Thursday, November 12, 2015

FLIP TAXES

Legal Line Question of the Week

 
Flip Taxes
Question
I am representing the owner of a co-op apartment that is 
in the process of selling her apartment.   The co-op 
board has just implemented a flip tax (the "Flip Tax") 
and the seller is concerned that the Flip Tax is 
going to decrease the value of her apartment.  
What are the steps that a co-op board must follow 
in order to implement a Flip Tax? Will the seller have 
to pay the Flip Tax when she sells her apartment?
Answer
A Flip Tax is a fee that a co-op charges (usually to the 
seller) upon the sale of the apartment. The general 
purpose of the Flip Tax is to increase revenue for 
the co-op without raising monthly maintenance fees. 
The origin of the Flip Tax dates back to the early days 
of co-op conversions when investors were buying 
co-ops (with no intention of living in the co-op) 
and then flipping" the apartment for a profit. 
The Flip Tax was a way for the co-op to get a share 
in the investor's profits.  In some cases, 
condominiums have also instituted Flip Taxes.

To implement a Flip Tax the co-op board must amend 
the co-op’s proprietary lease or the co-op’s by-laws. 
In order to amend either the proprietary lease or 
the by-laws, there must be an affirmative vote of 
the co-op’s shareholders (a change of this nature 
would typically require two-thirds of all shareholders 
to approve). Gathering this type of support can be 
difficult depending on the makeup of the co-op.  
Implementing a Flip Tax is predictably supported by 
those shareholders who are planning on living in 
the co-op for a long term and opposed by those 
shareholders who intend to sell in the near future.

Whether the seller is going to be required to pay 
the Flip Tax will depend on the terms and conditions 
of the co-op’s Flip Tax provision. For example, 
the co-op’s Flip Tax provision might state that it 
does not apply to shareholders who enter into contracts 
of sale within 60 days of the adoption of the Flip tax. Alternatively, the Flip Tax may apply to all sales 
closed after the implementation of the Flip tax.  
Thus, in order to determine whether the Flip Tax 
applies to the seller, you must look to the terms 
of the relevant provision in the co-op’s by-laws or 
proprietary lease.  

Important Tip:  Co-ops may use a variety of 
formulas to calculate a Flip Tax. Generally, 
this calculation is based on either a set percentage 
of the sales price, a set number of dollars per 
shares sold, or a percentage of the profit netted 
from the sale. Some co-ops have also tied the 
Flip Tax percentage to the seller’s length of 
ownership of the co-op.  For example, a shareholder 
who has lived in the co-op for a longer period of time 
(i.e. ten years) may pay a smaller Flip Tax than 
a shareholder who has lived in the co-op for a shorter 
period of time (i.e. one year). 

By: Neil B. Garfinkel, 
REBNY Broker Counsel
Partner-in-charge of real estate and banking practices
at Abrams Garfinkel Margolis Bergson, LLP
 

Monday, October 5, 2015

The New RESPA Rules on Mortgage Lending

THE DAY THE CLOSINGS STOOD STILL
 
As of October 3, 2015 the federal government enacted new RESPA rules on all mortgage lending which will have a dramatic impact on closings, the affect of which will not be felt for approximately two months or when these transactions are scheduled to close. The TILA-RESPA Integrated Disclosures (TRID) system, overseen by the Consumer Financial Protection Bureau (CFPB), was implemented this past Saturday.
Starting now, lenders will use two new forms to explain the details of mortgages, a loan estimate which must be given to a borrower no later than the third business day after the borrower applies and a final closing disclosure which borrowers must receive three business days prior to closing. The HUD-1 Settlement Statement which has been the traditional document issued by settlement agents at closings throughout the country is now a thing of the past.
Replacing the final truth-in-lending statement and the HUD-1 Settlement Statement will be the Closing Disclosure Form, which provides a detailed account of the entire real estate transaction, including loan terms, fees and closing costs. The new document combines the truth-in-lending statement and the HUD-1 Settlement into a form that is shorter and supposedly more user-friendly. Lenders must also give borrowers a disclosure, which details the final loan terms and summarizes the transaction three business days prior to closing. Borrowers can compare the disclosure with their initial loan estimate to see if any changes were incorporated into the loan from the date of the initial application.
If the main terms of the loan have been changed without the prior consent of the borrower, the settlement agent (or bank attorney) will have no choice but to adjourn the closing in order to reset the clock on a three business day right of review. One can imagine the issues that will be raised as a result of an adjourned closing. Sellers, who are using the proceeds of the sale to purchase replacement property, may be placed in the unfortunate position of defaulting on their purchase contract as a result of the adjournment. This will necessitate a change in contract terms when negotiating the contract of sale. Seller's attorneys will want to add penalty provisions to anticipate an adjournment by the settlement agent or bank attorney and the buyer's attorney will more than likely reject this request claiming that an adjournment of this nature is caused through no fault of the buyer. This is certainly new territory that will have to find some common ground. It is universally agreed that the new rules will add time to the already long process between contract and closing.
It is imperative that both parties to a real estate transaction be made aware of the new laws and the possible impact it will have on the transaction. 

As a side note, banks and lenders are worried about the fines that will be assessed for violation of the new rules, from $5,000 for unintentional mistakes to up to $1 million for flagrant, willful violations. If you have not already familiarized yourself with the new rules, it is time you did so. As always, we make ourselves available to answer any of your questions on this topic.
Alfred M. Fazio, Esq.
Capuder Fazio Giacoia LLP 
90 Broad Street 
New York, N.Y.  10004-2627  

Sunday, April 19, 2015

A Beautiful, Handy Guide to New York's Most Iconic Buidings

crop-P-Structures2_FPO.jpg
Drawing/painting/photographing the buildings of New York City is a popular (andpretty) hobby, and the latest architectural artistry from Pop Chart Lab distills the streetscape down to 54 significant structures, from local monuments like the Washington Square Arch to the world-famous One World Trade Center to the historic Plaza Hotel. Called "Splendid Structures of New York City," the poster orders the buildings by height and includes each building's address, year of construction, and architectural style.
A few things to note: Pop Chart Lab used each building's full height, including spires, so One World Trade Center is listed at 1,792 feet, not 1,776 (same goes for the Empire State Building and other skyscrapers on the chart). Additionally, the construction date is the year construction started on the building. "We decided to go with the date of construction since some buildings undergo constant or lengthy renovations/additions," said a Pop Chart Lab rep in an email. Additionally, two buildings on the chart—the Hearst Tower and Porter House—have two dates because they are historic buildings with significant additions
Click the image below for a closer look, or buy your own print for $29.
























By Jessica Daily - Curbed
http://ny.curbed.com/archives/2015/04/14/a_beautiful_handy_guide_to_new_yorks_most_iconic_buidings.php?utm_campaign=issue-36340&utm_medium=email&utm_source=Curbed+NY

Wednesday, February 18, 2015

Q4 2014 REAL ESTATE MARKET REPORT - Rutenberg - The Smart Brokers

Q4 2014 REAL ESTATE MARKET REPORT

          The Federal Reserve Beige Book reports that construction and real estate activity expanded across the country in the fourth quarter of 2014, and banks re­ported steady demand for consumer and residential mortgages. New York City’s co-op and condo market showed continued strength at the end of 2014 that has seamlessly carried over into the new year. On the rental side, rents in Manhattan and Brooklyn are up five percent from a year ago while Queens rents have been fairly steady. Luckily for all sectors and boroughs, multi-family construction remains robust.

            Lean inventory and strong demand were consistent themes when discuss­ing an increase in New York City average sales prices for 2014. In a November report, Streeteasy noted that Manhattan’s inventory was “nearly 20 percent beneath a five-year monthly average.” REBNY also alluded to this in its most recent report, which notes that New York’s residential sales market experienced rising prices but weakening sales volume. Large price increases in Manhat­tan (especially at luxury building One57) were instrumental in the 11 percent increase in the average sales price of a New York City home, and the average condo price increased 37 percent. Furthermore, The Real Deal reports that Man­hattan’s average sales price reached an all-time high of $1.7 million.

            While Manhattan remains dominant, Brooklyn is not to be ignored. REBNY reports that high prices in Brooklyn also drove New York City’s average sales price increase, and that the average Brooklyn condo price increased 13 percent. The Real Deal reports that average sales prices rose 9.7 percent from 2013, set a record high in 2014, and master appraiser Jonathan Miller points out that Brook­lyn is the only borough where prices have exceeded pre-financial crisis highs.

            In 2015, Streeteasy’s data scientist predicts that condo prices will increase at half their breathtaking 2014 pace. Such a slowdown would be a welcome indica­tion of prices settling into a healthier, more sustainable growth rate that could benefit all stakeholders: Sellers may be motivated to put their homes on the mar­ket in order to capture peak prices. This in turn would lead to greater inventory that could empower Manhattan buyers to be more assertive about negotiating asking prices.


Average sales prices in Manhattan and Brooklyn (Credit: Miller Samuel)

Average sales prices in Manhattan and Brooklyn (Credit: Miller Samuel)

Median sales prices in Manhattan and Brooklyn (Credit: Miller Samuel)



















Median sales prices in Manhattan and Brooklyn (Credit: Miller Samuel)


Have you been thinking about selling your Real Estate? Now is the best time! Ask me about it.

Fernando Branco, GRI, ABR, CNE
Lic. Assoc. Real Estate Broker
Realtor NY & CT
Graduate Realtor Institute (GRI) 
Accredited Buyer Representative (ABR) 
Certified Negotiator Expert (CNE)
Charles Rutenberg Realty
127 East 56th Street, NY NY  10022
(347) 879-0730
My profiles: 
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Working by referral. Let me help you find a home, too! 

Thursday, January 15, 2015

Legal Question: UCC-1 Filing Requirements and Co-ops


Question
I am a real estate salesperson and I was recently at a co-op closing which was delayed because the UCC-1 filing statement was incorrect due to a change in the law relating to UCC-1 filings. Can you please explain what a UCC-1 is and how the law has changed?
AnswerWhen a purchaser buys a co-op apartment and is also obtaining a loan, the bank that is making the loan will file a Uniform Commercial Code financing statement (the “UCC-1”). The UCC-1: (i) creates a lien against the co-op purchaser’s shares and proprietary lease (this is similar to a mortgage in a real property transaction), (ii) is filed in the county clerk’s office where the co-op is located and (iii) gives notice to the public that the bank has a lien against the co-op purchaser’s shares and proprietary lease.

In order to file the UCC-1, the bank must follow certain rules set forth in the Uniform Commercial Code (the “Code”).  Recently there was a revision to the Code regarding the way that the purchaser’s name appears on the UCC-1 (the “UCC Revision”).  The UCC Revision, which became effective on December 18, 2014, requires that the name of the purchaser on the UCC-1 must match exactly the name of the purchaser as it appears on the purchaser’s valid and non-expired New York State driver’s license or non-driver photo identification.   If the name does not match exactly, the lien created by the UCC-1 may not be valid.

Given the consequences of not complying with the UCC Revision, it should be expected that the attorneys for banks will be asking for a copy of each purchaser’s New York State driver’s license or non-driver photo identification in order to file the UCC-1.

Important Tip:  When preparing a “deal sheet” for the purchase of a co-op, you should ask the purchaser to provide you with the exact spelling of his/her name as such appears on his/her driver’s license or non-driver photo identification.  Furthermore, you should recommend that the attorneys involved with the transaction utilize the same spelling of the purchaser’s name on the contract of sale.  This will prevent the need to correct the contract of sale or the UCC-1 at a later time during the transaction.

By Neil B. Garfinkel, 
REBNY Broker Counsel

Friday, January 2, 2015

NYC's Best New Architecture, From the High Line to One WTC

it's time to make up a bunch of awards and hand them out to the most deserving people, places and things in the real estate, architecture and neighborhood universes of New York City! Yep, it's time for the 11th Annual Curbed Awards! Up now: the best of New York City's new architecture.
1407%20High%20Line%20at%20the%20Rail%20Yards%20-%20Photo%20by%20Iwan%20Baan-RS.jpg[Photo by Iwan Ban/the High Line]
Award for the Overall Best New Addition to New York City
The third and final leg of the High Line opened in September, completing a 15-year process that completely transformed what was one a neglected elevated rail line. The James Corner-designed project had been lauded around the world—and in New York—and it has become one of the city's biggest attractions. No matter what you think of the tourists crowding the walkways, the High Line is a beautiful space and there's no denying that it deserves the praise.
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[56 Leonard by Field Condition]
The Fun to Watch Rise Award
The coming years will see a fantastic variety of buildings that break out of the box (or conform very closely to the box, as no. 4 below). Here's what we're most excited to watch:
4) 432 Park: This skinny matchstick may have already topped out, but it's still a few more months away from completion. Architect Rafael Vinoly designed it around the square, the "purest geometric form," and some may find it unsightly, but the pattern of 10-foot-by-10-foot windows punched into a striking white concrete facade is mesmerizing.
3) 625 West 57th Street: Bjarke Ingels' giant pyramid is arguably one of the most interesting buildings to ever be built in New York City. Watching its triangular shape form on the west side has been a treat.
2) WTC Transit Hub: The transportation hub of the World Trade Center may not be as graceful as architect Santiago Calatrava originally intended (thank you, value engineering), but the white, winged bird is still a wild addition to the Downtown streetscape (though Steve Cuozzo disagrees).
1) 56 Leonard: Checking in on the construction of Herzog & de Meuron's cantilevering tower at 56 Leonard Street has been a highlight of the year, and it seems like just about everyone is excited for this building to finish.
57th-street-towers.jpg
[From left to right, 432 Park, the Nordstrom Tower, One57, and 107 West 57th.]
Award for the Skyline-Changing Architecture Trend
If there was one conversation that dominated the New York architecture world this year, it was the rise of the supertall towers. From casting shadows on Central Park to cantilevering over a landmark, the towers of 57th Street drummed up a lot of attention this year, and the topic isn't about to go away. Only two supertalls are complete in the skyline (One57 and 432 Park), and there are many more on the horizon: Jean Nouvel's MoMA tower at 53 West 53rd Street, SHoP's skinny addition at 111 West 57th Street, and Extell's Nordstrom Tower, just to name a few.
_MG_1482.jpg[Pier A, photo by Max Touhey]
Best Makeovers of the Year
3) Met Plaza: It's not a drastic change, but the plaza in front of the Metropolitan Museum of Art reopened in September after a $65 million renovation.
2) Cooper Hewitt: For $91 million, the Cooper Hewitt completely overhauled its home at Andrew Carnegie's former mansion. The three-year project was so elaborate that 13 architecture firms were involved, but boy, the results are stunning.
1) Pier A: It may not have as high a profile as the Met or the Cooper Hewitt, but Pier A's radical transformation is nothing short of jaw-dropping. Just look at what it looked like in 2010.
Screen shot 2014-06-24 at 1.08.57 PM.png[Photos by Will Femia]
Brooklyn's Building of the Year
It's definitely not the prettiest or the most interesting, but 388 Bridge Streetbecame the tallest tower in Brooklyn this year, so we figured we should award it before it's over taken by the next tallest tower.
15567173128_8484da1e97_o.jpg[Looking up at the oculus. Photo via the MTA's Flickr.]
Award for the Best New Addition to the Subway System
At long, long last, the Fulton Center opened downtown, bettering connecting 10 subway lines, and given the subway system its nicest station (though was it worth $1.4B? Maybe not). Designed by Grimshaw, the center's, uh, centerpiece is a 120-foot oculus that brings daylight into the depths with a glittering a "sky reflector net" created by James Carpenter.
1499487_740895142654393_3982532380355792564_n.jpg
Building of the Year
It may not be the most beautiful tower. It may be mired in political opportunism. It may have an odd antenna masquerading as a spire to reach a symbolic height. But One World Trade Center is far and away the most important structure to be completed in New York City this year. The post-9/11 rebuilding of Lower Manhattan has often been a fraught and controversial process, but the openingof the new World Trade Center's crown jewel is a major milestone. No matter what one thinks of the design, the tower has already become a symbol of the city, and for that, it deserves to be building of the year.
By Wednesday, December 31, 2014, by Jessica Dailey - Curbed