Real estate law in New York encompasses laws that address the many issues related to transactions involving real property and ownership of property assets. Most Americans aspire to home ownership, and many build wealth from such activities as owning small apartment buildings to investing in real-estate investment trusts (REITS).
A New York lawyer consultation would help a person understand the scope of property law that applies to real estate in New York.
Some of the legal issues that arise in connection with real property are the following:
- Title and Boundary Disputes: Owners of properties that share a boundary may dispute the exact location of the boundary. Boundary disputes come up today in the context of homeowners’ associations, where exact boundaries are needed to determine who has responsibility for landscaping and maintenance, and who has the right to trim or remove trees.
- Zoning or Land Use Issues: Zoning and land use issues involve local laws and ordinances in which county and municipal governments regulate the uses that can be made of property within their boundaries. For example, most localities regulate where commercial businesses can be conducted on a property and where the use must be restricted to residential use.
- Foreclosures: Home ownership is the goal of most Americans and most homebuyers must borrow the funds they need to complete the purchase of a home. Unfortunately, they sometimes cannot pay the mortgage loan as required by the lender and their home must be sold to pay off the loan. This is foreclosure and the laws that regulate the foreclosure process come into play when a foreclosure happens. For example, New York law requires a mortgage lender to give the borrower pre-foreclosure notice and advice as to how to seek help 90 days before they can file a foreclosure action in court.
- Real Estate Taxes: There are 2 major types of taxes imposed on the ownership of real estate, as follows:
- Property Taxes: The property tax is a local tax that is collected by counties. It is spent locally, usually to fund local governments and public schools. Property taxes are the largest source of revenue for local counties, municipalities and school districts.
- Capital Gains Tax: The federal Internal Revenue System (IRS) collects a capital gains tax on real property. When an owner sells a property at a higher price than they paid for it, they may have to pay capital gains tax on the profit they made. This depends on many factors, but it is possible that an owner would pay capital gains tax to the IRS on profit realized from the sale of real property.
- Housing Discrimination: The federal Fair Housing Act (FHA) protects people from discrimination in all types of real estate transactions. It prohibits discrimination in renting a home, buying a home, obtaining a mortgage loan, seeking housing assistance, or engaging in other housing-related activities. Discrimination based on the following is banned:
- Race
- Color
- National Origin
- Religion
- Gender
- Family Status
- Eminent Domain Law: Eminent domain law concerns the right of governments to take private property from its owner in order to put it to public use, e.g., to build a highway or bridge on it. In New York, the New York State Eminent Domain Procedure Law sets out the rules for the process. The state must pay reasonable compensation for the property it takes through its eminent domain authority.
- Common Interest Community: Increasingly, Americans live in homes that are part of common interest communities, i.e., condominium associations, homeowners associations, and cooperatives. The governing documents of these entities regulate the homeowners and what they can and cannot do, much like zoning laws. In addition, they impose obligations, e.g., for maintenance and conformity to architectural guidelines. New York has its Common Ownership Community Law, which regulates the operation of these entities.
- Mortgages: A mortgage loan is simply a loan made to a borrower for the purpose of buying residential real estate. The loan is secured by a lien on the title to the property that the borrower buys. This means that if the borrower defaults on paying the loan, the lender may take possession of the property, sell it and use the proceeds of the sale to pay off the loan.
- Landlord-Tenant Law: The landlord-tenant relationship is heavily regulated in New York state, which has a comprehensive legal framework that regulates it. The foundation of New York landlord-tenant law is the New York Real Property Law (RPL), which sets out the basic rights and responsibilities of each party.
- The New York Housing Stability and Tenant Protection Act (HSTPA) has brought new reforms into the relationship. It caps the security deposit that a landlord may charge to one month’s rent. It requires a landlord to give a tenant a written receipt for rent payments made in cash, which ensures financial transparency.
- This law also requires landlords to keep residential rentals in a condition that is habitable, and it covers heating, plumbing, and pest control. The warranty of habitability that applies to residential rentals is contained in the RPL. A tenant cannot waive their right to live in a habitable residential rental unit.
- Rent payment procedures are critical, with landlords required to provide written notice of rent increases at least 30 days in advance for leases under a year. The HSTPA restricts rent increases, particularly in rent-stabilized apartments, to prevent financial burdens on tenants. Additionally, late fees are capped at $50 or 5% of monthly rent, as provided in the HSTPA.
What Is New York Commercial Real Estate Law?
Commercial real estate is an industry in New York, especially in New York City, of course. A multitude of issues and disputes can arise in commercial real estate transactions.
Commercial transactions depend on the contracts that are their foundations. So contract law and the law of breach of contract play a vital role in commercial real estate. Some of the specific issues that may involve contract law are failures to disclose defects in property when it is sold or leased.
Non-payment of rent and other violations of lease terms are issues, as they are in residential real estate. When disputes of this type arise, a commercial landlord or tenant wants to consult a New York real estate lawyer for guidance in resolving them.
New York City is densely populated and city officials do enforce zoning and land use regulations. Disputes can arise when a property owner or developer tries to use a property in a way that is not allowed by zoning regulations, e.g., trying to build a commercial building in an area zoned for residential use.
A title dispute occurs when there is a disagreement over a property’s legal ownership. Errors in public records, unrecorded liens, or fraudulent transfers can give rise to title disputes in which several pirates may claim to own the same property. Making a thorough title search should be a routine part of any purchase or sale transaction.
Boundary disputes involving commercial properties are common. This is because properties may have been poorly surveyed long ago, and the physical boundaries of the land itself may change over time causing boundaries to shift. An experienced real estate lawyer could be needed to resolve these disputes.
Environmental liability is yet another issue in commercial real estate. Developers and owners can be liable for contamination and pollution, even if they did not cause it directly through their own activities. Costly cleanups can become necessary. If this is a potential issue, a person would want to consult a lawyer who knows environmental law and how to evaluate and mitigate environmental risks.
What about Construction Law in New York?
Construction laws are yet another domain of the law that has a significant impact on real estate transactions in New York. Contracts play a critical role in construction projects, as in so many other aspects of real estate law. Contracts will determine the obligations of parties to construction projects, property owners, contractors, and suppliers.
Contracts will govern the relationships between the funders of real estate development projects, the owners and developers. Contracts are likely to be critically important in construction disputes.
If a party needs a contract, they want a New York real estate lawyer to draft their contracts and review contracts presented by others. They want to make sure that contracts are complete and provide adequate protection of a party’s interests in a given transaction.
Labor law could also come into play in connection with real estate construction and development projects. Construction workers and others may be members of unions and their collective bargaining agreements may require that certain rules be followed in the employment and service of their members. For example, the New York State Building & Construction Trades Council represents more than 200,000 construction workers who belong to unions in New York State.
They represent the skilled tradesmen who construct buildings, roads, bridges, and other structures in New York. Union contracts may deal with wages and safe working conditions on construction sites.
What Are Some Tips To Know About Buying or Selling Property in New York?
An individual or business that wants to engage in buying and selling property in New York should proceed with caution. Having the advice of New York lawyers is also advisable. Again, contracts are key, and an individual would benefit from having a knowledgeable lawyer review all contracts to make sure their interests and rights are adequately protected.
Of course, it also pays to proceed with caution and never buy or sell real estate impulsively. Another key protection is to have a reliable property inspector who is capable of making a genuinely competent inspection for defects and deficiencies in a property that a person is thinking of buying.
How Will a Mortgage Affect Me in New York?
The mortgage lending industry is highly regulated by both New York and federal laws. New York Real Property Law establishes the rights and responsibilities of home loan borrowers and lenders in that state. In addition, New York banking law regulates mortgage lenders and brokers. The law requires them to be licensed and to obey regulations designed to protect consumers.
Federal laws are the Truth in Lending Act and the Real Estate Settlement Procedures Act. Both of these acts require that certain disclosures be made to borrowers in the course of obtaining a mortgage loan and offer other protections to borrowers.
The New York State Department of Financial Services supervises mortgage lenders, e.g., banks and credit unions, and enforces the laws and regulations that apply to them and their lending activities.
A mortgage creates a legal obligation on the part of the borrower to pay it back as agreed, usually in monthly mortgage payments. The borrower may also have an obligation to obtain and pay for mortgage insurance that serves as an additional level of security for the lender. Failure to pay as promised can lead to foreclosure as described above and loss of one’s home. So a borrower wants to be sure that they can afford any real estate they want to purchase.
What Is a Real Estate and Property Exchange?
Real estate and property exchange transactions can involve classic direct sales to buyers, investing in portfolios of property as with an REIT, or a tax-deferred exchange of properties that are similar. One example is a 1031 real estate exchange.
This type of transaction allows investors to defer paying capital gains tax by investing the gains in a qualifying replacement portfolio. A person would want to consult a New York tax attorney for details about how to conduct such a transaction.
Do I Need an Attorney Who Handles Real Estate Cases in New York?
If you wish to invest a significant amount of money in real estate in New York, you want to consult a New York real estate lawyer. The legal landscape for real estate is complex, as can be seen, and a New York real estate lawyer would be able to ensure that your interests are protected. They can also represent you in court if you need to make any appearances to address specific legal issues.
