PRACTICAL REAL ESTATE LAW



PRACTICAL REAL ESTATE LAW

Fourth Edition

Daniel F. Hinkel

New York State Supplement

By

Cathryn F. Kent, Esq.

Finger Lakes Community College

TABLE OF CONTENTS

Chapter 1: Introduction to the Law of Real Property 5

Real Property Law 5

Ethics: An Introduction 6

Chapter 2: Concurrent Ownership 7

Types of Concurrent Ownership 7

Chapter 3: Surveys and Land Descriptions 9

The Survey 9

Chapter 4: Public Regulations and Encumbrances 10

Public Regulation 10

Private Encumbrances 12

Chapter 5: Easements and Licenses 14

Easements 14

Chapter 6: Contracts 15

Requirements of a Valid Contract 15

Written Agreements 17

Real Estate Broker 17

Listing Agreements 17

Chapter 7: Preparation and Review of a Real Estate Contract 18

Elements in a Real Estate Contract 18

Chapter 8: Deeds 21

Types of Deeds 21

Requirements of a Valid Deed 21

Chapter 9: Financing Sources in Real Estate Transactions 23

Types of Loans 23

Permanent and Construction Loans 23

Chapter 10: Legal Aspects of Real Estate Finance 24

Mortgages, Deeds of Trust, and Security Deeds 24

Foreclosure and Other Mortgage Remedies 24

Chapter 11: Mortgage Forms and Provisions 27

Security Agreement and Financing Statement 27

Chapter 12: Title Examinations 28

Bona Fide Purchaser for Value Rule 28

Examining Title to Real Property 29

Chapter 13: Title Insurance 30

Owner’s Policy 30

Commitments for Title Insurance 30

Chapter 14: Real Estate Closings 31

Contact with Seller, Purchaser, and Broker by the Legal Assistant 31

The Closing and Aftermath 32

Chapter 15: Government Regulation of Real Estate Closings 34

Chapter 16: Real Estate Closing Forms and Examples 35

Chapter 17: Condominiums and Cooperatives 36

Time-Shares 36

Chapter 18: Leases 37

Common Law and Leases 37

Commercial Lease Provisions 38

Appendix A: Property Condition Disclosure Statement 40

Environmental 42

Structural 43

Appendix B: Durable General Power of Attorney, New York Statutory Short Form 48

CHAPTER 1

INTRODUCTION TO THE LAW OF REAL PROPERTY

REAL PROPERTY LAW

Textbook page 2

Laws That Govern Real Property Transactions

Textbook page 2

The laws governing real property transactions in the State of New York are primarily found in the following statutes:

New York Real Property Law

New York Real Property Actions and Proceedings Law

However, it should be noted that many other New York State statutes contain provisions regarding real property and its transfer, several of which will be mentioned in this supplement. Further, case law also serves as a primary source of real property law.

Real Property versus Personal Property

Textbook page 2

Real property is narrowly defined to include “real estate, land, tenements, and hereditaments” whether tangible or intangible. NY Gen. Const. Law § 40. Personal property is broadly defined to be anything that is subject to ownership which is not real property. NY Gen. Const. Law § 39.

Physical Elements of Real Property

Textbook page 2

Water Rights

Textbook page 3

New York State follows the common law doctrine of riparian rights.

Fixtures

Textbook page 5

New York UCC 9-102(41) defines fixtures as “goods that have become so related to particular real property that an interest in them arises under real property law.”

Methods of Acquiring Ownership to Real Property

Textbook page 7

Inheritance and Devise

Textbook page 7

In New York, if an individual dies without a Will, the State provides for the manner in which property will be distributed among the decedent’s legal heirs. NY EPTL § 4-1.1. The law further provides that if a person dies without a Will and there are no identifiable legal heirs, the property escheats to the State. NY EPTL § 4-1.5.

Adverse Possession

Textbook page 7

In New York, in order to obtain real property through adverse possession, one must possess the property for 10 years if the property is privately owned and for 20 years if the property is owned by the State. NY Real Prop. Acts. Law § 511; NY CPLR §§ 211 & 212.

Ethics: Introduction

Textbook page 14

The ethical rules which govern New York attorneys are called the “Code of Professional Responsibility” and are found in the New York Judiciary Law.

CHAPTER 2

CONCURRENT OWNERSHIP

TYPES OF CONCURRENT OWNERSHIP

Textbook page 18

New York recognizes three forms of co-ownership: tenancy in common, joint tenancy with rights of survivorship, and tenancy by the entirety. It does not recognize community property laws.

Tenancy in Common

Textbook page 19

In New York, a deed to two people who are not legally married to each other creates a tenancy in common, unless otherwise indicated. NY EPTL§ 6-2.2.

Partition

Textbook page 21

Real Property Actions and Proceedings Law Article 9 provides for partition proceedings.

Tenancy by the Entirety

Textbook page 21

A transfer of real property to a husband and wife in the state of New York will create a tenancy by the entirety unless the deed clearly indicates otherwise. NY EPTL § 6-2.2.

Dower and Curtesy

Textbook page 23

New York abolished dower and curtesy rights for couples who were married after September 1, 1930, and replaced it with the Elective Share Statute discussed in the following section.

Elective Share

Textbook page 23

In New York a child can be disinherited but one spouse cannot totally disinherit the other spouse. Since 1930, a spouse in New York has had a right to “elect” against the Will of his or her deceased spouse if the decedent was a domiciliary of New York. New York EPTL §§ 5-1.1 & 5-1.1-A. The right of election is calculated upon the decedent’s gross estate plus testamentary transfers and is either the greater of fifty thousand dollars or one-third of decedent’s net estate. The elective share may be exercised by either a surviving husband or a surviving wife, irrespective of gender.

CHAPTER 3

SURVEYS AND LAND DESCRIPTIONS

In New York, several methods are utilized for the legal description of real property; the most prevalent method is the metes and bounds description.

THE SURVEY

Textbook page 37

One of the most important elements in the contract of sale or deed is an accurate description of the property. Street addresses are not legal descriptions. Not only must the buyer inspect the property she/he is purchasing, but she/he must know its exact location and size and be able to identify easements and encroachments. The buyer will want to visually note any structural changes as this could be a “red flag,” and must make sure the proper building permits and final certificate of occupancy were obtained. A survey that states “proposed dwelling” is not acceptable. Any structural changes or improvements to the property that are not shown on the existing survey may result in the buyer having to obtain a new survey. The actual dwelling and any additions should be noted in detail on the survey along with the boundaries of the property and other significant findings regarding the same.

When representing a seller in a real estate transaction, the existing survey should be reviewed as soon as possible. If the survey is complete and recently prepared, there might not be a need to have a new survey done; an “updated survey” may be sufficient. This will save the client both time and money. However, if the seller has been in the home a number of years, or there have been physical changes to the property, the client will most likely have to order a new survey. It will be up to the buyer’s attorney, lending company, and title insurance company to determine what will be considered to be an acceptable survey.

CHAPTER 4

PUBLIC REGULATIONS AND ENCUMBRANCES

PUBLIC REGULATION

Textbook page 67

Zoning

Textbook page 67

New York gives zoning powers to local government authorities. They determine the use to which a particular parcel can be put. All real property within a municipality is divided into certain zoning districts. In New York, zoning districts are usually identified by a letter of abbreviation: R (residential); C (commercial); and I (industrial). There are classifications within each of these categories, such as R-1 (single family residential) and C-1 (commercial-retail). Zoning can affect the building height, building size, type of structure, and so on. New York State and local governments also have regulations to preserve buildings in historic areas. These are called “landmark preservation districts” and owners of properties in these areas may be restricted in their ability to alter the facade or even to choose which color paint will be used.

In New York, the various levels of government have planning commissions that prepare master plans and set out zoning districts. If an area is zoned for single-family residences, there may be a reason to request a variance, that is, a right to improve property in a way not authorized by existing zoning laws and regulations. It may involve placing a building closer to the building line than previously authorized, or it may require a change form commercial use to residential use. The zoning board of the local municipality would have a public hearing after giving notice to all neighboring property owners and the board would decide whether to permit or deny the variance.

Building Codes and Subdivision Regulations

Textbook page 68

New York State, along with local governments, has specific building standards called building codes. These codes require certain materials for electrical wiring and so on. Before one can build, he or she must get a building permit from the local municipality; municipal officials will verify that the proposed building is in compliance with building codes and zoning ordinances. After the structure is built, the appropriate official will then issue a certificate of occupancy (C of O).

Environmental Protection Laws

Textbook page 68

New York State has environmental conservation laws to protect the environment. The purpose of these laws is “to conserve, improve, and protect its natural resources and environment and control water, land, and air pollution, in order to enhance the health, safety, and welfare of the people of the state and their overall economic and social well being.” NY Envtl. Conserv. Law § 1-0101. The Department of Environmental Conservation (DEC) is the New York State agency which regulates the environmental laws of New York.

Power of Eminent Domain

Textbook page 72

In New York, once the government has determined that private property is needed for a public purpose, the property owner has no choice but to sell. The process of taking private property for a public good is governed by the New York Eminent Domain Procedure Law.

Taxation

Textbook page 73

In New York, the local municipalities impose taxes on real estate and these pay for many local services such as fire, police, schools, libraries, and water and sewer districts. These taxes are imposed on real estate based upon the property’s assessment. Property is periodically re-evaluated and a uniform tax rate for the municipality is applied. More and more municipalities are moving to full assessment. The more traditional method would assess the property for a fraction of its value then the tax rate would be based on that fractional share. In full assessment, the property is assessed for its fair market value and the tax rate is based on that fully assessed amount. This is thought to be more equitable, with more valuable properties having higher taxes. Each year the property owner has a period of time to protest the assessment (i.e., file a grievance) and if the assessment is not changed, the property owner may begin a lawsuit to reduce it.

New York allows a partial exemption from property taxes for veterans and religious organizations. In addition, New York has enacted the School Tax Relief Exemption, common known as the STAR Program. NY Real Prop. Tax Law § 425. The STAR Program grants partial to full exemptions from school taxes for persons with lower incomes or persons over the age of 65.

County, city, town and village taxes are collected in January of each year; school taxes are due in September of each year. When representing a buyer in a real estate transaction, it is important to make sure that all taxes are paid to-date; otherwise, any taxes owed will become a priority lien upon the real property. Further city and county tax liens are not subject to a statute of limitations and remain valid until paid. NY Real Prop. Tax Law § 902.

PRIVATE ENCUMBRANCES

Textbook page 74

Judgment Liens

Textbook page 74

In New York State, a judgment lien is good for 10 years and can be renewed. NY CPLR § 5203. A judgment may be executed by forcing the sale of the debtor’s property.

Mechanics’ and Materialmen’s Liens

Textbook page 74

In New York, mechanics’ and materialmen’s liens are governed by the New York State Lien law.

Any contractor, subcontractor, or supplier/sub-subcontractor can file a lien on real property for services rendered or materials supplied. NY Lien Law § 3. In the State of New York, it is important to distinguish whether the work is to be (or was) performed on privately-owned real property or on public property. If the work is to be (or was) performed on private property, the lien will attach to the real property itself and will be used as a guarantee for payment. If the work is to be (or was) performed on publicly-owned property, the lien will attach to money set aside by the appropriate governmental authority for the public improvement. NY Lien Law § 5.

In New York, a notice of a mechanics’ or materialmen’s lien must contain the statutory information that follows:

1. The name and residence of the lienor (the contractor, subcontractor, or supplier); and if the lienor is a partnership or a corporation, the business address of such firm, or corporation, the names of partners and principal place of business; and if a foreign corporation, its principal place of business within the state;

2. The name and address of the lienor’s attorney, if any;

3. The name of the owner of the real property against whose interest therein a lien is claimed, and the interest of the owner as far as known to the lienor;

4. The name of the person by whom the lienor was employed, or to whom he or she furnished or is to furnish materials; or, if the lienor is a contractor or subcontractor, the person with whom the contract was made;

5. The labor performed or materials furnished and the agreed price or value thereof, or materials actually manufactured for but not delivered to the real property and the agreed price or value thereof;

6. The amount unpaid to the lienor for such labor or materials.

7. The time when the first and last items of work were performed and materials were furnished;

8. The property subject to the lien, with a description thereof sufficient for identification; and if in a city or village, its location by street and number, if known;

NY Lien Law § 9.

Once prepared, a Notice of Lien is filed in the Office of the Clerk of the county in which the real property is located. NY Lien Law § 10. The notice may be filed at any time but no later than 4 months after completion of the work or supplying of materials for a single-family dwelling and 8 months on all other properties. NY Lien Law § 10. The lien attaches immediately upon filing.

Within 30 days of filing the Notice of Lien with the appropriate county clerk, a copy of the Notice of Lien must then be served on the property owner (and, if appropriate on the contractor—if the lien was filed by a subcontractor). Within 35 days of filing the Notice of Lien, the lienor must file an affidavit of such service with the county clerk. NY Lien Law§ 11. Failure to file an affidavit of service of the Notice of Lien within the requisite time frame will be fatal to the lien. If the lienor follows the appropriate statutory requirements, the lien will be good for 1 year and may be renewed. NY Lien Law § 17.

CHAPTER 5

EASEMENTS AND LICENSES

EASEMENTS

Textbook page 96

Creation of Easements

Textbook page 96

Express Grant

Textbook page 97

Easements created by express grant in the State of New York are prepared with the same formalities required for deeds. NY Real Prop. Law § 243.

Consideration

New York does not require consideration be exchanged in the granting of an easement.

Prescriptive Easement

Textbook page 100

Similar to obtaining property via adverse possession, a prescriptive easement in the State of New York must meet the requirements of open, adverse, and notorious use for 10 years. NY RPAPL §521; Thury, et. al. v. Britannia Acquisition Corp., 292 A.D. 2d 373, 738 N.Y.S. 2d 82 (Second Dept., 2002).

CHAPTER 6

CONTRACTS

Almost all real estate transactions begin with an agreement called a contract. Contracts are used to bind the parties and may provide the basis for the purchaser obtaining a mortgage. The contract is one of the most important documents in the real estate transaction, as it dictates the contents of the “deal.” When problems arise, the parties go back to see what the contract provided for. New York requires all contracts for the sale of real property to be in writing to be enforceable. New York adopted the “plain language law” for contracts which requires that certain written agreements for the sale or lease of residential property be written in a clear and coherent manner using everyday words.

All sellers of residential real property in the State of New York (other than those exempted by statute) must provide a signed Property Condition Disclosure Statement to the buyer prior to entering into a purchase contract. If the buyer and seller then enter into a contract, the buyer must, as well, sign the statement which will be attached to the back of the purchase and sale contract. NY Real Prop. Law §§ 462, 463. The statute requires the seller to inform the buyer of the property’s condition as is known to the seller at the time of contract; in other words, the seller is not required to undertake an inspection of the real property or to search public records for information regarding the same. A copy of the statutory form of the statement is found in Appendix A of this supplement.

REQUIREMENTS OF A VALID CONTRACT

Textbook page 113

Legal Capacity to Contract

Textbook page 113

To enter into a binding contract for real estate in New York, a person must be 18 years old and of sound mind. Persons younger than 18 may enter into a valid contract, but it is voidable by the minor until a reasonable time after reaching the age of 18.

Corporations

Textbook page 114

A contract entered into by a corporation must be signed by the corporate officer as follows: XYZ Corp. by DJK, President. It is always best to get a copy of the corporate resolution authorizing the sale.

Partnerships

Textbook page 114

A general partner of a partnership in New York may enter into a contract for the partnership unless the partnership agreement provides otherwise. In general, a review of the partnership agreement should be done. It is not necessary for all of the partners to join in.

Limited Liability Companies

Textbook page 115

A member of a limited liability company in New York may enter into a contract for the company unless the operating agreement provides otherwise. A review of the operating agreement should be completed.

Personal Representatives

Textbook page 115

A fiduciary may be an executor or an administrator. The fiduciary’s authority to act should be verified.

Trustees

Textbook page 115

Trustees in New York are bound by the Prudent Investor Act which requires that they always act in the best interest of the trust and its beneficiaries. The trustee may be granted additional powers by the trust document. The document should be carefully reviewed.

Agents

Textbook page 116

New York rules governing powers of attorney are found in the New York General Obligations Law § 5-1501. The law provides that the principal must initial each power that she or he wants the attorney in fact to exercise. The principal can choose whether to grant durable powers, that is, powers which survive disability or incapacity. The power of attorney form cannot be used to authorize health care decisions for the principal. It is important to note that a power of attorney expires at the death of the principal. Therefore, a power of attorney cannot execute a deed subsequent to the owner’s death. A sample New York power of attorney is included in Appendix B of this supplement.

WRITTEN AGREEMENTS

Textbook page 118

All contracts for the transfer of real property (other than a lease for less than 1 year in duration) in the State of New York must be in writing. NY Gen. Oblig. Law § 5-703.

REAL ESTATE BROKER

Textbook page 123

The New York Secretary of State, through the Division of Licensing Services, has proscribed the laws for the employment of a real estate broker. The manual issued by the Department of State states that a real estate broker’s license does not give one the right to give legal advice or to draw up legal documents. There are standard forms for real estate transactions, but one must have legal knowledge to fill-in the blanks, to delete clauses, and to choose additional clauses. Traditionally, real estate brokers fill-in contract forms which have been approved by local bar associations.

LISTING AGREEMENTS

Textbook page 125

There are three forms of listings in New York: (1) open listing; (2) exclusive agency listing (if you, the property owner, find a buyer, you will not have to pay a commission to the broker); and (3) exclusive right to sell (if you, the property owner, find a buyer for your house or if another broker finds a buyer, you must pay the agreed upon commission to the broker). New York does not allow the use of an automatic extension of a listing agreement.

CHAPTER 7

PREPARATION AND REVIEW OF A REAL ESTATE CONTRACT

Many times an attorney’s initial notification of representation of a client in a real estate transaction occurs when the purchase and sale contract is faxed to his or her office. The attorney will generally have 5 business days to review the same and send an approval letter to the other party’s attorney.

ELEMENTS IN A REAL ESTATE CONTRACT

Textbook page 137

The Property

Textbook page 138

The property is generally identified by its common description: 121 Elm Street, Victor, New York, and by its structural features: a single family dwelling with an attached garage. The primary aim of the description is that the property in question is clearly identifiable from all other real property.

Any personal property to be included in (or excluded from) the sale should be described in detail; for example, the contract might state, “Items to be included in the sale are as follows: dining room drapery, kitchen microwave, and front porch swing; items to be excluded from the sale are as follows: dining room crystal chandelier.” The more detailed the description of such personalty, the less likely there will be confusion as to what will stay and what will go at closing.

The Method of Payment

Textbook page 139

In New York, the most common method of payment is by certified or cashier’s check at closing, made payable to the seller. If the purchaser is seeking FHA or VA financing, the contract must state that. If the purchaser is not seeking VA or FHA financing, the mortgage contingency will provide for a conventional loan.

Seller Financing

Textbook page 140

If seller takes back a mortgage, the contract should indicate who will prepare the mortgage documents.

Possession of the Property

Textbook page 142

In New York, prepossession by buyers or post-possession by sellers is somewhat common. In these situations, the attorneys generally draft a separate agreement which provides the parties with additional protections in the unfortunate event that a closing fails to occur or sellers refuse to vacate.

Closing or Settlement Documents

Textbook page 143

Generally, the contract sets a closing date which is interpreted to be “on or about” such date, and the parties normally have a reasonable period, usually 60 days, to close. Closing rarely takes place on the date called for in the contract. Further the contract will provide a location for the closing to occur. Once again, closing rarely takes place at the location specified, which is usually the county clerk’s office. The closing is more likely to occur at the lender’s attorney’s office.

Condition of the Property and Risk of Loss

Textbook page 145

New York follows the Uniform Vendor and Purchaser Risk Act, which provides that the seller (vendor) must bear the loss from destruction or a taking by eminent domain which occurs before the title passes to the purchaser or the purchaser takes possession, whichever is earlier. NY Gen. Oblig. Law § 15-1311.

Time Is of the Essence

Textbook page 149

As stated previously, a real estate closing rarely, if ever, takes place on the date indicated in the contract. However, if the contract or some later memorandum states “time is of the essence,” then the closing date is crucial and the contract must be performed on or before that date. Whoever refuses to close on or before the specified date is in default and liable for damages. Zahl v. Greenfield, 162 A.D. 2d 449, 556 N.Y.S. 2d. 393 (Second Dept., 1990). This type of clause could penalize either side and should be used with caution.

Contingencies

Textbook page 150

Contract clauses that are conditional, such as one conditioned on the purchaser obtaining a mortgage commitment, are truly “escape” clauses for the buyer. The seller always wishes to limit these. In New York, many contracts are sold “subject to” a satisfactory engineer’s report, termite report, septic report, water report, or radon report. These conditions normally must be satisfied within a short period, that is, the purchaser has 2 weeks to obtain such reports and notify the seller if they are acceptable.

Execution

Textbook page 152

In New York, signatures of the buyer and seller on real estate contracts are customarily witnessed.

CHAPTER 8

DEEDS

TYPES OF DEEDS

Textbook page 204

Commonly, deeds in the State of New York are known as:

1. Deed with Full Covenants (General Warranty Deed)

New York employs the same six covenants men tioned in the main text.

2. Bargain and Sale Deed (Limited Warranty Deed)

3. Quitclaim Deed

4. Executor’s Deed

5. Referee’s Deed in Foreclosure

6. Referee’s Deed in Partition

BASIC REQUIREMENTS OF A VALID DEED

Textbook page 207

The requirements for a valid deed in New York are:

1. Identifiable grantor and grantee;

2. Recital of consideration (generally the consideration mentioned in the deed is not actual but a nominal amount such as $10.00);

3. Granting clause (using words of conveyance, such as “I hereby grant, covenant and demise”);

4. Proper designation of the real property in question (generally the legal description of the same); and

5. Signature and acknowledgement of the grantor.

NY Real Prop. Law § 291; NY Real Prop. Law § 243; Cohen v. Cohen, 188 A.D. 933, 176 N.Y.S. 893 (Second Dept., 1919); McGurl v. Burns, 192 Misc. 1045, 81 N.Y.S.2d 51 (Supreme Ct., Kings Co., 1948).

If the deed is to be recorded in the appropriate county clerk’s office, it must contain the addresses of both the grantor and the grantee. NY Real Prop. Law § 333. Finally, in order to properly transfer the property, the deed must be delivered to the grantee and the grantee must accept the same. Diamond v. Wasserman, 8 A.D.2d 623, 185 N.Y.S.2d 411 (Second Dept., 1959).

CHAPTER 9

FINANCING SOURCES IN REAL ESTATE TRANSACTIONS

TYPES OF LOANS

Textbook page 239

Along with the various types of loans mentioned in the main text, the State of New York Mortgage Agency (SONYMA) is an important source of money for New York homebuyers. SONYMA’s sale of tax-exempt and taxable bonds allows it to finance mortgages for qualified New York homebuyers at a lower interest rate and with a lower down payment than would otherwise be available to them. Homebuyers must not exceed income guidelines and the property in question must not exceed certain predefined limits. This program is generally available to first-time homebuyers or those buying in qualified areas within the state.

Further information about SONYMA’s programs can be found on its Web site: http//:sony/sonyma.html.

____________

PERMANENT AND CONSTRUCTION LOANS

Textbook page 241

Payment Plans

Textbook page 242

New York recognizes “reverse” mortgages. NY Banking Law § 6-h; NY Real Prop. Law § 280; NY Real Prop. Law § 280-a. These mortgages do not amortize, but are future advances of principal and deferred interest. The loan generally matures when the borrower dies. This allows the elderly to get access to equity that has built up in their home and enables them to live more comfortable lives. The homeowner gets a monthly payment. With each payment, the debt rises and interest is deferred until the loan is paid off.

CHAPTER 10

LEGAL ASPECTS OF REAL ESTATE FINANCE

MORTGAGES, DEEDS OF TRUST, AND SECURITY DEEDS

Textbook page 266

New York recognizes mortgages, deeds of trust, and security deeds.

Cancellation or Satisfaction of Mortgage

Textbook page 271

Once a mortgage has been paid in full, the mortgagee must sign a satisfaction of mortgage, deliver the same to the mortgagor, and file it in the appropriate county clerk’s office. NY Real Prop. Law § 275.

FORECLOSURE AND OTHER MORTGAGE REMEDIES

Textbook page 273

Types of Foreclosure

Textbook page 273

New York recognizes both judicial foreclosures and power of sale foreclosures; however, the former is the more widely used method as there are strict limitations on the latter. NY Real Prop. Acts. §§ 13 & 14.

After a default on the payment of the debt the mortgage secures, the mortgagee may foreclose. A lawsuit is commenced against the defaulting party. Further, any other interested parties (tenants, secondary mortgagors, mechanic lienors, etc.) must be brought into the lawsuit as proscribed by statute. NY Real Prop. Acts. § 1311. They are served with a summons and complaint, and the parties are given an opportunity to raise any defenses.

If the defendant does not submit an answer within the proscribed statutory time frame, he or she will be in default. If the defendant does submit an answer or otherwise appear in the action within the requisite time, the case will proceed to trial. Whether there is a default or the plaintiff prevails at trial, the court will enter a judgment of foreclosure and sale and direct that the mortgaged premises be sold to satisfy the debt. NY Real Prop. Acts. § 1351.

In New York, a judicial foreclosure requires a Notice of Sale to be published once a week for 4 successive weeks or twice a week for 3 consecutive weeks in a newspaper in the county where the property is located. NY Real Prop. Acts. § 231. The statute’s requirements regarding publication are exact and must be followed accurately. At the foreclosure sale, the court appointed referee will conduct the sale by reading the terms of sale out-loud. NY Real Prop. Acts. § 231. The lender may bid on the amount outstanding on its loan, and the highest bidder will prevail. After the sale, the court appointed referee will execute a Referee’s Deed. NY Real Prop. Acts. § 1353. If, at the foreclosure sale, the debt is not paid off, the lender may get a deficiency judgment for the balance, provided the sale results in less money than the judgment in foreclosure. NY Real Prop. Acts. § 1371. The purchaser at a foreclosure sale takes title clear of any claims of the parties to the foreclosure action. NY Real Prop. Acts. § 1353.

Power of Sale Foreclosure

Textbook page 274

In 1998 New York adopted the power of sale form of foreclosure. However, because of the absence of judicial oversight, this form of foreclosure has strict statutory requirements which must be followed precisely in order to assure the mortgagee that the sale will not be invalidated. NY Real Prop. Acts. Article 14.

A power of sale foreclosure is not available to most mortgages securing residential real property as provided in the following statutory section:

(a) a residential building containing less than six dwelling units, including structures and improvements appurtenant thereto, or

(b) a residential condominium unit in a residential building owned in a condominium form of ownership, or

(c) a residential building, including structures and improvements appurtenant thereto, owned by a qualified cooperative apartment corporation, or

(d) a building located in a city with a population of one million or more where the number of units occupied by residential tenants is equal to or greater than sixty-five per centum of the total number of units in the building, containing a provision that, upon a default of the mortgage, or the note, bond, or other obligation secured thereby, the mortgagee shall have the right to sell the mortgaged property.

NY Real Prop. Acts. § 1401.

Effect of a Valid Foreclosure Sale

Textbook page 274

The right of redemption is extinguished upon the sale of property at foreclosure and the successful bidder owns the property. NY Real Prop. Acts. §§ 1352 & 1410.

CHAPTER 11

MORTGAGE FORMS AND PROVISIONS

Security Agreement and Financing Statement

Textbook page 340

If the Uniform Commercial Code-1 (UCC-1) Statement is filed as a fixture filing, it will be filed in the appropriate county clerk’s office where the real property to which it refers is located. However, if the UCC-1 Statement is not to be filed as a fixture filing, it must be filed with the Secretary of State located in Albany. NY UCC § 9-501.

CHAPTER 12

TITLE EXAMINATIONS

BONA FIDE PURCHASER FOR VALUE RULE

Textbook page 358

In New York, all instruments affecting the chain of title must be recorded in the appropriate county clerk’s office or be void as to any subsequent bona fide purchaser for value. NY Real Prop. Law §§ 266 & 291; Doyle v. Lazzaro, 33 N.Y. 2d 981, 309 N.E. 2d 138, 353 N.Y.S. 2d 740 (1974).

Recording Statutes

Textbook page 360

New York is a “race-notice” jurisdiction. Priority is established by the date of recording, not the date on the deed or document. Therefore, it is important that all documents are recorded promptly. NY Real Prop. Law §§ 291 & 317.

Practice Tips for Ordering a Title Examination

Textbook page 362

While it is best to order a title examination as soon as possible, this is usually not done until the client obtains a mortgage commitment. At the closing, the title agent calls in to make certain there are no changes in the quality of title. New York title companies insure the gap between the closing and the recording of the instruments.

Information Needed to Do an Examination

Textbook page 363

Along with the information needed to order a title examination suggested by the main text, many New York counties require owners to have a document called an “Abstract of Title.” An Abstract is a certified compilation of the documents recorded at the appropriate county clerk’s office which affect the premises. An Abstract is created by searching the county clerk’s office records and must begin with a warranty deed. Attorneys examine the Abstract of Title to determine the status of the title to the premises. An Abstract is updated or continued each time a transaction occurs with respect to the premises. Either attorneys or title insurance companies may prepare updates of the Abstract of Title.

EXAMINING TITLE TO REAL PROPERTY

Textbook page 364

Period of Examination

Textbook page 364

In New York, a search usually goes back 40 to 60 years. If a problem is discovered with the title, it may go back even further. The search will begin in either the grantor/grantee index or the lot and block index, depending on the county being searched.

Other Things to Examine

Textbook page 366

Judgments

Textbook page 366

Money judgments in New York are good for 20 years. NY CPLR § 211. The title company does an update of the title search up to the time that title closes to make sure that no last minute judgments have been filed.

Probate Court Records

Textbook page 368

Probate Court is called “Surrogate’s Court” in New York.

Role of a Legal Assistant and Practice Tips

Textbook page 376

A legal assistant will generally order, and may conduct, the title search at the county clerk’s office; however, the actual title examination will be done by the attorney.

CHAPTER 13

TITLE INSURANCE

OWNER’S POLICY

Textbook page 383

In New York, when a mortgagee title insurance policy is being issued, all borrowers must be notified that they have the right to purchase an owner’s title insurance policy which equals the amount of the market value of the property in question at the time of the discovery of the title defect. NY Ins. Law § 6409 (c).

COMMITMENTS FOR TITLE INSURANCE

Textbook page 397

After the commitment, but no later than the closing, the title company runs a “continuation” search to make sure there are no new judgments or liens affecting the premises. In New York, the legal assistant reviews the title report and makes sure all the exceptions can be satisfied prior to or at closing.

In the New York City area, law firms do not generally act as title agents. In upstate New York, attorneys often act as agents for title insurance companies and prepare the title insurance binder, handle the recording of closing documents, mark up the title binder at closing, and then issue the final policy, post-closing.

CHAPTER 14

REAL ESTATE CLOSINGS

Closing, settlement, transfer of title—all of these refer to the day the buyer pays the entire purchase price and gets a deed. All the promises made in the contract must be completed. The deed is exchanged for money. Usually the mortgage loan closes at the same time as the transfer of title.

Customarily, closings take place at the lending institution or the office of the seller’s attorney, but it can be anywhere the parties agree. Attendees generally include the bank representative and/or bank attorney, buyer and seller, their respective attorneys, and, on occasion, the real estate brokers.

Within 24 hours prior to the closing, the buyer generally will check the premises with a thorough “walk-through.”

CONTACT WITH SELLER, PURCHASER, AND BROKER BY THE LEGAL ASSISTANT

Textbook page 442

The legal assistant is the lifeline of any real estate closing. He or she will make contact with the client, determine and prepare whatever documents are needed for the closing, track down all needed information, and coordinate the date and time of closing with the attorney, the client, and all other parties involved.

Ordering the Title Examination

Textbook page 446

In New York, once the parties know the deal is firm, that is, the mortgage commitment has been obtained, the seller’s attorney orders the title search performed and an updated Abstract of Title to be prepared, both of which will then be forwarded to the buyer’s attorney.

Ordering the Survey

Textbook page 448

The seller will be responsible for ordering the survey. However, the buyer must inform the seller as soon as possible as to whom the certifications on the survey must be made. Generally, the certifications are made to the buyers, the buyers’ attorney, and the mortgage company. This way, if the survey is not accurate, the named individuals to whom the survey was certified can proceed against the surveyor. If there is already a complete survey of the property, the purchaser and or mortgagee may be satisfied with an updated survey, which can be obtained for a lower fee than a brand new survey.

Ordering Hazard and Fire Insurance

Textbook page 448

If the buyer is to obtain a loan for the real property, the mortgage company will require proof of paid hazard and fire insurance on the real property at the time of closing in the form of an insurance binder.

Obtaining the Termite Clearance Letter or Bond

Textbook page 449

In the State of New York, there is no requirement that the seller produce a termite clearance letter or bond.

Satisfaction of Loans and Liens

Textbook page 449

It is a good idea to obtain a recent mortgage statement from the seller which will contain the lender’s name and telephone number, as well as the account number and approximate outstanding balance. This information will be helpful for requesting a “payoff” letter.

If there are unpaid taxes, they will need to be satisfied. If there are judgments of record, check to see if they are against the seller. They may simply be judgments against a party by the same name, that is, there are many Sarah Smiths in the area. If they are not against the seller, the title company will take an affidavit to that effect. If they are against the seller, they must be satisfied and paid prior to or at the closing.

THE CLOSING AND AFTERMATH

Textbook page 462

Once the closing date is set, the legal assistant must then begin determining the financial adjustments to be made to the purchase price. This is done on a “closing statement.”

The closing statement is one of the most important documents prepared for the closing (secondary to the deed, note, and mortgage) because it contains all the financial information for the transaction. Approximately 1 to 2 days prior to closing, the legal assistant for the seller and the legal assistant for the buyer will review the “numbers” for closing. That is, they will make sure that all credits have been made to their respective clients, they will prorate any outstanding costs, and they will insure they have an identical dollar amount to be paid by the buyer for the seller at closing. The buyer must then be advised to bring a certified check or money order to the closing in that amount.

On the date of closing, the legal assistants for the buyer and the seller should make sure the file is ready for the attorney, with all necessary paperwork. Further, there should be several blank checks included in the file in the event that the attorney must make disbursements on behalf of the client.

After the closing, any checks made payable to the attorney or law firm must be deposited as soon as possible in the appropriate account. Further, the legal assistant will prepare a formal closing statement to be mailed to the client.

CHAPTER 15

GOVERNMENT REGULATION OF REAL ESTATE CLOSINGS

The information contained in the main text is applicable in the State of New York.

CHAPTER 16

REAL ESTATE CLOSING FORMS AND EXAMPLES

Law firms tend to have their own personalized affidavits which are used to satisfy the legal requirements for the closing. In addition, the New York State Bar Association publishes Residential Real Estate Forms, which is available for purchase. The residential real estate practice forms have a complete selection of real estate documents (see Practice Forms). You can find more information regarding the same at .

CHAPTER 17

CONDOMINIUMS AND COOPERATIVES

Beginning in the 1970s, in New York, many owners of buildings decided to change the ownership of these buildings and convert them to condominiums or cooperatives. To do this, the sponsor (generally the property owner) prepares an offering plan which must follow in detail the regulations prescribed by the New York State Attorney General and the New York General Business Law. A copy of this proposal is then submitted to each tenant and the New York State Attorney General for review.

Once the Attorney General decides it is in compliance, the proposal is accepted for filing. The sponsor then issues a “black book” (black lettering on the cover) and the sponsor can begin to sell apartments. The building can be converted according to an “eviction” or “noneviction” plan. In an eviction plan, 51% of the tenants must purchase their units. Once 51% of the tenants purchase, the other tenants can be evicted after 3 years (the elderly and disabled are exempt form eviction by statute). If the sponsor decides to offer a noneviction plan (which is the much more prevalent form today), the sponsor must sell only 15% of the apartments for the plan to be effective. Under this plan, no tenants can be evicted.

NY Gen. Bus. Law § 352-eeee.

TIME-SHARES

Textbook page 568

When a time-share is offered for purchase in the State of New York, the promoter of the time-share must provide a buyer of the same with written disclosure of all restrictions and stipulations of such contract for sale within 5 business days of the date of the agreement. The contents of such disclosure are mandated by statute. Upon receipt of the written disclosure of the parties’ agreement, the buyer will have 3 days to rescind his or her consent to the same. NY Gen. Bus. Law § 157-a

CHAPTER 18

LEASES

COMMON LAW AND LEASES

Textbook page 596

Leases are contracts between the landlord and tenant. Most residential leases are uniform; landlords use preprinted form and add riders if necessary. All residential leases in New York must be:

1. Written in a clear and coherent manner using words with common and every day meanings;

2. Appropriately divided and captioned by its various sections. NY Gen. Ob. Law § 5-702(a).

The rights of tenants in New York State are protected under many different laws. The Multiple Dwelling Law (three or more apartments) applies to cities with a population of 325,000 or more. NY Mult. Dwelling Law § 3(1). The Multiple Residents Law applies to “all cities of less than three hundred twenty-five thousand population and to all towns and villages.” NY Mult. Res. Law § 3(1).

Every residential lease in New York contains an implied warrant of habitability, that is, the tenant is entitled to a safe and livable apartment. NY Real Prop. Law § 235-b. The failure to provide heat, hot water, or to get rid of insect infestations are examples of violations of the warranty of habitability. If the landlord breaches this warranty, the tenant can sue for a rent reduction.

In New York, a lease may not restrict occupancy to just the named tenant. In residential buildings use may include the named tenant, his immediate family, and one other person. NY Real Prop. Law § 235-f. In 1989, the New York State Court of Appeals extended the definition of “family” in a lease to include those who, although they are not related by blood or by law, have a special relationship characterized by emotional and financial interdependence. Braschi v. Stahl Associates Co., 74 N.Y.2d 201, 543 N.E.2d 49, 544 N.Y.S.2d 784 (1989).

Rent Control

New York City and other select locations around the State of New York have rent control and rent stabilization laws which are found under the Real Property Laws of the State of New York. These laws impose guidelines and limits to the amount of rent charged, as well as govern the rights and obligations of the tenants and landlords. Rent regulation is administered by the State Division of Housing and Community Renewal (DHCR).

In New York City, rent control laws arose because of the housing shortage that followed World War II, and they generally affect properties that were built before 1947. When an apartment is vacated, it moves under the rent stabilization laws or is completely removed from the rent control and stabilization laws.

Rent stabilization laws also apply to New York City dwellings and arose due to a shortage of affordable rental apartments. The law attempts to balance the needs of the landlord and tenant and generally affects buildings constructed between February 1, 1947 and January 1, 1974.

Outside New York City, rent stabilization applies to communities that adopted the Emergency Tenant Protection Act (ETPA). Where rent stabilization is in effect, maximum rent increases are set by the local rent stabilization boards.

More information on rent control/rent stabilization laws can be found on the Web at .

New York State Law prohibits discrimination in real estate transactions. A landlord may not refuse to lease property because of race, creed, color, national origin, age, sex, disability, marital status, or presence of children. NY Exec. Law § 236. Owners of two-family homes who live in one of the units are exempt. NY Exec. Law § 236.

In New York, security deposits are considered trust funds which must be put in an interest-bearing account. They cannot be commingled with the owner’s funds. NY Gen. Oblig. Law § 7-103.

COMMERCIAL LEASE PROVISIONS

Textbook page 596

Landlords’ Remedies for Tenant’s Default

Textbook page 605

The following information applies to both residential and commercial lease proceedings.

When a tenant breaches any lease provision, the landlord may sue. If the landlord breaches a lease provision, the tenant may similarly sue. In New York, the bases for which landlords can sue include nonpayment of rent, illegal use of premises, remaining in possession after the lease ends, and bankruptcy of the tenant. NY Real Prop. Acts. § 711. In order to evict a tenant the landlord must commence an eviction proceeding known as a “summary proceeding.” The law which governs such actions is found in the New York Real Property Actions and Proceedings Law.

There are two different lawsuits that can be brought and each requires notice to the tenant prior to commencing the lawsuit: (1) nonpayment action, where the landlord seeks to get the rent due; and (2) holdover proceedings, where the goal is to evict the tenant.

The tenant may have some defenses to an eviction proceeding, for example, if there are building code violations (after they have been reported and inspected), failure to provide heat, breach of warranty of habitability, or constructive eviction (if premises are not habitable).

Assignments, Subletting, or Mortgaging of the Leased Premises

Textbook page 611

Generally, the lease says the tenant may assign or sublease with the landlord’s consent. New York Real Property Law has detailed requirements that a tenant must follow to make a written request to sublet or assign. NY Real Prop. Law § 226-b.

APPENDIX A

PROPERTY CONDITION DISCLOSURE STATEMENT

Name of Seller or Sellers:

Property Address:

The property condition disclosure act requires the seller of residential real property to cause this disclosure statement or a copy thereof to be delivered to a buyer or buyer’s 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 tests and the buyer is encouraged to obtain his or her own independent, professional inspections and environmental tests and also is encouraged to check public records pertaining to the property.

A knowingly false or incomplete statement by the seller on this form may subject the seller to claims by the buyer prior to or after the transfer of title. In the event that a seller fails to perform the duty prescribed in this article to deliver a disclosure statement 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 five hundred dollars against the agreed upon purchase price of the residential real property.

“Residential real property” means real property improved by a one- to four-family 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 shall not refer to (a) unimproved real property upon which such dwellings are to be constructed, or (b) condominium units or cooperative apartments, or (c) property on a homeowners’ association that is not owned in fee simple by the seller.

Instructions to the seller:

(a) Answer all questions based upon your actual knowledge.

(b) Attach additional pages with your signature if additional space is required.

(c) Complete this form yourself.

(d) If some items do not apply to your property, circle “na” (non-applicable). if you do not know the answer circle “unkn” (unknown).

Seller’s statement: the seller makes the following representations to the buyer based upon the seller’s actual knowledge at the time of signing this document. The seller authorizes his or her agent, if any, to provide a copy of this statement to a prospective buyer of the residential real property. The following are representations made by the seller and are not the representations of the seller’s agent.

General information

1. How long have you owned the property?

2. How long have you occupied the property?

3. What is the age of the structure or structures? Note to buyer—if the structure was built before 1978 you are encouraged to investigate for the presence of 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 stated in documents available in the public record, such as rights to use a road or path or cut trees or crops?

Yes No Unkn NA

5. Does anybody else claim to own any part of your property?

Yes No Unkn NA (If yes, explain below)

6. Has anyone denied you access to 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 landowners or a homeowners association, such as walls, fences, or driveways?

Yes No Unkn NA (If yes, 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—In 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 released on the 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, fertilizers, pesticides, and insecticides; paint including paint thinner, varnish remover, and wood preservatives, and treated wood, construction materials 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—If contamination of this property from petroleum products and/or hazardous or toxic substances is a concern 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 (If yes, explain below)

11. Is any or all of the property located in a designated wetland?

Yes No Unkn NA (If yes, 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 site 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 if yes, are they currently in use? Yes no unkn na if yes, where are their location(s)? Are they leaking or have 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 (If yes, attach a copy of the 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 (If yes, describe below)

19. Has the property been tested for the presence of motor fuel, motor oil, 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))

STRUCTURAL

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 termite, insect, rodent, or pest infestation 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 roof/roof covering (slate, asphalt, other)? Any known material defects? How old is the roof? Is there a transferable warrantee on the roof 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 and services

26. What is the water source (circle all that apply) well, private, municipal, other? If municipal, is it metered?

Yes No Unkn NA

27. Has the water quality and/or 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?

If 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 explain below)

31. Does the basement have seepage that results in standing water?

Yes No Unkn NA (if yes, explain below)

Are there any known material defects in any of the following:

(if yes, explain below. Use additional sheets if necessary)

32. Plumbing system?

Yes No Unkn NA

33. Security system?

Yes No Unkn NA

34. Carbon monoxide detector?

Yes No Unkn NA

35. Smoke detector?

Yes No Unkn NA

36. Fire sprinkler system?

Yes No Unkn NA

37. Sump pump?

Yes No Unkn NA

38. Foundation/slab?

Yes No Unkn NA

39. Interior walls/ceilings?

Yes No Unkn NA

40. Exterior walls or siding?

Yes No Unkn NA

41. Floors?

Yes No Unkn NA

42. Chimney/fireplace or stove?

Yes No Unkn NA

43. Patio/deck?

Yes No Unkn NA

44. Driveway?

Yes No Unkn NA

45. Air conditioner?

Yes No Unkn NA

46. Heating system?

Yes No Unkn NA

47. Hot water heater?

Yes No Unkn NA

48. The property is located in the following school district __________

Yes No Unkn NA

Note: The buyer is encouraged to check public records concerning the property (e.g. tax records and wetland and flood plain maps)

The seller should use this area to further explain any previous item. If necessary, attach additional pages and indicate here the number of additional pages attached.

Seller’s 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 residential real property acquires knowledge which renders materially inaccurate a property condition disclosure statement provided previously, the seller shall deliver a revised property condition 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 _________________

Seller___________________________________________ date _________________

Buyer’s acknowledgment: buyer acknowledges receipt of a copy of this statement and buyer understands that this information is a statement of certain conditions and information concerning the property known to the seller. It is not a warranty of any kind by the seller or seller’s 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.

Buyer___________________________________________ date _________________

Buyer___________________________________________ date _________________

APPENDIX B

DURABLE GENERAL POWER OF ATTORNEY,

NEW YORK STATUTORY SHORT FORM

THE POWERS YOU GRANT BELOW CONTINUE TO BE EFFECTIVE

SHOULD YOU BECOME DISABLED OR INCOMPETENT

CAUTION: This is an important document. It gives the person whom you designate (your “agent”) broad powers to handle your property during your lifetime, which may include powers to mortgage, sell, or otherwise dispose of any real or personal property without advance notice to you or approval by you. These powers will continue to exist even after you become disabled or incompetent. These powers are explained more fully in New York General Obligations Law, article 5, title 15, sections 5-1502a through 5-1503, which expressly permit the use of any other or different form of power of attorney.

This document does not authorize anyone to make medical or other health care decisions. You may execute a health care proxy to do this.

If there is anything about this form that you do not understand, you should ask a lawyer to explain it to you.

THIS is intended to constitute a DURABLE GENERAL POWER OF ATTORNEY pursuant to Article 5, Title 15 of the New York General Obligations Law:

I, ______________________________ (insert your name and address) do hereby appoint:

__________________________________________________________________.

(If one person is to be appointed agent, insert the name and address of your agent above.)

__________________________________________________________________

__________________________________________________________________

__________________________________________________________________

__________________________________________________________________

(If two or more persons are to be appointed agents by you insert their names and addresses above.)

my attorney(s)-in-fact TO ACT

(If more than one agent is designated, CHOOSE ONE of the following two choices by putting your initials in ONE of the blank spaces to the left of your choice.)

( ) Each agent may SEPARATELY act.

( ) All agents must act TOGETHER.

(If neither blank space is initialed, the agents will be required to act TOGETHER.)

IN MY NAME, PLACE AND STEAD in any way which I myself could do, if I were personally present, with respect to the following matters as each of them is defined in Title 15 of Article 5 of the New York General Obligations Law to the extent that I am permitted by law to act through an agent:

(DIRECTIONS: Initial in the blank space to the left of your choice any one or more of the following lettered subdivisions as to which you WANT to give your agent authority. If the blank space to the left of any particular lettered subdivision is NOT initialed, NO AUTHORITY WILL BE GRANTED for matters that are included in that subdivision. Alternatively, the letter corresponding to each power you wish to grant may be written or typed on the blank line in subdivision “(Q),” and you may then put your initials in the blank space to the left of subdivision “(Q)” in order to grant each of the powers so indicated)

( ) (A) real estate transactions;

( ) (B) chattel and goods transactions;

( ) (C) bond, share, and commodity transactions;

( ) (D) banking transactions;

( ) (E) business operating transactions;

( ) (F) insurance transactions;

( ) (G) estate transactions;

( ) (H) claims and litigation;

( ) (I) personal relationships and affairs;

( ) (J) benefits from military service;

( ) (K) records, reports, and statements;

( ) (L) retirement benefit transactions;

( ) (M) making gifts to my spouse, children and more remote descendants, and parents, not to exceed in the aggregate $10,000 to each of such persons in any year;

( ) (N) tax matters;

( ) (O) all other matters;

( ) (P) full and unqualified authority to my attorney(s)-in-fact to delegate any or all of the foregoing powers to any person or persons whom my attorney(s)-in-fact shall select;

( ) (Q) each of the above matters identified by the following letters:

________________________________________________________

(Special provisions and limitations may be included in the statutory short form durable power of attorney only if they conform to the requirements of section 5-1503 of the New York General Obligations Law.)

________________________________________________________

________________________________________________________

________________________________________________________

This durable Power of Attorney shall not be affected by my subsequent disability or incompetence.

If every agent named above is unable or unwilling to serve, I appoint ____________________________________ (insert name and address of successor) to be my agent for all purposes hereunder.

To induce any third party to act hereunder, i hereby agree that any third party receiving a duly executed copy or facsimile of this instrument may act hereunder, and that revocation or termination hereof shall be ineffective as to such third party unless and until actual notice or knowledge of such revocation or termination shall have been received by such third party, and i for myself and for my heirs, executors, legal representatives and assigns, hereby agree to indemnify and hold harmless any such third party from and against any and all claims that may arise against such third party by reason of such third party. This durable general power of attorney may be revoked by me at any time.

In Witness Whereof I have hereunto signed my name this _________ day of _______________, 200__.

YOU SIGN HERE: _______________________________________________

(Signature of Principal)

(ACKNOWLEDGEMENT)

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