WHFirm Celebrates the Summer

After a busy winter and spring season this year, the WHFirm staff celebrated with a couple of happy hour outings to kick off the summer – first at Malone’s Bar in June, followed by the Freehold rooftop bar in July.

Our thanks to our hardworking crew. Without such a dedicated team of professionals, our firm would not be the same!

Above: at Malone’s Bar

Above: at Freehold rooftop bar

 

Congrats to the firm for making this year’s list of NYC’s top 40 law firms on The Real Deal! We entered the year with a bang, jumping immediately to number 25, and have held strong throughout the year.

The Real Deal bases their ranking on the dollar volume of closed sales recorded in ACRIS between August 1, 2022 and July 31, 2023. They factor deeded purchases and cooperative sales in Manhattan, Brooklyn, and Queens. We are especially pleased to have made the ranking, considering our firm’s focus has never been on the numbers, but rather on the client experience. The placement is particularly satisfying when we consider that it does not even include our firm’s largest volume transaction type, cooperative purchases!

For more, and to check out more NYC real estate news, you can find the article on The Real Deal here.

 

The law in New York surrounding the Property Condition Disclosure Statement (PCDS) changed significantly with Governor Hochul’s recent signing of A.1967/S.5400, which eliminates the option for sellers to offer a $500 credit to buyers at closing in lieu of completing the PCDS and adds questions disclosing the property’s flood history and risk to the PCDS itself.

What is a Property Condition Disclosure Statement?

The Property Condition Disclosure Act, established in Article 14 of the New York Real Property Law, requires sellers of real, residential property to provide a Property Condition Disclosure Statement to a prospective buyer. Real residential property refers to stand-alone homes used as, or intended to be used as, a residence by one or more individuals, and does not include vacant lots, condominiums, coops, or property in a homeowner’s association that is not owned in fee simple by the seller.

A PCDS is a document that provides important information about the condition of a property for sale. It is completed by the seller, then given to the buyer as part of the sales process; both parties must sign the document to acknowledge its completion and accuracy prior to the buyer’s signing of the final contract. A PCDS is a valuable disclosure tool that protects the buyer from unexpected and costly repairs or renovations after purchasing a property.

Who must complete a PCDS?

Until recently, there was a loophole in New York law that allowed sellers to avoid completing a PCDS provided they paid a $500 credit toward the purchase price of the property. This essentially allowed sellers to treat the PCDS as optional, with the $500 credit as the cost of doing business. On September 22, 2023, however, Governor Hochul signed bill A.1967/S.5400, which eliminates the $500 credit option and adds several questions to the disclosure form in order to protect New Yorkers from increasingly frequent and extreme flooding in the state. Therefore, beginning on March 10, 2024, all sellers of residential property must complete a PCDS or be held liable for a failure to do so.

The Property Condition Disclosure Act requires a listing’s real estate broker to timely inform the seller of their obligation to complete and deliver the PCDS to the potential buyer. Furthermore, the buyer’s broker (or the seller’s broker if the buyer is not represented by a broker) is required to inform the buyer of their right to receive the form. Both parties must sign the PCDS prior to the buyer’s signing of the contract.

What does a PCDS include?

A typical PCDS includes information about a property’s age, ownership, drainage, mold history, termite history, shared features of the property, and more. With the passing of A.1967, the New York PCDS will have several new questions relating to the property’s flood history and flood insurance requirements: specifically, whether the property is located in a 100-year or 500-year flood plain according to FEMA’s flood insurance rate maps, whether the property is subject to requirements under federal law to obtain and maintain flood insurance, and the flood insurance history of the property. With the new flood risk disclosure, New York state will empower home buyers with information about the flood risk of their potential property and allow them to have all the information they need to make informed decisions. Sellers must answer the questions themselves and based on their actual knowledge at the time of signing the PCDS.  A seller is not obligated to conduct any type of inspection of the property in order to complete the PCDS.

What happens if a seller fails to complete a PCDS?

With the elimination of the $500 dollar credit option, a seller who willfully fails to provide a PCDS to the buyer is liable for actual damages suffered by the buyer, in addition to any other existing equitable or statutory remedy.

The new changes to the PCDS will become effective on March 20, 2024 and will heighten the responsibilities of sellers in the New York marketplace while affording prospective buyers a more comprehensive picture of their potential future home.

 

 

 

Mortgage rates continued to decrease slightly this week, dropping to 6.69% average from 6.71% the previous week, influenced by the Fed’s recent decision to pause rate hikes. For more info, you can read the full article here.

The lightning development of AI tools such as ChatGPT is already being felt in many industries. As reported by the Guardian, this includes the field of cybercrime, and particularly the common type known as “phishing.” Phishing is the transmission of a virus or other harmful software, often via email and generally disguised as a legitimate email link or attachment. However, up till now most phishing attempts were relatively poorly constructed and easy to spot, full of grammatical inconsistencies, odd phrasing, and spelling errors. However, the ability to automatically generate a coherent email using AI is making these attempts significantly more difficult to spot, and the risk to real estate transactions if one or more parties fall victim to a scammer can be dire.

To avoid falling for a phishing attempt, it is important to use great caution when acting on a received email, whether clicking on attachments or links, or providing sensitive personal information. Beforehand, check the sender email address to make sure that it appears correct. If you are not sure what you have received, its best to check with the sender at a known telephone number (not the number in the suspect email) before opening or proceeding. If you are wiring funds as part of a real estate transaction, it is imperative to verbally verify any wire instructions that you receive via email via telephone in this manner.

For more information, you can read the article here.

According to date from Freddie Mac, mortgage rates have continued the overall downward trend that has been dominant since last November, apart from a slight rise during February 2023. As of the week ending March 30, the average rate had reached 6.32%.

To learn more, you can find the original article from CNN here:

For many New York City homeowners and renters, subdividing apartments with temporary walls can be an easy way to maximize space. Many renters are familiar with “flex” units where a new bedroom is created with space taken from living areas. However, the legal requirements for these walls can be complicated, and homeowners and tenants should be aware of the challenges before proceeding.[1]

There are two common types of temporary walls in New York City condos, co-ops, and rental apartments: temporary pressurized walls, and partial walls.[2] Temporary pressurized walls look and feel like any other wall and provide a floor to ceiling divider with a standard door.[3] These walls may create the most complete division, but they also require the most burdensome legal approvals.[4] To build a temporary pressurized wall, usually you will need to file building permits with the NYC Department of Buildings (DOB) and after completion, receive a new Certificate of Occupancy.[5] Both processes can take a significant amount of time.[6] Because of these procedures, it’s important to hire an experienced contractor for your temporary pressurized wall installation.[7] Failure to file legal permits can result in fines and can make your unit harder to sell in the future.

Partial walls are an easier option for many New Yorkers hoping to subdivide their space.[8] Partial walls are made from the same material as temporary pressurized walls.[9] The primary difference is that they must leave a gap of at least 12 inches between the top of the wall and the ceiling.[10] For some residents, such a gap would be unacceptable. But partial walls do not typically require any permits or certificates of occupancy.[11]

For either temporary pressurized walls or partial walls, it’s critical to speak with your building management.[12] Most landlords, management companies, condo and co-op boards require their approval before beginning construction, regardless of city permitting rules.[13]

 

NOTES:

[1] Street Easy, Everything to Know About Putting Up Temporary Walls in a NYC Apartment, Street Easy, (October 19, 2020), https://streeteasy.com/blog/temporary-walls-for-apartments/

[2] Id.

[3] Id.

[4] PropertyClub, Flex Wall Guide: How to Build Temporary Pressurized Walls in NYC, PropertyClub, (August 15, 2022), https://propertyclub.nyc/article/a-guide-to-building-a-temporary-pressurized-wall-in-new-york-city#temporary-pressurized-walls-vs-full-walls

[5] Evelyn Battaglia, From 1 room to 2: The insider’s guide to temporary pressurized walls, Brick Underground, (August 24, 2022), https://www.brickunderground.com/blog/2011/12/From_1_room_to_2%3A_%20An_insider%27s_guide_to_building_a_wall_in_NYC

[6] PropertyClub, supra note 4.

[7] Battaglia, supra note 5.

[8] StreetEasy, supra note 1.

[9] Id.

[10] Id.

[11] PropertyClub, supra note 4.

[12] StreetEasy, supra note 1.

[13] Id.

Homebuyers in New York City may be presented with the opportunity to purchase a “sponsor unit,” a type of property unique to New York City real estate.[1] At the most basic level, “a sponsor unit is an apartment that has never been sold” before.[2] However, this term can have a different meaning depending on whether the unit is in a condo or co-op building.[3] Before choosing to do so, buyers should understand what sponsor units are, along with the advantages and disadvantages of purchasing one.

In a condo building, a sponsor unit is being sold directly by the developer.[4] Sometimes these are units in a brand-new building, or they may be units that the developer itself rented out.[5]  For many NYC homebuyers, the opportunity to purchase a unit that has never been lived in is a huge bonus.[6] However, in the competitive NYC real estate market, condo sponsor units may even be sold before the building is completed.[7]

In a co-op building, sponsor units are either being sold by the original owner or have been converted from a rental by the co-op corporation.[8] In either circumstance, co-op sponsor units are often in original condition meaning a buyer may need to make significant renovations.[9] Purchasing a co-op sponsor units may mean you’re not beholden to the same rules as shareholders in the co-op, including the sometimes-burdensome board approval process.[10] However, there may be significantly higher closing costs and more complicated legal issues.[11] Before purchasing a co-op sponsor unit, be sure to have an experienced real estate attorney view all the materials in the transaction.[12]

NOTES:

[1] Erika Riley, What Is a Sponsor Unit in NYC Real Estate?, Street Easy, (July 28, 2021), https://streeteasy.com/blog/what-is-a-sponsor-unit/#ib-toc-anchor-1.

[2] Id.

[3] Id.

[4] Hannah Frishberg, What Is a Sponsor Unit and Why Does It Matter?, Brownstoner, (July 8, 2016), https://www.brownstoner.com/real-estate-market/sponsor-unit-co-op-building-definition-mortgage/

[5]Id.

[6] Riley, supra note 1.

[7] Id.

[8] Id.

[9] Victoria Alexander, What Is a Sponsor Unit?, Realty Collective , (June 22, 2020), https://realtycollective.com/what-is-a-sponsor-unit-2/

[10] Id.

[11] Frishberg, supra note 4.

[12] Alexander, supra note 9.

CNN recently published an interesting article highlighting the growing prominence of AI programs such as ChatGPT, which generates detailed responses from simple prompts, in the real estate industry. Used largely as a time-saving device, the program has been used for listings and even in some instances the initial drafting of legal documents. As the use of AI programs is still in its infancy, and many of its legal, ethical, and practical implications are unclear, it remains to be seen what long term effect AI will have.

To read the article in detail, please find it here:

As reported by CNN, Mortgage rates are continuing to fall this year, reaching 6.09% at the beginning of February, and down from last year’s peak of 7.08%. Forecasts predict that rates will continue to decrease this year as inflation eases.

To read further, please see the original article here.