On May 24, 2022, the Honorable Barry E. Warhit (NYS Sup. Ct., Westchester County) issued what may be the first Supreme Court decision concerning the validity of condominium board electronic voting requirements under June 17, 2020 amendments to the Not-For-Profit Corporation Law (NPCL). In granting respondents’ motion to dismiss a petition challenging such voting requirements, the Court ruled that a condominium board was permitted to “require shareholders to use a pre-designated email address for proxy voting, to authenticate such email address prior to the meeting, and that such requirement was reasonable as a matter of law.”

In The Lifesavers Building Homeowners Group, et al. v. Board of Managers of the Landmark Condominium et al. (Index No. 67545/2021), a group of unit owners in the 190 residential unit Landmark Condominium located in Port Chester (the “Condominium”), challenged the purported re-election of certain respondents to the Condominium’s Board of Directors (the “Board”). As explained by the Court, petitioners challenged the validity of a November 3, 2021 election, alleging that, “by e-mails disseminated October 20, 2021, the respondents improperly imposed new electronic proxy voting procedures with an email verification requirement”, according to which unit owners had to (i) authenticate e-mail addresses to be used for voting in the election and (ii) submit proxies using an electronic form sent directly to the accountant responsible for tabulating the results-of the election. Rather than comply, petitioners collected paper proxies and attempted to submit them as attachments to unauthenticated email addresses, which they argue complies with the Condominium’s By-Laws. Those proxies were not counted during the November 3, 2021 election. Respondents determined that a there was no quorum at that meeting and that the members of the Board would therefore
continue to serve for another year.

The Board moved to dismiss, arguing that the proxies were defective and that the new electronic proxy voting procedures were authorized by amendments to NPCL §603, enacted in response to the COVID pandemic, and permitting the Board in its sole discretion to conduct electronic meetings and to implement “reasonable measures” verify that each person participating electronically ls a member or a proxy of a (former NPCL §603(a)).

In deciding the motion to dismiss, the Court agreed with the respondent’s argument that the NPCL 603(a) amendment authorized the Board to requite shareholders to use a pre- designated e-mail address for proxy voting, to authentic such e-mail address prior to the meeting, and that the requirement was reasonable as a matter of law. As amended and quoted by the Court, NPCL §603(a) provides as follows:

Meetings of members may be held at such place, within or without this state, as may be fixed by or under the by-laws, or, if not so fixed, as determined by the board of directors. For the duration of the state disaster emergency declared by executive order two hundred two that began on March Seventh, two thousand twenty, the board of directors may, in its sole discretion, determine that meetings of members be held partially or solely by means of electronic communication, the electronic service and/or platform by which the meeting is held shall be the place of the meeting for purposes of this article if a meeting is held solely by means of electronic communication. Meetings conducted partially or solely by means of electronic communications in reliance upon this paragraph, and any member’s electronic participation in such meetings shall be subject to those guidelines and procedures as the board adopts, provided the board shall implement reasonable measures to: (1) verify that each person participating electronically is a member or a proxy of a member; (2) provide each member participating electronically with a reasonable opportunity to participate in the meeting, including an opportunity to propose, object to, and vote upon a specific action to be taken by the members, and to see, read or hear the proceedings of the meeting substantially concurrently with those proceedings; and (3) record and maintain a record of any votes or other actions taken by electronic communication at the meeting.

(see NPCL 603(a)). To the extent the “reasonableness” of the measures implemented by the board was challenged, it was protected by the business judgment rule, which prevented further Judicial scrutiny of the Board’s electronic voting procedures. In granting respondents’ motion to dismiss, the Court took particular note of the fact that petitioners did not even attempt to utilize the e-mail verification procedure. COVID-related electronic communications provisions appear increasingly accepted as the new normal in a broadening range of different circumstances. To the extent that trend continues, it becomes increasingly important to adapt to such changes. Here, the Court’s decision may further signal that growing trend.

* David is Senior Counsel at Starr Associates LLP and a member of the firm’s litigation department. He can be reached at dtyler@starr-lawfirm.com or (212) 620-2694.

If the aim of Hedgerow Exclusive Properties is to mimic the tales of opulence and opposition that make up its namesake book, “Philistines at the Hedgerow,” the upstart brokerage appears to be succeeding.

Author Steven Gaines’ 1998 work chronicles the millionaires and billionaires who have long made the Hamptons a playground for the ultra-rich, the ever-present clashes between new money and the establishment, and the brokers who orchestrate it all.

Hedgerow, a two-year-old brokerage that has carved out its niche by zeroing in on ultra-luxury properties, could not have planted its flag at a more opportune time. Co-founded by Preston Kaye and Gary Cooper, Hedgerow arrived in the Hamptons in 2020 along with a wave of wealthy Manhattanites in search of a second home as the pandemic locked down New York City.

Sales activity in the Hamptons exploded from 343 homes purchased in the first quarter to 433 in the second, 607 in the third and a whopping 803 in the fourth, according to data from appraisal firm Miller Samuel. Prices also skyrocketed. By the fourth quarter of 2020, home prices were up
55 percent year-over-year.

But those figures are averages across all segments of the market, and Hedgerow isn’t concerned with average homes. The brokerage has emerged as one of the top players on the East End, selling over $650 million worth of homes in its first two years, one luxury estate at a time.

“Their firm has certainly disrupted the balance of power in that high-end, both on- and off-market segment of the market,” said Compass’ Christopher Covert, the listing agent for a waterfront mansion at 35 Potato Road in Sagaponack that went for $46.5 million in May to a buyer represented by Hedgerow. “Whatever they’re doing seems to be working.”

Of the 10 priciest homes sold in the Hamptons last year, Hedgerow handled four: a $59.5 million oceanfront estate at 70 Further Lane in East Hampton; another at 442 Further Lane that went for $55 million; former HFZ Capital principal Nir Meir’s mansion at 40 Meadow Lane in Southampton, which sold to Robert Kraft, owner of the New England Patriots, for $43 million; and the off-market sale of a 5-acre parcel at 260 and 264 Jobs Lane in Bridgehampton for $38 million.

“Just the idea of building a model that laser-beams on that 1 percent niche, really expensive luxury. That’s the model,” said Ed Bruehl, a broker with local firm Saunders and Associates. “If you guys are kicking ass and making money, I’m stoked for you.”

Coastal clashes

This year, Hedgerow was involved in the second most expensive sale in Hamptons history: $118.5 million for a 21-acre compound at 70 and 71 Cobb Road in Water Mill. That transaction became the subject of a lawsuit against the sellers by rival Nest Seekers, which claimed it was wrongfully cut out of its commission on the co-exclusive deal. Hedgerow was not named as a defendant in the suit, which sources said stemmed at least in part from a dispute over promotional materials for the supposedly off-market listing.

Unlike its competitors, Hedgerow doesn’t spend much on marketing or technology, operating largely through the contacts and connections held by its fewer than 20 licensed agents.

“It’s an old-school mentality,” said Shaun Pappas, a partner at real estate law firm Starr Associates. “People want the anonymity, they don’t want the broadcasting. They’re going there to escape the heat, the visibility of New York or wherever they’re coming from.”

Hedgerow’s primary competitor is probably Bespoke Real Estate, the eight-year-old, Water Mill-based brokerage co-founded by brothers Zach and Cody Vichinsky, which, like Hedgerow, exclusively deals in luxury properties (those priced at $10 million and above).

A 6-foot-3 former college hockey player, Hedgerow co-founder Kaye first came to the Hamptons as an agent with Bespoke in 2016, but was fired in 2019 after a dispute with a co-worker, according to a lawsuit brought against him by Bespoke a few months before Hedgerow’s launch.

Bespoke alleged that Kaye had taken confidential documents with him, and in some instances deleted them, but the suit was voluntarily dismissed last November.

“The lawsuit was about alleged theft of trade secrets, not about anything else,” an attorney for Hedgerow said in a statement. “It was brought to stop competition and had no merit.” Bespoke declined to comment.

Few in the area seem to know anything about Hedgerow’s other co-founder, Cooper. Nest Seekers CEO Eddie Shapiro called him the “ghost of the Hamptons,” but emphasized that anyone who handles luxury listings in the area will almost certainly encounter him.

“It’s a very small sandbox,” Shapiro said.

In an email, Brown Harris Stevens’ Shannan North described Hedgerow as “a hybrid of a boutique service model yet a player with the bigger companies.”

In May, Kaye and Cooper were joined by a third partner, Terry Cohen, a veteran agent who has transacted over $2.5 billion dollars of real estate and brought over her four-person team from Saunders and Associates.

Cohen has spent much of her career at boutique firms that eventually grew into larger operations, starting at Allan Schneider Associates, which National Realty Trust scooped up in 2006, then joining Saunders the year it debuted in 2008. Saunders, too, has since grown into a sizable firm with dozens of agents across five Hamptons offices.

“Less is more,” Cohen told The Real Deal in June. “We always have to be dynamic, and you can be dynamic when you’re small. It’s hard to be dynamic when you’re so large.”

Cohen’s arrival at Hedgerow “brings some gravitas and almost some legitimacy, that this is a firm, and not just two partners,” Compass’ Covert said.

Trials to come

Breaking into the Hamptons can be difficult. Some firms have been established on the East End for decades, with a small number of top agents responsible for orchestrating many of their deals.

Hedgerow’s leaders “already had the track record, and they had the relationships,” said Geoff Gifkins, a regional manager at Nest Seekers. “I think they’d already done the hard work.”

But even in the Hamptons, it’s not all sunshine and beaches forever.

With inventory depleted and mortgage rates higher, some buyers have begun pulling out. Listing inventory in the luxury segment was down 34 percent annually in the first quarter of the year. Transactions fell 23 percent in the same period, according to Miller Samuel.

Hedgerow, which otherwise declined to comment for this story, says it’s not concerned.

“Contrary to current headlines, we continue to see pioneering trades across all segments of the Hamptons’ marketplace,” Kaye said in a statement.

For a brokerage that has only ever existed in a historic housing boom, it’s possible the Hamptons’ modern-day philistines have yet to face their first true test.

“It doesn’t mean that they can’t be successful, but it’s going to be a much more difficult market as opposed to the prior market, which was essentially order-taking,” said Miller Samuel’s Jonathan Miller. “The demand was insatiable.”

https://therealdeal.com/2022/08/10/luxury-brokerage-hedgerow-faces-its-toughest-challenge-yet/

The past several years have been extremely challenging for condominium developers. From pausing construction and sales efforts and shifting into virtual tours and closings; to navigating new filing procedures, labor shortages and supply chain issues; and more recently, dealing with rate hikes and an up-and-down housing market; condominium developers have been put through the ringer.

As a real estate law firm that focuses heavily on condominium work on behalf of sponsors and lenders, Starr Associates LLP has identified several key issues and areas of the practice that every condo developer needs to know as they finish out the year.  At Starr, we find that developers that best understand the many technical hurdles they face—and the strategies they can deploy from the onset—are better equipped and more likely to see their projects come to fruition without issue and with better results.

If you have any questions regarding the below mentioned items, please feel free to give our attorneys a call to discuss potential solutions to ensure your project and team is well-informed and best-prepared during the remainder of the year.

1. The Attorney General’s “Relief Period” is Still in Effect for Offering Plans
As a result of the COVID-19 pandemic, the Office of the Attorney General’s (“AG”) had implemented temporary guidelines relating to filings made with their office. These guidelines have been termed the “Relief Period,” and as of today are still in effect. In fact, the last COVID-19 guidance from the AG’s office was circulated over a year ago. Given the important timeframes and deadlines contained within an offering plan, this lack of information has no doubt made navigating the AG’s office more challenging than ever. Knowing the current state of affairs makes having the right condominium counsel vital.

2. Taking Advantage of Tax Incentives Available to Non-Profit Leases
Sections 420-a and 420-b of the New York State Real Property Tax Law authorize exemption from real property taxes of real property owned by certain nonprofit organizations. The leasehold condominium structure has become a popular and efficient way for landlords and nonprofit entities to create a way in which the nonprofit would qualify for the benefit in a case where it would otherwise not. It should also be noted that The Department of Finance recently provided guidance on a newer and more streamlined approach to the process. These transactions are extremely complex and careful considerations must be made by tenants, landlords, and lenders.

3. Marketing Out of State Projects to NY Buyers
Have you started developing outside of New York? If so, the New York State AG’s Cooperative Policy Statement #12 (“CPS-12”), makes it easier for developers of out-of-state projects to sell to New Yorkers.

The CPS-12, which applies to condominiums, cooperatives, timeshares and homeowners associations allows for an exemption from the usual compliance requirements for registrations of projects located outside of New York State but marketed to New Yorkers who are physically located in-state. To qualify for the exemption, the project must comply with—and be registered with—the situs state of the project and such state must have laws in place for the protection of purchasers akin to those of New York.

4. Make the Most of Your Mixed-Use Property
Many developers are unaware that many mixed-use buildings throughout NYC are structured as a condominium regime. Whether it is to establish separate ownership between a restaurateur and hotelier, finance a portion but not all of a property, or perhaps to capture ICAP benefits on the commercial space only, creating a condominium becomes an essential part of the transaction. These are just a few of situations we see day to day, but there is not much we have not seen in our 20 years at Starr. Make sure you are seeing all the possibilities.

5. Are Condominium Conversions Coming Back?
Since the passage of the Housing Stability and Tenant Protection Act in 2019, a Part 23 condominium conversion of an occupied building has become virtually obsolete. With the new requirement that a non-eviction plan may not be declared effective until 51% of the tenants in occupancy agree to buy, as opposed to the previous threshold of 15% of tenants in occupancy and bona
fide purchasers with an intent to reside has made a conversion nearly impossible. However, given the AG’s openness to have direct communication with firms like ours, we believe there is relief guidance on the horizon.

6. Local Law 97 Implications on Condominiums and Cooperatives
Local Law 97 was enacted in 2019 as a part of the Climate Mobilization Act to reduce the carbon emissions of buildings in New York. Under this groundbreaking law, most properties over 25,000 square feet will be required to limit their building’s carbon emission to meet new energy efficiency and greenhouse gas emissions limits by 2024, with stricter limits coming into effect in 2030. Local Law 97 applies to Cooperatives and Condominiums, so it is important to ensure that your project contains the necessary safeguards and provisions to satisfy these future requirements to avoid the fine of “$268 per metric ton of emissions over the limit.” As the required retrofits may take extensive time to deploy, developers will need to start as soon as possible to avoid the financial penalty of Local Law 97.

Shopping for the perfect home can be fun. Shopping for the perfect mortgage rate? Not so much.

A fast-moving housing market means borrowers need to take extra care. At the very least, you’ll want to double-check your housing budget and keep a close eye on the market as rates move. Some borrowers may also want to consider new bidding and borrowing strategies to help keep the rate they pay down—if not quite to the level it might have been six months ago, when
mortgage rates were still near record lows.

“It’s not a time for the faint of heart to be buying a home,” says Matt Hackett, operations manager at Equity Now, a direct mortgage lender.

While there’s no bringing back the record-low mortgage market of 2021, here are seven tips for making the most of a difficult market:

1. Double-check your budget
Higher mortgage rates don’t just mean home buyers pay more. They could mean you’ll be able to borrow less. If you set your housing budget in late 2021, it might be time for a reset.

In one of the sharpest run-ups in memory, 30-year mortgage rates jumped from around 3.5% in January to well over 5% in May. That equates to an additional 17% surge in home prices, according to Greg McBride, chief financial analyst for Bankrate.com. (Note: Bankrate is a commercial partner of Buy Side from WSJ)

If, say, for instance, you were targeting a monthly principal-and-interest payment of $4,000 when rates were 3.5%, you could have afforded a loan in the range of $675,000. But at 5.5%, you could only afford to borrow $525.000.

If you’re running the numbers at various rates using online calculators, remember you have to figure in your downpayment and closing costs, plus ongoing expenses of taxes, insurance and maintenance costs. One rule of thumb is to assume you will have to set aside 1% of your home’s value every year to pay for upkeep.

2. Make a habit of checking rates each week

Once you know what you can spend, you’ll want to make sure rates don’t move on you again, putting further strain on your budget. If you’re trying to make a purchase, you should check in with lenders at least once each week, according to mortgage brokers.

Weekly rate movements are typically less than 0.05%, although in this year’s fast-moving market they have reached 0.25% or more, according to Mike Tassone, co-founder of Own Up, a mortgage broker.

Your mortgage broker or loan officer can keep you in the loop. You can also monitor the action yourself: You can find daily average rates in The Wall Street Journal’s markets data section, while weekly ones are published by loan guarantors Fannie Mae and Freddie Mac.

Another tip is to follow the yield on the 10-year Treasury note (ticker symbol: TNX), which lenders use as the peg to price 30-year mortgages (since relatively few borrowers keep mortgages for the full 30-year term.) “As the yield goes up, mortgage rates tend to go up. As the yield goes down, mortgage rates tend to go down,” says Cameron Cook, a senior wholesale mortgage broker with CSI Mortgage Design by Cameron in Lone Tree, Colo.

3. Consider a mortgage contingency

Once you get to the bidding stage, you want to make sure nothing can upend your deal.

One way to create a little wiggle room is to ask for a mortgage contingency in your purchase agreement. These contract clauses (which also must be agreed to by the seller) can give you an out if, say, rising rates make it no longer possible to purchase the house with 80% financing, or if mortgage rates move outside a certain range.

“This might make it easier to sleep at night,” says Shaun Pappas, a partner with Starr Associates, a real estate law firm in New York.

Still, he points out there is a risk: “In a hot seller’s market, many sellers will look at non-contingent deals over contingent, even if the price for the contingent deal is a little better. Sellers want firm deals with no way to cancel.”

4. Tighten your rate lock

Once you pick a lender and begin the process of applying for a loan, you should be able to “lock” the rate in place, protecting you from further increases. And there are additional steps you can take to make sure there are no surprises.

Typically a mortgage lender offers a rate lock after your initial loan application has been received but before it’s submitted for underwriting. Most rates are locked for between 30 to 90 days with some longer-rate lock periods offered to accommodate things like delayed closings or new construction. However, if you do not close during the rate lock period, and the rate lock
expires, your rate will begin to float and be subject to daily rate changes.

One option is to extend your rate lock. It will cost you though. A typical mortgage rate lock extension costs about 0.5% of the total loan amount and can be extended for up to 120 days, says Pappas.

What if rates actually go down? You can also add a float-down provision to your loan which will allow you take advantage of any decline, as long as the new, lower rate meets a certain threshold. Usually it must be at least a quarter point below your original rate. But again, there’s typically a fee associated with this as well.

While most lenders offer a rate lock as a matter of course, if yours doesn’t you should definitely be proactive, according to Maura Ann Dowling, a certified financial planner and faculty member in the finance department of Bryant University in Smithfield, R.I.. “Locking in a rate is always a good idea as soon as you begin a mortgage relationship,” she says. “Then, if rates move up, you are protected.”

5. Think beyond the 30-year mortgage

It’s not hard to see why homeowners love the security of a 30-year mortgage. But if you are looking to lower your interest rate, sacrificing a little peace of mind can lead to substantial savings.

With an adjustable rate mortgage, or ARM, the initial interest rate is fixed for a period of time. After that, the rate applied on the outstanding balance resets periodically, based on prevailing market rates. The most common introductory ARM terms are five, seven and 10 years.

Because you’re are taking on future interest-rate risk as an ARM borrower, you’ll receive better rates during the initial, fixed period of the loan than you would with a 30-year mortgage. In recent years ARMs haven’t looked that attractive: With 30-year mortgage rates near historic lows, there wasn’t much room for these loans to shave off what borrowers were paying. In recent months as rates climbed, the gap has widened.

Homebuyers who switch from a 30-year loan to a 5/1 ARM (with a fixed rate of five years) can now expect to lower their rate roughly 1 to 1.25 percentage points, based on data from Freddie Mac. That’s a difference of about $300 a month on a $400,000 loan.

Of course, with a five-year floating rate loan, you could end up paying more if rates are even higher in the future. But that’s only a real worry if you plan to remain in your home longer than five years. Most homeowners with 30-year mortgages keep them for less than 10 years.

6. Pay for mortgage points

Another way to get a lower mortgage rate is to pay your lender for it. In the mortgage world, this is known as “buying points.”

Typically you can lower your rate by one-quarter percentage point for every 1% of the loan’s total value that you pay upfront to the lender. When rates were low several months ago, relatively few borrowers chose to buy points. But, as The Wall Street Journal newsroom recently reported, the option exploded in popularity as mortgage rates rose.

Because of the big upfront cost, points make the most sense when you plan to stay in your house more than a few years. For instance, a borrower offered a 5.5% rate on a $400,000 mortgage could lower the rate to 5% by paying $8,000 at the outset. The move could save the borrower more than $45,000 if they stayed in the home for a decade, according to Bankrate.com’s mortgage calculator. But they would come out behind if they moved out before year five.

In other words, if you can spare the cash, points can be a great way to save money in the long run. Just make sure you are willing to stick it out. “If you end up selling your home before you anticipate, the buy down is less attractive because the cost upfront could be more than the overall savings,” says Pappas.

7. Time your mortgage decision based on your own needs

The biggest mistake you could make is to rush to make a purchase you truly can’t afford because you’re afraid rates could climb. “In these situations, it’s better to pause your search than to get into a precarious financial situation,” says Jerimiah Taylor, vice president of real estate and mortgage services at OJO Labs, a real estate company.

If you can afford the payment at current rates on the home you want to buy, it’s probably foolish to hold off in the hope that 2021’s rates will return, say mortgage experts.

Do your best to put forward a strong offer. In the current climate, that means making clear to the seller that the new interest-rate environment hasn’t blown up your budget: “Make sure that you indicate that you have been pre-qualified for that offer,” says Dottie Herman, vice chair of real estate brokerage Douglas Elliman.

If you’ve found a home you want and the numbers work, should you hold off for a better rate or move forward? ”It’s hard to bet on the market and wait for rates to decrease, because they could increase instead,” says Jodi Hall, president of Nationwide Mortgage Bankers. It’s OK to tune out the current collective lamenting about rising rates and buy the home you want and can afford.

https://www.wsj.com/buyside/personal-finance/mortgage-rates-tips 01653595262?mod=wsjcbs_article

The New York City real estate market’s unexpectedly fast comeback is making getting divorced here more fraught than usual.

Divorces can take years to conclude but shifts happen fast in the NYC real estate market. Even so, prices here have rebounded to prepandemic levels much quicker than anticipated. This has upended plans for some spouses who wanted to buy their soon-to-be exes out of the marital home but can no longer afford to do so. And for those who need to find a place to rent, it is tougher than ever to track down an apartment near the family home that they can afford.

Sue Moss, a divorce attorney at Chemtob Moss Forman & Beyda, says some owners who worked out property agreements prior to 2020 are very unhappy, or at least that’s the case for one half of these couples.

That’s because some of these clients had their properties valued at what turned out to be a 30 percent discount, thanks to the swing in Manhattan pricing. For the spouse who kept the marital home, it’s a potential windfall when they go to sell—for the other spouse, it’s sheer frustration.

“Some got the short end of the stick, some got the long end of the stick,” she notes.

Even crazier is the Hamptons market, where record high prices have “exploded” deals for some couples who are just in the process of sorting out their property distribution, she says.

In places like Southampton, she says a couple who expected their house to be valued at $2 million received an appraisal in the $4 million range.

“Now they have to come up with new terms, because there’s no way the spouse who planned to buy the other out of the house can come up with the funds,” Moss says.

These high valuations can be problematic for the spouse who keeps the house if there aren’t sufficient funds to tap for closing costs (such as broker fees, as well as transfer and flip taxes), when property is sold later.

In these situations, “making the decision to keep the residence is a really bad idea.” Moss says. “Being ‘house poor’ is a reality for some people. They may say, ‘if things get too bad, I’ll sell it,’” but they may not take into consideration the high cost of selling a property in NYC, she says.

The case for selling
When couples who are negotiating a divorce find out their properties are worth more than they thought, one (or both) spouses may be uncomfortable with a buyout. In that case, selling the property is the only solution.

“The rise in NYC real estate prices happened much quicker than anyone could have predicted,” says Randi L. Karmel, a divorce attorney in private practice.

In New York, dividing the proceeds from the sale of the marital home requires equitable, or fair distribution—couples usually do split the proceeds, but it doesn’t necessarily have to be 50-50, Karmel says.

A combination and a break up
A Brooklynite named Carla (a pseudonym) has been dealing with a nightmare divorce on top of real estate fiasco: Her marriage fell apart just as the couple finished combining their condo with the one next door—a project that was greenlighted by her board but turned out to be unpermitted.

Faced with a very high appraisal for the newly combined unit, plus a dispute with her condo board over $30,000 in fines, she’s now dealing with the challenge of turning the combined apartment back into two units. It’s her only recourse, she says.

She can’t buy out her ex-spouse because she didn’t qualify for a loan to purchase one or both units. And she felt the appraisal was problematic because it used the most expensive apartment in her building, plus a unit in a white-glove building, as comps.

The details of the divorce are painful: Her husband walked out on her and her child and started a new life in a different country. The real estate situation has taken the ordeal to a new low.

“I was married 16 years. No one would have expected this,” Carla says. It’s been very expensive as well: “I’m in debt from the lawyers,” she says. It’s also been quite the real estate education for her and she’s brimming with advice for others who are planning on divorcing and have to make tough decisions concerning property. When you’re deciding what to do with the family home, having an accurate sense of how much the property is worth is crucial.

“Make sure you do your own due diligence and look into what apartments in your building are selling for,” she says. Some large national banks may not be familiar with your NYC building. (This is a problem in particular for co-ops, which are unique to the NYC area.)

If you plan on keeping the marital home, she also recommends negotiating for closing costs for an eventual sale, including fees for brokers and lawyers. And educate yourself on how capital gains change after a divorce, she says.

On that last point—be aware that when a spouse who took ownership of the house eventually sells, they are only able to exclude $250,00 of capital gains, unlike a married couple, who each get to claim a $250,000 deduction, for a total of $500,000, if they sell prior to getting divorced.

“When you’re making a decision, make sure you understand everything. Ask questions again and again until you do,” Carla says.

Third-party appraisals
When two soon-to-be exes don’t agree on an appraisal, going to a third party can help. It did for a client of Dean M. Roberts, an attorney at Norris McLaughlin.

He was involved in a divorce where one client had an appraisal for one amount and the spouse had one for substantially higher amount, both of which did not reflect the true market value. The solution was to use a third appraiser chosen by two other appraisers whose determination was binding.

“We knew we were doing a good job because everyone was equally unhappy,” he says.

When there is the potential for a substantial delay between the valuation and the completion of the agreement and property transfer, Roberts recommends including a provision in the
agreement that either clearly confirms the valuation as of the date of the agreement or provides for a valuation closer to the actual date of the transfer.

In NYC’s current superheated housing market, not having this adjustment can leave one party feeling they have been treated unfairly because of the substantial increase in the value of the property being divided, he says.

The challenge of finding a place to rent
Typically, the spouse that leaves the marital apartment rents an apartment nearby—but that plan is especially hard to pull off these days, says attorney Shaun Pappas, a partner at Starr Associates.

“If one spouse is staying, and the other relocating, what does that mean if rents have gone up by 30 percent?” Pappas asks. Today’s higher NYC rents impact how much you have available to provide for in alimony and keep the family in the living situation to which they’re accustomed, he says.

Even though you may have owned a place as a married couple, if you’re getting divorced it’s likely that you will need to educate yourself on what rents are in your neighborhood. Some of his clients going through a divorce consult real estate brokers just to get a sense of where the market is headed, he says. They may be negotiating to stay in place for a year and then move
and need to factor an “educated guess” into their agreement.

Property agreements are contracts
When it comes to real estate and divorce, there are no do overs: Property distribution agreements can’t be changed; they are like a contract in that regard.

The reason you can’t renegotiate is “because couples need finality,” Moss says. In divorce, “people want to destroy each other,” she says. The fighting, even though intermediaries, can get ugly. So “once you have a deal, it’s the deal,” Moss says.

Even though one side may feel shortchanged, a deal helps with closure and moving on.

Or as Moss puts it: If you have children, “you need to be able to walk down the aisle and dance at their wedding.”

https://www.brickunderground.com/sell/divorce-couple-spouse-high appraisal-marital-family-ho

When you’re buying a new condo, you can expect that when you take ownership, your apartment will still need some small repairs. Hopefully it won’t need anything major—maybe a paint touch up or light fixture adjustment—or other work that still needs to be completed as you sign your sales contract. These items will be part of a punch list for the sponsor to deal with.

The good news is that condo developers know fixes will be needed when their once-vacant buildings start filling up with residents.

It might be that the flooring is uneven or a closet still needs to be built out and so a few thousand dollars from the sales price is set aside. “We go through this all the time and buyers typically have their lawyers hold something back until the work has been completed,” says Andrew Gerringer, managing director at The Marketing Directors. This generally happens if a buyer is really keen to close because their mortgage rate lock is expiring or their lease term is ending, says attorney Shaun Pappas, a partner at Starr Associates.

However, we aren’t talking about substantial sums. “If it’s a large issue like plumbing or electrics, you’re not closing in the first place,” says Daniel Gershburg, partner at the law firm Konner Gershburg Melnick Darouvar.

Another option is to have the sponsor put money in escrow, but again it’s typically not more than a few thousand dollars, Gershburg says. In hundreds of recent deals, he’s only seen one or two sales that have involved the sponsor putting money in escrow and on those occasions it was for a parking garage that wasn’t yet completed.

The chronology typically works like this: You do an inspection prior to signing the contract, you find items that need fixing, and you tell the sponsor what needs to be done before you close. Then you do a walk through prior to closing.

“The one standard is that prior to the closing, the final punch list will be signed by both sides,” Gershburg says. Either this document will say all the items are taken care of, or it will list items that the sponsor plans to take care of.

“Every contract will usually say—and you can negotiate it—within 30 to 60 days post closing, these items on the punch list will be fixed, provided the sponsor is capable of procuring the materials,” Gershburg says. With the current challenges to the supply chain, it’s not always possible to get items within a 60 day window but most sponsors want to keep their buyers happy.

However, some buildings won’t allow inspections, Gershburg says. Instead, they bring in a third party, which prepares a punch list and makes the fixes on behalf of the sponsor. Gerhsburg says this is a recent change partly because listing agents can get overwhelmed with all the details but also it’s just more efficient for the sponsor—and reduces their liability.

Pappas says up to 20 percent of the sponsors he works with use a construction warranty company like Prohome to complete punch list repairs. Of course, many sponsors still have their contractor on site when you move in so they won’t use a third party but he says an independent contractor can often make repairs go more smoothly. “They are there to make it more efficient—and having that barrier between the sponsor and the buyer is helpful,” Pappas says.

Jade Shenker is director of relations at Prospect Management and was recently asked to oversee punch list repairs at a new development in Brooklyn and says in most cases, it’s the plumbing that’s the problem.

“It’s very likely there will be some kind of plumbing issue—from a six-unit multi-family to a $100 million building—it’s very common,” she says. Once residents are in place, that’s when you find out the shower drain isn’t pitched correctly or the fifth-floor apartments aren’t getting the same water pressure as the ones on the first floor.

This was the case in a new development recently. When a pump was installed to increase the water pressure on the upper floors, it then became clear the pipes couldn’t handle the new pressure. The result was a major leak.

That’s why your due diligence on the reputation of the sponsor is so important, Gerringer says. The sponsor often stays on board for up to five years after the closings begin so if something goes wrong shortly after closing they are usually responsive to repairs, especially if they still have apartments to sell. “They don’t want anything negative to get out about them being non-responsive to buyer issues,” he says.

And if you’re not getting timely or effective repairs you may need to share your experience with your social networks, if necessary, tagging the developer. “Social media is very powerful and scary for developers not willing to do the right thing,” he says.

Tips for repairs post closing

Shenker’s advice to buyers is to get the specifications (or specs) of the unit when you close—for example, you should know the type of tile used in the bathroom, the flooring in the kitchen, and the paint throughout.

“If there’s a leak one or two years in—regardless of whether the sponsor covers it or not—you are going to want to match what is there rather than repaint the entire apartment or redo the whole flooring,” she says. If you have all these details, the repairs can be done more efficiently. Pappas points out, this information should be outlined in the offering plan.

Another tip is to know the warranties of the appliances in your new apartment. If your stove has a one year warranty and you notice the control panel is giving an error code or the light isn’t functioning after a few months, don’t be slow about reporting it.

Of course, major construction defects that become evident months after closing are more complicated and could result in a lawsuit or complaints to the Attorney General’s office.

Starr Associates LLP, one of New York’s preeminent boutique real estate law firms, is pleased to announce that Evelyn D’Angelo has been named partner.

“We are thrilled to have named Evelyn as a partner at Starr Associates,” said Samantha Sheeber, Managing Partner of Starr Associates, LLP.  “We have had the pleasure to watch Evelyn grow from a young associate straight out of law school to an accomplished attorney who possesses the rare combination of intelligence and practicality and the ability to use both to solve problems.”

Ms. D’Angelo practices in the firm’s development and offering plan group, boasting nearly 10 years of experience handling complex residential, commercial, and mixed-use developments, including the preparation and filing of offering plans; the creation of condominiums, co-ops, and HOAs; contract negotiations; and other related real estate transactions.  She joined the firm in 2013.

“Starr Associates’ best-in-class real estate practice has allowed me to work directly with many of the City’s foremost developers, brokers and architects; I am honored to become a partner at the firm,” said D’Angelo.  “I look forward to supporting and expanding the firm’s extensive real estate platform while continuing to assist and support our clients.” “

Prior to joining Starr Associates LLP, D’Angelo interned at the Real Estate Finance Bureau of the New York State Office of the Attorney General, where she assisted with the review of amendments to offering plans to ensure compliance with applicable regulations.

Ms. D’Angelo graduated with honors from Brooklyn Law School, where she was published in the prestigious Brooklyn Law Review and was a member of the esteemed Moot Court Honor Society.  In addition, Ms. D’Angelo holds a B.A. from the University of Notre Dame and an M.A. from Bowling Green State University.

The litigation department at Starr Associates has successfully resolved a dispute between a commercial landlord and our clients, a tenant that allegedly owed rental arrears, and the personal guarantor under the lease. The matter was referred to our office with a summary judgment motion pending and the clients’ opposition deadline already expired. Starr defeated summary judgment and succeeded in amending the pleadings to add counterclaims against the landlord who claimed that the commercial lease tenants owed years of rent plus attorney fees and other relief. After effective motion practice, Starr obtained a highly beneficial settlement on behalf of our clients. It is safe to say that this is not the result plaintiff anticipated when filing suit.

Bitcoin, Ethereum, and other cryptocurrencies are beginning to change, well, just about everything. Over the last few years, “crypto” has infiltrated countless industries, including finance, real estate, energy, social media, art, sports, and many others.

While it certainly has its skeptics, it’s beginning to seem as though crypto is here to stay. Indeed, just last year, El Salvador passed a law to recognize Bitcoin as legal tender in the country. In January, Senator Wendy Rogers introduced a bill to add Bitcoin to the list of accepted legal tender in the state of Arizona. Numerous members of Congress and other Federal, State, and local officials have been outspoken advocates of Bitcoin, Ethereum, crypto, and blockchain technology. Perhaps most notable here at home, New York City Mayor Eric Adams received his first paycheck (and vowed to receive others) in the form of Bitcoin and Ethereum, and has made it clear that he wants New York City to be the center of cryptocurrency and other financial innovations.

With respect to real estate, crypto has already made a meaningful impact in New York City. Over the last several years, crypto started being used as consideration for various real estate transactions, and there has been a noticeable uptick in interest recently from developers, investors, and purchasers. Starr Associates LLP is proud to have facilitated the purchase and sale of residential and commercial units using crypto as the form of payment. In total, our firm has consummated tens of millions of dollars of crypto transactions via BitPay, a United States-based cryptocurrency payment service company. Starr Associates LLP’s verified Tier Four account with BitPay permits unlimited daily and annual transaction volume. Whether our firm is representing the purchaser or the seller, the process of exchanging real estate for crypto generally works as follows:

1. Within 24-48 hours of when the down payment or balance is due, our firm would coordinate with
BitPay to generate an invoice for the amount due.

2. The invoice is sent to the purchaser via email along with instructions for effectuating the payment. The amount due is denominated in the requested form of cryptocurrency and has a price-locked conversion rate in United States Dollars (“USD”). In addition to Bitcoin (BTC), BitPay also accepts the following other cryptocurrencies: Ethereum (ETH), Wrapped Bitcoin (WBTC), Dogecoin (DOGE), Litecoin (LTC), Bitcoin Cash (BCH), and five (5) different USD-pegged “stablecoins” (GUSD, USDC, USDP, DAI, and BUSD).

3. The purchaser has fifteen (15) minutes from the time purchaser opens the invoice payment flow to lock-in the conversion rate and effectuate the payment of the invoiced amount in cryptocurrency. Purchasers are, of course, advised to verify the legitimacy of the email and invoice prior to accessing any links and remitting the requested payment.

4. Upon receipt of the cryptocurrency, BitPay sends the corresponding USD value to our firm’s escrow account to be held until the USD funds are released to the applicable parties at the agreed- upon time.

Note: the above process may vary (both in substance and time), as BitPay performs additional layers of due diligence depending upon the size of the transaction.

Aside from real estate transactions, there are numerous projects seeking to disrupt the real estate industry and change how owners, operators, occupants, and investors interact with real estate. These projects are nascent and exciting, but they have an arduous road ahead as they must navigate Federal and State securities, banking, privacy, anti-money laundering, and other laws. But it is interesting to consider the potential impacts of crypto and blockchain technology on real estate ownership and chain of title, condominium and cooperative governance/voting, source of funds disclosures, and alternative methods of purchasing, selling, financing, and investing in real estate.

Starr Associates LLP has its finger on the pulse of this quickly-blossoming industry and is ready to assist clients incorporate crypto into their real estate transactions and ventures. For more information, please do not hesitate to contact Shaun Pappas and Benjamin Siegel at crypto@starr-lawfirm.com .

DISCLAIMER
Nothing herein should be considered or construed as financial, investment, legal, tax, or other advice. Readers should conduct their own due diligence, and consult with an attorney, accountant, and/or other trusted industry professional(s) before purchasing, utilizing, or otherwise interacting with
cryptocurrencies, tokens, or blockchain technology. Starr Associates LLP does not make any representations or warranties regarding Bitcoin, Ethereum, any other cryptocurrency or token, or blockchain technology, including, without limitation, their security, usability, reliability, fitness for any particular purpose, or legality within any particular jurisdiction. Transacting cryptocurrencies or tokens on a blockchain involves risk, volatility, and the payment of fees. Participate and interact with cryptocurrencies, tokens, and blockchain technology at your own risk.