WHY DO I HAVE TO MOVE MY FENCE

As an active Staten Island Real Estate Attorney I often get questions from homeowners about the location of fences and sheds. These questions invariably start “I received a notice from my neighbor telling me that my fence (shed) is over the property line and needs to be moved”.  When the client asks what to do I tell her I need to see a copy of the survey of her property so I can give her an opinion.  All fences and sheds should be located within the property lines indicated on your deed.  If they do go over the property line (encroach) your neighbor should ask that it be moved or it can lead to an adverse possession problem.  In this situation the property line is deemed to move to the end of the structure causing the person whose land is encroached upon to lose some property.  To avoid this problem when a structure does go over the property line (encroach) the offended owner should demand that the structure be moved, a written acknowledgment that adverse possession does not apply or if these fail then a lawsuit for trespass can be brought.  While most minor fence encroachments (less than 6 inches) do not affect title to the premises and do not warrant a legal battle between neighbors, it is still a good idea to try to make sure all your structures (and your neighbor’s) remain within the property boundaries otherwise when selling the property an issue can arise.  Before buying a property, or when you or your neighbor put up a fence it is best to have a survey which clearly shows the property lines and allows the fence to be put up correctly.  While attempting to put it right on the line is good, a few inches inside your property is safer. 

WHAT IS A SURVEY AND AN ENCROACHMENT

A survey is a property diagram prepared by a licensed surveyor. A title survey is prepared prior to a closing to show a property’s size and boundaries.  The surveyor prepares a line drawing showing the dimensions of the property (and house) along with the location of any other structures (decks, shed, fences, patios, pools) on or near the property boundaries.  The owner owns up to the property lines so all structures belonging to the property should be located within the boundary lines (not over).  Structures going over the property lines are said to be encroaching on the neighbor’s property. 

HOW CAN I TELL IF THERE IS AN ENCROACHMENT

If your neighbor complains you need to determine if it is an encroachment so a solution can be worked out.  Get a copy of both his and your surveys to compare to see if they match up and the problem can be resolved.  But what about a situation where the offending fence is not shown on the surveys?  Sometimes surveys will show dimensions from your house to your property line and then simple measurements can be done by the neighbors to determine if the structure encroaches.  If this doesn’t work a new survey must be prepared to settle the issue once and for all.  If the surveyor determines that the structure is encroaching it should be moved.  If this is not feasible your attorney can work out another solution like an easement or license agreement to allow the structure to remain without the neighbor having an adverse possession issue.   

CONCLUSION

Make sure before you buy a house that a new survey is prepared.  Make sure none of the structures on your property (or his) are over the property lines (encroach).  If encroachments do exist try to get them removed or get a signed writing from the neighbor to insure that if the encroachment remains that no adverse possession is created. Also whenever a fence is being erected make sure it does not encroach. 

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1)    Schools – before making an offer, parents of school age children should find out the school zone as this will determine where your children will go.  While most grammar schools (through grade 5) are pretty good, some thought needs to be given for certain middle (grades 6-8) and high schools.  Even if you do not have school age children, school district is an important item to consider for resale purposes as potential buyers will look at the school zone as a benefit or detriment.

2)    Real Estate Taxes- Assessed Value and Tax Abatements – Newer is not better.
If you have a newer home real estate taxes can be much higher than on an older home worth the same amount.

A)    Assessed Value– Assessed value is a property value used by NYC to come up with a home’s real estate taxes.  The assessed value is set based on market value when the house was constructed.  Older homes assessed values started at a low market value while newer homes are assessed at the market value when they were built.  Since NYS law sets limits on how much tax assessments can increase on existing homes older homes traditionally have lower assessments (and tax bills) than newer homes of the same value.
B)    Tax Abatements – one good thing about new construction is that NYC offered a tax abatement program which cut real estate taxes on new construction for the first 8 years after construction.  If a home has an abatement while taxes are less initially, they will go up for eight years until reaching market level.  Keep this in mind when looking at a house with a time left on the abatement as the taxes will continue to go up as the abatement lapses.

3)    Homeowners and Flood Insurance – Staten Island is an island and certain parts are in areas known as flood zones.  This is based on the homes proximity to bodies of water (bays, streams, lakes) and elevation above sea level.  The Federal Emergency Management Agency (FEMA) has maps indicating areas at risk for flooding (flood zones).  If you are in a flood zone you will need to get flood insurance in addition to your regular homeowners insurance.  Flood insurance is expensive and even more troubling is that many companies are now refusing to issue homeowners insurance to near flood zones.

4)    Transportation – Staten Island has a serious shortage of public transportation.  One train line, the ferry and some buses do not adequately serve the needs of 400,000+ people.  Make sure to understand that in some parts of Staten Island you need a car or car service to get around.

5)    Commute Time – take a good look at Staten Island’s major roadways in rush hour before you decide on a neighborhood.  During peak times the SI Expressway and major roads (Hylan Blvd, Richmond Avenue, etc) are extremely crowded.  Make sure you understand that a short distance commute (to NYC) can take hours.

Besides affordability and housing style, these 5 factors make a critical difference in the enjoyment you will get from owning your own home in Staten Island.  A knowledgeable, experienced Staten Island Realtor should be able to get you this information before you make an offer.  Have your realtor find school information and which grammar, middle and high school will be zoned for.  Have her investigate the real estate taxes and if you will need flood insurance.   Check for yourself the transportation and commuting issues a home may have for your daily lifestyle and work habits.  Getting the true answer to these 5 important questions can insure that before you get into contract that you are getting a home you can afford and enjoy.

Steven Decker is an experienced Staten Island real estate attorney.  He has successfully helped thousands of clients purchase homes in Staten Island, NYC’s 5 boros, and New Jersey for over 15 years.

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Both buyers and sellers should be concerned about the contract deposit.  The deposit can be handled several ways, 1) bonded and released to the seller, 2) an interest bearing account with the interest going to the parties or 3) an IOLA account with interest to the IOLA fund (most common). When buying a home make sure your contract calls for the seller’s attorney to put the deposit into an IOLA account so if the contract is cancelled the IOLA account will be there to insure the deposits return.  Sellers are even more concerned because if the deposit is stolen by their attorney the seller is responsible.  All sellers should make sure they hire an experienced real estate attorney from a firm which has malpractice insurance and will require that all contract deposits are held in the firm’s IOLA account.

As an experienced Staten Island real estate attorney I see many new lawyers trying to handle closings.  Unlike other legal areas some people think that a closing is a simple matter.  While a closing need not be adversarial you still need an attorney to protect your interests.  Failing to get an excellent real estate attorney can cost you  thousands of dollars, which is particularly true in the area of contract deposits.  When I first started practicing I was retained by several clients whose attorney had robbed their deposits.  Luckily the money had been in an IOLA account and I was able to get them reimbursed by the Client Fund.  Not everyone is so lucky.  I recently got a panicked call from a client who had bought a house several months earlier.  The attorney for the seller had stolen client funds and he was out a substantial amount of money.  I reminded my buyer that during contract negotiations the seller wanted interest on the deposit while I wanted it to be placed in an IOLA account.  The seller was adamant and after hearing the pitfalls of not using an IOLA account my buyer agreed to allow an interest bearing account (I did put in the contract that the seller’s attorney was an agent of the seller and the risk of loss was with the seller).  We successfully closed but after several months the seller still could not get the deposit money (which belonged to him after the closing) released.  Now with the news of the attorney’s problems the situation was clear, the money was gone.  Since the deposit wasn’t in an IOLA account the seller could not look to the Fund for reimbursement and PS he didn’t get the interest either.

Be smart; make sure you hire an experienced real estate attorney whose firm will be there to back you (and your funds) up.  Don’t be penny wise and pound foolish, insist on an IOLA account.

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In New York there is a mortgage tax based on the loan amount.  For residential mortgages up to $500,000 the rate is .8% (plus an additional 1% for if you live in New York City – Staten Island, Brooklyn, Bronx, Manhattan or Queens) and the rate increases for higher loan amounts.  When refinancing your mortgage you must pay the mortgage tax based on the new loan amount un less you plan wisely.  Here my client paid mortgage tax of 1.8% on his new loan amount $485,000 for a tax of $8730.  Since he paid off his old loan of $470,000 and his new payment was almost $300 a month less, he calculated he would recoup his closing costs in about 41 months (closing costs 12,200 ÷ monthly savings $300).   This refinance made sense but he could have avoided the mortgage tax by doing an assignment and modification and saved about $7200 by getting credit for the amount of mortgage tax paid on the original loan (1.8% of $470, 000) even after calculating the additional modification fees(about $1200).

If you have to pay them to do the refinance they are closing costs.  Call your lawyer before refinancing.  If I can’t help save you money I will tell you to do it on your own but most times I can save you money.  Get a Good Faith Estimate of closing costs and make sure to ask your mortgage broker about doing a modification to save mortgage tax.

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If a buyer needs a mortgage the contract make sure you contract contains a mortgage contingency clause.  This gives the buyer a certain amount of time (usually 30 -45 days) to submit an application and get an answer from his lender.  If the application is approved a mortgage commitment is issued, the contingency is satisfied and the buyer must purchase the house.  If at the end of the contingency period the lender has not made a decision (approval or denial), the buyer must ask the seller for more time to get the answer and the seller can decide to give more time or cancel the contract and refund the deposit.  When the mortgage application is denied the contingency allows the buyer to cancel the contract and receive a return of his contract deposit.

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While the banks aren’t happy to have to accept billions in losses they are getting used to the economic reality that borrowers in default are not likely to bring their accounts current so short sales make the best of a bad situation.  While the seller avoids the cost of the foreclosure process, the seller get two benefits – his credit score should be less affected by a short sale than a foreclosure and the lender agrees to forego the right to sue the seller for its loss. Many lenders have been hesitant to accept short sales in the hopes that a bailout plan are now actively working with their borrowers and are more open to short sales.

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Being a real estate attorney in Staten Island sometimes I am approached with the following question: “My contract date has passed and I want to close.  How can I force the other party to close?”

The contract should detail what actions (or omissions) will cause an event of default.  When a party breaks the contract (event of default) it triggers rights including cancellation of the contract and/or a suit for monetary damages.  Missing the closing date by an unreasonable amount of time can be cause for seeking to declare a default.  When a default is declared it is good practice to put the other party on notice that a default is being declared so that you can enforce your rights to cancel the contract and start a lawsuit. Most NY contracts have a closing date clause which is written “ON OR ABOUT” date.  This is a target date and allows either party to wait a reasonable time after the date before being obligated to close.  REASONABLE is always a term of art but most case law calls for a minimum of 30 days after the ON OR ABOUT date.  If it gets beyond the reasonable (30 day) mark and you want to close you must give the other side notice of your intention to force a closing.  This is done by sending a Time of the Essence (TOE) letter demanding a closing date upon the threat of a default.  If the party receiving the TOE letter fails to close a default can be declared.

You must first make sure a reasonable amount of time has passed and then send a Time of the Essence letter.  This will force the other side to respond and if their response is not what you want be prepared to declare a default and enforce your contract rights.

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Left unchecked termites can cause an incredible amount of damage to a home.  To protect your investment the buyer should make sure she has the home inspected by a licensed engineer before signing the contract.  The home inspection should include a termite/pest inspection as part of the report.  If termites are found the buyer needs to make sure that they are properly exterminated and any damage repaired.  In NY a termite treatment can only be done if active infestation is observed by a licensed exterminator.  A typical termite treatment can cost up to $1500.00.  While a treatment should insure that termite infestation should not reoccur for many years, a buyer who fails to purchase an extended warranty is making a critical mistake.  A buyer should discuss the treatment and warranty with the exterminator to make sure she understands the warranty.  The exterminator will also tell the buyer what she should be looking for to determine if termites are back.  By buying the extended warranty a buyer gets peace of mind as the termite company will inspect the premises at least once a year and if termites are spotted they will treat the condition at no cost to the homeowner.

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 As a result of the depressed economy, lenders have reduced interest rates to historic lows but many homeowners are not getting the benefits as they see refinancing as a hard process.  (See another interesting article from NY TIMES correspondent Bob Tedeschi) This is not the case so if you have an interest rate of more than 5.5% you need to call quickly investigate the benefits of refinancing your mortgage.  While lenders have tightened up their underwriting criteria (you will need good credit, income and your home must have positive equity) if you can qualify to refinance it should save thousands of dollars. 

A couple things to consider

1)  Difference in rates between existing and new loan
2)  Closing Costs
3)  Are you increasing your mortgage’s principal balance and loan term?
 
Refinancing should not be a mystery.  Call your lawyer with a copy of your current mortgage statement and he can give you a quick run down on what to say to a lender and how to save a couple dollars on lender and title company fees.  Call a couple of lenders and get a few good faith estimates (GFE) to review with your lawyer.  He will quickly show you the differences between the estimates and calculate the true closing costs.  Divide the closing costs by the monthly cost savings and you will get the time needed to recover the closing costs (number of months).  For the refinance to make sense you must be sure that you will keep the new mortgage long enough to recover the costs.

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Since a buyer will be doing the inspection anyway a prudent seller can save himself time, money and aggravation by putting his house in proper working order.  The little items that he didn’t have time to fix will probably become an issue when a buyer’s engineer does his report.  Besides painting, cleaning and general sprucing up of the house the small touch ups like dry water stains from old leaks, surface cracks, small sheetrock holes and other minor things should be resolved BEFORE you put the house on the market.  It will make the buyer more comfortable before he makes his offer and it will make the engineer’s report look better.  Remember until the contract is signed the buyer can ask for anything he wants or simply walk away, by removing as many potential obstacles before the inspection a prudent seller can make his sale much smoother.

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