818 (Supreme Court Suffolk County 2011) (holder of properly endorsed mortgage note had standing to foreclose MERS as nominee had authority to assign mortgage) Bagwell A Not-So-Brief History of MERS Litigation in New York 41 NY Real Prop LJ 9 (Winter 2013) 19 Liability Respecting Mortgage Applications Deutsche Bank National Trust Company v Sinclair 68 AD3d 914 891 NYS2d 445 (2d Deprsquot 2009) (homeownersrsquo third party action against mortgage broker alleging that broker procured three refinancing loans in one year by misrepresenting their income failed to state fraud where homeowners were aware of the overstatement) Morales v AMS Mortgage Services Inc 69 AD3d 691 897 NYS2d 103 (2d Deprsquot 2010) (mortgagee not liable for fraud for alleged improper misstatement of mortgagorrsquos income in loan applications where applicant separately certified it as accurate) 20 Attorneysrsquo Fees In 2010 New York added Real Prop L sect 242 which allows a prevailing borrower to recover attorneysrsquo fees if the mortgage allows the lender to do so 21 Loan Modifications Settlement Conferences Wells Fargo Bank NA v Meyers 108 AD3d 9 966 NYS2d 108 (2d Dept 2013) (servicer failed to negotiate loan modification in good faith but violation did not support imposition of terms of modification agreement remitted to trial court for further proceedings) US Bank NA v Rodriguez 972 NYS2d 451 (Supreme Court Bronx County 2013) (servicerrsquos strict reliance on in-house standards requiring either acceptance or rejection of loan modification rather than HAMP guidelines did not satisfy its duty to negotiate in good faith during settlement conference process) Wells Fargo Bank NA v Van Dyke 101 AD3d 638 958 NYS2d 331 (1st Dept 2012) (CPLR 3408 governing mandatory settlement conferences in residential foreclosure actions did not require bank to offer settlement where borrowerrsquos claimed income made her ineligible for available modifications)

5 TITLE EXAMINATION AND DISPOSITION OF

OBJECTIONS

5 Title Examination and Disposition of Objections By Kristin V Bellouny New York N Y

A Examination of title

Abstract of Title This is a full and complete history of the title to a piece of property from which the record ownership and encumbrances affecting the property are determined The abstract is the result of searches of the County Clerks Office or the Registerrsquos Office the tax office and the Courts Most upstate contracts call for the seller to deliver a title abstract tax search and up-to-date survey The Albany contract calls for a title abstract or fee title insurance policy at the expense of the purchaser or seller as indicated In Monroe County the approved contract provides that the abstract of title be redated to a date past that of the contract

ii) Title Commitment This is the compilation and distillation of the information gathered in the abstract of title It sets forth the ownership of the property it contains a description of the property to be insured and all items that are exceptions to title The exceptions are matters that the title policy will not insure against

B Title policy

What is covered The policy of title insurance covers loss to the insured by reason of encumbrances or defects in the title which the title company failed to disclose in its title search and commitment Further it insures the correctness of the searches of all instruments liens and charges affecting title to the property (Insurance Law sect 6401)

What is not covered

a) Acts of the insured defects the insured has caused or allowed b) Zoning building laws regulations which restrict prohibit or regulate

occupancy c) Post-policy events these are matters attaching or created subsequent to

the date of policy d) Matters resulting in no loss or damage to the insured

C Title report and disposition of title objections

The Title ReportCommitment

a) review all recorded and filed documents set forth in the abstract of title b) certify the record owner c) certify the description of the premises to be insured d) raise all encumbrances liens and defects affecting the title to the

premises as exceptions or objections in Schedule B of the Report Rights of Tenants Mortgages Judgments State Tax Liens Federal Tax Liens Estate Exceptions Estate taxes Disposition of Title Objections Exceptions

a) Title Affidavit b) Escrow sufficient funds to pay c) Proofs of payment d) Stipulation and Cancellation of Action and Lis Pendens e) Prior Title Policy f) Indemnity Letter Mutual Indemnity Agreement

D Endorsements and affirmative insurance

These are available to provide additional coverage over some of the exceptionsobjections raised in the Schedule B of the policy

Endorsements New York Standard Endorsement is attached to every policy of

insurance issued in New York State Special Risk Endorsements are available and require the

payment of an additional premium TIRSA 9 Endorsement Revolving Credit Mortgage Endorsements (RCE-1

RCE-2 RCE-3 amp RCE-4) Non-Imputation Endorsement Contract Vendee Endorsement (Residential) Contract Vendee Endorsement (Commercial) SWAP Endorsement Additional Interest Endorsement Mezzanine Endorsement Option Endorsement

Requires Title Insurer approval prior to issuance E Rates of insurance

Rates of Insurance are filed with the Department of Financial Services (formerly the Insurance Department)

II) Title Insurers in New York State operate pursuant to the Title Insurance Rate Service Association Inc Rate Manual

F Referrals and representation of multiple parties

Rule 17 ndash CONFLICT OF INTEREST CURRENT CLIENTS

(a) Except as provided in paragraph (b) a lawyer shall not represent a client if a reasonable lawyer would conclude that either (1) the representation will involve the lawyer in representing differing interests or (2) there is a significant risk that the lawyerrsquos professional judgment on behalf of a client will be adversely affected by the lawyerrsquos own financial business property or other personal interests (b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a) a lawyer may represent a client if

(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client

(2) the representation is not prohibited by law

(3) the representation does not involve the assertion of a claim by one client

against another client represented by the lawyer in the same litigation or other proceeding before a tribunal and

(4) each affected client gives informed consent confirmed in writing

G Note any Recent Title Insurance Developments (on line materials)

RECENT TITLE INSURANCE DEVELOPMENTS copy Karl B Holtzschue 2013 [most recent material in italics] 1 Title Insurance Rates The NY State Insurance Department rate manual divides the state into two zones Zone 1 covers upstate (north and west of Albany and Rensselaer Counties) and Zone 2 covers downstate As of 2001 the minimum regular premium for an ownerrsquos policy is now $356 (Zone 1) or $402 (Zone 2) for coverage up to $35000 A mortgage policy for the same amount costs $299 (Zone 1) or $344 (Zone 2) Above $35000 rates start at $792 (Zone 1) or $667 (Zone 2) per thousand on fee insurance and $661 (Zone 1) or $555 (Zone 2) per thousand on mortgage insurance up to $50000 Above $50000 the per thousand rates drop as the amount of insurances increases with the lowest rate becoming applicable at $15 million and up at $248 (Zone 1) or $276 (Zone 2) per thousand for fee insurance and $207 (Zone 1) or $231 (Zone 2) for mortgage insurance On May 23 2006 Fidelity National Title Group Inc and First American Title Insurance Co settled allegations of illegal rebates and referral fees with the New York State Attorney General Among other things the companies agreed to file an application for a reduction of 15 percent from current title insurance rates on all purchases of properties in New York valued at up to $1 million First Americanrsquos application was approved effective June 15 2006 for ownerrsquos polices under $1 million The N Y State Insurance Department held a public hearing on industry-wide practices and rates on Nov 3 2006 during which it was announced that the rate reductions would also apply to lenderrsquos policies 2 Duty to Defend and Indemnify A claim must be asserted against the insured to trigger the insurerrsquos obligation to defend title and indemnify for failure of title Hess v Baccarat 731 NYS2d 296 (3d Deprsquot 2001) (title insurer had no duty to defend encroachment action involving easement excepted from policy preliminary title report merged into final policy) Busch v Fidelity National Title Insurance Company 923 NYS2d 280 (3d Deprsquot 2011) (that insured was plaintiff not defendant in action to enjoin construction of road by neighbors on claimed easement did not relieve insurer of its duty to defend but issues of fact whether insured or insurer breached any duties) Resmac 2 LLC v Madison Realty Capital LP 86 AD3d 440 927 NYS2d 328 (1st Deprsquot 2011) (insurer had duty to reimburse mortgagorrsquos assignee for costs in defending its lien in bankruptcy court where insurer chose not to do so) 3 Exclusions from Coverage Corvetti v Fidelity Nat Title Ins Co of New York 258 AD2d 32 691 NYS2d 645 (3d Deprsquot 1999) (exception as to taxes held to also cover tax sale) Logan v Barretto 251 AD2d 552 675 NYS2d 102 (2d Deprsquot 1998) (failure to disclose sanitary code violations not covered) Wolf v Commonwealth Land Title Ins Co 180 Misc2d 307 690 NYS2d 880 (App Term 1st Deprsquot 1999) (cost of removing deck that violated certificate of occupancy not covered) 4 Coverage Denied to Lender Due to Fraud by Its Closing Agent Fidelity Nat Title Ins Co of New York v Consumer Home Mortgage Inc 708 NYS2d 445 (2d Deprsquot 2000)

(lenderrsquos closing agentrsquos checks dishonored after closing lender policies held invalid because mortgages invalid for lack of consideration coverage denied due to acts of insured lender due to fraud by closing agent designated by lender) But see GE Capital Mortgage Services Inc v Privetera 788 A2d 324 (NJ SuperCt AppDiv 2002) (title company not liable for funds delivered to buyerrsquos attorney to pay off liens under bankruptcy court order and then stolen by him) 5 TIRSA Ownerrsquos Extended Protection Policy (ldquoTOEPPrdquo) This new residential ownerrsquos title insurance policy was approved by the Department of Insurance on January 11 2001 For a premium of 120 of the regular ALTA ownerrsquos policy rate the policy offers various coverages in addition to the regular ALTA ownerrsquos policy including coverage against a lack of actual access violation of a listed covenant condition or restriction violation of a subdivision law or regulation forced removal of a structure due to lack of a building permit or due to violation of existing zoning or due to encroachment onto a neighbor loss due to encroachment onto the land inability to use as a single family residence due to violation of zoning and a neighbor building a structure that encroaches Rental of a substitute residence is covered The amount of the insurance automatically increases by 10 per year for five years up to 150 of the policy amount (similar to market value insurance) For a critical analysis see Pedowitz ldquoWhat Is the New TOEPP Title Policyrdquo 31 NY Real Property Law Journal 61 (Summer 2003) (not an ALTA policy worth remains a big question mark) 6 Ownerrsquos Insurance in Addition to Lenderrsquos Insurance See Malloy and Klapow Attorney Malpractice for Failure to Require Fee Ownerrsquos Insurance in a Residential Real Estate Transaction 74 St Johnrsquos LRev 407 (2000) Pedowitz Title Insurance What Every New York Lawyer Should Know in Real Estate Titles 2713 (3d ed NYSBA 2007) Murray Attorney Malpractice in Real Estate Transactions Is Title Insurance the Answer 42 Real Prop Prob amp TrJ 221 (Summer 2007) (discussing failure of attorney to advise purchaser to obtain ownerrsquos title insurance) 7 Liability of Title Company Ulysses I amp Co Inc v First American Title Ins Co 766 NYS2d 37 (1st Deprsquot 2003) (whether title company timely recorded deed immaterial as insured had prior notice of unrecorded contract gap provision does not extend to expressly excluded matters) Gem Services of New York Inc v United General Title Ins Co 28 AD3d 516 814 NYS2d 653 (2d Deprsquot 2006) (title companyrsquos alleged failure to timely record plaintiffrsquos mortgage supported claim of negligent failure to record mortgage independent of the contract of insurance) Darbonne v Goldberger 821 NYS2d 94 (2d Deprsquot 2006) (title insurer having paid attorneyrsquos fees in defending ownerrsquos title against the town resulting in invalidation of restrictive covenant and removal of defect in title had no further liability to the insured) Zev Cohen LLC v Fidelity Nat Title Ins Co 15 Misc3d 798 831 NYS2d 689 (Sup Court Kings County 2007) (title insurer not liable in negligence for failure to disclose existence of RPAPL Art 7-A rent administrator which was not an encumbrance on title or expired notice of pendency with respect to administrator) Appleby v Chicago Title Ins Co 80 AD3d 546 914 NYS2d 257 (2d Deprsquot 2011) (insurer obligated to reimburse insured for diminution of market value where rider insured that outcome of litigation over right of

vehicular access shall be favorable) All State Properties LLC v Old Republic National Title Insurance Co 944 NYS2d 310 (2d Deprsquot 2012) (insured breached title insurance policy by failing to cooperate with insurer where insured precipitously brought its own action to quiet title instead of affording insurer reasonable time to investigate) Choudhary v First Option Title Agency 967 NYS2d 86 (2d Dept 2013) (purchasers stated cause of action for damages for negligent failure to timely record deed where another deed was recorded before theirs) 9 Encroachments AXYS LLC v Ng NYLJ June 16 2004 p 18 col 1 (Sup Ct NY County) (encroachments on street held not to render title unmarketable) Bagwell AXYS LLC v Ng A Close Encounter of the Marketable Title Kind 33 NY Real Prop LJ 3 (Winter 2005) (expert for seller) Pedowitz The AXYS LLC Decision - Another Point of View 33 NY Real Prop LJ 3 (Winter 2005) (expert for purchaser) Semerjian v Byer-White 917 NYS2d 256 (2d Deprsquot 2011) (sellers did not breach contract when they removed portion of deck that encroached on adjoining property after purchasers objected) Candullo v Nicosia 98 AD3d 1073 951 NYS 556 (2d Deprsquot 2012) (sellers unable to deliver title because purchasersrsquo insurer refused to insure free and clear of encroachment by fence at rear which extended over property line by 28 feet for a length of 160 feet) 10 UCC Title Insurance (ldquoEagle Policyrdquo) UCC title insurance is a new form of title insurance being offered by a few title insurance companies in 2001 to coincide with the effective date of Revised Article 9 of the UCC Policies are available for lenders buyers vacation interests and residential cooperative interests The coverage can be extended to any property included in Revised UCC Article 9 Endorsements are also available This kind of insurance can be ldquoa supplement to - and in many cases a viable and economical replacement for - legal opinion lettersrdquo Blyth The UCC Title Insurance Policy (First Americanrsquos Eagle 9trade Policies) 33 NY Real Prop LJ 108 (Summer 2005) See also httpwwweagle9com 11 ALTA Forms In June of 2006 ALTA adopted a new generation of forms including new Loan and Ownerrsquos Policies and Endorsements In the Ownerrsquos Policy the insuring provisions now defined as ldquoCovered Risksrdquo have been expanded from four items to ten Matters that might have been implied as coverage in the 1992 policies are now expressed in the Covered Risks The Exclusions have been diminished in large part by moving an implication of coverage to the Covered Risks Defined terms have been expanded Several Covered Risks add coverage for events occurring after the Date of Policy Covered Risk 2(c) now expressly insures against matters of survey that were formerly covered in the ALTA 9 Endorsement The definition of ldquoInsuredrdquo has been expanded to include successors and affiliated grantees The coinsurance provision in Section 7(b) of the Conditions and Stipulations has been dropped The claims process has been made more favorable to the insured Arbitration is now available under ALTA rules for policies with an Amount of Insurance less than $2 million The Loan Policy has expanded the Covered Risks from eight to fourteen including coverage for events occurring after the Date of Policy The definitions of ldquoIndebtednessrdquo and ldquoInsuredrdquo have been expanded The sixty new Endorsements using the new defined terms will be designated with ldquo-06

at the end There are new endorsements for manufactured housing restrictions encroachments and minerals reverse mortgage and location The new forms were adopted in New York as of May 1 2007 See Palomar The 2006 ALTA Title Insurance Policies What New Protections Do They Give 42 Real Prop Prob amp TrJ 1 (Spring 2007) Bagwell New Title Policy Forms Now Required in New York 35 NY Real Prop LJ 10 (Fall 2007) 12 ALTA Endorsements In addition to the policy revisions in 2006 ALTA issued 60 revised endorsements using the new defined terms which will be designated with ldquo-06 at the end there are also 8 new endorsements for manufactured housing restrictions encroachments and minerals reverse mortgage and location In New York TIRSA has issued 21 revised endorsements (cluster condominium contract vendee cooperative [loan amp ownerrsquos] variable rate mortgage manufactured housing restrictions encroachments and minerals IDA land same as survey leasehold [loan and ownerrsquos] market value mezzanine financing non-imputation option residential revolving credit commercial revolving credit successor in ownership of indebtedness SWAP variable rate mortgage and negative amortization) The last dollar limited liability company and partnership and survey endorsements were withdrawn for use with the ALTA 2006 policies because they are not needed under the 2006 policies 13 NYSBA Standards for Title Examination The NYSBArsquos Standards for Title Examination have been revised to conform to NYSLTArsquos Recommended Practices and were adopted on June 23 2006 14 Scheme to Defraud A title company and its agent may be sued for a scheme to defraud Velazquez v Decaudin 49 AD3d 712 854 NYS2d 163 (2d Deprsquot 2008) (where decedentrsquos daughter alleged that mother was fraudulently induced to enter into contract to convey property to defendant with occupancy agreement and option to repurchase to save it from foreclosure allegation that title company and agent aided scheme to defraud stated cause of action) 15 Selection of title insurance company No mortgage broker or mortgage banker may require the use of a particular title insurance company agency or agent as a condition for approval of a mortgage loan Banking Law sect 595-a 16 Attorneys as title insurance agents In some areas lawyers have traditionally served as title insurance agents for their clients Acting in this dual capacity raises some ethical questions which can generally be resolved by disclosure and consent See generally the series of articles in The Lawyer as Title Insurance Agent NY Real Prop LJ 5 (Summer 2008) Title Insurance Disclosure to and Consent by Client 37 NY Real Prop LJ 42 (Winter 2009) (with RPLS model form of consent to attorney acting as agent) The attorney-agent would be well advised to use the form and have it signed by the client The form should be modified to conform to NYSBA Opinion 974

The New York State Insurance Department has proposed a bill to license title

agents (including attorney title agents) Real Property Law Section Report on New York State Insurance Department Title Insurance Regulation 38 NY Real Prop LJ 36 (Winter 2010) The Real Property Law Section has supported licensing but opposed a portion of the bill that would prevent lawyers from acting as title agents Another version has been proposed as part of the 2014 Governorrsquos Budget Bill introduced as A8557B and S6357B which the Section again feels should be modified to clarify that lawyers can act as title agents

See also Recent Ethics Developments section 11 (Attorney Use of Owned Title Abstract Company Attorney as Title Agent) particularly as to NYSBA Opinion 974 17 Lack of legal access Uzzle v Nunzie Court Homeowners Assrsquon Inc 70 AD3d 928895 NYS2d 203 (2d Deprsquot 2010) purchaser stated a valid cause of action against his attorney for malpractice and against title insurance company for damages arising from lack of legal access)

18 Lender may not require use of title insurance company or agent Various federal andstate statutes prohibit the lender from requiring a borrower to use a specific title insurance company or agent as a condition to a mortgage commitment NY Banking Law sectsect 247(2)(b) and 595-a NY Ins Law sect 2503(a)(2)

5 TITLE EXAMINATION AND DISPOSITION OF OBJECTS

6 SURVEYS

6 Surveys

By Ariel Weinstock New York NY

A What is a Survey

- Although most people assume that a ldquosurveyrdquo is a neatly drawn map which depicts from a

birdrsquos eye view a piece of property and the improvements on the property the word

ldquosurveyrdquo is actually derived from the Medieval French word ldquosurveirdquo meaning act of

viewing in detail to consider contemplate or to examine the condition of

- Applied in the real property context the ldquosurveyrdquo is the process of evaluating evidence in

order to locate the physical limits of a particular piece of land not the drawing prepared

by the surveyor (from Medieval Latin ldquosupervidererdquo meaning ldquooverseerdquo) That drawing is

called a map or plat of survey and that drawing is the diagrammatic representation of the

surveyorrsquos opinion regarding the location of a piece of property and the improvements

thereon

- These definitions are consistent with NYS Education Law sect7203 which defines the

practice of Land Surveying as ldquoThe practice of the profession of land surveying is defined

as practicing that branch of the engineering profession and applied mathematics which

includes the measuring and plotting of the dimensions and areas of any portion of the

earth including all naturally placed and man-or machine- made structures and objects

thereon the lengths and directions of boundary lines the contour of the surface and the

application of rules and regulations in accordance with local requirements incidental to

subdivisions for the correct determination description conveying and recording thereof or

for the establishment or reestablishment thereofrdquo

- However in practice we all refer to the map or plat of survey as the survey and for the

balance of this outline the term will be used interchangeably

B Types of Surveys

- There are many different types of surveys The name given to a particular survey does not

always clearly identify its purpose or the information to be contained therein Some

examples are a Boundary Survey Survey in Possession and Topographical Survey

o Boundary Survey A boundary survey shows only the perimeter of a tract of land

and does not show or depict any interior improvements

o Survey in Possession A survey in possession shows the perimeter and

improvements located near the tractrsquos boundaries such as retaining walls

buildings fences etc

o Topographical Survey A topographical survey would also include information

such as ground elevations and contours sewer mains and utilities

- The foregoing types of surveys are intended to aid engineers and other design

professionals and are insufficient for title purposes For title transfers loans and other

title-insured transactions the parties should obtain and review a ldquoTitle Surveyrdquo which

incorporates many of the elements of the aforementioned surveys and more

- However not all ldquoTitle Surveysrdquo are created to the same specifications and within the

ldquoTitle Surveyrdquo category there are varying methods for preparation of a survey map

depending on the standard being employed A few of the more commonly followed codes

of practice are

o ALTAACSM ndash 2011 (eff 2232011) Minimum Standard Detail Requirements

for Land Title Surveys

o NY State Association of Professional Land Surveyors ndash Code of Practice for Land

Surveys (rev July 1997)

o NYS Education Department ndash Land Surveying Practice Guidelines -2000

- The codes of practice delineate what must be contained on a survey map NOTE copies

of the ALTAACSM (American Land Title AssociationAmerican Congress of Surveying

and Mapping) and NYS Education Department guidelines are contained in the online

materials for this program

- In order to understand why only a ldquoTitle Surveyrdquo is acceptable for title transactions and

what to do with a survey once obtained it would be helpful to first identify why surveys

are needed

C Why are Surveys Needed

- To Prove the Existence of the Property In order to convey an interest in property the

instrument of conveyance must contain an adequate description of the land (or interest in

land) conveyed If a surveyor cannot locate the described land on the earthrsquos surface

(probably no one else can either) and the instrument of conveyance is deficient as vague

- To Establish the Relationship of the Property to Adjoining Properties Every parcel of

land is part of the larger community of neighboring properties All parcels of land exist in

relation to the parcels surrounding them These can include privately or publicly owned

lands rights of way easements roads water bodies and all of the improvements on the

adjoining parcels A legal or ldquometes and boundsrdquo description may include references to

common boundaries which by virtue of historical subdivisions earlier conveyances or

changed references may overlap or no longer appear to meet The presence of gaps and

gores may present serious problems when attempting to consolidate several adjacent

parcels or could leave a property landlocked A properly drawn survey may clarify or

help delineate the proper and current boundaries

- To Establish the Relationship of the Lines of Possession to the Record Lines of Title The

physical boundaries of the property as occupied by its owner often differ from the strict

legal description referred to in the instrument It is common to find that fence lines

retaining walls encroachments of buildings and outdoor installations (swing sets pools

and decks satellite dishes and so forth) are located across over or even within the strict

boundaries of a piece of property A significant mismatch suggests the potential claim of

ownership by adverse possession or by senior right or the possibility of an agreement

between the parties to trade portions of their respective parcels

D Obtaining and Reviewing a Survey Map

- On most real estate transactions the sellerborrower is the primary source for obtaining an

existing survey map However since the sellerborrower obtained the survey map prior to

the transaction at issue the survey will usually need to be updated for each new

transaction In other instances the title company can help the parties identify a surveyor

that has previously prepared a survey map or can identify a new surveyor who can update

a prior survey or prepare an entirely new survey Updating an existing survey prepared by

the same surveyor will almost always be less expensive than obtaining a new survey

- Typically the purchaser borrower or lender will ask the title company to contact the

surveyor to arrange for the creation or update of the survey On commercial transactions

the lender or purchaser will almost always require a survey prepared in accordance with

the ALTAACSM minimum survey standards

- The purchaserrsquos attorney should always ask the sellerrsquos attorney for a copy (if available)

of the sellerrsquos survey from the most recent transaction (either the original purchase or a

loanrefinance) In addition if the survey was incorporated into the title reportpolicy

there should be a ldquosurvey readingrdquo In such a policy the title company will identify any

encroachments and projections The survey can also be used for issue spotting (see the

following bullet point)

- It should be clear by now that a survey map is a due diligence tool Once obtained the

attorneys for the parties (and the title company and parties themselves) should review the

survey to among other things identify

o The Standard to Which the Survey Map has Been Drawn If the lender requires an

ALTAACSM survey but the surveyor has identified a different standard the

lender may refuse to fund the loan transaction

o The North Arrow This will help orient the drawing However note that there are

two distinct meanings of ldquoNorthrdquo There is ldquomagneticrdquo north (ie the direction the

arrow on a compass will point) and ldquogeographicrdquo north (ie the North Pole or the

northern tip of the axis through which the Earth rotates) There is a variance of

approximately 13 degrees which could if the wrong ldquoNorthrdquo is being assumed

lead to confusion regarding the orientation of the property and its improvements

o Reference Datum and Records If there are references to a particular datum set

such as elevations confirm that the relevant standard (such as Sandy Hook or

New York City Highway datum) is being used and that it conforms to the

requirements of the transaction or other reference data The surveyor should also

identify which maps or other reference sources the surveyor consulted in preparing

the map

o Survey Scale Confirm also that the survey scale is appropriate to the size and

nature of the property Also beware of distortions in the scale which may be

incorporated due to an attempt to harmonize the drawing with a truly visual

perspective (foreshortening) or disparate rates of foreshortening

o Surveyorrsquos Information The survey should include the name address telephone

number original signature and seal of the surveyor along with the surveyorrsquos

registration number These are both common sense requirements (so that you can

find the surveyor again and confirm that the surveyor is duly licensed) for any

survey as well as a requirement of the NYS Education Law which provides that

the ldquodeterminations of real property boundaries may only be done by a licensed

land surveyorrdquo and that survey maps must bear the surveyorrsquos inked seal (NYS

Education Law sect7208(e))

o Point of Beginning Angles Bearings Distances and Discrepancies One of the

first things a reviewer of a survey should do is to trace the boundary depicted on

the survey to confirm that it matches the legal metes and bounds description in the

conveyance documents The survey should clearly identify the point of beginning

all angles bearings and distances measured so that a reviewer can match up the

ldquocallsrdquo in the metes and bounds description with the drawn boundary in the survey

print Any discrepancies should be identified by the surveyor

o Whether the Description Forms a Mathematically Closed Figure In order to have

accurately described the property being conveyed the description must form a

closed figure (eg a complete square) The ALTAACSM standard requires the

surveyor to note if there is a gap of anything greater than 1 foot in 15000 feet (the

equivalent of the thickness of a quarter) Title is defective if the record description

does not form a closed figure NOTE a surveyor does not ldquodeciderdquo anything

rather the surveyor forms an opinion based on the surveyorrsquos field measurements

Therefore if the record description in the surveyorrsquos opinion does not form a

closed figure title may be defective If it is in fact determined (by a court or fact

finder of final say) that the description does not form a closed figure title is

defective

o Names and Widths of Abutting Streets Typically a municipal street may be up to

50 or 60 feet wide If a street abutting the property is paved to less than the full

width the ownerpurchaserborrower may believe that it has title up to the existing

street when in reality the municipality may widen the street to the full legal width

without compensating the then-owner for any loss (since any lost property would

be within the bed of the street)

o All Easements and Restrictions of Record and Other Possible Easements This

should be fairly obvious To this end the surveyor would need a copy of the title

report However the survey should also identify apparent easements whether or

not of record For example a well worn foot path may indicate that someone has a

right of way through the property

o Contiguity Gores and Overlaps If there is more than one parcel included in the

transaction the survey should identify whether the two parcels are contiguous (ie

whether the parcels share a common boundary and are connected) whether the

subject parcel contains any portions of the propert(ies) which are missing from the

legal description (for example if there is a sliver of land between two parcels

which is not included in the overall boundary of the property) or whether two

parcels overlap or cover the same piece of land

o Monuments and Stakes A Monument in a description is a man-made place or

point which cannot vary ALTAACSM standards require that surveyors identify

any monuments located on the property If there is a discrepancy between a stated

distance in the legal description and a monument the monument will take

precedent over the distance

o Structural Encroachments and Projections The surveyor should also identify all

structures and whether the structures encroach (ie (1) from another property onto

the subject property or (2) if a structure on the subject property is located within

an easement on the subject property) or project (ie from the subject property over

the boundary line onto an adjacent property) These can lead to exceptions for

violations of easements or ldquoout of possessionrdquo An out of possession exception

can suggest that another party may by adverse possession own a portion of the

property that the parties believed included in the transaction

o Structures Another diligence question that is raised by a surveyorrsquos depiction of

the structures on the property is whether the structures are lawfully constructed

For example if there is a porch swimming pool or even an air-conditioning unit

the purchaserrsquos attorney should verify that the certificate of occupancy permits

such improvements and whether the permits allowing for the building of such

improvement have been signed off

o Surveyorrsquos Certification When ordering a survey or survey update it is important

to require that the purchaser title company any lender providing financing and

any attorneys advising the purchaser or lender be specifically named in the

surveyorrsquos certification Although typically not included in the certification the

purchaserrsquos attorney must make sure that it is listed in the certification as the

attorney is advising the purchaser as to matters identified on the survey Without

certification to the attorney the attorney may not rely on the survey or have

recourse against the surveyor for inaccurate matters drawn on the survey map

E Surveys and the Title Policy

- If a new or updated survey is not obtained a title policy will contain an exception that the

policy is ldquosubject to any state of facts an accurate survey would showrdquo

o For 1-4 family residential policies the title company may perform a visual

inspection based on an older survey According to the rate manual the title

company may charge for this service

o If the title company performs the visual inspection they will exclude coverage for

any identified changes since the last survey However in the absence of any

apparent changes the title company may insure the purchaser against any changes

since the date of the old survey provided for the inspection

o NOTE whenever the purchaser elects not to obtain a survey or elects to have the

title company perform a survey update the purchaserrsquos attorney should warn the

purchaser about the risks inherent in not having a new survey certified to the

purchaser performed in connection with any real estate transaction

o On loan transactions covering 1-4 family residential properties a title company

may issue a ldquono surveyrdquo survey endorsement insuring against loss or damage by

any violation variation encroachment or circumstance that would have been

disclosed by an accurate survey However this endorsement costs 10 of the

policy premium and may end up being more expensive than having a survey

performed

- Where a new or updated survey is supplied the title company will limit the survey

exception described above to the state of facts shown on the provided survey The policy

will usually also contain a ldquosurvey readingrdquo specifying the particular title exceptions

disclosed on the provided survey It is important to note that the lack of exceptions does

not mean that there is affirmative coverage for other matters on the survey

o Accordingly when a survey is provided purchasers and lenders may obtain a

ldquoLand Same As Surveyrdquo endorsement to the title policy This endorsement costs

$25 (each) and insures that the legal description of the land matches the pictorial

diagram This endorsement does not insure any portion of the improvements (eg

that the improvements are correctly located or that they are lawfully constructed)

- Other title endorsements that may be appropriate based on the matters identified on a

survey include

o Access Available on loan policies only (it is already included in the standard

ownerrsquos policy) This endorsement insures that the parcel has the right of access to

and from public land or by other right or easement over other private lands

o Contiguity Available on owner and loan policies This endorsement insures

against any losses sustained due to the failure of the parcels identified in the policy

to be contiguous

o Tax Parcel (single or more than one) Available on loan policies only This

endorsement insures that the subject property (whether one or more parcels ndash make

sure you have the appropriate endorsement based on the number of parcels)

constitutes one or more separate tax lots which do not include any property outside

of the insured legal description

o ALTA Endorsement 9 - (Comprehensive Endorsement) Available on loan

policies only Among other matters this endorsement insures the holder of any

insured indebtedness against loss or damage by reason of violation of covenants

and restrictions encroachments setback lines and the forced removal of any

improvements This endorsement costs 10 of the policy premium

o TIRSA Ownersrsquo Extended Protection Policy (TOEPP) or Eagle Policy This

endorsement may have a different name depending on the title company

However it is available for 1-4 family residential ownersrsquo policies only and costs

20 of the premium This endorsement increases the policy amount to 150 of

the insured amount and in addition to providing coverage that would otherwise be

obtained under ldquoLand Same Asrdquo and ldquoALTA-9rdquo endorsements it insures against

Post policy violations of recorded covenants and restrictions

Costs of forced removal or corrections of violations of subdivision laws

Costs of forced removal of structures (excluding boundary fences) due to

lack of a building permit or certificate of occupancy

Costs of forced removal of encroachments (including boundary fences)

Actual vehicular and pedestrian access NOTE an Access endorsement

insures that there is legal access This endorsement insures access in fact

F Practice Tips

- Review survey before signing contract - Make sure the survey meets the appropriate standard for the nature of the transaction (ie

a Title Survey) and that the survey addresses the relevant requirements

- Make sure that the title and occupancy issues raised on the survey are appropriately

addressed in the contract of sale and that the partiesrsquo respective obligations are clarified

therein

- A survey reading is not a substitute for a new survey and is not intended to insure the

accuracy of the old survey The primary purpose of a survey reading is to identify

ldquochangesrdquo (addition or deletion of structures) that are not on old survey Even where a

survey inspection is permitted the better practice is to order a new survey

- Use a survey reading in a title report as a guide to identifying possible problems shown on

the survey

- Make sure to read every note on the survey map Everything on the survey map was

printed for a reason The surveyorrsquos notes will usually identify the issues the reviewing

attorney should be concerned with and it is at the reviewing attorneyrsquos peril should the

attorney choose to ignore an issue highlighted by the surveyor

- Remember to advise your client as to the availability and protections afforded by the

various endorsements to a title policy concerning survey-related issues

G Note any recent developments in Recent Survey Developments (see following)

RECENT SURVEY DEVELOPMENTS copy Karl B Holtzschue 2013 [most recent material in italics] 1 Minimum Standard Detail Requirements for ALTAACSM Land Title Surveys In October of 2005 the American Land Title Association The American Congress on Surveying and Mapping and the National Society of Professional Surveyors adopted a 2005 version of the requirements effective January 1 2006 which require specific certificate language See also Stein A Time-Saving Alternative to Complicated Long-Winded Survey Certificates (With Form) 33 NY Real Prop LJ 110 (Summer 2005) The requirements were amended in a major rewrite effective Feb 23 2011 2 Survey Update by Title Company Inspection Title insurance companies are authorized to update by inspection surveys for one-to-four family homes usually for a modest charge The results of the update will be inserted into the policy 3 How to Read a Survey See sect 406[2] in Holtzschue New York Practice Guide Real Estate (Matthew Bender) Hixson What to Look for When Examining a Survey Map 18 Prob amp Prop 54 (SepOct 2004) Bales Advanced Survey Examination Issues 18 Prob amp Prop 57 (SepOct 2004) 4 Cases on Surveys 681 Chestnut Ridge Road LLC v Edwin Gould Foundation for Children 73 AD3d 624 905 NYS2d 17 (1st Deprsquot 2010) (purchaser not entitled to cancel where contract subject to state of facts shown on survey attached which showed burial ground and title insurer refused to insure title against visits by relatives) Raab v Lefkowitz 76 AD3d 619 906 NYS2d 107 (2d Deprsquot 2010) (surveyor who did not perform survey himself failed to establish the competency and authority of his employees who actually conducted the survey so his affidavit insufficient to raise triable issue in opposition to affidavit of surveyor that building did not encroach)

6 SURVEYS

7 ETHICS AND PROFESSIONALISM

7 Ethics and Professionalism

by Anne Reynolds Copps Albany NY and Karl B Holtzschue New York City

A Sources of the rules ethics opinions

The New York Rules of Professional Conduct govern the conduct of attorneys they replaced

the New York Code of Professional Responsibility as of April 1 2009 The new Rules use the

American Bar Association Model Rules format but maintain much of the language and

substance of the prior Code The Rules were adopted by the Administrative Board of the New

York Courts Official Commentaries on the Rules were adopted by the New York State Bar

Association (NYSBA) House of Delegates

Ethics opinions are issued by the NYSBA Committee on Professional Ethics and by other

local bar associations NYSBA opinions are available on the NYSBA website under ldquoFor

Attorneysrdquo then ldquoEthics Opinionsrdquo

Professor Roy Simon of Hofstra Law School publishes annually a comprehensive analysis in

his New York Code of Professional Responsibility Annotated (West Group)

B Engagement letter and arbitration of fees

An attorney is required to provide a written letter of engagement to each client before

commencement of the representation [unless the fee is expected to be less than $3000)

detailing the scope of legal services and fees expenses billing practices and where

applicable notice of the clientrsquos right to arbitration of fee disputes NY Comp Codes Rules

amp Regs tit 22 part 1215 See Pratt New Yorkrsquos Engagement Letter Rule and Fee Dispute

Resolution Program The Process of Fee Collection NYSBA Journal 26 (June 2012)

Even where the fee is expected to be less than $3000 it is recommended that a written letter

of engagement be given to make sure the client understands the services offered and the

expenses to be charged

C BrokerLawyer

A lawyer may not act as both a lawyer and a broker for a client (Ethics Op 208) and may

not offer free legal services where the lawyer is acting as a broker (Ethics Op 916 919)

However a lawyer may conduct his law practice and a real estate brokerage business from the

same office and may advertise them together but cannot act as both in the same transaction

(Ethics Op 493 933)

The rule cannot be avoided where the broker is the lawyerrsquos spouse (Ethics Op 244 291

D Conflicts of interest attorneyclient between clients

A lawyer may not represent a client if a reasonable lawyer would conclude that there is a

significant risk that the lawyerrsquos professional judgment on behalf of the client will be

adversely affected by the lawyerrsquos own financial business property or other personal

interests unless the lawyer reasonably believes that the lawyer will be able to provide

competent and diligent representation to the client and if the client gives informed consent to

the representation confirmed in writing after full disclosure of the implications of the

simultaneous representation and the advantages and risks involved Rule 17 (confirmation in

writing is a change from the prior Code)

A lawyer may not represent a client if a reasonable lawyer would conclude that the

representation will involve the lawyer in representing differing interests unless the lawyer

reasonably believes that the lawyer will be able to provide competent and diligent

representation to each affected client and if each gives informed consent to the

representation confirmed in writing after full disclosure of the implications of the

Any type of writing even an email from the lawyer to the client confirming an oral consent is

sufficient (Ethics Op 829)

A lawyer may not represent both the buyer and seller of real estate where there is a clear

instance of conflicting interests (most cases) (Ethics Op 38 38A 162 807)

A lawyer may represent both a mortgagor and a mortgagee with express consent after full

disclosure (Ethics Op 199) An attorney representing a mortgagee may collect legal fees from

the mortgagor so long as the fees are not shared with the mortgagee (Ethics Op 438) An

attorney should not represent both a seller and a lender except under unusual circumstances

(Ethics Op 611 as to different lawyers in the same firm see Ethics Op 867)

An attorney may act as a title examiner and agent for a title company where he also

represents a party if there is full disclosure and consent (Ethics Op 351) See Title Insurance

Disclosure to and Consent by Client 37 NY Real Prop LJ 42 (Winter 2009) (with RPLS

model form of consent) However an attorney may not retain a title company discount

without crediting the client unless the client expressly consents to such retention after full

disclosure (Ethics Op 320)

An attorney may act also as a title insurance agent provided that such conduct is legal no

prohibited conflict exists consent is obtained from all parties after full disclosure the legal

fee is reduced by remuneration from the title company (absent express consent to the contrary

from the client) and the legal fee is not excessive (Ethics Op 576)

Prior opinions have said that it is improper for an attorney to refer clients to a title abstract

company owned by the attorney (Ethics Op 595 621 753) Opinion 621 has a vigorous

dissent that argued that this should be consentable The Commentaries on the new Rules agree

that this should be consentable Coffey NYSBA Ethics Opinions 752 753 and 755 - Written

by Traditionalists Who Wish to Live in a World That No Longer Exists 40 NY Real Prop

LJ 15 (Summer 2012)

A lawyer representing a lender where the fee is paid by the borrower must disclose to the

borrower that the lawyer will also receive compensation from the title insurer the lawyer may

retain the total fees paid by the borrower and the title insurer so loans ad the lender-client

consents and the total amount is not excessive (Ethics Op 626)

E Escrow account rules

Attorneys must handle escrow accounts carefully in accordance with the Model Rules court

rules and the Judiciary Law For guidance see Coffey amp Copps Attorney Escrow Accounts -

Rules Regulations and Related Topics (NYSBA 2d ed 2006) (handling of escrow funds

conflicts of interest of attorney as escrow agent sample escrow agreements Interest on

Lawyer Account Fund and Lawyers Fund for Client Protection)

The principal ethics rule as to handling escrow accounts is Rule 115 which covers the

prohibition against commingling and misappropriation keeping separate accounts

notification bookkeeping records authorized signatories and other matters (see following)

The First and Second Departments require lawyers renewing their registration to affirm that

they have read Rule 115

The attorney escrow account must be properly named ldquoAttorney Special Accountrdquo or

rdquoAttorney Trust Accountrdquo or rdquoAttorney Escrow Accountrdquo Rule 115(b)(2)

Many disciplinary cases against attorneys involve misuse of escrow accounts with discipline

ranging from censure to disbarment but most often a two-year suspension See Recent Ethics

Developments

An attorney holding the contract deposit as escrow agent should request instruction from the

seller and buyer about placing the funds in an interest-bearing account (Ethics Op 575)

An attorney escrow agent may not retain the interest earned on funds during escrow (Ethics

Op 532)

An attorney has discretion to deposit client funds in an Interest on Lawyer Account (IOLA) if

in the judgment of the attorney the funds are too small in amount or are reasonably expected

to be held for too short a time to generate sufficient interest income to justify the expense of

administering a segregated account for the benefit of the client Judiciary Law sect 497

Fees paid to a lawyer in advance of services refundable to the extent not earned are not client

funds and need not be deposited in a trust account (Ethics Op 570)

An attorney may allow a paralegal to use the attorneyrsquos signature stamp to execute escrow

checks under certain circumstances (Ethics Op 693) But see Coffey Authorized Signatories

on Escrow Accounts Ethics Opinion 693 is Misplaced 26 NY Real Prop LJ 19 (Winter

Absent authorization by all parties a lawyer who serves as an escrow agent may not release

funds to a client except as provided in the escrow agreement (Ethics Op 710)

A lawyer may not issue a check from an attorney escrow account drawn against a bank or

certified check that has not been deposited or has not cleared (Ethics Op 737)

A lawyer may use an ATM for making deposits (but not withdrawals) into a special account

(Ethics Op 759)

A lawyer may only accept IOLA account earnings credit with consent of the client after full

A lawyer may ethically accept an advance payment retainer place such funds in the lawyerrsquos

own account and retain any interest earned (Ethics Op 816)

F Lawyers Fund for Client Protection

The Lawyers Fund for Client Protection funded by part of the license fees paid by lawyers

pays claims against lawyers Many of the claims arise from misuse of attorney escrow

accounts

The Fund publishes an Annual Report on its website (wwwnylawfundorg) listing the names

of lawyers against whom claims were made See Highlights from the 2011 Annual Report in

the online materials Claims as to real property escrow were over half the total claims the

Second Department had more than half of those claims

G Preserving client confidences communication

Except where permitted by the Rules a lawyer shall not knowingly reveal a confidence or

secret of a client to the disadvantage of the client Rule 16(a)

A lawyer shall not communicate on the subject of the representation with a party the lawyer

knows to be represented by a lawyer unless the lawyer has the prior consent of the lawyer

representing the other party Rule 42(a)

H Advertising and referrals

Rule 71 governs advertising and is extremely detailed The rule outlines what information

may be included what methods and media including websites are permissible filing

requirements for advertisements All advertisements must be truthful

Rule 72 prohibits payments for referrals and expressly permits referrals to non-legal business

in a contractual relationship permitted by Rule 58

Rule 73 governs solicitation which is advertising aimed at a target audience and prohibits in

person or real-time solicitation unless the recipient is a friend relative or client The rule

outlines content and filing requirements for solicitations

Rule 74 provides that a lawyer may identify an area of law in which the lawyer practices but

may not state that heshe rdquospecializesrdquo in a field such as real estate unless heshe has bee

certified as a specialist by a private organization approved for that purpose by the American

Bas Association

A lawyer who is also a real estate broker may ethically offer to share her brokerrsquos commission

with attorneys who refer buyers or seller to her if either (a) the referring lawyer is not

representing either or (b) the referring lawyer is representing either but credits the referral fee

to the client and obtains the clientrsquos informed consent (Ethics Op 845)

It is not per se improper for a lawyer to accept repeated referrals from a real estate broker

(Ethics Op 467)

An attorney may accept a referral fee from a mortgage broker provided the client consents

after full disclosure all proceeds thereof are credited to the client if the client requests the

attorney to do so the aggregate attorneyrsquos fees are not excessive and the attorney exercises

independent professional judgment on behalf of the client (Ethics Op 667)

An advertisement is improper if it is a paid for endorsement or recommendation by a third

party and misleading if it does not appear to be an advertisement but in fact is paid for by the

attorney (Ethics Op 566)

I Sellerrsquos Concession

Participation in a residential real estate transaction that includes a ldquosellerrsquos concessionrdquo and

ldquogrossed up ldquo sale price is prohibited unless the transaction is entirely lawful the gross-up is

disclosed in the transaction documents and no parties are misled to their detriment (Ethics Op

If the sale price in a residential real estate transaction has been ldquogrossed-uprdquo in exchange for a

ldquosellerrsquos concessionrdquo all transaction documents containing the grossed-up sales price must

disclose that the sales price has been increased by a sum equal to the sellerrsquos concession

(Ethics Op 882)

The fact that the sales price in a residential real estate transaction has been ldquogrossed-uprdquo must

be expressly disclosed in the transaction documents containing the sales price in addition to

the amount of the ldquosellerrsquos concessionrdquo (Ethics Op 892)

J Discipline of attorneys (excerpts from Richard Supple online materials)

There are eight grievance committees in New York (some called ldquodisciplinary committeerdquo or

ldquocommittee for professional standardsrdquo)

Each of the four appellate divisions run its own distinct attorney-discipline system with their

own procedural rules

Under Judiciary Law 90(10) all disciplinary proceedings are ldquodeemed private and

confidentialrdquo until and unless public discipline is imposed

Sanctions include (1) admonition (imposed without a hearing) (2) reprimand (imposed after

a hearing) (3) censure (public discipline set forth in a decision published in the official

reports and The New York Law Journal) suspension (from three months to five years) and

disbarment (lasting for at least seven years) The Second Third and Fourth Departments also

issue ldquoLetters of Cautionrdquo and in the Third Department ldquoLetters of Educationrdquo) which do not

constitute formal discipline

K See also Real Estate Ethics Opinions and Opinions of the NYSBA Committee on Professional

Ethics on Escrow Accounts (including the full text of Rule 115) in the online materials

L NY Rules of Professional Conduct Rule 115 (Client Funds) (see following)

M Note any Recent Ethics Developments (see following)

RULE 115 PRESERVING IDENTITY OF FUNDS AND PROPERTY OF OTHERS FIDUCIARY

RESPONSIBILITY COMMINGLING AND MISAPPROPRIATION OF CLIENT FUNDS OR PROPERTY MAINTENANCE OF BANK ACCOUNTS RECORD

KEEPING EXAMINATION OF RECORDS (a) Prohibition Against Commingling and Misappropriation of Client Funds or Property A lawyer in possession of any funds or other property belonging to another person where such possession is incident to his or her practice of law is a fiduciary and must not misappropriate such funds or property or commingle such funds or property with his or her own (b) Separate Accounts

(1) A lawyer who is in possession of funds belonging to another person incident to the lawyerrsquos practice of law shall maintain such funds in a banking institution within New York State that agrees to provide dishonored check reports in accordance with the provisions of 22 NYCRR Part 1300 ldquoBanking institutionrdquo means a state or national bank trust company savings bank savings and loan association or credit union Such funds shall be maintained in the lawyerrsquos own name or in the name of a firm of lawyers of which the lawyer is a member or in the name of the lawyer or firm of lawyers by whom the lawyer is employed in a special account or accounts separate from any business or personal accounts of the lawyer or lawyerrsquos firm and separate from any accounts that the lawyer may maintain as executor guardian trustee or receiver or in any other fiduciary capacity into such special account or accounts all funds held in escrow or otherwise entrusted to the lawyer or firm shall be deposited provided however that such funds may be maintained in a banking institution located outside New York State if such banking institution complies with 22 NYCRR Part 1300 and the lawyer has obtained the prior written approval of the person to whom such funds belong specifying the name and address of the office or branch of the banking institution where such funds are to be maintained

(2) A lawyer or the lawyerrsquos firm shall identify the special bank account or accounts required by Rule 115(b)(1) as an ldquoAttorney Special Accountrdquo ldquoAttorney Trust Accountrdquo or ldquoAttorney Escrow Accountrdquo and shall obtain checks and deposit slips that bear such title Such title may be accompanied by such other descriptive language as the lawyer may deem appropriate provided that such additional language distinguishes such special account or accounts from other bank accounts that are maintained by the lawyer or the lawyerrsquos firm (3) Funds reasonably sufficient to maintain the account or to pay account charges may be deposited therein (4) Funds belonging in part to a client or third person and in part currently or potentially to the lawyer or law firm shall be kept in such special

account or accounts but the portion belonging to the lawyer or law firm may be withdrawn when due unless the right of the lawyer or law firm to receive it is disputed by the client or third person in which event the disputed portion shall not be withdrawn until the dispute is finally resolved

(c) Notification of Receipt of Property Safekeeping Rendering Accounts Payment or Delivery of Property A lawyer shall

(1) promptly notify a client or third person of the receipt of funds securities or other properties in which the client or third person has an interest

(2) identify and label securities and properties of a client or third person promptly upon receipt and place them in a safe deposit box or other place of safekeeping as soon as practicable

(3) maintain complete records of all funds securities and other properties of a client or third person coming into the possession of the lawyer and render appropriate accounts to the client or third person regarding them and (4) promptly pay or deliver to the client or third person as requested by the client or third person the funds securities or other properties in the possession of the lawyer that the client or third person is entitled to receive

(d) Required Bookkeeping Records

(1) A lawyer shall maintain for seven years after the events that they record

(i) the records of all deposits in and withdrawals from the accounts specified in Rule 115(b) and of any other bank account that concerns or affects the lawyerrsquos practice of law these records shall specifically identify the date source and description of each item deposited as well as the date payee and purpose of each withdrawal or disbursement (ii) a record for special accounts showing the source of all funds deposited in such accounts the names of all persons for whom the funds are or were held the amount of such funds the description and amounts and the names of all persons to whom such funds were disbursed

(iii) copies of all retainer and compensation agreements with clients (iv) copies of all statements to clients or other persons showing the disbursement of funds to them or on their behalf

(v) copies of all bills rendered to clients (vi) copies of all records showing payments to lawyers

investigators or other persons not in the lawyerrsquos regular employ for services rendered or performed (vii) copies of all retainer and closing statements filed with the Office of Court Administration and

(viii) all checkbooks and check stubs bank statements prenumbered canceled checks and duplicate deposit slips

(2) Lawyers shall make accurate entries of all financial transactions in their records of receipts and disbursements in their special accounts in their ledger books or similar records and in any other books of account kept by them in the regular course of their practice which entries shall be made at or near the time of the act condition or event recorded (3) For purposes of Rule 115(d) a lawyer may satisfy the requirements of maintaining ldquocopiesrdquo by maintaining any of the following items original records photocopies microfilm optical imaging and any other medium that preserves an image of the document that cannot be altered without detection

(e) Authorized Signatories All special account withdrawals shall be made only to a named payee and not to cash Such withdrawals shall be made by check or with the prior written approval of the party entitled to the proceeds by bank transfer Only a lawyer admitted to practice law in New York State shall be an authorized signatory of a special account (f) Missing Clients Whenever any sum of money is payable to a client and the lawyer is unable to locate the client the lawyer shall apply to the court in which the action was brought if in the unified court system or if no action was commenced in the unified court system to the Supreme Court in the county in which the lawyer maintains an office for the practice of law for an order directing payment to the lawyer of any fees and disbursements that are owed by the client and the balance if any to the Lawyersrsquo Fund for Client Protection for safeguarding and disbursement to persons who are entitled thereto (g) Designation of Successor Signatories

(1) Upon the death of a lawyer who was the sole signatory on an attorney trust escrow or special account an application may be made to the Supreme Court for an order designating a successor signatory for such trust escrow or special account who shall be a member of the bar in good standing and admitted to the practice of law in New York State

(2) An application to designate a successor signatory shall be made to the Supreme Court in the judicial district in which the deceased lawyer maintained an office for the practice of law The application may be made by the legal representative of the deceased lawyerrsquos estate a lawyer who was affiliated with the deceased lawyer in the practice of law any person who has a beneficial interest in

such trust escrow or special account an officer of a city or county bar association or counsel for an attorney disciplinary committee No lawyer may charge a legal fee for assisting with an application to designate a successor signatory pursuant to this Rule (3) The Supreme Court may designate a successor signatory and may direct the safeguarding of funds from such trust escrow or special account and the disbursement of such funds to persons who are entitled thereto and may order that funds in such account be deposited with the Lawyersrsquo Fund for Client Protection for safeguarding and disbursement to persons who are entitled thereto

(h) Dissolution of a Firm Upon the dissolution of any firm of lawyers the former partners or members shall make appropriate arrangements for the maintenance by one of them or by a successor firm of the records specified in Rule 115(d) (i) Availability of Bookkeeping Records Records Subject to Production in Disciplinary Investigations and Proceedings The financial records required by this Rule shall be located or made available at the principal New York State office of the lawyers subject hereto and any such records shall be produced in response to a notice or subpoena duces tecum issued in connection with a complaint before or any investigation by the appropriate grievance or departmental disciplinary committee or shall be produced at the direction of the appropriate Appellate Division before any person designated by it All books and records produced pursuant to this Rule shall be kept confidential except for the purpose of the particular proceeding and their contents shall not be disclosed by anyone in violation of the attorney-client privilege (j) Disciplinary Action A lawyer who does not maintain and keep the accounts and records as specified and required by this Rule or who does not produce any such records pursuant to this Rule shall be deemed in violation of these Rules and shall be subject to disciplinary proceedings Comment [1] A lawyer should hold the funds and property of others using the care required of a professional fiduciary Securities and other property should be kept in a safe deposit box except when some other form of safekeeping is warranted by special circumstances All property that is the property of clients or third persons including prospective clients must be kept separate from the lawyerrsquos business and personal property and if monies in one or more trust accounts 85 including an account established pursuant to the ldquoInterest on Lawyer Accountsrdquo law where appropriate See State Finance Law sect 97-v(4)(a) Judiciary Law sect 497(2) 21 NYCRR sect 700010 Separate trust accounts may be warranted or required when administering estate monies or acting in similar fiduciary capacities [2] While normally it is impermissible to commingle the lawyerrsquos own funds with

client funds paragraph (b)(3) provides that it is permissible when necessary to pay bank service charges on that account Accurate records must be kept regarding which portion of the funds belongs to the lawyer [3] Lawyers often receive funds from which the lawyerrsquos fee will or may be paid A lawyer is not required to remit to the client funds that the lawyer reasonably believes represent fees owed to the lawyer However a lawyer may not withhold the clientrsquos share of the funds to coerce the client into accepting the lawyerrsquos claim for fees While a lawyer may be entitled under applicable law to assert a retaining lien on funds in the lawyerrsquos possession a lawyer may not enforce such a lien by taking the lawyerrsquos fee from funds that the lawyer holds in an attorneyrsquos trust account escrow account or special account except as may be provided in an applicable agreement or directed by court order Furthermore any disputed portion of the funds must be kept in or transferred into a trust account and the lawyer should suggest means for prompt resolution of the dispute such as arbitration The undisputed portion of the funds is to be distributed promptly [4] Paragraph (c)(4) also recognizes that third parties may have lawful claims against specific funds or other property in a lawyerrsquos custody such as a clientrsquos creditor who has a lien on funds recovered in a personal injury action A lawyer may have a duty under applicable law to protect such third party claims against wrongful interference by the client In such cases when the third-party claim is not frivolous under applicable law the lawyer must refuse to surrender the property to the client until the claims are resolved A lawyer should not unilaterally assume to arbitrate a dispute between the client and the third party but when there are substantial grounds for dispute as to the person entitled to the funds the lawyer may file an action to have a court resolve the dispute [5] The obligations of a lawyer under this Rule are independent of those arising from activity other than rendering legal services For example a lawyer who serves only as an escrow agent is governed by the applicable law relating to fiduciaries even though the lawyer does not render legal services in the transaction and is not governed by this Rule

126 State Street 6th Flr Albany New York 12207 5184364170 5184361456 (fax) wwwCoppsDiPaolacom FACSIMILE amp EMAIL SERVICE NOT ACCEPTABLE

CD COPPS DIPAOLA PLLC

Anne Reynolds Copps Esq Partner arcoppscoppsdipaolacom Kathleen (ldquoCaseyrdquo) Copps DiPaola Esq Partner kdipaolacoppsdipaolacom Kate Siobhan Howard Esq Associate khowardcoppsdipaolacom

Shannon M Wickenden Paralegal swickendencoppsdipaolacom Christine M Wilson-Smith Real Estate Closing Coordinator cwsmithcoppsdipaolacom Brittany L Ericsen Administrative Assistant bericsencoppsdipaolacom

Client

Address

I appreciate your retaining me with respect to the above-referenced matter (the matter) This letter shall serve as an agreement between us with respect to the delivery direction and procurement of legal services for you in connection with this matter This letter is provided to you in accordance with regulatory requirements of New York If you so desire I recommend that you seek the advice of an attorney not associated with this office before signing this agreement

Retainer Agreement

Names and Addresses of Parties entering into the Agreement

THIS AGREEMENT FOR LEGAL SERVICES by and between (Law Firm) and (Client) This agreement constitutes a binding and legal contract and should be reviewed carefully

Nature of Services to be Rendered This letter confirms that you have retained this firm as your attorney to represent you in connection with the real estate of the contract and negotiation of any issues contained in the contract if the contract requires that you provide title we will order title insurance on your behalf unless you direct otherwise You will be responsible for the payment of the title at the time of closing If you cancel after Title has been ordered you may be charged a cancellation fee by the Title Company We will prepare an early-occupancy agreement if necessary and if specifically requested and agreed to by all parties we will answer and address any questions or concerns you have from the time of entering the contract to the closing

If we represent you as Purchaser we will contact your bank and arrange for the closing You as Purchaser will be required to notify us as to who your lender will be so that we can contact them directly We will notify all parties of the closing and attend the closing with you You will satisfy any conditions in your commitment letter We will assist you with satisfying any of said conditions in your commitment only if you shall so request that we do so

If you are the seller we will be contacted by the purchaserrsquos attorney who will arrange for the closing with the bankrsquos attorney and we will notify you of the closing date

The client authorizes the Law Firm to take any steps which in the sole discretion of the firm are deemed necessary or appropriate to protect the clients interest in the matter

We shall keep you informed of the status of your case and agree to explain the laws pertinent to your situation the available course of action and the attendant risks We shall notify you promptly of any developments in your case and will be available for meetings and telephone conversations with you at mutually convenient times We do insist that appointments be made for personal visits to our office Copies of all papers will be supplied to you as they are prepared (unless you request to the contrary)

It is specifically acknowledged by you that this firm has made no representations to you express or implied concerning the outcome of your matter presently pending or hereafter to be commenced between you and any other party

Amount of the Advance Retainer if any and What it is Intended to Cover

(a) We will not require an advance retainer fee The amount of our eventual fee will be based upon our flat fee as indicated hereinafter along with any out-of-pocket disbursements (such as messenger services long distance telephone calls telefaxes postage photocopies) which are incurred in your behalf

Flat Rate Fee

You will be required to pay a flat fee of $________ which includes attending the closing for a period of not more than two hours (not including travel time) In the event that the closing takes place in the County where the subject premises is located and is more than forty-five (45) miles from our office an additional fee of $15000 may be assessed In the event that the closing exceeds the two hour limit an additional flat fee of $15000 may be assessed In the event that we need to prepare a Power of Attorney there will be an additional fee of $10000 for each Power of Attorney prepared In the event that we need to prepare the Contract there will be an additional fee of $10000 In the event that we need to prepare a Note and Mortgage there will be an additional fee of $15000 In the event that additional documents require drafting by this office there will be an additional fee If the contract is cancelled and you do not use us for another closing one half of the fee will be due for services rendered If you do use us for the next closing $15000 will be due for the cancelled contract work In addition to the foregoing your responsibility will include direct payment or reimbursement of this firm for disbursements advanced on your behalf the same may include but not necessarily be limited to copying costs messenger services photocopies telefaxes and postage Said fees shall be paid at the time of closing In the event that said fee is not paid at the time of closing interest will begin to accrue at the rate of 9 per annum and shall be added to the balance due to us

Right to Cancel the Agreement

You have the absolute right to cancel this retainer agreement at any time Should you exercise this right you will be charged only the fee expenses (time charges and disbursements) incurred within that period based upon an hourly rate of $22500 per hour for time expended by Attorneys in this office and $16500 per hour for the time expended by Paralegals in this office and any disbursements which were incurred on your behalf

You are advised that if in the judgment of this firm we decide that there has been an irretrievable breakdown in the attorney-client relationship or a material breach of the terms of this retainer agreement we may withdraw from representation upon written notice to you Should any fees be due and owing to this firm at the time of our discharge we may have the right to seek a judgment against you and collect pursuant to New York State law

In the event that any bill from the Law Firm remains unpaid beyond a 120-day period the client agrees that the Law Firm may seek to withdraw its representation In the event that an action is pending and absent your consent an application must be made to the Court for such withdrawal Where the fee is unpaid for the period set forth above the client acknowledges that in connection with any such withdrawal application that the account delinquency may be good cause for withdrawal

Right to Arbitration

We seek to avoid any fee disputes with our clients and rarely have such disputes We shall make every effort to resolve such disputes in an amicable fashion We will participate in voluntary arbitration if you wish through Third Department Program prior to seeking judicial intervention You must notify us of your intention to arbitrate

If the foregoing retainer agreement meets with your understanding and acceptance kindly indicate your acceptance by signing the enclosed copy of this letter below where indicated and return it to me together with the initial retainer

Please note that because of the inherent properties of internet transmissions and communications this law firm cannot guarantee the confidentiality of e-mail Therefore you are here by cautioned not to send any confidential information via email

We look forward to working with you

By___________________________

By signing below I the client acknowledge that I have read this agreement in its entirety have had full opportunity to consider its terms and have had full and satisfactory explanation of same and fully understand its terms and agree to such terms

I the client fully understand and acknowledge that there are no additional or different terms or agreements other than those expressly set forth in this written agreement

I the client acknowledge that I was provided with and read the Statement of Clients Rights and Responsibilities

I HAVE READ AND UNDERSTAND THE ABOVE LETTER HAVE RECEIVED A COPY AND ACCEPT ALL OF ITS TERMS

x____________________________ x____________________________ Client ndash Client ndash

Statement of Clientrsquos Rights and Responsibilities

1 You are entitled to be treated with courtesy and consideration at all times by your lawyer and the other lawyersand personnel in your lawyerrsquos office

2 You are entitled to an attorney capable of handling your legal matter competently and diligently in accordancewith the highest standards of the profession If you are not satisfied with how your matter is being handled youhave the right to withdraw from the attorney-client relationship at any time (court approval may be required insome matters and your attorney may have a claim against you for the value of services rendered to you up tothe point of discharge)

3 You are entitled to your lawyerrsquos independent professional judgment and undivided loyalty uncompromised byconflicts of interest

4 You are entitled to be charged a reasonable fee and to have your lawyer explain at the outset how the fee willbe computed and the manner and frequency of billing You are entitled to request and receive a written anditemized bill from your attorney at reasonable intervals You may refuse to enter into any fee arrangement thatyou find unsatisfactory

5 You are entitled to have your questions and concerns addressed in a prompt manner and to have your telephonecalls returned promptly

6 You are entitled to be kept informed as to the status of your matter and to request and receive copies of papersYou are entitled to sufficient information to allow you to participate meaningfully in the development of yourmatter

7 You are entitled to have your legitimate objectives respected by your attorney including whether or not tosettle your matter (court approval is required in some matters)

8 You have the right to privacy in your dealings with your lawyer and to have your secrets and confidencespreserved to the extent permitted by law

9 You are entitled to have your attorney conduct himself or herself ethically in accordance with the Code ofProfessional Responsibility

10 You may not be refused representation on the basis of race creed color religion sex sexual orientation agenational origin or disability

RECENT ETHICS DEVELOPMENTS copy Karl B Holtzschue 2014 [most recent material in italics]

1 New York Rules of Professional Conduct The New York Rules of ProfessionalConduct replaced the New York Code of Professional Responsibility as of April 1 2009 The new Rules maintain much of the language and substance of the prior Code drawing on both the old Disciplinary Rules and the old Ethical Considerations Changing to the ABA model rules format was first proposed by NYSBArsquos Committee on Standards of Attorney Conduct (COSAC) with a section-by-section commentary explaining the proposals and comparing them to both the old NY Code and the ABA Model Rules of Professional Conduct COSAC also supplemented that commentary with detailed Reportersrsquo Notes that explained the changes and sometimes cited case law or discussed comparable rules in other jurisdictions Simon Comparing the New NY Rules of Professional Conduct to the Existing NY Code of Professional Responsibility (Part I) NY Professional Responsibility Report 1 (Feb 2009) (with tables comparing the Rules with the Code) The Administrative Board of the New York Courts adopted most but not all of COSACrsquos proposals Official Commentary on the Rules drafted by COSAC have been adopted by the NYSBA House of Delegates

2 Recent Ethics Opinions See NYSBA Ethics Opinions 752 753 and 755 (relating toMDP and conflicts) and 757 (specialist certification disclaimer) ABCNY Opinion 2002-2 (interest on escrow funds) and 2002-3 (advising on client to client communication) and Nassau County Opinion 02-3 (use of paralegals) summarized at the end of the Ethics Opinions section See online materials

NYSBA Ethics Op 829 (42909) A lawyer having a valid consent obtained prior to the effective date of the Rules (4109) need not obtain a new consent in writing The client need not sign the consent Any type of writing even an email from the lawyer to the client confirming an oral consent would be sufficient

NYSBA Ethics Op 845 (101410) (lawyer who is broker may ethically offer to share brokerrsquos commission with attorneys who refer buyer or seller if either (a) referring lawyer is not representing buyer or seller or (b) referring lawyer is representing buyer or seller but credits referral fee to client and obtains clientrsquos informed consent)

NYSBA Ethics Op 882 (2011) (if sales price ldquogrossed-uprdquo in exchange for ldquosellerrsquos concessionrdquo all transaction documents must disclose both)

NYSBA Ethics Op 891 (2011) (attorney may refer client to title abstract company or title company agent in which attorney has financial interest in the limited case where the company or agent does only ministerial tasks)

NYSBA Ethics Op 958 (2413) (lawyer may accept finderrsquos fee for introducing clients to prospective investor provided that lawyer complies with Rules of Professional Conduct including those governing protection of confidential information avoidance of conflicts

business transactions with clients competent advice on applicability of privileges in performing legal services and adherence to rules on excessive fees)

NYSBA Ethics Opinion 974 (71913) (when circumstances make it ethically permissible for lawyer to represent a party and also receive payment to act as agent of title abstract company lawyer must consider any relevant legal restrictions before reducing legal fee to the transaction party overlap in services provided does not automatically render fees excessive reaching a conclusion different from Opinion 576 as to reducing the fee)

NYSBA Ethics Opinion 993 (111313) (mere existence of sellerrsquos concession does not require statement that purchase price has been increased but when purchase price has in fact been grossed up by sellerrsquos concession lawyer is required to ensure that grossing up is disclosed)

3 NYSBA 2001 MDP Amendments On July 232001 a joint order of the four AppellateDivision departments adopted the NYSBArsquos House of Delegates recommendations of a new DR 1-106 (Responsibilities Regarding Non-Legal Services) and DR 1-107 (Contractual Relationship between Lawyers and Non Legal Professionals) and related amendments to DRs 2-101 2-102 and 2-103 The rules specifically govern lawyer participation in multi-disciplinary practice (MDP) groups which offer clients professional services such as engineering financial planning accountain brokerage social work and real estate Prior to commencement of legal representation of a client referred by a nonlegal service provider or prior to the referral of an existing client to a nonlegal service provider a lawyer must provide the client with a prescribed statement of the clientrsquos rights

4 Arbitration of Fee Disputes For representation commenced after June 1 2001 clientsmay require arbitration of fee disputes involving $1000 to $50000 22 NYCRR Part 137 The engagement letter is required to notify the client of a possible right to arbitration in case of a fee dispute Lorin v 501 Second St LLC 769 NYS2d 361 (Civil Court NY City 2003) (clientrsquos defense of legal malpractice did not excuse attorneys failure to arbitrate fee dispute) Larrison v Scarola (Supreme Court NY County 2005) (law firm prohibition of arbitration without its consent violated public policy)Calendar v Edwards 33 AD3d 343 822 NYS2d 262 (Civil Court Queens County 2006) (reference to court website was not adequate notice to client of right to resolve fee dispute by arbitration) Ween v Dow 35 AD3d 58 822 NYS2d 257 (1st Deprsquot 2006) (lack of reciprocal provision for attorneysrsquo fees should client prevail made retainer agreement provision unenforceable) Pruzan vLevine 15 Misc3d 377 833 NYS2d 378 (Civil Court Kings County 2007) (civil court lacked jurisdiction to issue equitable declaratory judgment re attorney fee dispute discussion of proper procedure for de novo review of arbitration award in attorney fee dispute) Tray v Thaler amp Gertler LLP 13 Misc3d 617 842 NYS2d 713 (District Court Nassau County 2007) (court lacked jurisdiction to provide de novo review of arbitration under fee dispute resolution program judge cites need for review to articulate specific procedures for judicial review) Jay Arthur Goldberg PC v 30 Carmine LLC 896 NYS2d 660 Supreme Court N Y County 2010) (retainer did not contain written waiver of clientrsquos right to de novo review of arbitration of fee

dispute)

5 Letter of Engagement Effective March 4 2002 an attorney must deliver a writtenletter of engagement with each client unless the fee is expected to be less than $3000 22 NYCRR Part 1215 Even when the fee is smaller this is a good practice to clarify the terms of the engagement by use of a letter It would be also advisable though not required to have the client sign and return a copy of the letter The consequences of failure to deliver a letter of engagement have been litigated Seth Rubenstein PC v Ganea 41 AD3d 54 833 NYS2d 566 (2d Deptrsquot 2007) (attorneyrsquos failure to provide letter of engagement was unintentional and did not preclude recovery in quantum meruit) (see discussion deploring the quandary resulting from disparate lower court rulings in other Departments in Emanuel 2nd Department Interprets Engagement Rule in NY Prof Responsitility Rep 1 (May 2007)) Kutner v Antonacci 16 Misc3d 585 837 NYS2d 859 (District Court Nassau County 2007) (retainer agreement provision for 16 interest on unpaid legal fees though not usurious was not fair and reasonable reduced to 9 statutory pre-judgment rate) Rimberg amp Assocs PC v Jamaica Chamber of Commerce Inc 40 AD3d 1066 837 NYS2d 259 (2d Deprsquot 2007) (non-refundable minimum retainer fee agreement was void but did not prevent attorney from seeking to recover reasonable value of legal services) Barry Malin amp Assocs PC v Nash Metalware Co Inc 48 AD3d 1096 849 NYS2d 752 (Civil Court NY County 2008) (law firm did not have enforceable contract to represent client where letter of engagement for $100000 fee never signed and was not entitled to recover in quantum meruit distinguishing Seth Rubenstein) Fishkin v Taras 50 AD3d 400 858 NYS2d 5 (1st Deprsquot 2008) (attorneys not entitled to recover compensation for legal services where they failed to timely file retainer statements) Pratt New Yorkrsquos Engagement Letter Rule and Fee Dispute Resolution Program The Process of Fee Collection NYSBA Journal 26 (June 2012) Bryan L Salamone PC v Cohen 40 Misc3d 338 965 NYS2d 324 (Supreme Court Suffolk County 2013) (usurious interest rate of 18 pa rendered retainer agreement null and void) Notrica v North Hills Holding Co LLC 105 AD3d 826 964 AD2d 167 (2d Dept 2013) (counselrsquos failure to provide letter of engagement did not bar claims for fees for services rendered)

6 Malpractice Hansen v Caffry 720 NYS2d 258 (3d Deprsquot 2001) (sellers could notassert legal malpractice claim against purchasersrsquo attorney who drafted deeds at sellersrsquo request) Hotaling v Sprock 107 AD3d 1446 967 NYS2d 794 (4th Dept 2013) (client raised issue of fact as to whether he sustained damages for loss of rent precluding summary judgment in favor of attorneys sued for negligence in failing to determine that zoning ordinance prohibited him from operating adult use business in building he purchased for that purpose) Landow v Snow Becker Krauss PC 975 NYS2d 119 (2d Dept 2013) (claim that law firms incorrectly advised client in opinion letter that proposed sale of property would not result in loss of his tax deferment status dismissed as three-year statute of limitations had run and was not tolled by continuous representation doctrine)

7 Conflicts of Interest

(a) Conflicts In re Ferraro 91 AD 3d 121 934 NYS2d 211 (2d Deprsquot 2011) (representing seller on recommendation by real estate broker to entity in which broker was principal while simultaneously representing brokerrsquos entity in resale for more money to third party without disclosing conflicts warranted two-year suspension)

(b) Waiver of Conflict Roller v Walsh 718 NYS2d 519 (4th Deprsquot 2000) (acknowledgment and waiver of conflicts of interest arising from representation of limited liability companies and agreement to hold attorney harmless did not establish defense as matter of law to claim that waivers failed to disclose nature and extent of conflicts due to advancing interests of one member to the detriment of others)

(c) Consent to Conflict Under the new Rules of Professional Conduct consents to conflicts by clients must be in writing Rule 17 NYSBA Ethics Op 829 states that the client need not sign the consent and that any type of writing even an email from the lawyer to the client confirming an oral consent would be sufficient

8 Uncleared Checks In re Apponlinecom Inc 284 BR 181 (EDNY 2002)(settlement attorney violated Georgia ldquogood fundsrdquo statute by depositing check issued on behalf of lender nine days after closing and liable to known assignee of loan) In re Iaquinta-Snigur 813 NYS2d 170 (2d Deprsquot 2006) failure to timely investigate overpayment of wired funds disbursing IOLA funds without receiving corresponding deposit or clearance of funds and disbursing funds from IOLA account in amount greater than deposit resulting in misappropriation of IOLA funds warranted three-year suspension)

9 Discipline re Escrow Accounts Many disciplinary cases against attorneys involvemisuse of escrow accounts with discipline ranging from censure to disbarment (most often two-year suspension) In re Wilkins 70 AD3d 1119 895 NYS2d 552 (3d Deprsquot 2010) (failure to supervise employee as to client escrow accounts and maintain records warranted censure) In re Emengo 902 NYS2d 579 (2d Deprsquot 2010) (failure to maintain sufficient balance in attorney trust account for down payment warranted two-year suspension) In re Gelzinis 907 NYS2d 273 (2d Deprsquot 2010) (failing to preserve escrow funds misappropriation of client funds and treating escrow money as his personal bank account warranted disbarment) In re Jakabovics 908 NYS2d 22 (1st Deprsquot 2010) (failure to maintain sufficient funds in IOLA account and deficient record keeping warranted resignation) In re Abrams 908 NYS2d 202 (1st Deprsquot 2010) (misappropriating client funds and failure to maintain attorney trust account records warranted two-year suspension) In re Koston Hui Feng 908 NYS2d 435 (2d Deprsquot 2010) (conversion of client funds and failure to maintain required records warranted six-month suspension) In re Rahmanan 90 AD 3d 7 934 NYS2d 105 (1st Deprsquot 2011) (failure to return $150000 deposited in IOLA account as an investment by client allowed to resign) In re Galasso 90 AD 3d 1 940 NYS2d 88 (2d Deprsquot 2012) (failure to maintain vigilance over client trust funds resulting in hundreds of thousands of dollars misappropriated by firmrsquos bookkeeper and attorneyrsquos brother warranted two-year suspension) In re Hager 94 AD 3d 161 941 NYS2d 53 (1st Deprsquot 2012) (failing to advise client that funds for $9 million deposit in escrow account did not clear to his

clientrsquos detriment in real estate loan transactions warranted acceptance of attorneyrsquos resignation) In re Cusack 945 NYS2d 104 (2d Deprsquot 2012) (family company in-house counsel abdicating control over attorney escrow account as lenderrsquos attorney in mortgage loan transactions to non-attorney related to borrowerbuyer failing to disburse funds to satisfy mortgages and pay mortgage transfer and recording taxes engaging in numerous conflicts of interest converting client funds by over-drawing on escrow account improperly sharing fees with a non-attorney thus helping to perpetuate vast criminal conspiracy warranted four-year suspension) In re Galasso 105 AD3d 103 961 NYS2d 475 (2d Dept 2013) (on review of sanction imposed due to misuse of client funds by attorneyrsquos brother where there were ldquored flagsrdquo and no reimbursement of the client losses two-year suspension was upheld) In re Shtindler 964 NYS2d 173 (2d Dept 2013) (failure to safeguard escrow funds which were stolen by her paralegal failure to maintain ledger book and misleading client as to funds warranted one-year suspension) In re Rosenberg 970 NYS2d 516 (1st Dept 2013) (longstanding trust account misconduct warranted public censure rather than suspension due to mitigating factors that conduct was negligent not venal he provided specialized legal services for children expressed remorse took corrective measures and there was no harm to clients)

Attorneys have been disciplined for mishandling of attorney escrow accounts handled by their partners In re Laudonio 75 AD3d 144 904 NYS2d 696 (2d Dept 2010) (failure to monitor attorney special accounts failure to discover partnerrsquos misappropriation of $17 million and failure to prevent $3 million in dishonored checks where partner hid his misconduct was firmrsquos founder and pillar of community warranted six-month suspension) In re Fonte 75 AD3d 199 905 NYS2d 173 (2d Dept 2010) (failure to make adequate effort to review or supervise or to detect partnerrsquos fraudulent manipulation of attorney special accounts and failure to cooperate in investigation warranted three-year suspension rejecting Special Referreersquos conclusion that respondent was a victim of fraudulent scheme by firmrsquos founder and pillar of community)

10 Liability re Escrow Accounts An attorney escrowee has been held not liable forinterest on a downpayment deposited in an IOLA account not earned during a four-year dispute (court divided 3-2) Takayama v Schaefer 240 AD2d 21 669 NYS2d 656 (2d Deprsquot 1998) If there is a dispute the escrowee might consider seeking advice from the parties An escrow agent was awarded fees for legal services to itself Corazza v Jacobs 717 NYS2d 2 (1st Deprsquot 2000) See also Mann v Skidmore 2 Misc3d 50 774 NYS2d 252 (Supreme Court App Term 9th and 10th Jud Dist 2003) (evidence failed to establish that attorney lacked good faith in depositing funds in IOLA account or failing to transfer to interest-bearing account later) Bazinet v Kluge 764 NYS2d 320 (Supreme Court New York County 2003) (seller of cooperative apartments stated malpractice claim where attorney deposited two escrow amounts in excess of one million dollars each in IOLA accounts but deposit in small Connecticut bank that failed was not gross negligence) reversed (as to malpractice) 14 AD3d 324 788 NYS2d 77 (1st Deprsquot 2005) (no requirement that escrow funds be deposited in insured account) Chen Li v Akhtar 6 Misc3d 1021A 800 NYS2d 344 (Supreme Court Queens County 2005)(risk of misappropriation of down payment by sellers attorney falls on seller citing Holtzschue parties ordered to close the sale purchaser directed to convey to sellers any

interest in the down payment sellers directed to apply to the Lawyers Fund for Client Protection for reimbursement) Maddox v All One Enterprises 820 NYS2d 277 (2d Deprsquot 2006) (attorney escrow agent not liable to buyer for breach of agreement to obtain buyerrsquos approval before releasing funds for repair where attorney deposited funds in court escrow agreement did not require escrow funds to be held in interest-bearing account) NY Lounge Group LLC v Sullivan 823 NYS2d 49 (1st Deprsquot 2006) (frivolous suit against attorney escrow account stakeholder entitled stakeholder to $3600 in attorneyrsquos fees) RPLS Task Force on Attorney Escrows Current Practice Alternatives and Improvements 34 NY Real Prop LJ 93 (Fall 2006)(concluding that attorneys should continue to hold escrows despite a few thefts) Real Property Law Section Task Force on Attorney Escrow Supplemental Report 36 NY Real Prop LJ 6 (Fall 2008) (confirming recommendations) Hovav v Loew 50 AD3d 488 856 NYS2d 80 (1st Deprsquot 2008) (when purchaser failed to provide financial information required by cooperative board sellerrsquos attorney as escrow agent acted in good faith in disbursing deposit to seller)

11 Attorney Use of Owned Title Abstract Company Attorney as Title Agent Ethicsopinions state that a purchaserrsquos attorney may not recommend use of a title abstract company in which the attorney has an ownership interest In re Drysdale 811 NYS2d 97 (2d Deprsquot 2006) (failure to disclose interest in company that provided title abstract services warranted public censure) NYSBA Ethics Opinion 621 (1991) (but note dissent) and 738 (2001) and 753 (2002) (non-consentable) For an argument that this should be consentable see Lee Dual Roles in Real Estate Transactions Disclosure and Consent 24 NY Real Prop LJ 16 (Spring 1996) See also In re MacKinnon 223 AD2d 807 637 NYS2d 321 (3d Deprsquot 1996) (no an impermissible conflict of interest) In re Ford 287 AD2d 870 732 NYS2d 115 (3d Deprsquot 2001) (declining to find it was a conflict of interest) Note however that proposed Rule 57 of NYSBArsquos Committee on Standards of Attorney Conduct seems intended to make the referral of a client to an abstract company in which the attorney has an ownership interest a consentable event if the required steps are taken While subsection (d) of the proposed Rule 57 was not adopted by the Appellate Divisions the Commentary adopted by the NYSBA House of Delegates does appear to make that consentable on a case-by-case basis and the NYSBA Committee on Professional Ethics should be guided accordingly Holtzschue NY Rules of Professional Conduct Make It Consentable for a Lawyer to Refer a Client to the Lawyerrsquos Title Abstract Company 38 NY Real Prop LJ 15 (Spring 2010) Jurist Because Rule 57 Was Not Adopted It Is Not Consentable for a Lawyer to Refer a Client to the Lawyerrsquos Title Abstract Company 38 NY Real Prop LJ 23 (Fall 2010) [Author conclusion disputed by COSAC members] Ward Realtor-Owned Title Agencies Turn Away From the Quagmire 39 NY Real Prop LJ 18 (Winter 2011) (referral to an attorney conditioned on placement of title insurance orders with title agency owned by realtor violates RESPA Ins Law sect 6409(d) and is ethical breach per se) In re Woitkowski 921 NYS2d 74 (2d Deprsquot 2011) (escrow account violations and use of own title abstract company in representing parties without disclosing conflict implications warranted two-year suspension) Coffey NYSBA Ethics Opinions 752 753 and 755 - Written by Traditionalists Who Wish to Live in a World That No Longer Exists 40 NY Real Prop LJ 15 (Summer 2012) [ldquoKarl got it rightrdquo] NYSBA Ethics Op 891 (2011) (attorney may

refer client to title abstract company or title company agent in which attorney has financial interest in the limited case where the company or agent does only ministerial tasks) NYSBA Ethics Opinion 974 (2013) (when circumstances make it ethically permissible for lawyer to represent a party and also receive payment to act as agent of title abstract company lawyer must consider any relevant legal restrictions before reducing legal fee to the transaction party overlap in services provided does not automatically render fees excessive reaching a conclusion different from Opinion 576)

An attorney may act as a title agent however provided such conduct is legal no prohibited conflict exists consent is obtained from all parties after full disclosure the legal fee is reduced by remuneration to the lawyer from the title company (absent express consent to the contrary from the client) and the legal fee is not excessive NYSBA Ethics Opinions 576 595 626 731 and 738 NYSBA Ethics Opinion 974 (2013) (when circumstances make it ethically permissible for lawyer to represent a party and also receive payment to act as agent of title abstract company lawyer must consider any relevant legal restrictions before reducing legal fee to the transaction party overlap in services provided does not automatically render fees excessive reaching a conclusion different from Opinion 576 as to reducing the fee)

12 Conflict of Interest is Not Malpractice Kimm v Chang 38 AD3d 481 833NYS2d 429 (1st Deprsquot 2007) (conflict of interest even if a violation of the Code of Professional Responsibility does not by itself support a cause of action for malpractice)

8 PREPARATION FOR CLOSING CLOSING

POST-CLOSING MATTERS

THE HOUSE CLOSING (Downstate) Nancy A Connery Esq

I SELLER PREPARING FOR CLOSING

The seller=s attorney has the following basic functions to perform prior to the

closing

A Arrange for pay-off of loans The seller should advise its bank of

the projected closing date and request a pay-off letter The sellerrsquos

attorney should confirm the numbers with the seller and send the

payoff letter to both the purchaserrsquos attorney and the title company

for review The title company will advise the sellerrsquos attorney of the

amount it will want to collect at closing to satisfy the loan That

amount will be a little more than the outstanding principal amount

of the mortgage and accrued interest because the title company will

want to collect a few extra daysrsquo interest to cover the lapse in time

between the closing date and the date the pay-off check is delivered

to the bank Although the title company normally sends the check

by overnight courier there can be delays and the title company will

therefore collect sufficient money to give itself a little leeway Be

aware that if the house is encumbered by a HELOC (home equity

line of credit) the title company will require the seller to terminate

the HELOC before the closing and obtain a letter from the bank

confirming that it has closed the line of credit all of which takes

time For a house closing and condo closing the title company will

collect the funds needed to pay off the mortgage at closing deliver

the funds to the bank immediately after the closing and obtain and

record a satisfaction from the bank after the pay-off A cooperative

closing is handled differently in that the sellerrsquos bank will send its

attorneys to the closing to collect the payoff funds and deliver the

original stock certificate and proprietary lease

B Review of Title The sellerrsquos attorney reviews the buyerrsquos title

report and arranges for removal of any exceptions to title that must

be removed pursuant to the terms of the contract of sale The

objections are listed on Schedule B of the title report The most

common objection to title is a mortgage that has to be satisfied (see

above) Other common objections include judgments tax liens

easements restrictive covenants sidewalk violations and potential

water charges Occasionally more esoteric exceptions are listed

such as a problem in chain of title To determine how to eliminate

title objections the sellerrsquos attorney need only talk to the title

companyrsquos clearance attorney Some matters can be dealt with by

affidavit (eg confirmation that New York City has not performed

any work that could be the basis for an emergency repair lien and

confirmation that seller has not been known by any other name for

the past 10 years) Other matters must be removed prior to closing

For example if there are any judgments against the seller the title

company will normally require seller to pay the judgment and

obtain a satisfaction prior to the Closing

C Schedule the Closing When the purchaser and seller are both

ready to close the closing must be scheduled which is an art in and

of itself considering the number of parties involved For a house the

seller buyer title company and attorney for the buyerrsquos bank must

attend the closing which is usually held (unless the contract

otherwise provides) at the office of the lenderrsquos attorney If the

buyer is not borrowing money a house closing is usually held at the

office of the sellerrsquos attorney The same rule applies to condos but

coop closings are usually held at the office of the cooprsquos managing

agent Although it is the buyerrsquos job to schedule the title company

itrsquos not a bad idea for the sellerrsquos attorney to confirm the closing

date with the title company once a date has been confirmed with

the purchaser

D PrepareObtain the Closing Documentation The seller must

prepare or obtain among other things (a) the closing documents

required by the contract of sale (b) transfer tax documentation (c)

the documentation required by the title company to clear title (d) a

closing statement or memorandum and (e) power(s) of attorney if

the seller(s) will not attend the closing

a Contract of Sale Documents The contract of sale provides a

blueprint for the closing documents For a house that

documentation will include

i Bargain and Sale Deed (with covenants) A deed must

be delivered at a house or a condo closing (although

the language of a condo deed differs from the language

of a house deed) but is not delivered at a coop closing

ii If the seller is a foreign national who does not reside in

the United States the buyer must pay over to the

Internal Revenue Service 10 of the purchase price at

the Closing subject to certain exceptions Assuming

the seller is not a non-resident foreign national the

seller is required to deliver to the purchaser a

Certificate of Non-Foreign Status (not required by law

for transactions where the purchase price does not

exceed $300000 although the exemption is

conditioned on continuing residency by the purchaser

but the certificate is required by contract)

iii Fuel statement The seller should have its fuel oil

company measure the fuel in the housersquos oil tank a day

or two before the closing and provide the seller with a

statement showing the amount of oil in the tank and

its price

iv Water meter reading If the water consumption is

measured by a water meter DEP must be contacted

several weeks before the closing to obtain a ldquofinalrdquo

water meter reading

b Title Company Documentation

i Sellerrsquos ldquoCommon Exceptionsrdquo Title Affidavit

ii If water charges are listed in the title report as a

possible title objection Seller must provide a recent

meter reading This may involve calling the Dept of

Environmental Protection to obtain a ldquofinalrdquo water

meter reading Such a reading should generally be

ordered at least 2 weeks before the closing to give the

Department time enough to read the meter and

furnish a reading Water meter readings are not

required for condos or coops If the title company is

willing to pay the water bill the funds for the meter

reading can be delivered to the title company at

closing

iii Obtain other documentation required by the title

company to clear title including loan payoff letter and

if therersquos a HELOC in place confirmation from the

bank that the HELOC has been closed

iv Obtain an invoice from the title company listing the

amounts seller will have to pay at closing to the title

company including transfer taxes any charges to

record a power of attorney and any charges billed by

the title company for its services in satisfying the

sellerrsquos mortgage

c Transfer Tax Documents and Related Government Filings

For all transfers in New York State a TP-584 (New York

State Real Estate Transfer Tax AffidavitCredit Line

Mortgage Certificate) and RP-5217 (Transfer

ReportEqualization Form) must be prepared (the forms can

be obtained through the website of the New York State

Department of Taxation and Finance) Additional transfer

tax documentation may be required in some local

jurisdictions For example a New York City closing requires

preparation of a TP-584 (New York State Real Estate

Transfer Tax AffidavitCredit Line Mortgage Certificate)

NYC RPTT (New York City Real Property Transfer Tax

Report) RP-5217 (Transfer ReportEqualization Certificate)

smoke alarm affidavit and Housing Preservation and

Development Affidavit certifying that the housecondocoop is

not a multiple dwelling To confirm the government filings to

be made in any jurisdiction check with the title company

d Income Tax Documentation If seller is an individual

partnership estate or trust and is not a resident of New

York seller must complete a form IT-2663 which is an

estimate of the sellerrsquos income tax liability to New York State

with respect to the sale Generally the sellerrsquos accountant or

the seller should prepare the form If estimated income tax

will be payable to New York State a check for that amount

will have to be delivered to the title company at closing along

with the form IT-2663 Pre-clear with the title company the

IT-2663 and the tax amount

e Powers of Attorney If the seller will not attend the closing

the sellerrsquos attorney will need to prepare a power of attorney

using the statutory form Before having the power signed a

copy of the draft power should be delivered to both the title

company and the purchaser for review Once the form is

approved the sellerrsquos attorney should have it signed and

acknowledged and then send the signed acknowledged form

to the title company and purchaser for further review The

sellerrsquos attorney will need to confirm that the seller is alive at

the closing and sign an affidavit that the power of attorney is

in full force and effect Accordingly the seller should be

advised to make himself or herself available by telephone at

the Closing

f Closing StatementMemorandum The attorney should

prepare a closing statement or memorandum for the sellerrsquos

review that at a minimum sets out all the financial

elements of the transaction including (a) the seller credits

the buyerrsquos credits the adjustments and the net balance of

the purchase price payable at closing (b) the disbursement of

the down payment (c) the disbursement of the balance of the

purchase price and (d) a list of closing expenses not already

reflected in the disbursement of the down payment and

balance of the purchase price A sample form of closing

statement is set out below which assumes the sale of a New

York City house on August 5 2012

Due Seller Credit to Purchaser

Purchase Price $110000000

Downpayment $11000000

Real Estate Taxes $ 1808070

Fuel Cost $ 10000

PCDA Credit $ 50000

Subtotal $111818070 $11050000

Balance Due

Of Purchase Price $100768070

Disbursement of Downpayment ($110000 plus $8231 interest)

$6600000 to ABC Broker for brokerage commission

$1567500 to Chicago Title Insurance Company in payment of New York

City Real Property Transfer Tax ($15675) New York State Real

Estate Transfer Tax ($4400) mortgage satisfaction fee ($200)

and recording charges for power of attorney ($120)

$202430 to MupsyBupsy PC (Sellerrsquos law firm)

$2638301 to John Smith (Seller)

Payment of Balance of Purchase Price

$80845023 to Citibank NA in payment of 1st mortgage

$20000 (712012-6302012)365 days x 330 days (8412-63013) = $1808070

E Review Numbers with Seller and with Purchaserrsquos Attorney Once

the closing statement is prepared it should be reviewed with the

seller Once numbers are confirmed with the seller the

computation of the balance of the purchase price including

apportionments should be sent to the buyerrsquos attorney for review

Note that it is not uncommon for apportionments to differ slightly

because of rounding differences and just plain bad math It is

rarely economic to spend any time resolving apportionment

differences

F Reminders to Seller Remind the Seller (preferably in writing) of

the following

a The required condition of the property (usually vacant and

broom clean)

b Bring keys garage opener security codes to the Closing

c Bring photo identification to the Closing

d Cancel insurance after the Closing

e Cancel utilities after the Closing

II PURCHASER PREPARING FOR CLOSING

A The Purchaserrsquos pre-closing tasks include

a Clearing the Loan The bankrsquos issuance of a loan commitment to the

buyer is only the first step in getting to the closing The bank will not

close until all the conditions of the commitment have been met and the

bankrsquos underwriters have signed off Once the underwriters have

signed off closing can occur The buyerrsquos attorney needs to establish

contact with the bankrsquos attorney and monitor the status of

underwriting clearance

b Review Title SearchClear Title Objections against Buyer Buyerrsquos

attorney should ask the title company to send copies of the title report

to the sellerrsquos attorney and the attorneys for the buyerrsquos lender Once

received the buyerrsquos attorney should review the title report and advise

seller in writing of any objections to title The report should also be

reviewed for title objections relating to the buyer (in connection with

the loan) For example judgments against the buyer will have to be

satisfied before the closing and proof of satisfaction furnished to the

title company

c Prepare Closing StatementClosing Memorandum The buyerrsquos

attorney should prepare a closing statement or memorandum for the

buyerrsquos review that at a minimum sets out all the financial elements

of the transaction including (a) the seller credits the buyerrsquos credits

the apportionments for taxes water fuel and any other charges and

the net balance of the purchase price payable at closing (b) the

disbursement of the balance of the purchase price and (c) a list of

closing expenses Typical closing expenses include

i Mansion Tax (1 of purchase price if purchase price is

$1000000 or more) (usually paid to title company)

ii Title company charges for (a) premium for ownerrsquos title policy

and lenderrsquos title policy (b) Mansion Tax (if applicable) (c)

mortgage tax (d) survey charges and (e) additional title

charges including survey charges and recording charges

iii Closing attendance feegratuity to title closer

iv Some local jurisdictions impose a transfer tax on buyers (eg

the Peconic Bay region)

Review the closing statement with the purchaser and once confirmed

review with the seller the calculation of the balance of the purchase

price and apportionments

d Determine Net Loan Proceeds and Money Purchaser Will Need to

i The lending bank normally pays a portion of the balance of the

purchase price and the remaining balance is paid by the

purchaser Once the balance of the purchase price is computed

the buyerrsquos attorney needs to know the net loan proceeds in

order to compute the amount the buyer must bring to the

closing For example if the buyer is borrowing $800000 the

bank will not fund $800000 at the closing It will deduct from

the loan amount certain charges including prepaid interest

prepaid tax escrow attorneys fees owed the bankrsquos attorney

(sometimes paid separately by the buyer at closing and

sometimes deducted from the loan proceeds) and fees owing the

bank The loan amount less those charges is the ldquonet loan

proceedsrdquo If the net loan proceeds are $789200 and the balance

of the purchase price is $100758070 then the buyer will need

an official bank check in the amount of $21838070 to pay the

balance of the purchase price at closing computed as follows

$100758070 balance of purchase price

$ 78920000 net loan proceeds

$ 21838070 official bank check needed from

Purchaser

Unfortunately the lending bank will often delay in providing

the information as to the net loan proceeds until the day before

the closing Accordingly ldquoguesstimatesrdquo must be made in

preparing the draft closing statement and the numbers put in

final form only after the bankrsquos numbers are received

ii The lending bankrsquos attorneys must be advised of the

requirement for an official bank check since they may intend to

bring an attorney escrow account check In Manhattan official

bank checks are typically required In some other areas

attorney escrow checks are accepted

iii Obtain from the Seller instructions on how the balance of the

purchase price is to be disbursed and provide lending bank and

purchaser with appropriate instructions

e Closing Documents For a house sale closing documents are generally

prepared by the sellerrsquos attorney However it is generally a good idea

for the buyerrsquos attorney to bring to the closing

i A Certificate of Non-Foreign Status (in case the sellerrsquos attorney

forgets)

ii If there is no lender a form 1099 information sheet to be

completed by the seller so the purchaserrsquos attorney can file a

f Reminders to Purchaser The Purchaser should be advised of the

following

i ALL checks for the balance of the purchase price must be official

bank checks including the lending bankrsquos checks

ii Inspect the house (preferably the day of the closing) to

determine if there has been any damage since the contract

signing

iii Arrange for utilities

iv Arrange for insurance

v Advise purchaser to file for a STAR tax exemption (if

applicable)

vi If purchaser will not attend closing and the purchaserrsquos attorney

is acting under a power of attorney advise the purchaser to be

available by telephone at the closing

g Schedule the Closing DO NOT forget to schedule the title company

as well as the seller purchaser and lenderrsquos attorneys

III CLOSING

a NEVER FORGET

BUYER Get the deed and title policy

SELLER Collect the entire balance of the purchase price

Be sure checks are made out to the proper parties currently

dated drawn on a local bank and are either certified cashiers

or official bank checks Except in rare cases PERSONAL

CHECKS ARE NOT ACCEPTABLE NOR ARE CHECKS

DRAWN ON THE BUYER=S OR THE BUYER=S LENDER=S

ATTORNEY ESCROW ACCOUNT (UNLESS THE CHECK IS

CERTIFIED CASHIERS OR OFFICIAL BANK CHECK)

b Typical Problems

i Purchaser pays Seller cash at Closing for personal property

having failed to advise hisher attorney A sales tax return

must be filed and sales tax must be paid The buyerrsquos and

sellerrsquos attorneys canrsquot ignore the sales tax obligation

ii Damage to the apartment Itrsquos not unusual for the buyer to

note some damage at the pre-closing inspection The form

contract unless it has been modified provides that the buyer

accepts the property in its ldquoas isrdquo condition as of the date the

contract is signed The question becomes then whether the

damage was present at contract signing or occurred after the

contract signing and the cost of repairs Itrsquos generally a

negotiation

iii Bankrsquos attorney comes to closing with a check thatrsquos not an

official bank check The risks of closing with what is

essentially a personal check should be explained to the seller

and the seller should make the decision (preferably with an

acknowledgement in writing that itrsquos against the attorneysrsquo

advice) The contract requires official bank checks the safest

money instrument is an official bank check and an official

bank check will generally clear immediately whereas a

personal check takes time (maybe a week) to clear ndash seems

like a no brainer

IV POST-CLOSING

1 The title company will record all documents that have to

be recorded and pay the transfer taxes

2 If the sellerrsquos payoff bank was holding a tax escrow the

escrow is typically returned to seller after the closing

3 A 1099 must be filed by January 31 of the calendar year

following the calendar year in which the closing was held

If there was no bank representative at the closing this

duty normally falls to the buyerrsquos attorney

by Nancy A Connery Esq

7) If commitment requires repairs attorneys should determine responsibility under contract for making repairs or credits and if necessary arrange for Buyers access to property to make repairs if Buyer is responsible

8) Buyers attorney reviews title and orders title insurance Buyers attorney needs to discuss availability of owners title insurance with client Check the commitment letter and check with lenders attorney for any special requirements

9) Buyers attorney to collect applicable documentation from Sellers attorney regarding all representations and warranties made by Seller in the contract (eg certificate of occupancy zoning compliance legal subdivision lot copies of building permits for additions copies of leases operability of septic or well)_

10) Buyers attorney confirms whether Buyer needed and received agricultural district disclosure (RPL sect333-c)~ and whether resubdivision is required (RPL sect333(1-e) (liraquo Resubdivision is required if only a portion of the lot is to be conveyed or if two or more lots are to be combined

11) Respective attorneys determine who will execute documents

a) Will power of attorney be used If so prepare record notify other attorney and mortgage lenders attorney and determine any requirements that they may have Does power of attorney contain language to survive subsequent incompetency of principal Provide affidavit of non-revocation of power of attorney or other documentation of authority of attorney-in-fact to act (See General Obligations Law sect5-1501 et seq)

b) Are parties executing the documents competent Authorized

c) Some lenders will require a confirmatory phone call at closing from the principal executing the power of attorney

12) Entities as parties

a) Determine who is authorized to sign under entity documentation (partnership agreement bylaws operating agreement) and prepare authorization or resolution if necessary

b) Corporate seller

(i) Ifnon-profit or religious corporation seller determine whether court order is required and proceed to obtain (See NPCL sect 511 RCL sect 12)

(i1) Obtain franchise tax search

(iii) If relocation company note that contract may either give it power or authority to facilitate closing

(iv) If foreign corporation get proof of authority to do business in New York State and Certification of Good Standing in State of incorporation

(v) Corporate seal generally not required unless recited in acknowledgement

(vi) Board of Directors resolution generally required

c) Limited Liability CompaniesILimited Liability partnerships

(i) Review Articles of Organization filing receipt proof of publication Certificate of Good Standing for the entity

(ii) Review Operating Agreement for LLCILLP and any amendments thereto regarding requisite authority of managersmembers to approve transaction and execute documents on behalf of the entity

Note Any authorized member can execute documents on behalf of a member managed LLC)

(iii) Obtain and review appropriate consents and or certificates as required by the Operating Agreement

13) Transfer Tax and Mansion Tax

a) Transfer tax of $2 for each $50000 or fractional part thereof of consideration is due at closing (see New York Tax Law sectsect 1400 et seq) The tax is computed and reported on form TP-584 which must be filed with the Deed The tax is usually paid by the Seller (See MCBAlGRAR forms)

b) Additional tax may be required if consideration for residential property is $1000000 or more (See Tax Law sectsect 1402-a 1404 et seq)

14) Does the property include an interest in a Homeowners Association If so

a) Sellers attorney orders proof of payment of common charges from Associations managing agent

b) Both attorneys review contract to see if instrument survey map is to be provided MCBA Form Contract (499) requires a survey

c) Both attorneys review contract to determine if homeowners insurance is under a master policy If so Sellers attorney provides all known information to Buyers attorney so that he can order proof of insurance from managing agent Remind Buyer to obtain separate insurance coverage for Buyers personal property

d) Buyers attorney obtains from Sellers attorney all documents listed in contract (Note that the offering plan is relevant if the offering is still open) Review with Buyer the impact of the recorded declaration

e) Engineers inspection

-+ Practice Pointer Advisable for Buyers attorney to call managing agent to inquire about special assessments capital improvements litigation and finanCial

infonnation

15) Is the property a Condominium If so

a) Sellers attorney orders proof of payment of common charges from managing agent

b) Maps - Sellers attorney orders and provides county clerk certified copy of condominium map filed in Civil Actions and Proceedings files of Clerks Office

c) Both attorneys review contract to determine if homeowners insurance is under a master policy If so Sellers attorney provides alilmown information to Buyers attorney so that he can order proof of insurance from managing agent Remind Buyer to obtain separate insurance coverage for Buyers personal property

d) Buyers attorney obtains from Sellers attorney aU documents listed in contract (Note that the offering plan is relevant if the offering is still open) Review with Buyer the impact of the recorded declaration

-+ Practice Pointer Advisable for Buyers attorney to call managing agent to inquire about special assessments capital improvements litigation and financial information

16) Are there rental units in the property If so

a) Buyers attorney obtains copies of leases (or representation of no written leases) and reviews

b) Buyers attorney verifies security deposits with Sellers attorney

c) Buyers attorney investigates need for and availability of Certificate of Occupancy (C of 0)

d) Even if no new C of 0 required Buyers attorney requests from Sellers attorney the original Certificate of Occupancy If not available request zoning compliance letter from municipality

e) Rent roll from Seller (lists tenants teIDls of leases and expiration dates rent square footage rented or apartment number security deposits)

f) Security deposits to be transferred (see General Obligations Law sect 7-105 and if 6 or more units sect 7-108)

g) Recommend Buyer meet speak with tenants to deteIDline existence of defaults by them or Seller

h) Consider requiring tenant estoppel certificates from tenants certifying rental security deposit expiration date existence of 110 defaults

i) Rental Rider Lead Based Paint EPA

17) Is each Seller a US citizen Ifnot check need for Foreign Investment in Real Property Tax Act compliance (26 US C sectsect 897 1445 especially sect1445(b)(2) and (b)(5)) Buyer and Buyers agent has liability if you do not get affidavit

18) Is a new certificate of occupancy required For example required in Village of Fairport East Rochester City of Canandaigua and City of Rochester if two or more family dwellings)

19) Buyers attorney reminds Buyer of issues Buyer is to cover such as pre-closing inspection or walk-through homeowners insurance (including contents insurance if property is mastershyinsured by condominium or homeowners association) flood insurance if property is in a flood hazard area notification to telephone company water company measurement of fuel oil etc With respect to walk-through attorney should encourage client to try appliances plumbing light switches etc confinn the Seller has perfonned any repairs required under contract make a list of any deficient or incomplete items (especially in new construction) and to contact Sellers attorney before closing if possible to report any problems Uris enables Sellers attorney to wOlk through any issues before closing

B) CLOSING DOCUMENTS

1) Sellers attorney drafts and sends deed and other closing documents to Buyers attorney for review

2) Sellers attorney determines all documents which Seller must execute before closing

3) Deed

a) Is it from all parties in title Did all parties in title sign the contract

b) If from a corporation include representation that property is not all or substantially all of grantors interest and is in the normal course of business (Newyenork Business Corporation Law sect 909(b ))

c) Fonn of deed (warranty bargain amp sale quit claim) - check contract

4) Combined Real Estate Transfer Tax Return and Credit Line Mortgage Certificate (TP 584) (Seller) (See Tax Law sectsect 1400 et seq)

5) Real Property Transfer Report (EA 5217) (RPL sect 333(1-eraquo Non-resident reporting

6) Smoke Detector Affidavit (Executive Law sect 378(5raquo

7) Carbon Monoxide Detector (Executive Law sect 378(5)a)

8) Title curatives if necessary a) Boundary Line Agreements

b) JudgmentBankruptcy Affidavit

c) Affidavit of tax exempt status

d) Mortgage payoff statement and arrange for availability of discharge if privately held mortgage

e) Authorization for entity (Board resolution Partnership authorization members consent)

f) Tax Bills

g) Other

h) Franchise Tax Search

i) Good Standing Certificate

j) Attorney Guarantees Commonly used and accepted in this community for items such as water unpaid taxes etc Confirm acceptability in advance of closing

Note Sellers attorney should obtain MCBA Guarantee consent form (see Appendix) and have client sign Attorney should take steps he deems necessary to issue andor accept guarantee such as

a) Confirm parameters of liability

b) Is client moving out of jurisdiction

c) Is client a long-standing client offirm

d) Reputation of individual issuing guarantee

Note Guarantee is local custom only

9) W-9 for Sellers and allocation of proceeds among multiple Sellers (not husband-wife)

10) Check on 1099 reporting requirement - See Section llIA(2)

11) Purchase money mortgage documents if provided for under contract (Note Mortgage Mortgage tax affidavit if Mortgagee is natural person Tax Law sect 253(I-a)(araquo Proof of insurance naming Seller as mortgagee Buyers attorney should review before closing Determine who prepares (usually Seller) Contract may prescribe form

12) Certificate of Occupancy ifrequired

13) Celiificate of zoning compliance if required

14) Rental Property

a) Assignment of Leases

b) Originals of all Leases

c) Assignment of Security Deposits

d) Notice of Ten ants of Transfer

e) Security Deposit

1) Notice to Tenants of Transfer

C) FINANCIAL ASPECTS

1) Both attorneys reverify deposit held by real estate broker

2) Both attorneys review contract to note any credits allowances nonstandard charges or cost-allocation (especially prevalent in builders contracts for new construction)

3) Calculate closing adjustments for pre-and post-paid taxes other service contracts can use 12 month30 days or 365 days Recommend 365 days Be careful in calculating adjustments for embellishments if not all instalhnents are paid

a) Taxes No Adjustment-Re-Ievy

b) PropaneFuel oil - Seller arranges for tank to be filled prior to closing (topped off) with statement from oil company showing cost paid and total gallons in tank Compute adjustment based on total gallons in tank

c) SewerlVater - Establish whether town or village has separate bill and whether cost is included in taxes and whether prospective or retrospective charge

d) Rent (tenants or pre-- or post-closing occupancy) - actual number of days

e) Homeowners AssociationCondominium Charges - actual number of days

f) Interest on mOligage held by Seller - Actual number of daysusing 365 days

g) Mortgage Assumption - Prorated interest based on actual number of days also MIP including day of closing

h) Security systems other service contracts such as lawn fertilizing snow plowingshyinquire with company look to contract

D) SCHEDULING THE CLOSING

1) Buyers attorney coordinates with Sellers and Lenders counsel

a) Obtain possible dates with client and Sellers attorney

b) Schedule with Lenders attorney and inform all parties of closing date

c) Confirm figures remaining title issues and commitment conditions outstanding

d) Cross check bank figures against commitment advise Lenders attorney of all financial adjustments between Buyer and Seller for HUD-l and possible reshyunderwriting of loan (particularly in new construction where extras and credits may affect price and loan to value ratio)

e) Advise clients of closing figures and funds that Buyer is required to bring to closing

Note Some lenders counsel require a title company representative be present at closing to examine curatives and mark up commitment

2) Attorneys remind clients what to bring to closing

a) Seller to provide to Sellers attorney - keys garage door opener warranties security system information (especially if new construction)

b) Buyer - homeowners insurance issued in accordance with requirements of commitment letter any mortgage commitment curatives extra funds to close Advise client about availability and form offunds (bank check wire etc)

3) Buyers attorney confums results of walk-through Completionrepair escrow may be needed even if Lender does not require or in addition to what Lender requires It is recommended that this be written Cost estimates of repairs or replacements are recommended There is no commonstandard local fOrID Escrowed amount should be sufficient to enable third party to complete if Seller does not 150 of estimated cost is standard

4) Utilities - confum final readings made

5) Pre- or Post-Closing Possession Agreement (MCBA has a suggested fonn) should be received before closing See MCBA suggested fonn in appendix

ll A NOTE ABOUT USE OF TRUST ACCOUNTS AND THE FORM OF CLOSING PROCEEDS

A) TRUST ACCOUNTS

1) An attprney in possession of client funds is a fiduciary In general an attorney is required to segregate client funds in a separate account identified as the attorneys Special Trust or middot~scrow account The account must be maintained in a banking institution which agrees to report dishonored checks to the Lawyers Fund for Client Protection The specific rules governing trust accounts are set forth in detail in 22 NYCRR sect120046

2) The Dishonored Check Rules set forth in 22 NYCRR sect 1300 require that the bank send to the Lawyers Fund for Client Protection a dishonored check report

whenever a properly payable instrument is presented against an attorney special trust or escrow account which contains insufficient availible funds and the banking institution dishonors the instrument for that reason (22 NYCRR sect13001(craquo [emphasis added]

Unless withdrawn as erroneously filed due to a clerical error within ten (10) days the report is forwarded to the appropriate attorney disciplining committee

3) Issuance of a dishonored check report may trigger an investigation or audit by the Fourth Department Grievance Committee

4) An attorney called upon at closing to disburse funds for closing expenses or mortgage payoffs faces a particular dilemma in complying with these rules On the one hand the attorney is required to write checks at closing which are intended to be paid either out of the closing proceeds or fimds received from the client just prior to the closing On the other hand funds representing the closing proceeds cannot be deposited until the closing has gone on record and then must go through the bank collection process before being actually received in the attorneys account

There is no single solution to this problem

One solution might involve requiring clients to provide funds sufficiently in advance to enable them to be collected into the attorneys account prior to closing or the use of a special closing account where the attorney pays the disbursements from his own funds and later reimburses himself once the client funds have been collected into the trust account

See Management of Attorney Trost Accounts in Appendix for additional infonnation

B) FORM OF CLOSING PROCEEDS

1) The MCBNGRAR fonn contracts require that the closing proceeds be paid by certified check or official bank draft Nevertheless by long standing custom and practice in iliis C()mmunity attorneys have regularly accepted local attorney trust account checks in payment of closing proceeds

2) There are occasions where acceptance of an attomei s trust account check in payment of closing proceeds may be impractical or unwarranted For example a certified check may be needed where funds must be wired to another location as soon as the closing has been recorded The same may be true where a clients sale and purchase are scheduled to close back to back Other instances when an attorneys trust account check would not be an acceptable form of payment must be left to the individual attorneys judgment on a case by case basis

3) In view of the local custom and practice it is recommended that whenever an attorney representing a Seller intends to require strict adherence to the official bank draft or certified check provisions of the contract he should so advise Buyers attorney in writing Such notice should be given sufficiently in advance of closing so as to enable Buyers attorney to obtain the funds in the proper form without undue inconvenience to the attorney or the client Arrangements win also need to be made with Buyers lender concerning the form of any mortgage proceeds to be paid to the Seller

4) In addition to the extent possible it would be wise for Buyers and Sellers attorneys to prepare and confirm closing adjnstments prior to closing

5) Selling clients should also be made aware that funds might not be immediately available on the day of closing or even the day after The availability of funds from closing should be discussed with the client at the time the purchase and sale contract is approved

In CLOSING

A) CONDUCT OF THE CLOSING

1) Be courteous and patient

2) Buyers attorney uses checklist iu the conduct of the closing to aid as he reviews all executed documents and confirm that he receives all title curatives and other documents expected Consider addressing issues with Sellers attorney early to enable him to C()nclude presence at closing speedily when possible and practicable

3) Unless he knows the client notary requests drivers license or other suitable identification to establish identity of those whose acknowledgments he is taking (BuyersSeHers attorneys generally expected to take acknowledgments of their own clients)

4) Closing is generally held at Lenders counsels office

5) Buyers attorney should explain documents including review of survey tract restrictions etc

B) CLOSrnG DOCUMENTS

1) Review list of Closing Documents at Part ill Section lB

C) RECORDING

1) Recording of Documents Lenders attorney generally delivers documents to abstract company with instructions to record (called buck slip) and to notify Buyers and Sellers attorneys when recorded

2) Escrow Sale and loan proceeds in residential closings are customarily disbursed in escrow pending recording of documents Some Lenders counsel require Sellers attorney to sign a written escrow receipt (their form - Buyers attorneys may wish to use their own form) For this reason proceeds checks are frequently made payable to Sellers attorney in trust The check itself is to be held in escrow and not deposited until the escrow is fulfilled by the recording of documents and notification by abstract company

D) FINANCIAL ASPECTS

1) Amount of Funds Lenders counsel will generally disburse a net amount after deduction of some or all mortgage expenses Funds are disbursed as Buyer directs usually to payoff and satisfy Sellers mortgage and the balance to Sellers attorney Buyer makes up the price difference Buyers attorney should be mindful of ethical considerations regarding available funds necessary for trust account checks or Buyers endorsement of Buyers bankcertified check

2) Form of Funds Contract calls for certified funds or official bank draft but attorney trust account check is by local custom and usage commonly accepted Some relocation companies and banks require certified funds

See Note about use of Trust Accounts and the Form of closing Proceeds in Part m Section II above

3) Both attorneys review adjustments with clients If property is benefited by Sellers tax exemption (veterans old age) Buyers attorney should advise Buyer of recapture of exemption amount from date of closing

New York State Department of Taxation and Finance

Combined Real EstateTransfer Tax Return

Credit Line Mortgage Certificate andCertification of Exemption from the

Payment of Estimated Personal Income Tax

TP-584 (413) Recording office time stamp

See Form TP-584-I Instructions for Form TP-584 before completing this form Print or typeSchedule A mdash Information relating to conveyance

Condition of conveyance (check all that apply)

a Conveyance of fee interest

b Acquisition of a controlling interest (statepercentage acquired )

c Transfer of a controlling interest (statepercentage transferred )

d Conveyance to cooperative housingcorporation

e Conveyance pursuant to or in lieu offoreclosure or enforcement of securityinterest (attach Form TP-5841 Schedule E)

GrantorTransferor

Individual

Corporation

Partnership

EstateTrust

Single member LLC

GranteeTransfereeIndividual

Corporation

Partnership

EstateTrust

Single member LLC

Name (if individual last first middle initial) ( check if more than one grantor) Social security number

Mailing address Social security number

City State ZIP code Federal EIN

Single member EIN or SSN

Name (if individual last first middle initial) ( check if more than one grantee) Social security number

Location and description of property conveyed

f Conveyance which consists of amere change of identity or form ofownership or organization (attach Form TP-5841 Schedule F)

g Conveyance for which credit for taxpreviously paid will be claimed (attachForm TP-5841 Schedule G)

h Conveyance of cooperative apartment(s)

i Syndication

j Conveyance of air rights ordevelopment rights

k Contract assignment

l Option assignment or surrender

m Leasehold assignment or surrender

n Leasehold grant

o Conveyance of an easement

p Conveyance for which exemptionfrom transfer tax claimed (completeSchedule B Part III)

q Conveyance of property partly withinand partly outside the state

r Conveyance pursuant to divorce or separation s Other (describe)

Tax map designation ndash SWIS code Street address City town or village County Section block amp lot (six digits)(include dots and dashes)

Type of property conveyed (check applicable box)

1 One- to three-family house 5 CommercialIndustrial Date of conveyance2 Residential cooperative 6 Apartment building 3 Residential condominium 7 Office building4 Vacant land 8 Other

Percentage of real property conveyed which is residential real property

(see instructions)month day year

For recording officerrsquos use Amount received Date received Transaction number

Schedule B Part I $Schedule B Part II $

Single memberrsquos name if grantor is a single member LLC (see instructions)

Single memberrsquos name if grantee is a single member LLC (see instructions)

of 4 TP-584 (413)

Part III ndash Explanation of exemption claimed on Part I line 1 (check any boxes that apply)

The conveyance of real property is exempt from the real estate transfer tax for the following reason

a Conveyance is to the United Nations the United States of America the state of New York or any of their instrumentalities agencies or political subdivisions (or any public corporation including a public corporation created pursuant to agreement or compact with another state or Canada) a

b Conveyance is to secure a debt or other obligation b

c Conveyance is without additional consideration to confirm correct modify or supplement a prior conveyance c

d Conveyance of real property is without consideration and not in connection with a sale including conveyances conveying realty as bona fide gifts d

e Conveyance is given in connection with a tax sale e

f Conveyance is a mere change of identity or form of ownership or organization where there is no change in beneficial ownership (This exemption cannot be claimed for a conveyance to a cooperative housing corporation of real property comprising the cooperative dwelling or dwellings) Attach Form TP-5841 Schedule F f

g Conveyance consists of deed of partition g

h Conveyance is given pursuant to the federal Bankruptcy Act h

i Conveyance consists of the execution of a contract to sell real property without the use or occupancy of such property or the granting of an option to purchase real property without the use or occupancy of such property i

j Conveyance of an option or contract to purchase real property with the use or occupancy of such property where the consideration is less than $200000 and such property was used solely by the grantor as the grantorrsquos personal residence and consists of a one- two- or three-family house an individual residential condominium unit or the sale of stock in a cooperative housing corporation in connection with the grant or transfer of a proprietary leasehold covering an individual residential cooperative apartment j

k Conveyance is not a conveyance within the meaning of Tax Law Article 31 section 1401(e) (attach documents supporting such claim) k

Schedule B mdash Real estate transfer tax return (Tax Law Article 31)

Part I ndash Computation of tax due 1 Enter amount of consideration for the conveyance (if you are claiming a total exemption from tax check the

exemption claimed box enter consideration and proceed to Part III) Exemption claimed 1 2 Continuing lien deduction (see instructions if property is taken subject to mortgage or lien) 2 3 Taxable consideration (subtract line 2 from line 1) 3 4 Tax $2 for each $500 or fractional part thereof of consideration on line 3 4 5 Amount of credit claimed for tax previously paid (see instructions and attach Form TP-5841 Schedule G) 5 6 Total tax due (subtract line 5 from line 4) 6

Part II ndash Computation of additional tax due on the conveyance of residential real property for $1 million or more 1 Enter amount of consideration for conveyance (from Part I line 1) 1 2 Taxable consideration (multiply line 1 by the percentage of the premises which is residential real property as shown in Schedule A) 2 3 Total additional transfer tax due (multiply line 2 by 1 (01)) 3

The total tax (from Part I line 6 and Part II line 3 above) is due within 15 days from the date conveyance Please make check(s) payableto the county clerk where the recording is to take place If the recording is to take place in the New York City boroughs of Manhattan Bronx Brooklyn or Queens make check(s) payable to the NYC Department of Finance If a recording is not required send this return and your check(s) made payable to the NYS Department of Taxation and Finance directly to the NYS Tax Department RETT Return Processing PO Box 5045 Albany NY 12205-5045

of 4 TP-584 (413)

Complete the following only if the interest being transferred is a fee simple interestI (we) certify that (check the appropriate box)

1 The real property being sold or transferred is not subject to an outstanding credit line mortgage

2 The real property being sold or transferred is subject to an outstanding credit line mortgage However an exemption from the tax is claimed for the following reason

The transfer of real property is a transfer of a fee simple interest to a person or persons who held a fee simple interest in the real property (whether as a joint tenant a tenant in common or otherwise) immediately before the transfer

The transfer of real property is (A) to a person or persons related by blood marriage or adoption to the original obligor or to one or more of the original obligors or (B) to a person or entity where 50 or more of the beneficial interest in such real property after the transfer is held by the transferor or such related person or persons (as in the case of a transfer to a trustee for the benefit of a minor or the transfer to a trust for the benefit of the transferor)

The transfer of real property is a transfer to a trustee in bankruptcy a receiver assignee or other officer of a court

The maximum principal amount secured by the credit line mortgage is $3000000 or more and the real property being sold or transferred is not principally improved nor will it be improved by a one- to six-family owner-occupied residence or dwelling

Please note for purposes of determining whether the maximum principal amount secured is $3000000 or more as described above the amounts secured by two or more credit line mortgages may be aggregated under certain circumstances See TSB-M-96(6)-R for more information regarding these aggregation requirements

Other (attach detailed explanation)

3 The real property being transferred is presently subject to an outstanding credit line mortgage However no tax is due for the following reason

A certificate of discharge of the credit line mortgage is being offered at the time of recording the deed

A check has been drawn payable for transmission to the credit line mortgagee or his agent for the balance due and a satisfaction of such mortgage will be recorded as soon as it is available

4 The real property being transferred is subject to an outstanding credit line mortgage recorded in (insert liber and page or reel or other identification of the mortgage) The maximum principal amount of debt or obligation secured

by the mortgage is No exemption from tax is claimed and the tax of is being paid herewith (Make check payable to county clerk where deed will be recorded or if the recording is to take place in New York City but not in Richmond County make check payable to the NYC Department of Finance)

Schedule C mdash Credit Line Mortgage Certificate (Tax Law Article 11)

The undersigned certify that the above information contained in schedules A B and C including any return certification schedule or attachment is to the best of hisher knowledge true and complete and authorize the person(s) submitting such form on their behalf to receive a copy for purposes of recording the deed or other instrument effecting the conveyance

Signature (both the grantor(s) and grantee(s) must sign)

Grantor signature Title Grantee signature Title

Reminder Did you complete all of the required information in Schedules A B and C Are you required to complete Schedule D If you checked e f or g in Schedule A did you complete Form TP-5841 Have you attached your check(s) made payable to the county clerk where recording will take place or if the recording is in the New York City boroughs of Manhattan Bronx Brooklyn or Queens to the NYC Department of Finance If no recording is required send your check(s) made payable to the Department of Taxation and Finance directly to the NYS Tax Department RETT Return Processing PO Box 5045 Albany NY 12205-5045

of 4 TP-584 (413)

Schedule D - Certification of exemption from the payment of estimated personal income tax (Tax Law Article 22 section 663)

Complete the following only if a fee simple interest or a cooperative unit is being transferred by an individual or estate or trust

If the property is being conveyed by a referee pursuant to a foreclosure proceeding proceed to Part II and check the second box under Exemptions for nonresident transferor(s)seller(s) and sign at bottom

Part I - New York State residents

If you are a New York State resident transferor(s)seller(s) listed in Schedule A of Form TP-584 (or an attachment to Form TP-584) you must sign the certification below If one or more transferorssellers of the real property or cooperative unit is a resident of New York State each resident transferorseller must sign in the space provided If more space is needed please photocopy this Schedule D and submit as many schedules as necessary to accommodate all resident transferorssellers

This is to certify that at the time of the sale or transfer of the real property or cooperative unit the transferor(s)seller(s) as signed below was a resident of New York State and therefore is not required to pay estimated personal income tax under Tax Law section 663(a) upon the sale or transfer of this real property or cooperative unit Signature Print full name Date

Signature Print full name Date

Note A resident of New York State may still be required to pay estimated tax under Tax Law section 685(c) but not as a condition of recording a deed

Certification of resident transferor(s)seller(s)

This is to certify that at the time of the sale or transfer of the real property or cooperative unit the transferor(s)seller(s) (grantor) of this real property or cooperative unit was a nonresident of New York State but is not required to pay estimated personal income tax under Tax Law section 663 due to one of the following exemptions

The real property or cooperative unit being sold or transferred qualifies in total as the transferorrsquossellerrsquos principal residence (within the meaning of Internal Revenue Code section 121) from to (see instructions)

Date Date

The transferorseller is a mortgagor conveying the mortgaged property to a mortgagee in foreclosure or in lieu of foreclosure with no additional consideration

The transferor or transferee is an agency or authority of the United States of America an agency or authority of the state of New York the Federal National Mortgage Association the Federal Home Loan Mortgage Corporation the Government National Mortgage Association or a private mortgage insurance company

Part II - Nonresidents of New York State

If you are a nonresident of New York State listed as a transferorseller in Schedule A of Form TP-584 (or an attachment to Form TP-584) but are not required to pay estimated personal income tax because one of the exemptions below applies under Tax Law section 663(c) check the box of the appropriate exemption below If any one of the exemptions below applies to the transferor(s)seller(s) that transferor(s)seller(s) is not required to pay estimated personal income tax to New York State under Tax Law section 663 Each nonresident transferorseller who qualifies under one of the exemptions below must sign in the space provided If more space is needed please photocopy this Schedule D and submit as many schedules as necessary to accommodate all nonresident transferorssellers

If none of these exemption statements apply you must complete Form IT-2663 Nonresident Real Property Estimated Income Tax Payment Form or Form IT-2664 Nonresident Cooperative Unit Estimated Income Tax Payment Form For more information see Payment of estimated personal income tax on page 1 of Form TP-584-IExemption for nonresident transferor(s)seller(s)

RESIDENTIAL REAL ESTATE TRANSACTIONSmdashFORMS 299

SETTLEMENT STATEMENTPAGE 1 OF 3

A Settlement Statement (HUD-1)

HUD-1Previous editions are obsolete Page 1 of 3

J Summary of Borrowerrsquos Transaction K Summary of Sellerrsquos Transaction

100 Gross Amount Due from Borrower 400 Gross Amount Due to Seller

101 Contract sales price 401 Contract sales price

102 Personal property 402 Personal property

103 Settlement charges to borrower (line 1400) 403

104 404

105 405

Adjustment for items paid by seller in advance Adjustments for items paid by seller in advance106 Citytown taxes to 406 Citytown taxes to

107 County taxes to 407 County taxes to

108 Assessments to 408 Assessments to

109 409

110 410

111 411

112 412

200 Amounts Paid by or in Behalf of Borrower 500 Reductions In Amount Due to Seller201 Deposit or earnest money 501 Excess deposit (see instructions)

202 Principal amount of new loan(s) 502 Settlement charges to seller (line 1400)

203 Existing loan(s) taken subject to 503 Existing loan(s) taken subject to

204 504 Payoff of first mortgage loan

205 505 Payoff of second mortgage loan

206 506

207 507

208 508

209 509

Adjustments for items unpaid by seller Adjustments for items unpaid by seller210 Citytown taxes to 510 Citytown taxes to

213 513

214 514

215 515

216 516

217 517

218 518

219 519

220 Total Paid byfor Seller 520 Total Reduction Amount Due Seller

300 Cash at Settlement fromto Borrower 600 Cash at Settlement tofrom Seller301 Gross amount due from borrower (line 120) 601 Gross amount due to seller (line 420)

302 Less amounts paid byfor borrower (line 220) ( ) 602 Less reductions in amount due seller (line 520)

303 Cash From To Borrower 603 Cash To From Seller

B Type of Loan

6 File Number 7 Loan Number 8 Mortgage Insurance Case Number1 FHA 2 RHS 3 Conv Unins

4 VA 5 Conv Ins

C Note This form is furnished to give you a statement of actual settlement costs Amounts paid to and by the settlement agent are shown Items markedldquo(poc)ldquo were paid outside the closing they are shown here for informational purposes and are not included in the totals

D Name amp Address of Borrower E Name amp Address of Seller F Name amp Address of Lender

G Property Location H Settlement Agent I Settlement Date

Place of Settlement

The Public Reporting Burden for this collection of information is estimated at 35 minutes per response for collecting reviewing andreporting the data This agency may not collect this information and you are not required to complete this form unless it displays acurrently valid OMB control number No confidentiality is assured this disclosure is mandatory This is designed to provide the parties toa RESPA covered transaction with information during the settlement process

300 NEW YORK LAWYERSrsquo PRACTICAL SKILLS SERIES 2011ndash2012

L Settlement Charges

700 Total Real Estate Broker Fees

Division of commission (line 700) as follows

701 $ to

702 $ to

703 Commission paid at settlement

800 Items Payable in Connection with Loan

801 Our origination charge $ (from GFE 1)

802 Your credit or charge (points) for the specific interest rate chosen $ (from GFE 2)

803 Your adjusted origination charges (from GFE A)

804 Appraisal fee to (from GFE 3)

805 Credit report to (from GFE 3)

806 Tax service to (from GFE 3)

807 Flood certification (from GFE 3)

900 Items Required by Lender to Be Paid in Advance

901 Daily interest charges from to $ day (from GFE 10)

902 Mortgage insurance premium for months to (from GFE 3)

903 Homeownerrsquos insurance for years to (from GFE 11)

1000 Reserves Deposited with Lender

1001 Initial deposit for your escrow account (from GFE 9)

1002 Homeownerrsquos insurance months $ per month $

1003 Mortgage insurance months $ per month $

1004 Property taxes months $ per month $

1005 months $ per month $

1007 Aggregate Adjustment ndash$

1100 Title Charges

1101 Title services and lenderrsquos title insurance (from GFE 4)

1102 Settlement or closing fee $

1103 Ownerrsquos title insurance (from GFE 5)

1104 Lenderrsquos title insurance $

1105 Lenderrsquos title policy limit $

1106 Ownerrsquos title policy limit $

1107 Agentrsquos portion of the total title insurance premium $

1108 Underwriterrsquos portion of the total title insurance premium $

1200 Government Recording and Transfer Charges

1201 Government recording charges (from GFE 7)

1202 Deed $ Mortgage $ Releases $

1203 Transfer taxes (from GFE 8)

1204 CityCounty taxstamps Deed $ Mortgage $

1205 State taxstamps Deed $ Mortgage $

1300 Additional Settlement Charges

1301 Required services that you can shop for (from GFE 6)

1302 $

1303 $

1400 Total Settlement Charges (enter on lines 103 Section J and 502 Section K)

Paid FromBorrowerrsquosFunds at

Settlement

Paid FromSellerrsquos

Funds atSettlement

$123456 or

Note If you have any questions about the Settlement Charges and Loan Terms listed on this form please contact your lender

Comparison of Good Faith Estimate (GFE) and HUD-1 Charges Good Faith Estimate HUD-1

Charges That Cannot Increase HUD-1 Line Number

Our origination charge 801

Your credit or charge (points) for the specific interest rate chosen 802

Your adjusted origination charges 803

Transfer taxes 1203

Charges That in Total Cannot Increase More Than 10 Good Faith Estimate HUD-1

Government recording charges 1201

Increase between GFE and HUD-1 Charges

Charges That Can Change Good Faith Estimate HUD-1

Initial deposit for your escrow account 1001

Daily interest charges 901 $ 2 day

Homeownerrsquos insurance 903

Loan Terms

Your iinitial lloan aamount iis $

Your lloan tterm iis years

Your iinitial iinterest rrate iis

Your iinitial mmonthly aamount oowed ffor pprincipal iinterest aand $ includes

and aany mmortgage iinsurance iis Principal

Interest

Mortgage Insurance

Can yyour iinterest rrate rrise No Yes it can rise to a maximum of XXX The first change will be

on [DATEDATE] and can change again every [DATEDATE] after

[DATEDATE] Every change date your interest rate can increase or decrease

by XXX Over the life of the loan your interest rate is guaranteed to never be

lower than XXX or higher than XXX

Even iif yyou mmake ppayments oon ttime ccan yyour lloan bbalance rrise No Yes it can rise to a maximum of $[AMOUNT]

Even iif yyou mmake ppayments oon ttime ccan yyour mmonthly No Yes the first increase can be on and the monthly amount

amount oowed ffor pprincipal iinterest aand mmortgage iinsurance rrise owed can rise to $[DATEDATE]

The maximum it can ever rise to is $[DATEDATE]

Does yyour lloan hhave aa pprepayment ppenalty No Yes your maximum prepayment penalty is $[AMOUNT

Does yyour lloan hhave aa bballoon ppayment No Yes you have a balloon payment of $[AMOUNT] due in

XXX years on [DATEDATE]

Total mmonthly aamount oowed iincluding eescrow aaccount ppayments You do not have a monthly escrow payment for items such as property

taxes and homeownerrsquos insurance You must pay these items directly yourself

You have an additional monthly escrow payment of $[AMOUNT]

that results in a total initial monthly amount owed of $[AMOUNT] This includes

principal interest any mortgage insurance and any items checked below

Property taxes Homeownerrsquos insurance

Flood insurance

RECENT CLOSING DEVELOPMENTS copy by Karl B Holtzschue 2014 [most recent material in italics] 1 Escrow Agreement Model forms of escrow agreements have been published by the Title and Transfer Committee of the Real Property Section of the NYSBA See Title and Transfer Committee Drafts Escrow Form 25 NY Real Prop LJ 76 (Spring 1997) and Attorney Escrow Accounts (NYSBA 2006 Coffey ed) (one for the escrow deposit and one for work to be done after the closing with discussion of provisions) See Ermiger v Black 36 AD3d 1053 827 NYS2d 764 (3d Deprsquot 2007) (purchaser entitled to release of funds deposited in escrow but to be returned if third party legal action resulted in grant of easement) Elm Sea Realty Corp v Chicoy 68 AD3d 1047 892 NYS2d 163 (2d Deprsquot 2009) (seller entitled to release of escrow funds from sale after presenting certificates of completion of work) Finn v Church for Art of Living Inc 90 AD 3d 826 935 NYS2d 93 (2d Deprsquot 2011) (once seller and purchaser resolved dispute over ownership of funds in escrow account and instructed sellerrsquos attorney to disburse them to purchaser he was under an obligation to do so) Transfer of title did not become effective until the conditions of escrow were satisfied and each deed was physically delivered to the optionee by the escrow agent TDNI Properties LLC v Saratoga Glen Builders LLC 914 NYS2d 746 (3d Deprsquot 2011) 2 Closing Stipulation A closing stipulation resolving a dispute that was unambiguous has been held to bar extrinsic or parole evidence Del Vecchio v Cohen 733 NYS2d 479 (2d Deprsquot 2001) (dispute as to legal apartment) 3 Interest on Wired Funds A lender has been held to be justified in collecting pre-closing interest for monies advanced by wire transfer despite state law Washington Mutual Bank FA v Superior Court 95 CalApp4th 606 115 CalRptr2d 765 (2002) (under federal Home Ownerrsquos Loan Act Congress intended to fully preempt state regulation of loan charges by ldquooccupying the fieldrdquo) 4 ACRIS and Tax Returns in New York City In the fall of 2003 NY City plans to require that all RPTT TP-584 and related forms be completed and printed on the internet-based Automated City Register Information System (ldquoACRISrdquo) Changes on the forms must be made by accessing the internet Preparation of separate signature pages is allowed 5 Unauthorized Practice of Law at Closings Various non-lawyers and entities sometimes prepare documents and provide other services at real estate closings including closings of sales leases mortgages and refinancing of mortgages Some out-of-state courts have held certain activities in connection with closings to be the unauthorized practice of law (ldquoUPLrdquo) while others have not The Federal Justice Department and the Federal Trade Commission ldquohave become increasingly concerned about efforts to prevent non-lawyers from competing with attorneys in the provision of certain services through the issuance of opinions by state bar

agencies and the adoption of laws and regulations by state courts and legislatures relating to the unauthorized practice of law Through letters and amicus curiae briefs the FTC and Justice Department have urged the American Bar Association Virginia Rhode Island Kentucky North Carolina Georgia West Virginia and Ohio to reject such restrictions on competition between attorneys and non-attorneys [citation omitted] Separately the Department of Justice has brought suits for violating the antitrust laws against bar associations that attempted to restrain competition from non-lawyers [citations omitted]rdquo (Letter from Federal Trade Commission to Rep Paul Kujawski House of Representatives Commonwealth of Massachusetts dated October 6 2004 supporting proposed Massachusetts HB 180 which would authorize non-attorneys to perform certain real estate settlement services such as drafting deeds mortgages leases and agreements examining titles issuing title certification of policy of title insurance and representing lenders as their closing agents The suits enumerated were US v Allen County Indiana Bar Assrsquon Civ No F-79-0042 (ND Ind 1980) US v NY County Lawyers Assrsquon No 80 Civ 6129 (SDNY 1981) US v Coffee County Bar Assrsquon No 80-112-S MD Ala 1980))

Proposed and backed by NYSBA and the Real Property Law Section the NY State Attorney General is authorized to bring criminal as well as civil actions for unauthorized practice of law Judiciary Law sect 476-a A person who violates a prohibition against unauthorized practice of law and causes monetary loss or damages exceeding $1000 of other material damage resulting from impairment of a legal right may be guilty of a Class E felony Judiciary Law sect 485-a New York Cases In re LaMattina 51 AD3d 371 858 NYS2d 222 (2d Deprsquot 2008) (attorney who aided non-attorneys to engage in unauthorized practice of law through corporation bearing his name that represented lending institutions at real estate closings was disbarred) In re Tambini 77 AD3d 143 904 NYS2d 177 (2d Deprsquot 2010) (24 charges including forming corporation with nonlawyer to provide settlement services to lenders sharing legal fees with a nonlawyer and ongoing misuse of attorney trust account in 47 matters warranted three-year suspension) But see Fuchs v Wachovia Mortgage Corp 41 AD3d 424 838 NYS2d 148 (2d Deprsquot 2007) (mortgagees filing in blanks on FannyMae forms and charging $100 document preparation fee did not constitute unauthorized practice of law) NYSBA Ethics Op 809 (21207) (lawyer does not aid UPL where lawyer in order to represent client deals with non-lawyer such as ldquosettlement companyrdquo who is engaged by clientrsquos counter-party and may be engaged in UPL) 7 Making Time of the Essence Either of the parties may make time of the essence by demanding performance by the other within a reasonable time in a clear distinct and unequivocal notice EC LLC v Eaglecrest Manufactured Home Park Inc 713 NYS2d 391 (4th Deprsquot 2000) (seller properly made time of the essence 18 days notice held reasonable) Cave v Kollar 744 NYS2d 497 (2d Deprsquot 2002) (demand for fixing closing date insufficient to make time of the essence) Kevan v Modesta 738 NYS2d 382 (2d Deprsquot 2002) (letter stating closing would take place ldquoon or prior tordquo stated date did not make time of essence) Baltic v Rossi 735 NYS2d 148 (2d Deprsquot 2001)

(purchasers not entitled to declare time of the essence before closing date set forth in contract) Mosdos Oraysa Inc v Sausto 13 AD3d 838 787 NYS2d 160 (3d Deprsquot 2004) (seller did not waive time of the essence clause in contract) Guippone v Gaias 13 AD3d 339 786 NYS2d 112 (2d Deprsquot 2004) (time made of the essence by purchaserrsquos letter giving 5 daysrsquo notice) Hand v Field 15 AD3d 542 790 NYS2d 681 (2d Deprsquot 2005) (purchaserrsquos time of the essence notice adopting adjournment date requested by seller held reasonable) Marioni v 94 Broadway Inc 866 A2d 208 (NJ Super Ct App Div 2005) (sellerrsquos notice ineffective because seller unwilling to remove debris) Sternlicht v Ferrara 35 AD3d 440 826 NYS2d 371 (2d Deprsquot 2006) (fact issues existed as to whether it was reasonable for seller to notice a closing for less than one month later for seller to set a date when purchasers attorney was known to be unavailable for purchasers attorney to fail to make himself available) Marcantonio v Picozzi 46 AD3d 522 846 NYS2d 647 (2d Deprsquot 2007) (sellersrsquo letters failed to make time of the essence the first did not threaten default the second did not allow a reasonable time to act) Iannucci v 70 Washington Partners LLC 51 AD3d 869 858 NYS2d 322 (2d Deprsquot 2008) (sellerrsquos letter sent one day prior to rescheduled closing did not give reasonable time to perform and did not make time of the essence) Bowery Boy Realty v HSN Realty Corp 55 AD3d 766 869 NYS2d 551 (2d Deprsquot 2008) (sellerrsquos 31 day letter sufficient to make time of the essence) Nehmadi v Davis 63 AD3d 1125 882 NYS2d 250 (2d Deprsquot 2009) (purchaser not in default for failing to appear at closing as sellerrsquos letter to purchaser making time of the essence did not contain language informing purchaser that he risked default letter to purchaserrsquos attorney did not cure the deficiency) 115-117 Nassau St LLC v Nassau Beekman LLC 74 AD3d 537 903 NYS2d 25 (1st Deprsquot 2010) (purchasers defaulted after sellers made time of the essence having consented to two adjournments sellers had no obligation to consent to another) Martin v Burns 909 NYS2d 98 (2d Deprsquot 2010) (purchaser breached contract by failing to appear at closing after seller gave unequivocal closing date where time was of the essence) Champion v Blue Water Advisors Inc 82 AD3d 568 919 NYS2d 21 (1st Deprsquot 2011) (sellerrsquos failure to appear at contractrsquos time of the essence closing was default that seller was ready a day or two later was immaterial) Chaves v Kornfeld 921 NYS2d 64 (1st Deprsquot 2011) (once contractual time-of-the-essence closing date was waived sellers were within their rights to set a time-of-the essence closing date 33 days later) 2626 BWAY LLC v Broadway Metro Associates LP 85 AD3d 456 925 NYS2d 437 (1st Deprsquot 2011) (sellerrsquos three weeksrsquo prior notice was reasonable time to set time of the essence closing date) Plotch v 375 Riverside Drive Owners Inc 92 AD 3d 478 938 NYS2d 524 (1st Deprsquot 2012) (contract for sale of cooperative apartment providing that balance to be paid within 30 business days from date of sale with time of the essence was enforceable) Latora v Ferreira 102 AD3d 838 958 NYS2d 727 (2d Dept 2013) (letter from purchaserrsquos attorney demanding that seller fix a closing date did not make time of the essence) Westreich v Bosler 106 AD3d 569 965 NYS2d 467 (1st Dept 2013) (by not voicing objection to notice of closing date purchasers acquiesced in reasonableness of closing date ldquoif you do not close I shall release escrow fundsrdquo was sufficient to make time of the essence)

See also ldquo10 Contract Closing Daterdquo in Recent Contract Developments ADC Orange Inc v Coyote Acres Inc 2006 NY LEXIS (2006) (phrase ldquoin no event later thanrdquo as to closing date in contract insufficient to make time of the essence)

8 Discharge of Mortgage Satisfaction of Mortgage Effective Nov 7 2005 failure by a mortgagee to present a certificate of discharge for recording shall result in the mortgage being liable to the mortgage for $500 if the mortgagee fails to present such certificate within 30 days (or $1000 within 60 days or $1500 within 90 days) Mortgagee does not include one who makes less than five mortgage loans in any calendar year RPL sect 275(1) RPAPL sect 1921(1) See also Donerail Corporation NV v 405 Park LLC 952 NYS2d 137 (1st Deprsquot 2012) (provision requiring payment of existing mortgage satisfied by payment for defeasment securities that entitled seller to a discharge of the mortgage where title insurer committed to insure without exception and seller offered to allow purchaser to escrow an amount sufficient to protect it) HSBC Mortgage Corporation (USA) v Pascoe 100 AD3d 701 954 NYS2d 138 (2d Deprsquot 2012) (mortgagors satisfied statutory requirement of written request for satisfaction of credit line mortgage) 9 Adjournment of Closings See Top Ten Reasons Closings are Adjourned 37 NYSBA NY Real Prop LJ 35 (Fall 2009) (including not bringing proof of homeowners insurance not bringing photo ID not bringing certified funds for transfer taxes not allowing for deduction of closing costs from mortgage proceeds lenderrsquos closing letter showing legal fees due) 10 Electronic Recording Authorized In 2011 NY Real Prop Law 291-i authorized electronic recording 11 Closing Services Countrywide Home Loans Inc v United General Title Insurance Company 109 AD3d 953 972 NYS2d 296 (2d Dept 2013) (closing services company complied with its contractual obligation to obtain signatures and verify identity of person signing even though mortgagor presented fabricated driverrsquos license where there was no evidence license was obviously false or to otherwise put company on notice contract did not require company to insure identity)

RECENT TAX DEVELOPMENTS copy Karl B Holtzschue 2010

1 NYC Rules re Continuing Lien Exclusion from Real Property Transfer Tax

In May of 1998 the NYC Commissioner of Finance issued for comment draft rules applicable to residential transfers under the NYC Real Property Transfer Tax that would narrow the use of the exclusion allowed by the statute (Tax Law sect 1201 Chapter 314 of the Laws of 1997) In response to comments by the NYSBA Title and Transfer Committee and others the NYC Tax Law Division has issued a redraft of the NYC RPT Rules on the continuing lien exclusion that incorporates compromises agreed to at a meeting with the Tax Law Division on September 24 1998 The Division agreed to drop the two year negative presumption drop the requirement of continuing personal liability permit gift and divorce transfers to qualify and create a safe harbor for refinancings more that six months before and more than three months after a transfer The Divisionrsquos proposed provision allowing the exclusion where the lender did not change will also apply The convoluted rules (based on case law under a prior statute with language about transfers ldquoin connection with or anticipation ofrdquo the transfer) would then apply only to the very few transfers not exempted above Under the redraft the exclusion would also not apply if there was a document indicating a plan to transfer the property after a mortgage was obtained or to discharge a mortgage after title was transferred regardless of the safe harbor time limits The bar association commentators concluded that the redraft was an acceptable compromise that protected the vast majority of transfers and that it was the best that could be done in the circumstances

NOTE under these proposed Rules documents indicating a plan to transfer the property after a mortgage is obtained or a plan to discharge a mortgage after title is transferred can lead to loss of the continuing lien exclusion from the RPT

2 School Tax Relief (ldquoSTARrdquo) under RPTL sect 425 See Pedowitz ldquothe STAR Tax Exemptionrdquo 27 NY Real Prop LJ 22 (Winter 1999) There are two parts (1) a ldquobasicrdquo exemption applicable to all eligible residential property and (2) and ldquoenhancedrdquo exemption applicable only to senior citizens at least 65 years old with total annual income of $60000 or less See Pedowitz ldquothe STAR Tax Exemptionrdquo 27 NY Real Prop LJ 22 (Winter 1999)

3 Nassau County Transfer Tax Repealed Although Nassau County adopted a transfer tax at the rate of five dollars per five hundred dollars of consideration pursuant to state statute in the summer of 1999 the County repealed the tax prospectively on November 24 1999 Tax Law Article 31-E sect 1449-111 et seq

4 Federal Taxation of Sales of Residences Final IRS regulations clarify various issues relating to the exclusion from taxation of the sale of a residence 67 Fed Reg 78358 (December 24 2002) Temporary regulations on residences not owned and used for two of the last five years were issued for comment 67 Fed Reg 78367 (December 24 2002) 5 Federal Tax Lien on Tenancy by the Entirety The US Supreme Court has held that the federal tax lien attaches to a tax-debtor spousersquos interest in property held in tenancy by the entirety (US v Craft 122 SCt 1414 (2002)) but this can be lived with Johnson Why Craft Isnrsquot Scary 37 Real Prop Prob amp TrJ 439 (Fall 2002)

6 Automated City Register Information System (ACRIS) and Tax Returns in New York City (see Recent Closing Developments)

7 Estimated State Income Tax by Non-resident Sellers A nonresident seller or transferor or real estate in New York is now required to file with the Tax Department an estimate and payment of any tax due apply on Form IT-2663 for a certification by the Department and deliver the certification to the recording officer with the deed to be recorded Payment of estimated tax may now be made upon presentation of the deed for recording After November 18 2004 a similar filing is required for cooperatives on Schedule D of Form TP-584 or new Form IT-2664

8 NY Real Estate Transfer Tax Return (TP-584) and Instructions (TP-584-I) have been revised

9 Like-Kind (1031) Exchanges See Lipton The ldquoState of the Artrdquo in Like-Kind Exchanges 19 Prac Real Est Law 31 (May 2003) Haggerty Anell amp LaSala Tenancy-in-Common Ownership for 1031 Exchanges - The Risks with TICs 21 Prob amp Prop 36 (JanFeb 2007) Grekin 1031 Exchanges Know Your Accommodator 21 Prob amp Prop 54 (NovDec 2007) Winters v Dowdall 63 AD3d 650 882 NYS2d 100 (1st Deprsquot 2009) (client stated malpractice claim against law firm respecting advice on Section 1031 exchange and selection of qualified intermediary subsequent theft of funds by intermediary did not relieve firm from consequences of their negligence)

10 Refundable Tax Credit for First-Time Homebuyers A refundable tax credit is available for first-time homebuyers equal to the lesser of $8000 ($4000 for married individuals filing separately) or 10 percent of the purchase price of a principal residence for residences purchased between April 9 2008 and May 1 2010 An individual who has owned and used the same residence as such individualrsquos principal residence for any 5-consecutive-year period during the 8-year period ending on the date of the purchase of a subsequent principal residence is treated as a first-time homebuyer with a limit of $6500 ($3250 for married individuals filing separately) In addition a taxpayer purchasing a home during the eligible period in 2009 can elect to treat the purchase as if it occurred December 31 2008 for purposes of taking the credit on their 2008 return IRC sect 36

11 Mansion Tax Deutsch Tane Waterman amp Wurtzel v Hochberg 25 Misc3d 54 890 NYS2d 755 (Sup Court App Term 1st Deprsquot 2009) (sellerrsquos attorneys as assignee of sellerrsquos contract rights allowed to recover from purchasers sellerrsquos mistaken payment at closing of $12225 Mansion Tax HUD-1 was disclosure document not a contract)

8 PREPARATION FOR CLOSING CLOSING POST-CLOSING MATTERS

ONLINE MATERIALS

TABLE OF CONTENTS

1 Introduction and Program Overview 001

Differences in Practice between Downstate and Upstate (K Holtzschue) 003

Reference Materials on Purchases and Sales of Homes (K Holtzschue) 005

Pre-Contract Considerations (K Holtzschue) 009

Checklist for Sale of New York Real Property (K Holtzschue) 019

Checklist for Purchase of New York Real Property (K Holtzschue) 033

Brokerage Agreement (K Holtzschue) 047

RPL sect443-a Disclosure Obligations 049

Disclosure of Lead Paint 051

Holtzschue Property Condition Disclosure Act Enacted 30 NY Real Prop LJ 15

(Winter 2002) 057

Holtzschue Property Condition Disclosure Act Implications of the $500 Credit

30 NY Real Prop LJ 100 (Summer 2002) 065

Holtzschue Property Condition Disclosure Act First Case has Right Result for

Wrong Reasons 31 NY Real Prop LJ 5 (Spring 2003) 069

Holtzschue The Purchaser Hasnt a Ghost of a Chance Update on PCDA Cases and PCDA Revision

35 NY Real Prop LJ 7 (Winter 2007) 079

Holtzschue With a PCDS the Purchaser Now Has More Than a Ghost of a Chance

An Update on PCDS and Caveat Emptor Cases 41 NY Real Prop LJ 25 (Winter 2013) 107

Hall amp Hall Statement of Buyers Estimated Closing Costs 125

Hall amp Hall Statement of Sellers Estimated Closing Costs 127

3 Contract Drafting and Negotiations 131

Annotated 2000 NYSBA Residential Contract of Sale (K Holtzschue) 133

Holtzschue Notes to Annotated 2000 NYSBA Residential Contract of Sale 143

Holtzschue 2000 NYSBA Residential Contract of Sale Mortgage Commitment Contingency Clause

and Other Changes 28 NY Real Prop LJ 107 (Fall 2000) 146

Sample Sellerrsquos and Purchaserrsquos Riders 157

Holtzschue Mortgage Contingency Clauses Courts Favor Purchasers

26 NY Real Prop LJ 53 (Spring 1998) 169

Holtzschue Responses of the Legislature and Bar Associations to Court Decisions on

Sales of Residences 33 NY Real Prop LJ 78 (Spring 2005) 177

Contract for Purchase and Sale of Real Estate (Capital Region MLS) and other forms 183

List of Forms (Capital Region MLS) 219

Purchase and Sale Contract for Residential Property (Greater Rochester Association

of Realtors Inc and Monroe County Bar Association) and other forms 221

List of Forms (Greater Rochester Association of Realtors Inc and Monroe County

Bar Association) 261

Residential Contract (Buffalo Niagara Association of Realtors and Bar Association of Erie County)

and other forms 263

List of Forms (Buffalo Niagara Association of Realtors and Bar Association of Erie County) 305

Contract to Purchase (Central New York Information Service Inc) and other forms 307

Contract of Sale for Office Commercial and Multi-Family Premises 315

Contract of Sale New Construction 335

Mortgage Financing (G Sterrett) 359

Sample Forms 373

Note (State Form 3233 Fannie MaeFreddie Mac - New York Fixed Rate) 375

Mortgage 385

Adjustable Rate Rider 399

Consolidation Extension and Modification Agreement 403

Settlement Statement (HUD-1) (386) 411

Residential Loan Application 417

Estimate of Settlement Costs 419

Summary of the Ability-to-Repay and Qualified Mortgage Rule and the

Concurrent Proposal (Regulation Z) (Consumer Financial Protection Bureau) 421

Title Insurance Disposition of Exceptions and Title Insurance Policies (K Bellouny) 431

Title Insurance (M Bagwell amp J De Salvo) (2010 Update by M Mitzner) 461

ALTA 2006 Ownerrsquos Title Insurance Policy 479

NYSLTA Recommended Practices and Forms (March 2009) 483

Sales And Compensating Use Tax Questions Regarding Abstracts Of Title 507

Common Exceptions Affidavit 515

Affidavit of Heirship 517

Agreement to Hold Escrow 519

6 Surveys 523

Surveys are Significant in Realty Transactions (W Colavito) 525

Code of Practice for Land Surveys (NYS Association of Professional Land Surveyors) 533

Survey Related Title Insurance Endorsements 537

ALTA-ACSM Minimum Standard Detail Requirements 547

NYS Education Department Survey Standards 557

Real Estate Ethics Opinions (AR Copps) 565

Opinions of the NYSBA Committee on Professional Ethics on Escrow Accounts 566

Ethics Opinions Applicable to Transactions (K Holtzschue) 583

Handling of Escrow Funds by Attorneys (M Ochs) 593

What Every Lawyer Should Know About IOLA (J Blattmachr) 625

Sample Letter of Engagement 637

NYSBA Ethics Opinions 752 753 and 755 - Written by Traditionalists Who Wish to Live in a

World That No Longer Exists (P Coffey) 40 NY Real Prop LJ 15 (Summer 2012) 643

Attorney Discipline in NY A Nuts and Bolts Primer (JR Supple) 659

Highlights from the 2012 Annual Report of the Lawyersrsquo Fund for Client Protection 669

House Closings (Downstate) (N Connery) 675

Pre-Closing and Closing (Upstate) (A Adjutori amp S Krane) 685

Sale Engagement Letter 699

Sale Closing Statement 703

Purchase Engagement Letter 707

Purchase Closing Statement 711

Possession Agreement (Buyer Pre-Closing) 717

Possession Agreement (Seller Post-Closing) 721

Escrow Agreement 725

Sample Closing Adjustments 729

Closing Statement 731

Affidavit of Title 735

FIRPTA Non-Foreign Certification by Individual Transferor 737

Real Property Transfer Report (RP-5217) 739

NY Statutory Short Form Power of Attorney 741

Income Tax Considerations (R Nassau) 755

New Yorkrsquos Mortgage Recording Tax (M Berey) 763

Transfer Taxes in New York (M Berey) 782

Mortgage Tax Chart and Transfer Tax Chart (J Partridge) 797

NYC-RPT 799

Affidavit of Compliance with Smoke Detector Requirement for One-and Two-Family Dwellings 811

RP-5217 NYC 817

Combined Real Estate Transfer Tax Return (TP-584) (413) 819

Real Estate Transfer Tax Return Supplemental Schedules (TP-5841) (1109) 825

Nonresident Real Property Estimated Income Tax Payment Form (IT-2663) (2010) 827

Affidavit in Lieu of Registration Statement (NYC) 833

FAQs Regarding the Additional Tax on Transfers of Residential Real Property for 7 Million or more

(Pub 577) (210) 835

Faculty Biographies 847

SUPPLEMENTAL HANDOUTS

TABLE OF CONTENTS

1 CAPITAL REGION (ALBANY) 001

STANDARD FORM CONTRACT FOR PURCHASE AND SALE OF REAL ESTATE 003

ADDENDUM ___ CONTINGENCY REGARDING CONTRACT FOR SALE OF PURCHASERS PROPERTY

AND NOTIFICATION REGARDING SECONDARY CONTRACT 007

NOTICE REGARDING SECONDARY CONTRACT 009

ADDENDUM ___ GOVERNMENT APPROVALS CONTINGENCY 010

ADDENDUM ___ PURCHASE MONEY MORTGAGE 011

ADDENDUM ___ VA 012

ADDENDUM ___ ASSUMPTION OF MORTGAGE CONTINGENCY 013

CONTINGENCY REMOVAL 014

ADDENDUM ___ EXTENSION OF CONTINGENCY 015

ADDENDUM ___ CANCELLATION AND RELEASE - ALL PARTIES 016

ADDENDUM ____ ESCROW RELEASE AUTHORIZATION 017

ADDENDUM ____ LEAD-BASED PAINT TESTING CONTINGENCY 018

AGRICULTURAL DISTRICT DISCLOSURE FORM AND NOTICE 019

ELECTRIC ANDOR GAS SERVICE DISCLOSURE 020

AREA BOUNDARIES 021

SELLER PROPERTY CONDITION DISCLOSURE LAW 031

PROPERTY CONDITION DISCLOSURE STATEMENT 033

CONTRACT ADDENDA COVER PAGE 037

FHA DISCLOSURES AMENDATORY CLAUSE REAL ESTATE CERTIFICATION 038

CAPITAL REGION MULTIPLE LISTING SERVICE INC FORMS 039

2 BUFFALO 041

RESIDENTIAL CONTRACT 043

LEAD-BASED PAINT RIDER 056

RENTED PROPERTY RIDER 058

SALE CONTINGENCY RIDER 060

VACANT LAND RIDER 063

LOAN ASSUMPTION RIDER 065

SELLER FINANCING RIDER 066

CONDOMINIUM HOMEOWNERSrsquo ASSOCIATION RIDER 067

PROPERTY INSPECTION NOTICE AND ADDENDUM 070

ADDENDUM 071

AGRICULTURAL DISTRICT RIDER 072

ADDENDUM SYSTEM DATABASE CLAUSES 073

CONTRACT CANCELLATION CLAUSES 077

BUFFALO NIAGARA ASSOCIATION OF REALTORSreg AND BAR ASSOCIATION OF ERIE COUNTY FORMS 085

PAUL NESPER HANDOUT - CLOSING A WESTERN NEW YORK REAL ESTATE MATTER 087

3 ROCHESTER 193

POSSESSION AGREEMENT(BUYER PRE-CLOSING POSSESSION) 195

SELLER NOTICE TO BUYER TO REMOVESALE AND TRANSFER OF TITLE

CONTINGENCY(BUMP NOTICE) 199

PURCHASE AND SALE CONTRACT FOR LOTS AND VACANT LAND 200

PURCHASE AND SALE CONTRACT FOR RESIDENTIAL PROPERTY 204

PURCHASE AND SALE CONTRACT FOR MANUFACTURED HOUSING WITHOUT LAND 209

PURCHASE AND SALE CONTRACT FOR RESIDENCE IN CONDOMINIUM OR

HOMEOWNERS ASSOCIATION (HOA) 214

ADDENDUM FORM TO PURCHASE AND SALE CONTRACT - PROPERTY INSPECTION 220

ESCROW AGREEMENT 221

CONSTRUCTION AND SALE CONTRACT FOR RESIDENTIAL PROPERTY 225

BUYERS NOTICE OF REMOVAL OF PROPERTY CONDITION CONTINGENCIES 231

BUYERS NOTICE OF CONDITIONAL REMOVAL OF PROPERTY CONDITION CONTINGENCIES 232

ADDENDUM FORM TO PURCHASE AND SALE CONTRACT 233

GREATER ROCHESTER ASSOCIATION OF REALTORSreg INC AND MONROE COUNTY BAR

ASSOCIATION FORMS 234

4 SYRACUSE 235

CENTRAL NEW YORK INFORMATION SERVICE INC CONTRACT TO PURCHASE 237

REQUIRED FHA ADDENDUM 244

5 NEW YORK CITY LONG ISLAND WESTCHESTER 245

ANNOTATED RESIDENTIAL CONTRACT OF SALE 247

SAMPLE SELLERrsquoS RIDER FORM 257

SAMPLE PURCHASERrsquoS RIDER FORM 263

NYSBA RESIDENTIAL CONTRACT OF SALE POWERPOINT SLIDES - K HOLTZSCHUE 269

SURVEYS POWERPOINT SLIDES ndash ARIEL WEINSTOCK 309

FACULTY BIOGRAPHIES

Kristin V Bellouny Senior Underwriting Counsel

Title Associates a division of Stewart Title Insurance Company of New York

Kristin V Bellouny is Senior Underwriting Counsel of Title Associates a division of Stewart Title Insurance Company of New York underwriting New York commercial and residential transactions Ms Bellouny is a member of the New York Bar admitted in March 1981 She has more than 30 years of experience in the title industry Immediately prior to joining Title Associates Ms Bellouny was Senior Vice President and Senior Underwriting Counsel of Fidelity National Title Insurance Company handling national commercial multi-site and multi-state transactions and underwriting New York commercial transactions From 1997 to 2000 Ms Bellouny was Senior Vice President and General Counsel of TitleServ NY where she was involved in major New York City commercial closings From 1995 to 1997 Ms Bellouny was Vice President and New York State Counsel at Fidelity National Title Insurance Company of New York where she handled major New York real estate title and commercial closings as well as multi-site national deals From 1992 to 1995 Ms Bellouny was Counsel with First American Title Insurance Company of New York handling New York commercial transactions From 1982 to 1992 she was an underwriter and counsel with LTIC Assoc Inc Ms Bellouny has lectured for the New York State Bar Association New York State Land Title Association The Association of the Bar of the City of New York and to many law firms on topics relating to title insurance condominiums distressed real estate and securitized transactions She is also the author of an article entitled When Does A Deed Become a Mortgagerdquo which appeared in the New York Law Journal in August 1995 Ms Bellouny has served on the Legislative and Law Committees of the New York Sate Land Title Association Ms Bellouny is the chair of the Law and Forms Committee of the Title Insurance Rate Service Association Inc Ms Bellouny received her BA Degree from Brooklyn College of the City University of New York and her Juris Doctor from Brooklyn Law School in June of 1980

Michael M Blinkoff received his undergraduate degree from Hamilton College (1972) graduated SUNY Buffalo Law School (1975) and is a member of the New York State Bar Association and Erie County Bar Association He is a former Chairman of the Erie County Bar Association Real Property Committee and served as 8th District Representative to the Real Estate Executive Committee of the New York State Bar Association Mr Blinkoff has been selected by fellow practitioners to the list of Best Real Property Lawyers in America Whorsquos Who in Western New York Law and the Super Lawyers of the Western New York region Vastly experienced as a lecturer at CLE seminars he has spoken on such topics as Surveys and Title Claims Resolution of Title Problems Basic Real Estate Skills and many others He has often been retained by litigating counsel to render opinions on title and to testify as an expert witness on such matters

William H Bradt is Counsel and co-owner of Bradt-Luciani Real Property Services

a Syracuse based title insurance agency A graduate of Albany Law School he has

worked at several major title insurance companies and large agencies He is a member of

the New York State Magistratersquos Association and sits on the North Area Family YMCA

and Greater Syracuse YMCA boards of directors

Mark E Burhans 122 Niagara Street

Lockport New York 14094

716-434-2825

1990 to Present District Counsel Chicago Title Insurance Company 122 Niagara Street Lockport

New York

1985 to 1990 Assistant Counsel Ticor Title Guarantee Company 110 Franklin Street Buffalo

New York

1982 to 1985

Geologist Penerex Corporation 1 West Main Street Rochester New York Education

JD 1982 State University of New York at Buffalo

BS cum laude 1976 Syracuse University Member

New York State Bar Association and its Real Property and Environmental Law

Sections Bar Association of Erie County and its Real Property Law Committee Lockport Bar Association (past president) Niagara County Bar Association American Association of Petroleum Geologists

EIGHTH JUDICIAL DISTRICT BUFFALO

CHIEF COUNSEL

GREGORY J HUETHER

CHAIRPERSON

DEANNE M TRIPI

PRINCIPAL COUNSEL

RODERICK QUEBRALMARGARET C CALLANAN

ASSOCIATE COUNSEL

GUY C GIANCARLO

INVESTIGATORS

MARY E DAVISCAROLYN M STACHURA

CRAIG E SEMPLE

State of New York

Attorney GrieVance Committees

438 Main Street Suite 800 bull Buffalo New York 14202-3212 bull (716)845-3630 bull Fax(716)856-2701wwwcourtsstatenyusad4

MARGARET C CALLANAN ESQPrincipal Counsel

Attorney Grievance Committee Eighth Judicial District438 Main Street Suite 800Buffalo New York 14202

(716) 845-3630

Margaret C Callanan has been counsel to the Grievance Committee since 1992 and is currentlya Principal Counsel where she has been responsible for the investigation of complaints againstattorneys alleging professional misconduct and the presentation of numerous majorinvestigations to the Grievance Committee and to the Appellate Division of the New YorkSupreme Court Fourth Judicial Department including the trials of serious cases before Referees Prior to 1992 Ms Callanan was an associate with Harter Secrest amp Emery in Rochester and aConfidential Law Assistant to the Appellate Division Fourth Department in Rochester Shereceived her BA degree from the University of Rochester and her JD from the SUNY BuffaloSchool of Law where she was a member of The Buffalo Law Review She is a member of theNew York State Bar Association the Bar Association of Erie County the New York StateAssociation of Disciplinary Attorneys and the National Organization of Bar Counsel and is afrequent lecturer on ethics and attorney discipline topics

Nancy Ann Connery Partner Nancy Conneryrsquos area of concentration is real estate law She has a general real estate practice and

has represented individuals public and private companies utilities and not-for-profit entities in a

variety of real estate matters including Leasing and Other Space Transactions Purchases and

Sales Lending Cooperatives and Condominiums General Real Estate Matters Before practicing

law Ms Connery taught high school biology chemistry and physics

Professional Recognition

Member American College of Real Estate Lawyers

New York SuperLawyers 2008-2010

Professional Activities

Member Executive Committee of Real Estate Section

Member Cooperative and Condominium Law Committee and Commercial Leasing

Committee

Ms Connery has participated in the drafting of a model form of mortgage opinion model

contract of sale for cooperative apartment model form of sublease and overlandlord consent

model form of office lease model form of contract of sale for a commercial office building

and a model form of ground lease She also chaired a Task Force that evaluated proposed

cooperative disclosure legislation

The Association of the Bar of the City of New York

Former Chair Committee on Real Property Law

Former Chair Committee on Cooperative and Condominium Law

Member

National Association of Women Lawyers

Member

American Bar Association

Vice Chair - Assignment and Subletting Committee Leasing Group

Member Leasing Group

Publications and Speaking Engagements

Tips for Negotiating the Small Office Space Lease The Practical Real Estate Lawyers

Manual On Commercial Leasing in Troubled Times (ALI ABA 2009)

Tenant Buyouts NYSBA NY Real Property Law Journal Winter 2008 Vol 36 No 1

Chapter Author ldquoNegotiating and Drafting Office Leasesrdquo (Law Journal Seminars-Press)

ldquoCourtesy Professionalism and Ethics E-mail the Internet and Computersrdquo Fall 2002 NY

Real Property Law Journal (New York State Bar Association)

Evicting Defaulting Sponsors and Investors and Terminating Their Interestsrdquo Metes and

Bounds (publication of Real Property Law Committee of the The Association of the Bar of

the City of New York)

Chapter Author Practicing Law Institute Handbook series (chapters on security deposits

bankruptcy boilerplate leasing concepts subleases letters of credit leasehold mortgage

financing and construction issues)

Speaker programs on commercial leasing and other aspects of real estate law sponsored by

the Practicing Law Institute ALI-ABA the New York State Bar Association and the

Association of the Bar of the City of New York Topics she has covered include compliance

with laws construction issues bankruptcy security letters of credit the Americans with

Disabilities Act ground leases and assignment and subleasing She has also participated in

panels on residential transactions and lending transactions

EDUCATIONAL

Faculty Member Real Estate Institute New York University (1987-1990)

Jeffrey B Davis Jeffrey B Davis has practiced for over 35 years emphasizing real estate law representing purchasers sellers and lenders He is a graduate of Syracuse University and Syracuse College of Law He speaks periodically at state and local bar association seminars on real estate matters

PROFILE Jessica A Desany works with commercial lenders developers and title insurance agencies on a wide range of real estate matters including commercial loan transactions commercial lease negotiations and commercial litigation She provides experienced legal services to her clients in the complexities of commercial contracts leases and loan documents and offers experience in reviewing negotiating and drafting contracts commercial leases loan and financing documents Ms Desany maintains an active civil litigation practice including defending claims of professional liability personal injury premises liability and construction work-site injuries under New York Statersquos Labor Law She provides her clients with insurance coverage analysis and litigates insurance coverage disputes She has lectured on topics related to insurance coverage construction work-site litigation ethics and trial technique EDUCATION State University of New York at Buffalo School of Law JD 1998 University of Notre Dame du lac BA cum laude 1995 BAR ADMISSIONS New York State 1999 US District Court for the Northern District of New York 1999 US District Court for the Western District of New York 2000 US Court of Appeals for the Second Circuit 2000 MEMBERSHIPS ALFA International Albany County Bar Association American Bar Association Defense Research Institute Inc (DRI) DRI of Northeastern New York Federal Court Bar Association Northern District of New York New York State Bar Association New York State Bar Association Real Property Law Section Rensselaer County Bar Association Rensselaer County Regional Chamber of Commerce (Firm Representative

Maureen Garvey Vice President and Counsel of Frontier Abstract and Research Services Inc Maureen Garvey is Vice President and Counsel of Frontier Abstract and Research Services Inc Maureen is responsible for management of Frontierrsquos Default and Real Property Tax Units and handles the companyrsquos legal compliance matters Maureen is recognized for her ability to resolve complex title issues that arise in real estate and foreclosure matters Maureen has extensive real estate and title experience including the representation of lenders purchasers and sellers including HUD and FHLMC Maureen is a graduate of Brooklyn Law School Maureenrsquos professional activities include Monroe County Bar Associationrsquos Real Estate Council ‐Secretary Member of Board of the Foundation of the Monroe County Bar Association Member of Womenrsquos Council of Realtors ‐Budget amp Finance Committee and GRAR RealtorBar Committee

Anthony J GigliottiPRINCIPAL COUNSEL bull Attorney Grievance Committee Appellate Division 4th Department 5th JudicialDistrict 224 Harrison Street Suite 408 Syracuse New York 13202Anthony J Gigliotti received his undergraduate degree from Syracuse University in 1968 and went on to earn his lawdegree from St Johnrsquos University in 1971 He started his career as the Staff Attorney for Onondaga NeighborhoodLegal Services and in 1976 became the Executive Director of Legal Services of Central New York a position heheld for 10 years It was during this time that he began his periodic work as adjunct professor at the SyracuseUniversity College of Law which spanned over two decades From 1987 to 1996 he held positions as Syracuse CityCourt Judge General Counsel for the Widewaters Group Assistant NYS Attorney General In Charge of theWatertown Regional Office as well as private law practice Since 1996 Mr Gigliotti has served as Principal Counsel for the Attorney Grievance Committee Appellate DivisionFourth Department Fifth Judicial District and has lectured extensively on ethics at numerous continuing legaleducation programs In 2001 Tony was appointed as one of the founding members of the New York State LawyerAssistance Trust by Chief Justice Judith S KayeTony is a member of the Onondaga County Bar Associationrsquos Lawyers Assistance Steering Committee led the effortto establish the local Volunteer Lawyerrsquos Project and now serves on its oversight Pro Bono Practice Committee Hehas been a member of the New York State Bar Association throughout his legal career having served on the RealEstate Sectionrsquos former Committee on Residential Landlord and Tenant Law the Committee on Legal Aid andcurrently serves on the Lawyer Assistance Committee Mr Gigliotti advocated for and assisted in the authorship of Real Property Law sect235-b which established NewYorkrsquos Implied Warranty of Habitability and helped launch the first Pro Bono Service Awards now awardedannually by the NYSBA President

LAW OFFICES OF RICHARD E GRAYSON ATTORNEY AND COUNSELOR AT LAW

202 MAMARONECK AVENUE THIRD FLOOR WHITE PLAINS NEW YORK 10601

----- PHONE (914) 682-0037

FAX (914) 684-0646 WWWRICHARDGRAYSONESQCOM

Biographical Sketch

Richard E Grayson Esq

Richard E Grayson worked for the Ninth Judicial District Grievance Committee in

White Plains from 1978 to 1982 Since then he has been in private practice in White Plains counseling attorneys with ethical problems defending attorneys who are being investigated or prosecuted by the various grievance committees throughout the state and assisting bar applicants who are under consideration by the Character and Fitness Committees He also represents judges before the State Commission on Judicial Conduct

He has also testified as an expert witness and researches and writes ethics opinions for

lawyers and law firms

As an individual course provider certified by the New York State Continuing Legal Education Board he has presented or has been a panelist at more than 150 CLE ethics programs for attorneys and judges

He is a member of the New York State Bar Association Committee on Professional Discipline and is also a member of the Association of Professional Responsibility Lawyers (the national organization of ethics counsel) and is the manager and first baseman of the New Rochelle Bar Association softball team

Gary C Hisiger Partner Moritt Hock amp Hamroff LLP Garden City

Gary Hisiger has been a partner since 1998 He currently heads the firmrsquos Real Estate and Banking practice and serves on the firmrsquos management committee

Mr Hisiger concentrates in real estate corporate and financing transactions He is regularly involved in a variety of transactions involving real estate developers corporations industrial development agencies lending institutions and investors Mr Hisiger often draws on other areas of expertise within the firm in providing full-service to clients

Mr Hisiger represents real estate investors lenders businesses and individuals doing business on Long Island and elsewhere He regularly acts as counsel to many well established businesses including large real estate development groups and corporations He also handles their real estate and corporate matters while advising them and guiding them through various tax litigation bankruptcy and other types of matters

Education Brooklyn Law JD 1990 University of New York at Albany BS 1987 (Finance) Admissions Mr Hisiger is admitted to practice in New York and New Jersey

Affiliations Mr Hisiger is extremely active in the community and has held various board and leadership positions at Sunrise Day Camp the Childrenrsquos Medical Fund Menrsquos Division Brsquonai Brsquorith Youth Organization and the South Shore YJCC

Recognitions In 2012 Mr Hisiger was honored by Sunrise Day Camp for his outstanding dedication and service to the organization and in 2009 he was named among Whorsquos Who in Commercial Real Estate Law by Long Island Business News

KARL B HOLTZSCHUE

122 EAST 82ND STREET APT 3C

NEW YORK NEW YORK 10028-0859

Telephone 212-472-1421

Fax 212-472-6712

E-mail kbholtgmailcom

Education Dartmouth College (AB cum laude 1959) Columbia University (LLB 1966)

Admitted to the bar 1967 New York and US District Court Eastern and Southern Districts of New York

Practice Associate at Webster amp Sheffield 1966-1974 Partner at Webster amp Sheffield 1974-1988 OrsquoMelveny amp Myers 1988-1990 General practice in real estate

Adjunct Professor Fordham Law School (1990-2003) and Columbia Business School (1990-1996)

Author Holtzschue on Real Estate Contracts amp Closings (PLI) Vol 1 New York Practice Guide Real Estate (Matthew Bender) Real Estate Transactions Purchase and Sale of Real Property (Matthew Bender) LexisNexis AnswerGuide New York Real Property Editor NYSBArsquos Residential Real Estate Forms on HotDocs Attorney Escrow Accounts Fourth Edition (NYSBA) Numerous articles and lectures on real estate and ethics NYSBA ldquoPractical Skills Purchases and Sales of Homesrdquo (lecturer 1997-2014 Chair 1997-2007 Co-Chair 2013-2014) PLI ldquoResidential Contracts and Closingsrdquo (lecturer 1994-2007 Chair 2000)

New York State Bar Association (Real Property Law Section Exec Com Chair 2007-2008 Member 1998- RPLS Professionalism Award 2012 Co-Chair Legislation Committee 2008- Co-Chair Title amp Transfer Committee 1998-2004) Association of the Bar of the City of New York (Chair Committee on Real Property Law 1987-1990) American College of Real Estate Lawyers Whorsquos Who in America

041714

TRISHA L KIRSCH - Associate

Davidson Fink LLP Rochester

As an associate with the firmrsquos real estate department Trisha Kirsch specializes in commercial transactions and banking law She has experience counselling clients in the areas of mortgage lending (commercial IDA SBA residential and aircraft) commercial leasing banking procedures tax liability property acquisition and financing business formation and development

Prior to joining Davidson Fink LLP Ms Kirsch was an associate with Menter Rudin Trivelpiece PC in Syracuse New York where she represented numerous clients in commercial lending and workout matters

Admissions to Practice

New York State Bar United States District Court for the Northern District of New York

Professional and Community Affiliations

Monroe County Bar Association New York State Bar Association Greater Rochester Association for Women Attorneys

Education

JD State University of New York at Buffalo BA Ithaca College cum laude

Chava Eva Klein Partner Ruskin Moscou Faltischek PC Uniondale University of Miami Law School (JD Magna Cum Laude 1995) Stern College for Women (BA Magna Cum Laude 1984)

Eva Klein is a Partner at Ruskin Moscou Faltischek PC where she is a member of the firmrsquos Real Estate Department

Ms Klein counsels clients in all aspects of real estate transactions including the acquisition sale leasing and development of office retail hotel and multi-use properties She also represents clients in the preparation and negotiation of construction contracts for major developments as well as representing institutional lenders in commercial real estate financing

Eva began her professional career in Miami Florida where she was a shareholder with Stearns Weaver Miller Weissler Alhadeff amp Sitterson PA focusing her practice in the area of real estate During the course of her career Eva served on the American Bar Association Hospitality Industry Liaison Subcommittee lectured on hotel acquisitions on behalf of the subcommittee and published an article called ldquoComplex Issues in the Sale of a lsquoBusiness in a Boxrsquordquo which addressed various issues involved in negotiating a hotel purchase contract From 2005-2010 she was ranked 2 in the real estate division in Chambers USA Americarsquos Leading Lawyers for Business In addition in 2005 she was selected for inclusion in Top Women in Commercial Real Estate in the Florida Real Estate Journal and was also selected for inclusion in Florida Super Lawyers for the years 2008-2011

ABRAHAM B KRIEGER ESQ 990 Stewart Avenue

Suite 300 PO Box 9194

Garden City New York 11530-9194 (516) 592-5757 ndash voice (516) 741-6707 ndash fax akriegermsekcom

Abraham B Krieger is an attorney in the Commercial Real Estate Law practice of

Meyer Suozzi English amp Klein PC having joined the firm as a member in February 2007 Mr Kriegerrsquos broadly-based practice focuses on representing businesses and individuals in commercial and residential real estate lending acquisition sale and lease transactions and real estate and commercial litigation An integral portion of his practice includes representing commercial lenders and borrowers on real estate fiduciary transactions and representing title companies on defending title and enforceability and foreclosability of mortgages Prior to joining the firm Mr Krieger was in private practice since 1976 From 1995 until 2002 Mr Krieger was senior partner in a Great Neck based law firm and from 1989 until 1993 also a partner in New York City Mr Krieger was also General Counsel at Safeco Title Insurance Company of New York He is a member of the New York State and Nassau County Bar Associations is currently a member of the Grievance Committee for the Tenth Judicial District former Dean of the Nassau County Bar Association a current member of the NYBA Real Property Executive Committee served on the Sub-Prime Subcommittee of the Nassau Bar Real Property Committee and is a member of the NYS Bar Real Property Section Fraudulent Practices Committee He has served as chair of the NCBArsquos Real Property Committee from 2003-2004 the Advisory Task Force on Escrows Moot Court program Judge (2005-2006) the NCBA Board of Directors from 2002 to 2005 Chairman of the NCBA By-Laws Revision Committee 2001-2002 New Member Regional Liaison 1999-2003 and Committee Vice-Chairman in 2001 He has served on the Board of Directors of the Great Neck Lawyerrsquos Association and the Executive Board of the American Inns of Court Theodore Roosevelt Chapter He participates in the NCBA of Counsel Mentor Program and has been a member of the Nassau County District Court Arbitration Panel since 1998 He is admitted to practice law in New York State before the United States District Court Eastern and Southern Districts of New York the United States Supreme Court and the United States Tax Court

849927 262

BIOGRAPHY

Virginia A Leasure Esq is a graduate of Temple University and Syracuse University College

of Law She is a sole practitioner and concentrates her practice in commercial and residential

real estate Virginia has been an adjunct professor at Syracuse UniversitymdashUniversity College

in the Legal Studies Program teaching Real Estate and Contracts for more than 20 years

Michael J Lombardo is a partner at the law firm of Duke Holzman Photiadis amp

Gresens LLP His practice areas include all aspects of residential and commercial real estate

acquisitions financing leases and sales Additionally Mr Lombardo is an adjunct instructor

with the School of Management at SUNY at Buffalo with over 30 years of teaching experience

where he is responsible for developing and teaching a business law course with an emphasis on

contracts He is a frequent speaker before various organizations on legal issues concerning real

property matters Mr Lombardo is the current Chair of the Real Property Law Committee of the

Bar Association of Erie County and has been a regular active member of its contract revision

subcommittee responsible for the revisions to the local standard residential real estate contract

Mr Lombardo received his BS BA JD and MBA degrees from the University at

Buffalo

Rocco ManganoMangano Lucchesi amp Collins

Mr Mangano is a native of Syracuse In 1978 he graduated from the University of Rochester with a Bachelor of Arts Degree in History and Political Science He received his Law Degree from Syracuse University in 1981 graduating Magna Cum Laude

Mr Mangano has over 30 years experience in the General Practice of Law with a concentration in Real Estate Business and Corporate Law and Wills and Estates He is Vice Chairman of the Real Property Law Section of the Onondaga County Bar Association and a member of the Real Property Law Section of the New York State Bar Association He is a frequent lecturer at New York Bar Association Seminars for attorneys and other real estate professionals Mr Mangano has also been engaged by several local real estate companies to train agents in real estate and real estate contracts

John M Martin Esq is vice president and general counsel at All New York Title

Agency Inc He has over 25 years legal experience in title insurance and real property

matters His responsibilities involve the legal operation of the company from review of

routine title issues to closing the most complex commercial transactions Mr Martin also

handles operations of Section 1031 like-kind exchanges for the company He has chaired

the Law Committee of New York State Land Title Association and the Westchester

County Bar Associationrsquos Real Property Section Prior to All New York Title Mr

Martin held positions in the title industry as claims counsel New York and New Jersey

state counsel and vice president of operations for a major title insurance underwriter

John I Menard Partner VanLoon Menard Attorneys at Law

Areas of Practice Matrimonial Law Family Law Attorney for the Child ResidentialCommercial Real Estate Estates amp Wills

Education State University of New York at Buffalo School of Law JD 2003 State University of New York at Buffalo BA 2000

AdmissionPanel United States District Court ndash Western District of New York New York State (4th Department) United States Bankruptcy Court ndash Western District of New York Assigned Counsel Panel ndash Monroe County Attorney for the Child Panel ndash Appellate Division 4th Department

Associations Monroe County Bar Association (Family Law Real Estate Sections) New York State Bar Association (Family Law Real Estate Sections) New York State Mortgage Brokers Association NMLS 67428

Seminars

Presenter ldquoEthics for Real Estate Lawyersrdquo (October 26 2010) New York State Bar Association ndash Real Property Law Section

wwwhodgsonrusscom

The Guaranty Building 140 Pearl Street

Suite 100 Buffalo NY 14202-4040

7168564000 Fax 7168490349

677 Broadway Suite 301

Albany NY 12207 5184652333

Fax 5184651567

1540 Broadway 24th Floor New York NY 10036

2127514300 Fax 2127510928

Areas of Practice Commercial and industrial real property taxation acquisitions development and

environmental concerns including wetlands delineation protection enhancement and water

resources

Professional Experience Mr Meyer has extensive experience with the New York State

Environmental Quality Review Act (SEQRA) Among other significant projects he (i) represented an

industrial development agency as lead agency under SEQRA for the review comments to modification

hearing and final acceptance of the Environmental Impact Statement for a 1200-acre recreational and sporting complex (ii) handled environmental and real property matters for the transfer of the water

system from a city to a public authority (iii) worked extensively with NYS DEC regulatory legal and

permitting personnel and (iv) represented a large supermarket chain in connection with

environmental matters for several facilities including a major distribution center in Lancaster New York and several other facilities in New York State

PresentationsArticles Mr Meyer lectures extensively about commercial and industrial real estate

taxation development and environmental issues

Publications Author Major New York Tax Developments Affect Real Estate Attorneys Transfer

Gains Transfer and Mortgage Taxes and Trolley Tax Shortfall Prompts Administrative Steps Bar

Association of Erie County Bulletin A Little Learning is a Dangrous Thing Drink Deep or Taste not the Pierian Spring NY Real Property Law Journal

Professional Associations American College of Real Estate Lawyers (2008-present) Erie County

Bar Association member Environmental Law Committee (chair 1990-94) and Real Property Law Committee New York State Bar Association Real Property Law Section Executive Committee (chair

2006-07) Committee on State and Local Taxation (co-chair 1990-94) Publication Committee (co-

chair 1994-2004) Membership Committee (2011-present) New York State Bar Association House of

Delegates (2005-09) New York State Bar Association Mass Disaster Response Committee Environmental Committee of the United States Law Firm Group (chair 1988-97) Erie County Local

Emergency Planning Committee (member 1990-present chair 1994-2005) United States Coast

Guard Area Maritime Security Committee (vice-chair 2003-08 chair 2008-present) FBI Infragard

Members Alliance Program (board member and Buffalo Chapter secretary 2005-present)

Community Activities University at Buffalo Humanities Institute (advisory board member) Hull

House Foundation (board of trustees member) Preservation Buffalo Niagara (Buffalo City Hall tour

docent)

HonorsAwards Member Phi Beta Kappa listed Best Lawyers in America (Real Estate Law)

Landmarker of Year 2007

Bar Associations New York State Bar Association Bar Association of Erie County

Admitted to Practice New York

Education

BA magna cum laude Yale University

LLB Yale Law School

Harry G Meyer

Direct tel 7168481417

hmeyerhodgsonrusscom

Of Counsel

Environment amp Energy Practice Group

Buffalo Office

Attorney Advertising 268

Paul T Nesper

Nesper Ferber amp DiGiacomo LLP Amherst

Paul T Nesper concentrates his practice on corporate law business law succession planning

and real estate law He is legal counsel to various corporations ranging in size from small single

shareholder to large multi‐national corporations He also represents numerous limited liability

companies sole proprietorships and partnerships He has worked with closely held businesses

and is involved in such transactional matters as business formation commercial finance and

the construction and development of commercial realty In addition Mr Nesper has extensive

experience in business succession planning and has assisted clients in the transfer or sale of

their businesses to family members and the control of their businesses through the use of

trusts and through the use of private trust companies

Mr Nesper is an Agent for Stewart Land Title Insurance Company and Examining Counsel for

Ticor Title Insurance Company

Education

JD State University of New York at Buffalo 1984

BS State University of New York at Buffalo summa cum laude 1981

Professional Associations

Mr Nesper is admitted to practice in the State of New York the State of Pennsylvania and the

State of New Hampshire He is rated A(V) the highest rating given by the Martindale attorney

rating service He is a member of the New York State Bar Association and has participated in the

Section on Real Estate Law since 1987 He is also a member of the Erie County Bar Association

and has belonged to the Committee on Real Estate Law and the Surrogates Court Practice and

Procedures Committee

Mr Nesper frequently lectures throughout the legal community and has spoken on Real

Property Law each year since 1987 the New Limited Liability Company Law in New York in

1998 and on Corporate Buy‐Sell vs Redemption Agreements in 2001

Mr Nesper is past Chairman of the Board and Director the Amherst Chamber of Commerce

Past Director of the Amherst Task Force for Healthy Community Healthy Youth Past Director of

the Epilepsy Association of Western New York and a current Director of Harvest House in

Buffalo New York

JEAN M PARTIRDGE

JEAN M PARTIRDGE co-founder and principal of Benchmark Title Agency LLC has been in the title insurance business for over 25 years Prior to co-founding Benchmark Title Agency LLC in 2005 Jean was a Senior Vice President Branch Counsel of First American Title Insurance Company of New York and a member of their Board of Directors

Jean began her career in the title insurance industry while attending law school at Pace University School of Law Upon graduation she continued working at L amp H Abstract Corporation She remained with First American Title Insurance Company of New York after they acquired L amp H Abstract Corporation

Presently Jean serves on the Executive Committee of the New York Land Title Association and is an editor of their monthly newsletter She is also co-chairperson of their liaison committee with the County Clerks of the Hudson Valley Region and a member of their E Recordings committee and their licensing committee Additional affiliations include the New York State Bar Association Westchester County Bar Association White Plains Bar Association and National Association of Realtors Formerly Jean served on the Board of Directors of the Westchester Womenrsquos Bar Association

Jean earned her undergraduate degree from the State University of New York at Stony Brook and her law degree from Pace University School of Law She is admitted to practice law in New York State and Connecticut She is also rated AV for ethical standards and legal ability by Martindale-Hubble peer review

ichael A Piette is a member of the Firms Economic amp Land Development

Financial Services Affordable Housing and Real Estate practice groups His

practice involves a wide variety of matters in the fields of commercial real

estate including transactions involving the acquisition financing develop-

ment leasing and exchange of commercial real estate real estate titles and low

income housing tax credit transactions He has counseled and negotiated on

behalf of lending institutions not-for-profit entities and commercial owners in

connection with the closing of sophisticated forms of financing including var-

ious loan and grant transactions involving industrial development agencies

andor Federal and State agencies His practice also involves environmental

and land use regulation matters including brownfield redevelopment

In addition Mr Piette has been a lecturer for the New York State and Erie

County bar associations and the Buffalo Niagara Association of Realtors The

topics he has presented on include real estate contracts title and other real

estate subjects

Mr Piette is admitted to practice in New York State and is a member of Real

Property Committee of the Bar Association of Erie County and the Real Estate

Section of the New York State Bar Association

Mr Piette serves as a Director and member of the Executive Committee for

Family amp Childrens Service of Niagara He also serves on the Board of

Directors for the University at Buffalo Law Alumni Association and Niagara

Area Foundation Council an affiliate of the Community Foundation for

Greater Buffalo He is listed in Best Lawyers in America as well as WhorsquosWho in Law published annually by the Business First of Buffalo Mr Piette is

a recipient of the 2012 Skip Helfrich Lifetime Achievement Award presented

annually by Leadership Niagara

M I C H A E L A P I E T T E

jaecklecom

CONTACT

BUFFALO OFFICEAvant Building - Suite 900

200 Delaware Avenue

Buffalo NY 14202-2107

Tel 7168433882

Fax 7168560432

mpiettejaecklecom

PRACTICE AREASAdvanced Energy

Economic amp Land Development

Financial Services

Housing Resources

Real Estate

EDUCATIONState University of New York at Buffalo Law School

(JD 1980)

State University of New York at Buffalo

(BA cum laude 1977)

Nancy W Saia is the senior attorney at the Law Offices of Nancy W Saia where

her concentration is in real estate law wills and estates and elder law Nancy graduated

from Canisius College summa cum laude in 1981 and from the University at Buffalo Law

School magna cum laude in 1984 She has spent her entire 27 year legal career with the

same firm In 1997 Nancy took over the firm and has expanded the practice since then

Always active in the Bar Association of Erie County Nancy served as Chair of

the Real Property Law Committee from 1995-1998 During that tenure she also started

the major overhaul of the local residential real estate contract and helped coordinate the

computer program for its implementation For over 20 years Nancy has served on the

various Bar Association subcommittees which draft and revise the residential real estate

contract the note the mortgage and the local title standards She was elected and served

as a Director of the Bar Association from 2007-2010

As a frequent lecturer on real estate law topics Nancy has been an instructor for

the Erie Institute of Law the New York State Bar Association the Buffalo Niagara

Association of Realtors and the Womenrsquos Council of Realtors She has also been active

at the Fox Valley Golf Club serving five terms on the Board of the Womenrsquos Golf

Association three times as President She was instrumental in drafting that

organizationrsquos Constitution and By-Laws Nancy just completed serving as President of

the Womenrsquos Buffalo District Golf Association which is an association of 21 country

clubs fostering competitive womenrsquos golf in the region

Nancy has received many awards including two (2) prestigious Special Service

Awards from the Bar Association of Erie County and has been selected to Buffalo Firstrsquos

Whorsquos Who in Law seven (7) times The firm was just named in US News and World

Reports - Best LawyersBest Law Firms ndash Real Estate

An avid golfer Nancy can often be found on the golf course with her husband Al

They live in Williamsville and have an adult daughter Alicia who lives in Virginia

Frank C Sarratori born inTonawanda New York November 27 1964 admitted to bar 1991 New York and US District Court Northern District of New York Education State University of New York at Albany (BS cum laude 1987) Albany Law School of Union University (JD 1990) National School of Banking (graduate with honors 2007) PRACTICE AREAS State and Federal banking regulation Real Estate Law Commercial Law Creditorrsquos Rights General Practice Frank worked in private practice with the law firm of Martin Shudt Wallace DiLorenzo and Johnson from 1986 until May 2004 In May 2004 Frank assumed the position of Vice President and General Counsel with Pioneer Bank and has served since 2005 as Senior Vice President General Counsel and Chief Compliance Officer Additionally in 2009 Frank was appointed Secretary of Pioneer Bank In 2010 Frank was appointed to the Board of Directors of PSB Financial Services Inc a subsidiary of Pioneer Bank Frank is a current board member of the Rensselaer County Historical Society a member of the Independent Bankers Association of New York State Compliance Peer Group Co-chair 2011- present HVCC Foundation Board Member Governance Committee Chair 2010 ndash present PSB Financial Services Board Member Secretary Sr Vice President amp General Counsel 2010 - present Rensselaer ARC Foundation Board Member 2009 ndash present Unity House of Troy Board Member Vice President (past Treasurer) 2008 ndash present Finance Property amp Executive Committees 2009 ndash present Real Property law section of the New York State Bar Association 2006 ndash present Executive committee representative of the third judicial department 2006 ndash 2010 Co-Chair of the Mortgage Finance Committee 2010 ndash present Upstate Chair ndash Hot Topics in Real Estate Lawpresenter 2010 ndash present Albany Junior Chamber of Commerce ndash Council 1991 ndash 1999 University at Albany Lawyers Association ndash Treasurer and Founding Board Member 1997 ndash 1999 ldquoLegal Aspects of Home Buyingrdquo seminar presenter 1991 ndash present Rensselaer County Chamber of Commerce ndash Board of Directors 1994 ndash 1997Town of Brunswick Master Plan Land Use Committee ndash Chairman1996 ndash 1998 Troy Renaissance Merchants Group Organization ndash Council 1996 ndash 1998 New York State Bar Association New York State Bar Association ndash Banking Real Estate and Business Law Sections Rensselaer County Bar Association

GEORGE A SCHELL JR

PRACTICE FOCUS amp EXPERIENCE

Mr Schell concentrates his practice in the areas of residential and commercial real estate and lender servicing He regularly works with buyers and sellers in the purchase sale or lease of residential and commercial properties and he represents lenders in residential and commercial mortgage lending Mr Schell has presented numerous continuing education seminars for other attorneys lenders and realtorsreg on various topics relating to residential transactions and lender servicing He has been a member of Schell Law PC and its predecessor Schell amp Schell PC since November 2000 when he helped establish the firm Mr Schell also practiced with the firms of Murch amp Wise PC (Webster New York) from 1999 through 2000 and Johnson Mullan amp Brundage PC (Rochester New York) from 1994 through 1999

georgejrschelllawcom P 5853772682 x 11

EDUCATION Villanova University School of Law JD 1993

University of Rochester BA 1990

McQuaid Jesuit High School 1986

BAR ADMISSIONS New York 1994

Pennsylvania 1995

COURT ADMISSIONS US District Court (Western District of New York)

US Bankruptcy Court (Western District of New York)

All New York State Trial amp Appellate Courts

PROFESSIONAL RECOGNITION amp AWARDS 2011 Greater Rochester Assn of Realtors (GRAR) Honor Society Inductee

o GREATER ROCHESTER ASSN OF REALTORS o Recognition of those who have made outstanding contributions to GRAR and assisted GRAR in achieving GRARrsquos

mission statement while also advancing the real estate industry as a whole

2006 Empire State Counsel Program Honoree o NEW YORK STATE BAR ASSN o Recognition of high quality service to indigent clients

2000 William McKnight Award Recipient o VOLUNTEER LEGAL SERVICES PROJECT OF MONROE COUNTY INC o Award for exceptional pro bono service

2 8 E a s t M a i n S t r e e t S u i t e 1 7 0 0 R o c h e s t e r N Y 1 4 6 1 4 w w w d a v i d s o n f i n k c o m

SCOTT A SYDELNIK

Associate Davidson Fink LLP

Areas of Practice Banking and Finance Creditorsrsquo Rights in Bankruptcy Default Litigation Default Servicing Eviction Foreclosure Law Loss Mitigation Real Estate Owned (REO) Residential Real Estate

Scott Sydelnik is an associate in the firmrsquos default servicing department specializing in foreclosure and creditorsrsquo rights in bankruptcy Mr Sydelnik has experience counseling clients in the areas of real estate and mortgage lending

Prior to joining Davidson Fink LLP Mr Sydelnik practiced residential and commercial real estate mortgage lending and bankruptcy with a law firm in Rochester He has represented buyers sellers and lenders in real estate transactions throughout New York State Mr Sydelnik has also represented debtors and creditors in the Western and Northern Districts of the United States Bankruptcy Court Mr Sydelnik also serves as the District Representative for the 7th District of the New York State Bar Association Real Property Section In addition Mr Sydelnik has served as an editor for Thompson Reuters and has lectured on the topics of real estate and bankruptcy for the New York State Bar Association and the National Business Institute

Mr Sydelnik currently resides in Rochester with his wife Stefanie

Admissions to Practice - New York State Bar - United States District Court for the Eastern Northern Southern and Western Districts of New York

Professional and Community Affiliations - Monroe County Bar Association - New York State Bar Association - Mortgage Bankers Association

Education - JD State University of New York at Buffalo - BA Ithaca College

Mindy H Stern is managing partner of Schoeman Updike Kaufman Stern amp Ascher LLP a boutique New York City law firm where she concentrates in real estate estate planning and estate administration

Ms Stern is Secretary of the Real Property Law Section of the New York State Bar Association and is a member of that Sectionrsquos Executive Committee She also Chairs the Committeersquos Task Force creating a scholarship fund in memory of the Associationrsquos deceased former President Lorraine Power Tharp and is a member of the Executive Committeersquos Task Force regarding attorney escrow accounts and a member (and former Co-Chair) of the Sectionrsquos committee on Not For Profit Entities and Concerns Ms Stern currently serves as a member of the Association of the Bar of the City of New Yorkrsquos delegation to the House of Delegates of the New York State Bar Association and she is a past Chair of the Association of the Bar of the City of New Yorkrsquos Committee on Real Property Law as well as a former Secretary of the Associationrsquos Committee on Cooperatives and Condominiums

Ms Stern is an Adjunct Professor at Benjamin N Cardozo School of Law where she teaches a Real Estate Contract Drafting course She has lectured for the New York State Bar Association Practicing Law Institute the Real Estate Institute of New York University and the Association of the Bar of the City of New York and authored numerous articles on a variety of real estate related topics She is a member of the American College of Real Estate Lawyers has been voted by her peers to be a New York Super Lawyer since 2008 and was named one of Real Estate Weeklyrsquos 100 Women Real Estate Leaders for the 21st Century

Francis D Stinziano Jr Esq

Partner

Gilberti Stinziano Heintz amp Smith PC

Syracuse

Mr Stinziano focuses his practice on real estate and corporate law He is experienced in complex

real estate matters including like-kind exchanges under the Internal Revenue Code actions to quiet

title under the Real Property Actions and Proceedings Law and land use and development

Mr Stinziano regularly represents purchasers and sellers of commercial and residential real property

as well as lenders in commercial and residential real estate transactions He serves as examining

counsel for several title insurance companies Mr Stinzianorsquos practice also includes representing

landlords and tenants in commercial leasing transactions counseling property owners in real

property tax assessment review proceedings and the formationdissolution of corporations

partnerships and limited liability companies He is also experienced in estate planning

Mr Stinziano is dedicated to expanding his knowledge of business community affairs and

leadership issues He is a graduate of the Leadership Greater Syracuse program which selects

applicants based on their commitment to leadership and the community The program works to bring

together diverse groups of citizens to work towards transforming the community Mr Stinziano has

also been a panel member for the New York State Bar Association on Continuing Legal Education

programs related to real estate transactions

Education

Juris Doctor Syracuse University College of Law

Bachelor of Science LeMoyne College

Admissions

State of New York

Honors and Affiliations

Onondaga County Bar Association

2007 Leadership Greater Syracuse Program

Christian Brothers Academy Alumni Association

Delta Mu Delta National Honor Society in Business

Administration

J Richard Supple Partner Hinshaw amp Culbertson LLP New York NY Practice Focus Rick Supple concentrates in the representation of law firms and lawyers in professional ethics-related matters including disciplinary and legal malpractice cases partnership and fee disputes disqualification and sanctions motions risk management advising and internal investigations As both a prosecutor and defense counsel Mr Supple has tried dozens of disciplinary cases He has also tried or arbitrated partnership and attorney contract disputes litigated other professional ethics related matters in state and federal courts and argued appeals before the United States Court of Appeals for the Second Circuit the New York Court of Appeals and intermediate appellate courts Professional Background Before joining Hinshaw amp Culbertson LLP in 2004 Mr Supple was counsel to a large international law firm and before that was Principal Trial Counsel to the Departmental Disciplinary Committee of the New York Supreme Court Appellate Division First Department Mr Supple is an adjunct professor at the Benjamin N Cardozo School of Law a faculty member of the Practising Law Institute and is the Chair of the New York City Barrsquos Professional Discipline Committee He has also received intensive mediation training from the faculty of the Pepperdine University School of Lawrsquos top-ranked Straus Institute for Dispute Resolution In 2011 he was included in ldquoThe Best Lawyers in Americaregrdquo in the area of Ethics and Professional Responsibility Law Publications and Presentations Mr Supple has written and lectured widely on professional ethics matters including at more than 50 CLE programs in the New York area and elsewhere and is a frequent speaker at Hinshawrsquos annual Legal Malpractice and Risk Management Conference in Chicago Practice Areas

Legal Ethics amp Professional Responsibility

Legal Malpractice

Commercial Litigation

Mediation Services Education

JD University of Wisconsin Law School 1989 Posner Award Winner for public interest advocacy

BA magna cum laude Duke University 1985 Bar Admissions

1990 New York Courts

US District Court Eastern District of New York 1990

US District Court Southern District of New York 1999

US District Court Northern District of New York 2008

US Court of Appeals Second Circuit 2008

Denise P Ward Esq

Grean amp Ward

222 Grace Church StreetSuite 206B Port Chester New York 10573 (P) 914-937-2800(F) 914-937-7404

dpwarddpwardnet

Denise Pagano Ward is a practicing attorney in Westchester County Admitted to practiceafter graduation from Georgetown University Law Center in 1983 she began her career asa clearance office with LTIC Associates Inc an agent for Lawyerrsquos Title InsuranceCorporation She practiced exclusively in real estate with a small firm in Manhattan fortwo years and then began practicing in Rye New York representing individualhomeowners as well as developers She maintains a primary office in Port Chester NewYork

Denisersquos practice is limited to transactional residential and commercial real estate estateplanning and probate and elder law She has lectured extensively in these areas for localand state bar associations

Denise is a member of the American Bar Association the New York State Bar Associationand the New Rochelle Bar Association She is a member of the Board of Directors of theWestchester County Bar Association She is President of both the Mamaroneck-Harrison-Larchmont Bar Association and the Port Chester-Rye Bar Association

Denise is fluent in written and spoken Italian

Ariel Weinstock Esq Katsky Korins LLP New York NY

EDUCATION Brooklyn Law School JD 2007 Yeshiva University BA 2004 cum laude BAR ADMISSIONS 2008 New York 2008 District of Columbia 2007 New Jersey BIOGRAPHY Ariel Weinstock joined the real estate department in 2007 His practice focuses on real estate and construction matters Since joining the firm Ariel has been involved in numerous real estate transactions including commercial leases sales acquisitions and financings Ariel has also been involved in drafting and negotiating construction agreements including AIA-based construction documents for both national and local clients on significant construction projects Ariel was recently appointed as the Vice-Chair of the New York County Lawyersrsquo Association Construction Law Committee and currently serves as Secretary of the Construction Law Committee of the New York State Bar Associationrsquos Real Property Law Section COURT ADMISSION US District Court of New Jersey BAR AFFILIATIONS AND PRESENTATIONS New York County Lawyersrsquo Association Vice-Chair Construction Law Committee New York State Bar Association Secretary Construction Law Committee Real Property Section Lecturer Default by Owners Mechanic Lienors and Lenders in Construction Contracts ndash Remedies for Cure NYSBA CLE Hot Topics in Real Property Law and Practice (December 2010) Lecturer Survey Examination NYSBA CLE Practical Skills ndash Purchases and Sales of Homes (November 2010) Lecturer Opening Up Office Leasing and Renovation Contracts NYCLA CLE First Annual Business and Contract Law Institute (September 2010) Lecturer Survey Examination NYSBA CLE Practical Skills ndash Purchases and Sales of Homes (November 2009)

CDocuments and SettingscareillyLocal SettingsTemporary Internet FilesContentOutlookXLK69R7I347125 v7 - BW Short Bio with Picturedoc

Benjamin Weinstock is co-chair of the Real Estate Department

of Ruskin Moscou Faltischek PC in Uniondale New York where

he concentrates on transactional real estate matters Mr

Weinstock received his law degree (cum laude) in 1978 from

Brooklyn Law School In 2001 Governor Pataki appointed him to

the New York State Real Estate Board where he served as

Secretary through 2009 Mr Weinstock is a Special Professor of

Law at New York Law School a founding member of the Institute of Real Estate at

Hofstra University and a member of the Legal Advisory Boards of First American Title

Insurance Company of New York and Chicago Title Insurance Company Mr

Weinstock is a Fellow of the American College of Real Estate Lawyers has been

included in New York Magazinersquos Best Lawyers in New York since 2009 and in Super

Lawyers since 2007 He is a frequent lecturer for continuing legal education programs

sponsored by the New York State Bar Association and several other CLE providers

He is the author of the chapter on Lease Guaranties in the New York State Bar

Associations desk book on Commercial Leasing and has published numerous legal

articles Mr Weinstock also serves as Deputy Mayor of the Village of Cedarhurst and

is the Second Vice Chair of the Real Property Law Section of the NY State Bar

Association

James Whalen has served as the Associate Counsel amp Compliance Officer for Pioneer Bank since 2007 He is a graduate of the University at Albany (2000) and Albany Law School (2003) and was admitted to practice in New York State and the Northern District of New York in 2004 Mr Whalen holds the rank of Captain in the US Army Reserve Judge Advocate Generalrsquos Corps He currently serves a member of the Clifton Park Town Board and as President of the Board of Directors for the Troy Boys and Girls Club

Michelle H Wildgrube Esq

Ms Wildgrube has been a principal of Cioffi

Slezak Wildgrube PC (formerly Carpenter amp

Cioffi PC) since 2004 and has been with the

firm since 1999 Prior to joining Cioffi Slezak

Wildgrube PC Ms Wildgrube worked for a

general practice firm that provided a broad

foundation for her practice which now

concentrates in the areas of estate planning and

administration corporate and business law and

real estate

As a volunteer with The Legal Projectrsquos

Affordable Housing Attorney Assistance Program

(AHAA) Ms Wildgrube trains attorneys to

represent clients with regard to real estate

purchases She also lectures for the New York

State Bar Association and the Schenectady County

Bar Association on real estate and estate planning

issues Ms Wildgrube is a frequent community

volunteer with the Legally Speaking Program for

The Legal Project on the topics of real estate and

estate planning

Ms Wildgrube currently serves on the boards of directors of the Federation of Bar

Associations Fourth Judicial District (Immediate Past President) The Legal Project

(Immediate Past President) and the Disability Education Forum of New York (Treasurer)

She is a member of the Executive Committee for the New York State Bar Associationrsquos Real

Property Law Section the New York State Bar Associationrsquos Lawyer Referral Committee

and the New York State Bar Associationrsquos CLE Committee Ms Wildgrube is a trustee for

the John Alexander Trust Memorial Scholarship which is administered through the

Schenectady County Bar Association Ms Wildgrube was the recipient of the Schenectady

County Bar Associationrsquos first Young Lawyer Award the Schenectady County Bar

Associationrsquos 2012 Lawyer of the Year Award and the New York State Bar Associationrsquos

2013 Presidentrsquos Pro Bono Award

Ms Wildgrube holds a Bachelor in Arts Degree in English from Rutgers College and a Juris

Doctor from the State University of New York at Buffalo School of Law She is a member

of the New York State Bar Association the Schenectady County Bar Association and the

Capital District Womenrsquos Bar Association

Michelle can be reached at

mwildgrubecswlawfirmcom

(518) 377-6700

Jared P Yaffee Esq Lemery Greisler LLC 50 Beaver Street 2nd Floor Albany New York 12207 United States of America (518) 433-8800 x 317 jyaffeelemerygreislercom Practice Areas

Banking amp Commercial Finance Real Estate

Education

BA Ithaca College 1997 JD Brooklyn Law School 2003

Jared P Yaffee concentrates his practice in the area of real estate corporate and commercial lending including SBA loan closings and secured transactions designed to cultivate economic development create and preserve job opportunities and stimulate growth of businesses throughout upstate New York He brings to his practice experience representing clients in real estate transactions and business law as well as commercial and civil litigation

Prior to joining the firm Mr Yaffee was a Vice President and counsel at the countrys largest title insurance underwriter based in New York City where he underwrote and closed national commercial transactions After relocating to upstate New York he was associated with a general practice in Columbia County Mr Yaffee is admitted to practice in the State of New York and before the United States District Court for the Northern District of New York

Robert J Zaccagnino

Pace University School of Law JD 1989

Worked ten (10) years for a General Practice and Civil Litigation Firm in Mamaroneck New York (Law Offices of Joseph C Messina)

Maintained Private Practice as a Solo Practitioner since 2000

Office Located in Rye New York

Law Offices of Robert J Zaccagnino

Grantor Off

more than one grantor

0 Off

Name of grantor

0

SSN1

0

1

address of grantor

0

SSN2

0

1

city of grantor

0

state of grantor

0

ZIP of grantor

0

FEIN1

0

1

single member grantor

0

single memberSSN1

0

1

Grantee Off

more than one grantee Off

Name of grantee

address of grantee

city of grantee

state of grantee

ZIP of grantee

single member grantee

text map

0

SWIS code

street address of property

city of property

county of property

property type Off

other describe

converyance month

0

converyance day

converyance year

percent residential real

Check a Off

Check b Off

percent controlling interest

Check c Off

controlling interest transfer

Check d Off

Check e Off

Check f Off

Check g Off

Check h Off

Check i Off

Check j Off

Check k Off

Check l Off

Check m Off

Check n Off

Check o Off

Check p Off

Check q Off

Check r Off

Check s Off

S other describe

exemption claimed Off

dollars 1

0

1

2

3

4

5

0

3

4

5

cents 1

0

1

2

3

4

5

0

3

4

5

Pt 3 Chk A

0 Off

1 Off

2 Off

3 Off

4 Off

5 Off

6 Off

7 Off

8 Off

9 Off

10 Off

Sch D Chk 1 Off

Sch D 3 Chk 1 Off

para1

para2

para3

title

0

0

1

1

0

1

Sch D Chk 2a Off

Print full name

0

0

1

1

0

1

2

0

1

3

0

1

Print full name date

0

0

1

1

0

1

2

0

1

3

0

1

from date

to date

Pg 4 Chk 1 Off

This program is offered for educational purposes The views and opinions of the faculty expressed during this program are those of the presenters and authors of the materials Further the

statements made by the faculty during this program do not constitute legal advice

health issues

18002550569

Personal Inventory

18002550569

There Is Hope

PROGRAM AGENDA

900-910 1 OVERVIEW

1025-1035 BREAK

215-225 BREAK

415 ADJOURNMENT

MCLE CREDITS

months)

CREDIT BREAKDOWN

10 Ethics (Topic 8)

CLE NotePadcopy

TABLE OF CONTENTS

Topic Overview 003

Lined Paper 005

Topic Overview 013

Lined Paper 031

Topic Overview 039

Lined Paper 077

Topic Overview 085

Lined Paper 112

Topic Overview 119

Lined Paper 129

6 Surveys 135

Topic Overview 137

Lined Paper 147

Topic Overview 155

Lined Paper 181

Lined Paper 233

Practical Skills

and agents

FOtA1io

_e-n _

~ ft u

~ ~~shy

~_3 --~IIofIIgs

bull ~o10-rl~

~-bull 0-0 ~saM ~shy 5~1gr - ~ ~r~~

t 1 ~ __ s -gtn _u~ mlW_

8NelOrl

bull ~~ 0

W eleom

uZS ez=n M a r

Upcomi n g E~nts

04~Ol) OltLatgt1l

O = - n-~ N+XT F ee-=

Annou nctHn~nt5

e_ bull bull

AI~_-~ ~~ r gtfo~j ~~_

~eu-l __ ~ ~_=orlO=

--~ ~laquo~ -s

eo_c _ _T_ a u __ 1 _lM_ _

S1 ___ ru=

-=~(- _

A Seller

1 Client interview

and co detectors

gazebo etc)

ordinary sales

materials)

purchaser offer

on the sale

B Purchaser

1 Client interview

delayed

leaked

purchaser offer

3 Financing

F Checklists

Purpose

Important dates

Your loan term is

$ per month

Borrower

Property Address

Date of GFE

Name of Originator

Originator Address

Originator Email

g Transfer taxes

No change

Initial loan amount

Loan term

Rate lock period

Prepayment penalty

Balloon payment

Seller ____ _______ _ Date _______ _

SelJer __________ _ Date _______ _

Buy~ ______________________ __ Date ________ __

Buyer ________________________ __ Date _________ __

negotiates changes

2 Parties

4 Personal property

3a) (B para 4A)

ATC11(D))

9 Acceptable funds

(B para 7 ATC9)

title (S para 7)

closing (B para 12)

15 Deed

(B para 8)

23 Broker

26 Offer

12(D))

things (R para 6b)

E Checklists

unions)

Most common

Private Lenders

several reasons

lender

Mortgage Brokers

lending sources

occupied units)

quickly

Mortgage Bankers

expenses

Types of Loans

term of the loan

- The Application

- Loan Costs

Pre-Closing

o Application fee

o Credit check

o Appraisal

o Points

o Lock-in-Fee

Closing

to title)

the unit

requirements

expenses

Letter

Funding

contract is signed

Practice Tips

payment

Developments sect 3

G Loan Commitment

deliver

______ __ 20_

[Date]

[Property Address

[City1 lState]

2 INTEREST

3 PAYMENTS

5 LOAN CHARGES

(B) Default

7 GIVING OF NOTICES

9 WAIVERS

-Borrower

_______________________ (S)

-Borrower

_______________________ (S)

-Borrower

[Date] [City]

[Property Address I

[State]

2 INTEREST

3 PAYMENTS

(A) Change Dates

(8) Tbe Index

6 LOAN CHARGES

(8) Default

8 GIVING OF NOTICES

10 WAIVERS

-Borrower _______________________________ Campru)

-Borrower

______________________________ CSI)

-Borrower

OBJECTIONS

B Title policy

What is not covered

6 SURVEYS

6 Surveys

A What is a Survey

thereon

B Types of Surveys

of practice are

are needed

the map

defective

performed

survey include

to be contiguous

F Practice Tips

therein

the survey

6 SURVEYS

C BrokerLawyer

(Ethics Op 493 933)

LJ 15 (Summer 2012)

Developments

Op 532)

(Ethics Op 759)

accounts

Bas Association

(Ethics Op 467)

(Ethics Op 882)

Client

Address

Retainer Agreement

Flat Rate Fee

By___________________________

dispute)

closing

the purchaser

its price

water meter reading

closing

the Closing

Fuel Cost $ 10000

PCDA Credit $ 50000

Subtotal $111818070 $11050000

Balance Due

$20000 (712012-6302012)365 days x 330 days (8412-63013) = $1808070

differences

the following

broom clean)

title company

Purchaser

forgets)

following

signing

applicable)

III CLOSING

a NEVER FORGET

b Typical Problems

negotiation

like a no brainer

IV POST-CLOSING

b) Corporate seller

infonnation

3) Deed

f) Tax Bills

g) Other

14) Rental Property

e) Security Deposit

A) TRUST ACCOUNTS

In CLOSING

C) RECORDING

GrantorTransferor

Individual

Corporation

Partnership

EstateTrust

Single member LLC

Corporation

Partnership

EstateTrust

Single member LLC

i Syndication

n Leasehold grant

of 4 TP-584 (413)

Date Date

104 404

105 405

109 409

110 410

111 411

112 412

206 506

207 507

208 508

209 509

213 513

214 514

215 515

216 516

217 517

218 518

219 519

B Type of Loan

4 VA 5 Conv Ins

Place of Settlement

701 $ to

702 $ to

1100 Title Charges

1302 $

1303 $

Settlement

Funds atSettlement

$123456 or

Transfer taxes 1203

Loan Terms

Interest

Mortgage Insurance

Flood insurance

ONLINE MATERIALS

TABLE OF CONTENTS

(Winter 2002) 057

and other forms 263

Sample Forms 373

Mortgage 385

6 Surveys 523

NYC-RPT 799

RP-5217 NYC 817

(Pub 577) (210) 835

TABLE OF CONTENTS

ADDENDUM ___ VA 012

AREA BOUNDARIES 021

2 BUFFALO 041

ADDENDUM 071

3 ROCHESTER 193

4 SYRACUSE 235

FACULTY BIOGRAPHIES

716-434-2825

New York

1982 to 1985

CHIEF COUNSEL

GREGORY J HUETHER

CHAIRPERSON

DEANNE M TRIPI

PRINCIPAL COUNSEL

ASSOCIATE COUNSEL

GUY C GIANCARLO

INVESTIGATORS

CRAIG E SEMPLE

State of New York

(716) 845-3630

Committee

Member

EDUCATIONAL

----- PHONE (914) 682-0037

Biographical Sketch

KARL B HOLTZSCHUE

Fax 212-472-6712

041714

Education

849927 262

BIOGRAPHY

Buffalo

Seminars

wwwhodgsonrusscom

7168564000 Fax 7168490349

Albany NY 12207 5184652333

Fax 5184651567

2127514300 Fax 2127510928

resources

docent)

Education

LLB Yale Law School

Harry G Meyer

Of Counsel

Buffalo Office

Paul T Nesper

Education

Buffalo New York

JEAN M PARTIRDGE

estate subjects

jaecklecom

CONTACT

200 Delaware Avenue

Tel 7168433882

Fax 7168560432

mpiettejaecklecom

Financial Services

Housing Resources

Real Estate

(JD 1980)

(BA cum laude 1977)

GEORGE A SCHELL JR

Pennsylvania 1995

SCOTT A SYDELNIK

Partner

Syracuse

Education

Admissions

State of New York

Administration

Legal Malpractice

Denise P Ward Esq

Grean amp Ward

dpwarddpwardnet

Association

real estate

estate planning

(518) 377-6700

Education

Robert J Zaccagnino

Grantor Off

0 Off

Name of grantor

0

SSN1

0

1

address of grantor

0

SSN2

0

1

city of grantor

0

state of grantor

0

ZIP of grantor

0

FEIN1

0

1


0

single memberSSN1

0

1

Grantee Off


Name of grantee

address of grantee

city of grantee

state of grantee

ZIP of grantee


text map

0

SWIS code


city of property

county of property

property type Off

other describe

converyance month

0

converyance day

converyance year


Check a Off

Check b Off


Check c Off


Check d Off

Check e Off

Check f Off

Check g Off

Check h Off

Check i Off

Check j Off

Check k Off

Check l Off

Check m Off

Check n Off

Check o Off

Check p Off

Check q Off

Check r Off

Check s Off

S other describe


dollars 1

0

1

2

3

4

5

0

3

4

5

cents 1

0

1

2

3

4

5

0

3

4

5

Pt 3 Chk A

0 Off

1 Off

2 Off

3 Off

4 Off

5 Off

6 Off

7 Off

8 Off

9 Off

10 Off

Sch D Chk 1 Off

Sch D 3 Chk 1 Off

para1

para2

para3

title

0

0

1

1

0

1

Sch D Chk 2a Off

Print full name

0

0

1

1

0

1

2

0

1

3

0

1


0

0

1

1

0

1

2

0

1

3

0

1

from date

to date

Pg 4 Chk 1 Off

health issues

18002550569

Personal Inventory

18002550569

There Is Hope

PROGRAM AGENDA

900-910 1 OVERVIEW

1025-1035 BREAK

215-225 BREAK

415 ADJOURNMENT

MCLE CREDITS

months)

CREDIT BREAKDOWN

10 Ethics (Topic 8)

CLE NotePadcopy

TABLE OF CONTENTS

Topic Overview 003

Lined Paper 005

Topic Overview 013

Lined Paper 031

Topic Overview 039

Lined Paper 077

Topic Overview 085

Lined Paper 112

Topic Overview 119

Lined Paper 129

6 Surveys 135

Topic Overview 137

Lined Paper 147

Topic Overview 155

Lined Paper 181

Lined Paper 233

Practical Skills

and agents

FOtA1io

_e-n _

~ ft u

~ ~~shy

~_3 --~IIofIIgs

bull ~o10-rl~

~-bull 0-0 ~saM ~shy 5~1gr - ~ ~r~~

t 1 ~ __ s -gtn _u~ mlW_

8NelOrl

bull ~~ 0

W eleom

uZS ez=n M a r

Upcomi n g E~nts

04~Ol) OltLatgt1l

O = - n-~ N+XT F ee-=

Annou nctHn~nt5

e_ bull bull

AI~_-~ ~~ r gtfo~j ~~_

~eu-l __ ~ ~_=orlO=

--~ ~laquo~ -s

eo_c _ _T_ a u __ 1 _lM_ _

S1 ___ ru=

-=~(- _

A Seller

1 Client interview

and co detectors

gazebo etc)

ordinary sales

materials)

purchaser offer

on the sale

B Purchaser

1 Client interview

delayed

leaked

purchaser offer

3 Financing

F Checklists

Purpose

Important dates

Your loan term is

$ per month

Borrower

Property Address

Date of GFE

Name of Originator

Originator Address

Originator Email

g Transfer taxes

No change

Initial loan amount

Loan term

Rate lock period

Prepayment penalty

Balloon payment

Seller ____ _______ _ Date _______ _

SelJer __________ _ Date _______ _

Buy~ ______________________ __ Date ________ __

Buyer ________________________ __ Date _________ __

negotiates changes

2 Parties

4 Personal property

3a) (B para 4A)

ATC11(D))

9 Acceptable funds

(B para 7 ATC9)

title (S para 7)

closing (B para 12)

15 Deed

(B para 8)

23 Broker

26 Offer

12(D))

things (R para 6b)

E Checklists

unions)

Most common

Private Lenders

several reasons

lender

Mortgage Brokers

lending sources

occupied units)

quickly

Mortgage Bankers

expenses

Types of Loans

term of the loan

- The Application

- Loan Costs

Pre-Closing

o Application fee

o Credit check

o Appraisal

o Points

o Lock-in-Fee

Closing

to title)

the unit

requirements

expenses

Letter

Funding

contract is signed

Practice Tips

payment

Developments sect 3

G Loan Commitment

deliver

______ __ 20_

[Date]

[Property Address

[City1 lState]

2 INTEREST

3 PAYMENTS

5 LOAN CHARGES

(B) Default

7 GIVING OF NOTICES

9 WAIVERS

-Borrower

_______________________ (S)

-Borrower

_______________________ (S)

-Borrower

[Date] [City]

[Property Address I

[State]

2 INTEREST

3 PAYMENTS

(A) Change Dates

(8) Tbe Index

6 LOAN CHARGES

(8) Default

8 GIVING OF NOTICES

10 WAIVERS

-Borrower _______________________________ Campru)

-Borrower

______________________________ CSI)

-Borrower

OBJECTIONS

B Title policy

What is not covered

6 SURVEYS

6 Surveys

A What is a Survey

thereon

B Types of Surveys

of practice are

are needed

the map

defective

performed

survey include

to be contiguous

F Practice Tips

therein

the survey

6 SURVEYS

C BrokerLawyer

(Ethics Op 493 933)

LJ 15 (Summer 2012)

Developments

Op 532)

(Ethics Op 759)

accounts

Bas Association

(Ethics Op 467)

(Ethics Op 882)

Client

Address

Retainer Agreement

Flat Rate Fee

By___________________________

dispute)

closing

the purchaser

its price

water meter reading

closing

the Closing

Fuel Cost $ 10000

PCDA Credit $ 50000

Subtotal $111818070 $11050000

Balance Due

$20000 (712012-6302012)365 days x 330 days (8412-63013) = $1808070

differences

the following

broom clean)

title company

Purchaser

forgets)

following

signing

applicable)

III CLOSING

a NEVER FORGET

b Typical Problems

negotiation

like a no brainer

IV POST-CLOSING

b) Corporate seller

infonnation

3) Deed

f) Tax Bills

g) Other

14) Rental Property

e) Security Deposit

A) TRUST ACCOUNTS

In CLOSING

C) RECORDING

GrantorTransferor

Individual

Corporation

Partnership

EstateTrust

Single member LLC

Corporation

Partnership

EstateTrust

Single member LLC

i Syndication

n Leasehold grant

of 4 TP-584 (413)

Date Date

104 404

105 405

109 409

110 410

111 411

112 412

206 506

207 507

208 508

209 509

213 513

214 514

215 515

216 516

217 517

218 518

219 519

B Type of Loan

4 VA 5 Conv Ins

Place of Settlement

701 $ to

702 $ to

1100 Title Charges

1302 $

1303 $

Settlement

Funds atSettlement

$123456 or

Transfer taxes 1203

Loan Terms

Interest

Mortgage Insurance

Flood insurance

ONLINE MATERIALS

TABLE OF CONTENTS

(Winter 2002) 057

and other forms 263

Sample Forms 373

Mortgage 385

6 Surveys 523

NYC-RPT 799

RP-5217 NYC 817

(Pub 577) (210) 835

TABLE OF CONTENTS

ADDENDUM ___ VA 012

AREA BOUNDARIES 021

2 BUFFALO 041

ADDENDUM 071

3 ROCHESTER 193

4 SYRACUSE 235

FACULTY BIOGRAPHIES

716-434-2825

New York

1982 to 1985

CHIEF COUNSEL

GREGORY J HUETHER

CHAIRPERSON

DEANNE M TRIPI

PRINCIPAL COUNSEL

ASSOCIATE COUNSEL

GUY C GIANCARLO

INVESTIGATORS

CRAIG E SEMPLE

State of New York

(716) 845-3630

Committee

Member

EDUCATIONAL

----- PHONE (914) 682-0037

Biographical Sketch

KARL B HOLTZSCHUE

Fax 212-472-6712

041714

Education

849927 262

BIOGRAPHY

Buffalo

Seminars

wwwhodgsonrusscom

7168564000 Fax 7168490349

Albany NY 12207 5184652333

Fax 5184651567

2127514300 Fax 2127510928

resources

docent)

Education

LLB Yale Law School

Harry G Meyer

Of Counsel

Buffalo Office

Paul T Nesper

Education

Buffalo New York

JEAN M PARTIRDGE

estate subjects

jaecklecom

CONTACT

200 Delaware Avenue

Tel 7168433882

Fax 7168560432

mpiettejaecklecom

Financial Services

Housing Resources

Real Estate

(JD 1980)

(BA cum laude 1977)

GEORGE A SCHELL JR

Pennsylvania 1995

SCOTT A SYDELNIK

Partner

Syracuse

Education

Admissions

State of New York

Administration

Legal Malpractice

Denise P Ward Esq

Grean amp Ward

dpwarddpwardnet

Association

real estate

estate planning

(518) 377-6700

Education

Robert J Zaccagnino

Grantor Off

0 Off

Name of grantor

0

SSN1

0

1

address of grantor

0

SSN2

0

1

city of grantor

0

state of grantor

0

ZIP of grantor

0

FEIN1

0

1


0

single memberSSN1

0

1

Grantee Off


Name of grantee

address of grantee

city of grantee

state of grantee

ZIP of grantee


text map

0

SWIS code


city of property

county of property

property type Off

other describe

converyance month

0

converyance day

converyance year


Check a Off

Check b Off


Check c Off


Check d Off

Check e Off

Check f Off

Check g Off

Check h Off

Check i Off

Check j Off

Check k Off

Check l Off

Check m Off

Check n Off

Check o Off

Check p Off

Check q Off

Check r Off

Check s Off

S other describe


dollars 1

0

1

2

3

4

5

0

3

4

5

cents 1

0

1

2

3

4

5

0

3

4

5

Pt 3 Chk A

0 Off

1 Off

2 Off

3 Off

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5 Off

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9 Off

10 Off

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para1

para2

para3

title

0

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0

1

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Print full name

0

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0

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0

0

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1

0

1

2

0

1

3

0

1

from date

to date

Pg 4 Chk 1 Off

health issues

18002550569

Personal Inventory

18002550569

There Is Hope

PROGRAM AGENDA

900-910 1 OVERVIEW

1025-1035 BREAK

215-225 BREAK

415 ADJOURNMENT

MCLE CREDITS

months)

CREDIT BREAKDOWN

10 Ethics (Topic 8)

CLE NotePadcopy

TABLE OF CONTENTS

Topic Overview 003

Lined Paper 005

Topic Overview 013

Lined Paper 031

Topic Overview 039

Lined Paper 077

Topic Overview 085

Lined Paper 112

Topic Overview 119

Lined Paper 129

6 Surveys 135

Topic Overview 137

Lined Paper 147

Topic Overview 155

Lined Paper 181

Lined Paper 233

Practical Skills

and agents

FOtA1io

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--~ ~laquo~ -s

eo_c _ _T_ a u __ 1 _lM_ _

S1 ___ ru=

-=~(- _

A Seller

1 Client interview

and co detectors

gazebo etc)

ordinary sales

materials)

purchaser offer

on the sale

B Purchaser

1 Client interview

delayed

leaked

purchaser offer

3 Financing

F Checklists

Purpose

Important dates

Your loan term is

$ per month

Borrower

Property Address

Date of GFE

Name of Originator

Originator Address

Originator Email

g Transfer taxes

No change

Initial loan amount

Loan term

Rate lock period

Prepayment penalty

Balloon payment

Seller ____ _______ _ Date _______ _

SelJer __________ _ Date _______ _

Buy~ ______________________ __ Date ________ __

Buyer ________________________ __ Date _________ __

negotiates changes

2 Parties

4 Personal property

3a) (B para 4A)

ATC11(D))

9 Acceptable funds

(B para 7 ATC9)

title (S para 7)

closing (B para 12)

15 Deed

(B para 8)

23 Broker

26 Offer

12(D))

things (R para 6b)

E Checklists

unions)

Most common

Private Lenders

several reasons

lender

Mortgage Brokers

lending sources

occupied units)

quickly

Mortgage Bankers

expenses

Types of Loans

term of the loan

- The Application

- Loan Costs

Pre-Closing

o Application fee

o Credit check

o Appraisal

o Points

o Lock-in-Fee

Closing

to title)

the unit

requirements

expenses

Letter

Funding

contract is signed

Practice Tips

payment

Developments sect 3

G Loan Commitment

deliver

______ __ 20_

[Date]

[Property Address

[City1 lState]

2 INTEREST

3 PAYMENTS

5 LOAN CHARGES

(B) Default

7 GIVING OF NOTICES

9 WAIVERS

-Borrower

_______________________ (S)

-Borrower

_______________________ (S)

-Borrower

[Date] [City]

[Property Address I

[State]

2 INTEREST

3 PAYMENTS

(A) Change Dates

(8) Tbe Index

6 LOAN CHARGES

(8) Default

8 GIVING OF NOTICES

10 WAIVERS

-Borrower _______________________________ Campru)

-Borrower

______________________________ CSI)

-Borrower

OBJECTIONS

B Title policy

What is not covered

6 SURVEYS

6 Surveys

A What is a Survey

thereon

B Types of Surveys

of practice are

are needed

the map

defective

performed

survey include

to be contiguous

F Practice Tips

therein

the survey

6 SURVEYS

C BrokerLawyer

(Ethics Op 493 933)

LJ 15 (Summer 2012)

Developments

Op 532)

(Ethics Op 759)

accounts

Bas Association

(Ethics Op 467)

(Ethics Op 882)

Client

Address

Retainer Agreement

Flat Rate Fee

By___________________________

dispute)

closing

the purchaser

its price

water meter reading

closing

the Closing

Fuel Cost $ 10000

PCDA Credit $ 50000

Subtotal $111818070 $11050000

Balance Due

$20000 (712012-6302012)365 days x 330 days (8412-63013) = $1808070

differences

the following

broom clean)

title company

Purchaser

forgets)

following

signing

applicable)

III CLOSING

a NEVER FORGET

b Typical Problems

negotiation

like a no brainer

IV POST-CLOSING

b) Corporate seller

infonnation

3) Deed

f) Tax Bills

g) Other

14) Rental Property

e) Security Deposit

A) TRUST ACCOUNTS

In CLOSING

C) RECORDING

GrantorTransferor

Individual

Corporation

Partnership

EstateTrust

Single member LLC

Corporation

Partnership

EstateTrust

Single member LLC

i Syndication

n Leasehold grant

of 4 TP-584 (413)

Date Date

104 404

105 405

109 409

110 410

111 411

112 412

206 506

207 507

208 508

209 509

213 513

214 514

215 515

216 516

217 517

218 518

219 519

B Type of Loan

4 VA 5 Conv Ins

Place of Settlement

701 $ to

702 $ to

1100 Title Charges

1302 $

1303 $

Settlement

Funds atSettlement

$123456 or

Transfer taxes 1203

Loan Terms

Interest

Mortgage Insurance

Flood insurance

ONLINE MATERIALS

TABLE OF CONTENTS

(Winter 2002) 057

and other forms 263

Sample Forms 373

Mortgage 385

6 Surveys 523

NYC-RPT 799

RP-5217 NYC 817

(Pub 577) (210) 835

TABLE OF CONTENTS

ADDENDUM ___ VA 012

AREA BOUNDARIES 021

2 BUFFALO 041

ADDENDUM 071

3 ROCHESTER 193

4 SYRACUSE 235

FACULTY BIOGRAPHIES

716-434-2825

New York

1982 to 1985

CHIEF COUNSEL

GREGORY J HUETHER

CHAIRPERSON

DEANNE M TRIPI

PRINCIPAL COUNSEL

ASSOCIATE COUNSEL

GUY C GIANCARLO

INVESTIGATORS

CRAIG E SEMPLE

State of New York

(716) 845-3630

Committee

Member

EDUCATIONAL

----- PHONE (914) 682-0037

Biographical Sketch

KARL B HOLTZSCHUE

Fax 212-472-6712

041714

Education

849927 262

BIOGRAPHY

Buffalo

Seminars

wwwhodgsonrusscom

7168564000 Fax 7168490349

Albany NY 12207 5184652333

Fax 5184651567

2127514300 Fax 2127510928

resources

docent)

Education

LLB Yale Law School

Harry G Meyer

Of Counsel

Buffalo Office

Paul T Nesper

Education

Buffalo New York

JEAN M PARTIRDGE

estate subjects

jaecklecom

CONTACT

200 Delaware Avenue

Tel 7168433882

Fax 7168560432

mpiettejaecklecom

Financial Services

Housing Resources

Real Estate

(JD 1980)

(BA cum laude 1977)

GEORGE A SCHELL JR

Pennsylvania 1995

SCOTT A SYDELNIK

Partner

Syracuse

Education

Admissions

State of New York

Administration

Legal Malpractice

Denise P Ward Esq

Grean amp Ward

dpwarddpwardnet

Association

real estate

estate planning

(518) 377-6700

Education

Robert J Zaccagnino

Grantor Off

0 Off

Name of grantor

0

SSN1

0

1

address of grantor

0

SSN2

0

1

city of grantor

0

state of grantor

0

ZIP of grantor

0

FEIN1

0

1


0

single memberSSN1

0

1

Grantee Off


Name of grantee

address of grantee

city of grantee

state of grantee

ZIP of grantee


text map

0

SWIS code


city of property

county of property

property type Off

other describe

converyance month

0

converyance day

converyance year


Check a Off

Check b Off


Check c Off


Check d Off

Check e Off

Check f Off

Check g Off

Check h Off

Check i Off

Check j Off

Check k Off

Check l Off

Check m Off

Check n Off

Check o Off

Check p Off

Check q Off

Check r Off

Check s Off

S other describe


dollars 1

0

1

2

3

4

5

0

3

4

5

cents 1

0

1

2

3

4

5

0

3

4

5

Pt 3 Chk A

0 Off

1 Off

2 Off

3 Off

4 Off

5 Off

6 Off

7 Off

8 Off

9 Off

10 Off

Sch D Chk 1 Off

Sch D 3 Chk 1 Off

para1

para2

para3

title

0

0

1

1

0

1

Sch D Chk 2a Off

Print full name

0

0

1

1

0

1

2

0

1

3

0

1


0

0

1

1

0

1

2

0

1

3

0

1

from date

to date

Pg 4 Chk 1 Off