NYSBA Ethics Opinion 882 (10/14/2011)

Topic: Lawyer’s participation in residential real estate transaction that includes both a “seller’s concession” and an equivalent “gross-up” in the sales

price

 

Digest: If the sales price in a residential real estate transaction has been “grossed-up” in exchange for a “seller’s concession,” all transaction documents containing the grossed- up sales price must disclose that the sales price has been increased by a sum equal to the seller’s concession. Rules: 8.4(c).

“…in a residential real estate transaction where the sales contract, the HUD-1 Settlement Statement, the transfer tax return and any other documents that contain the sales price [shall] each contain the following statement (or a substantially similar statement): “The sales price has been increased by a sum equal to the seller’s concession.”

 

Read the entire opinion here.

Accusations of Fraudulent Mortgage Documents Led Citigroup to Settle With Homeowners – ProPublica

Take this case in New York, in which Citigroup‘s mortgage unit, Citimortgage, filed this proof of claim. Both the promissory note and the mortgage produced were agreements between the borrower, Replique D’Amelio, and the lender, Home Loan Center. Citimortgage also included an assignment of mortgage, dated June 24, 2010, to prove that ownership of the mortgage had been transferred to Citimortgage. The homeowner’s attorney objected, however, questioning the validity of the mortgage assignment and noting that bankruptcy proceedings had started June 2, 2010–before the supposed transfer of ownership was executed. “The assignment of mortgage is an attempt to perfect a lien after the commencement of the case and therefore is voidable by this Court,” attorney Linda Tirelli argued in a motion objecting to Citimortgage’s proof of claim. Rather than produce an original assignment to prove its claim, the company chose to settle.

Read full text of ProPublica Article.

Related articles

• Accusations of Fraudulent Mortgage Documents Led Citigroup to Settle With Homeowners (propublica.org)

 

FAMILY FEUDS: A James Island lawsuit illustrates the danger of waiting to resolve who owns family land

David Savage, a Charleston lawyer, took care when he, his wife Lisa and other family members bought 4.3 undeveloped acres on the eastern edge of the property in 1996. Savage and his wife lived about a mile away and thought the property would make a nice investment, and a nice place for a new home one day.

Savage even required the sellers to arrange for an archaeological survey. He noted that the Pinckney family previously sold the 4.3 acre tract to another set of buyers in 1966, and no one said anything at that time.

Still, when the lawsuit arose, Savage put his title insurance company and others on notice. “I didn’t have a sense of peace,” he said. “Worry doesn’t get you anywhere … (but) the fear was, ‘Hey, I might lose my household.’ “

“I knew somebody was going to be sadly disappointed, but there was nothing else I could have done,” he said.

Read entire article in the Post & Courier

NYLJ: Lender Did Not Demonstrate That Homeowner Had Been Given Proper Notice, Complaint Rife With Errors

Bank of America v. Satnarine Maharaj, 5804-2010

This application is replete with inconsistent and inaccurate proofs concerning the type of loan at issue and whether or not RPAPL $1304 was, in fact complied with. This application is an example of the scores of prior applications for orders of reference from plaintiffs counsel in this action, as well as from plaintiff-banks’ attorneys in general, in which a lack of attention to detail leave this Court and, no doubt, courts throughout the State, the unenviable and overwhelming task of closely scrutinizing hundreds and thousands of foreclosure motions to effectuate the legislative protections afforded to homeowners in the throes of foreclosure. While the sheer volume of foreclosure filings themselves are enough to overwhelm the courts, the poorly and inaccurately drafted applications for orders of reference have an exponentially burdensome effect upon on the courts.

Since the only proper evidentiary proof in this case indicates that the defendant was entitled to a 90-day notice pursuant to RPAPL 5 1304 prior to commencement of this action, and since the plaintiff has failed to submit proper evidentiary proof of compliance with such pre-commencement requirements, the application for an order of reference is denied and the action is dismissed.

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Read full text of Decision from Suffolk Co. Supreme Ct. here.

 

NYLJ: Judge Finds Numerous Untrue Statements in Bank’s Complaint in Foreclosure Action

J.P. Morgan Chase Bank N.A. v. Jonathan Austern, 2009-24711

Even the most cursory examination of the documents before the Court demonstrate that some, if not virtually all of the statements in Plaintiff’s complaint are grossly inaccurate and untrue. The Court cannot speculate upon the veracity, or lack thereof, of Plaintiff’s submissions and cannot determine, at this juncture, whether Plaintiff’s counsel has been cavalier with the truth or merely grievously careless.

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Full Text of Supreme Court, Suffolk Co. Decision.

 

NYLJ: Title Abstracts and Public Documents Now Taxable

Title Abstracts and Public Documents Now Taxable

Joseph Lipari and Debra Silverman Herman
New York Law Journal September 17, 2010

The TSBM explains that to better reflect controlling judicial case law, the tax department is reversing its prior correspondence that indicated that sales of abstracts of title (condensed history of title to a particular piece of real estate) were not subject to sales tax. Therefore, on or after Sept. 1, 2010, sales of an abstract of title to either a prospective purchaser of real property or to an attorney who uses the abstract in connection with an opinion of title are taxable information services.

Notably, the TSBM concluded that a title search conducted by an attorney is exempt as the provision of legal services. While abstracts of title do reflect raw data, and therefore represent the type of information the sales tax law intended to be taxed as an information service, they are often used to prepare policies of title insurance. Difficult issues arise when the sale of the abstract is in connection with the sale of title insurance, since insurance is not subject to sales tax.

Read entire article (free registration required)

Download pdf of TSB-M-10(7)S

NYLJ: Panel Rejects Oneida Bid for Compensation For Upstate Land

U.S. Court Of Appeals, Second Circuit

Panel Rejects Oneida Bid for Compensation For Upstate Land

Oneida Indian Nation of New York, Oneida Tribe of Indians of Wisconsin, Oneida of The Thames—Plaintiffs-Appellees-Cross-Appellants, United States of America —Intervenor-Plaintiff-Appellee-Cross-Appellant, v. County of Oneida, County of Madison—Defendants-Cross-Appellees, State of New York—Defendant-Appellant-Cross-Appellee, 07-2430-cv(L), 07-2548-cv(XAP), 07-2550-cv(XAP) (full text of Decision)

The Oneida Indian Nation lost a major court decision Monday that could doom its 40-year-old land claim case. The 2nd U.S. Circuit Court of Appeals in Manhattan ruled that the nation can’t reclaim its ancient lands and the state doesn’t have to pay any money for the 250,000 acres the Oneidas say was illegally taken from them centuries ago. The Oneidas had said they were owed at least $500 million. If the ruling stands, it sweeps away decades of uncertainty for thousands of landowners in Oneida and Madison counties, who at one point faced eviction under the lawsuit.

(See full article- The Post- Standard [Syracuse])

Calls for State Insurance Threaten Property Transfers

Wednesday, April 14, 2010
By Adam Leitman Bailey and Dov Treiman

Adam Leitman Bailey, founding partner of Adam Leitman Bailey, P.C., and Dov Treiman, a partner at the firm, write:

Currently before the State Legislature are two bills that would inject the state in the business of title insurance, damaging New York’s standing as the capital of real estate transactions. One would broaden the power of the State Insurance Fund to provide a State alternative to the current private system of title insurance. The other would create a new state title authority for the same purpose. Many real estate attorneys see these bills as a threat, both to the heart of the safe transfer of real estate and to the capitalist system itself.

Read the full text of this article here.

Official New HUD-1 Fill-in Form

For those who may have difficulty in accessing or using the Scribd form below:

HUD has moved its new official fill-in form from a separate page to its complete list of forms. It can be downloaded by clicking here.

New HUD 1 on Scribd

Example-New HUD 1

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