Friday, June 12, 2009

Real Estate FAQ Part 1

What follows are some of the more common questions we encounter in a residential real estate transaction. Whether you are buying or selling, these questions come up all the time. Remember, real property law is unique to each state and while the law is the same within a state, customs will differ in different regions of a state. The following answers apply to New York State and Long Island and New York City in particular.

Q. When will my closing take place?
A. The contract of sale you entered into generally has a closing date written in, but that is known as an “on or about date”. It is when the parties hope to get the closing done, but is not written in stone. Variables such as attorney and bank schedules, schedules of the parties, the time it take for the lender to be ready, moving truck availability and so on, all contribute to the uncertainty. As a general unwritten rule either party can postpone the closing date for 30 days without penalty. The courts have used the term “reasonable time”, most attorneys consider that to be 30 days, but there are plenty of situations where it could be much less. Once everyone is ready, the attorneys for the buyer, seller and lender will try to find a time when everyone can get together for the closing. They will set a date and time, usually 2 to 7 days in advance, so you may not have much notice.

Q. Do I need to be out of my house when the closing takes place?
A. As a general rule, yes. You are selling your house. As of the closing it is no longer yours, it belongs to the buyer and he/she expects to have a clean, empty house to move into. If this is a real problem for you, it is more and more common for sellers to stay in the house for up to 5 to 7 days after the closing to move out or complete the closing on the house they are buying. You will need to leave a deposit in escrow to guarantee that you will get out and cover any damage. You will be expected to pay the new owners carrying costs, i.e. their per diem mortgage interest, which can be in the $50 to $200 per day range, depending on the size of their loan and interest rate. Attorneys don’t like this, it makes them nervous to have things unsettled and we would generally prefer to postpone the closing for a few days.

Q. What is title insurance and do I need it?
A. Title insurance is insurance you buy when you purchase real property. It is a onetime payment and is good for as long as you own the property. How do you know the person selling you the property actually owns the property and has the legal right to sell it to you? How do you know there isn’t a mortgage on the property from the seller, or a judgment or lien against the seller that gives someone else rights to the property. You don’t want to buy a house and a few years later have a bank foreclosing on your property for a loan the seller didn’t pay. The title insurance company will research all the public records and provide you with insurance that the title is clean. If some question comes up down the road, the title company will cover it, up to the value of the house as of the day you purchased it (or current value if you choose the extra coverage). All attorneys will tell you to get “fee insurance”, coverage for your ownership interest. All lenders will require you also get “mortgage insurance”, separate coverage for the lender’s interest in the property. So yes, you need title insurance.

Friday, June 5, 2009

Stupid Lawsuit of the Day

Extra! Extra! Read all about it, Crunchberries are not real fruit. Apparently Janine Sugawara of Southern California, has been eating Cap’n Crunch with Crunchberries cereal for four years thinking they were actual berries! Imagine her surprise when she discovered they were just cereal shaped into little balls and dyed in colors not known to nature. Well, she was mad enough to sue Pepsi, the owners of Quaker Oats who makes the awesome cereal. Sugawara v. Pepsico, 08-cv-01335, United States District Court for the Eastern District of California

Actually she and her attorneys Howard Rubenstein of Aspen, Colorado and Harold Hewell of San Diego, California were more likely enticed by the combination of class action lawsuits and California’s pro-consumer protection laws. They sought class status on behalf of all California consumers who purchased Crunchberries and alleged misrepresentation of the nature of the crunchberries on the cereal’s packaging, false and misleading advertising and labeling. As damages they wanted Quaker Oats to return all the money they made by selling crunchberries, punitive damage of an unspecified amount and attorneys fees. Ah, the attorneys fees. That’s the insidious part of class action lawsuits. But that is a topic for another blawg entry.

Thankfully in this case the judge wouldn’t stand for any nonsense. Defendant made a motion to dismiss the complaint and it was granted. The judge pointed out, “this court is not aware of, nor has Plaintiff alleged the existence of, any actual fruit referred to as a “crunchberry.”” The Court concluded its decision by denying the Plaintiff the opportunity to amend her complaint by stating “The survival of the instant claim would require the Court to ignore all concepts of personal responsibility and common sense. The Court has no intention of allowing that to happen.”

Good job Judge Morrison C. England, Jr. Still the entire process took over a year and undoubtedly Quaker Oats had to spend tens or hundreds of thousands of dollars defending this nonsense, the actions of a greedy lawyer and a greedy plaintiff.