If you’re not able to reach an agreeable settlement out-of-court, your legal dispute is likely to reach the lawsuit phase. Here’s what you need to know as your case winds its way through the civil court system.
There are countless ways you could find yourself in court, either filing (or facing) a civil lawsuit. Maybe you’ve been injured in a car accident, or perhaps someone is claiming you owe them money. Regardless of how you got to civil court, chances are it’s foreign territory. Most people aren’t all that familiar with the different stages of a lawsuit (most legal disputes settle, after all) but it’s important to get a sense of what’s to come, so that you can best protect yourself and your rights. So, read on for a summary of the different steps to expect if your dispute makes its way to court. The person who starts a lawsuit is called the plaintiff. The person who has been sued in the lawsuit is called the defendant. Complaint and Summons A lawsuit begins when the plaintiff goes to court and files a complaint against the defendant, and the complaint along with a summons is served on the defendant. The complaint explains why the plaintiff is suing the defendant and sets out the remedy (i.e. money damages, the return of certain property, or an injunction to stop the defendant from taking certain actions) the plaintiff is asking from the court. The summons tells the defendant that a lawsuit has been filed and when a response must be made. The summons usually must be “served” on the defendant personally (or on someone authorized to receive “service of process”), but it may be mailed in some situations. Defendant’s Answer The defendant has a limited number of days (usually 20 to 30) to file an answer to the complaint. In the answer, the defendant will usually set out any defenses he or she plans to raise in response to the plaintiff’s claims. For example, if the defendant wishes to argue that the plaintiff’s suit is barred by the statute of limitations (meaning the suit wasn’t filed within the time period allowed by law) the answer will state that argument. If the defendant doesn’t file an answer under the deadline set by the court’s procedural rules, the court will usually enter a default judgment in favor of the plaintiff. This means the plaintiff wins automatically, without having to prove the defendant did anything wrong. But the defendant can also come before the court and ask that the default judgment be “set aside” so that the lawsuit can proceed on its merits. If the plaintiff and defendant can’t reach a settlement, the lawsuit will proceed to trial, usually to be held before (and to be decided by) a jury, but sometimes before a single judge (this is called a “bench trial”) Discovery After a lawsuit is filed, both parties can use the discovery process to gather information about the case. A variety of tools they can be used to investigate the facts and the other side’s Interrogatories (written questions that must be answered under oath, sent from one party to another). Deposition (an in-person, out-of-court session where a party or a witness answers questions, also under oath, and the entire proceedings are recorded in a transcript). Requests for Production (usually this involves the parties asking for and exchanging documents that are relevant to the dispute). Motions While discovery is going on (and after it has concluded), the parties will typically go before the judge and ask for different kinds of help (ordering the production of certain evidence, or the subpoena of a crucial witness, for example) and different kinds of relief, including motions for summary judgment, which can basically put an end to the lawsuit. Trial If the plaintiff and defendant can’t reach a settlement, the lawsuit will proceed to trial, usually to be held before (and to be decided by) a jury, but sometimes before a single judge (this is called a “bench trial”). Judgment The judgment is the court’s official announcement of the decision — who won and who lost. It also spells out what relief, if any, the plaintiff is given (usually that means a specific dollar amount). Collection upon the Judgment is the Final Step, whether by attachment to assets, or wage garnishment as the most common means. Beware of the “judgment-proof” debtor, it may be best to settle.
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WHAT YOU NEED TO KNOW BEFORE DECIDING TO SUE
Before deciding to commence a lawsuit, here are some things to think about:
1. Do you have a good case? This may seem obvious, but you need to have a genuine legal claim or “cause of action” in order to have a court support your position. For example, the mere fact that you might have fallen in a store does not mean you will necessarily be successful if you decide to pursue a “slip and fall” claim. The elements of such a claim will need to be proven, including the store owner’s fault in failing to ensure your safety.
2. Have you made a final demand in connection with your dispute? This step also seems obvious, but is often overlooked by people in their rush to the courthouse. If they know they are at fault and are able to make the situation right, most individuals or businesses will do what they can to resolve the matter, rather than be dragged into court.
3. Have you tried to settle the dispute by compromise? Take a realistic look at the other party’s point of view. Perhaps he or she has a valid argument, or even a potential claim against you. If so, adjust your own position accordingly. If a dollar amount is at issue, you may want to think about reducing the amount you are asking for. From a purely practical point of view, you may receive more that way than you would by suing, because you will have to pay attorneys’ fees and other costs in connection with a lawsuit.
4. Will you be able to collect a judgment if you win? Take a hard look at the financial condition of the party you are going to sue. You want to be reasonably certain that you will be able to collect a judgment before you spend a lot of money on a lawsuit.
5. Do you have the money to pay a lawyer to handle the lawsuit? Lawsuits can be expensive, and recovering your attorneys’ fees is often not an option. Ask your lawyer for an estimate of legal fees, and do the math. It may be cheaper to settle.
6. Do you have the time and resources to devote to a lawsuit? A lawsuit may take a lot of time and energy, and can be emotionally draining. Remember that you might find that you have less time and energy to devote to your work, business, family, and social life for the duration of the lawsuit.
7. Are you within the applicable “statute of limitations”? Check with your lawyer to make sure that any time limits for filing a lawsuit have not run (laws that place a time limit on bringing a lawsuit are called “statutes of limitations”).
8. Where will you be able to sue? If you are suing someone from a different state, a court in your state may not have power or “jurisdiction” over that person. In that case, you might have to sue the defendant in his or her location, which will probably be more expensive and inconvenient for you.
MORTGAGE LOANS FOR SMARTIES
“How much house can I afford?”
This is a critical question that every homebuyer faces, particularly first-timers. If you are in the market for a house, you must assess your personal borrowing limits very seriously with a financial professional (accountant, financial advisor, or attorney) who can take a close look at your finances before you zoom in on your dream home. Champagne Wishes vs. Beer Pockets, you know the drill. From a lender’s perspective, loan eligibility is commonly based on a 30% formula, namely, the monthly mortgage payment should not exceed 30% of one’s gross income. Be mindful, however–this calculation includes more than just the loan and also necessarily covers the four major components of a mortgage: principal, interest, taxes and insurance. This is often referred to as “PITI”. As in, “Oh, what a pity, it isn’t cheap to buy a home!”
Another Reality check: Although mortgage eligibility is based on gross income, your monthly payments are paid from your net income. Hence, your $50,000 paycheck is reduced to $36,000 net, after the typical 28% income tax hit.
Taking $20,000 out of that to pay the mortgage leaves you $16,000 to live on for the year. On a monthly basis, that’s $1,333.33. Factor in a car payment, credit cards bills, student loans, child expenses and there won’t be much left over at the end of the month. You may be one emergency away from disaster, (i.e. car needs breaks, oil burner on the fritz) and you could really be in hot water. What comes next are late payment notices, the lender’s endless collection activities, even losing your home to foreclosure, or bankruptcy. The Lesson? Choose your loan wisely. Don’t adopt Mortgage Loans for Dummies!
Now the Good News: Owning a home can be a powerful financial tool and often an individual’s single largest source of wealth! Even if you don’t have enough money left at the end of the month to invest in traditional wealth-building vehicles like stocks and bonds, simply making your housing payment (mortgage not rent) can help you amass a substantial net worth. It is entirely possible that in 30 years, your nest can double or triple in value into a bona fide nest egg. Now, let’s discuss the mortgage. There are several types: Fixed-Rate, Interest-only and Adjustable Rate.
A fixed-rate mortgage is a loan whose interest does not change throughout the life of the loan. If you have a steady source of predictable income and intend to own the home for an extended period of time (7-20 years at least), Fixed-rate loans are generally recommended. Because the interest rate does not change, homebuyers are protected from sudden and potentially significant increases in monthly mortgage payments as with adjustable rate loans. Most Fixed-rate loans also permit borrowers to make extra payments in order to shorten the term of the loan or to make lump-sum payments to payoff the loan. Non-traditional versions of the fixed-rate mortgage offer the option to pay only the interest for a set period of years before making a one-time change to the payment schedule to incorporate the interest payments as well as repayment on the loan’s principal. They enable homeowners to purchase expensive homes with relatively small payments during the initial period of time in which the interest-only portion of the loan is in effect. Notably however, fixed rate loans have a downside, mainly, that the rate wont change unless you refinance. This is problematic in that it is costly to do so, in most cases.
An Adjustable-rate mortgage is a loan that has varying interest rates, usually low to high. When such a change occurs, the monthly payment is “adjusted” to reflect the new interest rate. After the initial teaser rate period, interest rates increase, this causes the monthly mortgage payment to increase. Adjustable rate loans are suitable for those who anticipate declining interest rates, only plan to own the premises for 3-5 years, or anticipate being able to pay off their mortgages before the interest rate adjustment period is reached. Beware: One of the biggest risks for a homebuyer with a variable-rate mortgage is sudden and sizable increase in the monthly payments, which creates serious problems in household budgeting. This is typically not the financially prudent way to borrow money.
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CLOSING COSTS WHEN BUYING A HOME IN NEW YORK
When contemplating a home purchase, there are certain closing costs and expenses a purchaser can expect to pay. Among residential homes, condo and co-op apartments, there are differences in closing costs.
There are also addition fees when a lender is involved in the financing of the purchase, in the form of origination fees, appraisals, and processing the loan application. If you are buying a house, an engineer report is generally recommended, with additional fees for termite inspection, fuel tanks, lead based paint and other hazards. If there is no current survey acceptable to the lender, a new survey preparation will likely be required, which could run up to $1,000.00 or more, depending on the size and number of structures on the property. If there is a current survey that is approved, then a survey inspection will be sufficient. For house purchases, the purchaser is usually required to pay for homeowner’s insurance prior to closing, which is typically the face value of the mortgage or a 100% guaranteed replacement value policy. Of course, it is generally recommend that even without financing, a prospective homeowner should secure homeowner insurance.
At closing, a purchaser must pay for a one time premium for title insurance, which protects both the purchaser and lender against a defect in the chain of title to the premises.
Title insurance rates are regulated by the State of New York, and accordingly, no company can charge more than the other. Premiums are lower if the purchaser is not obtaining a loan. Other fees are charged including various searches, endorsements required by the lender and other fees for deed recording of the deed, mortgage and other documents at the county clerk. As for co-op and condos, there are lien search fees, UCC-1 Filing Fees, Managing Agent Fees, damage deposits, and other adjustments. New York imposes a tax on the purchaser based on the amount of the loan, as well as “mansion tax” of one percent for purchases over $1,000,000.00. Lenders also collect monies for points, private mortgage insurance, and funds to be held in escrow reserve account, to pay for upcoming real estate taxes and insurance premiums. It is customary to give a gratuity or attendance fee to the title closer at the table for handling the closing, ranging from $150-$250. Last, but certainly not least from this lawyer’s view, attorney fees are a critical closing cost, and usually run from $1,200.00 to $1,600.00 for a typical residential purchase, depending on the difficulty of the transaction and contingencies, i.e. financing, title work, etcetera.
A any experienced entrepreneur, homebuyer or investor will advise, it is money well spent to have a Trusted Advisor at your side! Call us or email us to find out more.
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BUYER BEWARE: WHAT TO CONSIDER BEFORE BUYING A CO-OP OR CONDO IN NEW YORK CITY
Purchasing real estate in New York City has never been more competitive–home values continue to rise. When looking into a purchase of real estate, many buyers understandably concentrate on location and price, with amenities and size a close second.
Of course, finding a place with your “must-haves” is no easy task. Once you find your Dream Apartment, and you are zooming in on your find, your next level of scrutiny should be the physical condition of the building overall, and the offering plan.
Know this: The purchase of a unit in a cooperative or condominium has many significant legal and financial consequences. Prospective purchasers should seriously consider the considerable risks associated with purchasing a unit in a cooperative or condominium in New York City.
A prospective purchaser should read the entire offering plan AND consult with an attorney BEFORE signing a purchase agreement.
Typically, there are rules and regulations that govern the sale of interests in cooperatives and condominiums, which are made pursuant to the terms and conditions of an offering plan. Every offering plan includes detailed information about the physical aspects of the building or group of buildings being offered, whether it’s new construction or an existing building or group of building undergoing conversion.
Additionally, it is important for prospective purchasers to ensure that any representations by a building sponsor or its representatives are set forth in writing (e.g., a rider to the purchase agreement) between the prospective purchaser and sponsor, if not already stated in the offering plan.
Often, in newly constructed buildings there are misunderstandings and discrepancies between what is provided for in the offering plan, assurances by a selling agent, and what is actually reality. Therefore, the recreational facilities, landscaping, building façade, upgrades, common areas, appliances and amenities within the units should be fully detailed in the offering plan, as well as the management’s maintenance and future plans for the building and grounds. Ultimately, the price of the home, namely what you ended up paying, should reflect the quality of the materials used in construction and continuing upkeep of the property.
For purchasers of an apartment in an existing building that is being converted to cooperative or condominium ownership, the sponsor is required to have the building evaluated by an engineer. Furthermore, the offering plan must disclose all of the defects visible to that engineer or known to the managing agent as a result of complaints. Not every defect has to be corrected, as long as it has been disclosed. It is rare for an existing building to be without any defects, so prospective purchasers should read the offering plan carefully.
Besides reading the offering plan section which describes the physical condition of the building, there are other critical things a buyer should do to protect themselves BEFORE purchasing.
In existing apartment buildings, there is always a need for repairs and maintenance of the building, and in new buildings, there is often a “punch list” of yet-to-be completed items by the builder or management of the building. However, a buyer should not be deterred by a need for some repairs. Just be aware of potentially expensive building-wide repairs and know how much such repairs are likely to cost. Ultimately, capital improvements translate into higher common charges and/or maintenance charges. The most expensive problems in existing buildings involve facade defects. Pointing (repairing the mortar between the bricks), roof and elevator repairs are also very costly. Other significant problems include upgrades to the mechanical systems including plumbing, electrical and boiler replacements.
To learn about potential and known building defects, good resources of information include minutes of board meetings, recent financial reports which may also contain information about defects, and the actual or potential cost of certain repairs, or even the local building department, which may have violations on record. A buyer can also ask the sponsor and/or the selling agent, for a list of known or disclosed defects. It never hurts to ask.
I welcome your inquiries, whether buying or selling real estate. Feel free to contact me with any questions… and good luck!
Basic Timeline for Residential Real Estate Purchase
HOW LONG DOES IT TAKE TO BUY A HOUSE?
Amongst all the excitement and anticipation that comes with buying a home, it's important to keep a realistic timeline of just how long it takes to purchase a house. The truth is, the timeline for buying a house can vary due to a number of factors like financing needs, if it’s a buyer’s or seller’s market, the time of year, and type of home you’re searching for. However, in most cases, once a seller has accepted your offer, the closing process typically takes 30 to 60 days - unless you made an all-cash offer.
The journey to becoming a homeowner involves a lot of steps and any of them could extend the process, especially if you're not well prepared. Read on to learn how long it takes to buy a house and get the keys in hand based on the three most common scenarios: a cash offer, a mortgage, and a short sale.
1. How long it takes to buy a house with cash - as little as two weeks
Nearly one-third of homes in the U.S. are bought with all cash. If a buyer has the cash available and provides proof of the funds, buying a house with an all-cash offer can happen in as little as two weeks. Once an offer is accepted, the buyer will likely want to conduct an inspection within the next week.
Assuming that the home inspection goes well or post-inspection negotiations wrap up quickly, attorneys can draw up the transfer documents to close quickly. That is unless the buyer’s cash offer is contingent on proceeds from the sale of his or her home, in which case the buyer will have to wait until their home sells.
Paying all cash for a home has many advantages. Homebuyers can save money on closing costs, home appraisals, mortgage applications and fees, title insurance, and more. Cash buyers can also save money by eliminating the need to pay interest on the mortgage loan. An all-cash offer is typically more attractive to the seller and gives the homebuyer a tremendous advantage against competition. This is due to fewer financing hurdles, a quicker closing process, and no risk of the buyer’s financing falling through.
A step-by-step process for buying a house with cash
Seller verifies that the buyer has the cash to buy the house
With a mortgage, the bank will confirm that the buyer has money for the down payment. Since there isn’t a mortgage involved, the seller will be required to request proof of funds and earnest money.
Secure title and escrow services
The escrow company, a third party in your deal, ensures that all conditions of your real estate transaction are met. They’ll hold onto the earnest money until the deal is done. Your agent should be able to recommend a title company.
A title search ensures there are no outstanding liens or heirs listed in the title history.
1 week to book, 1-4 hours to complete
A home inspector will test the operational status of all major systems – plumbing, electrical, heating, and cooling – and check the roof, the foundation, and the home’s exterior. The inspector's job is not to fix or warn you about potential issues but to take note of the house’s current condition at that point in time and identify any safety or repair concerns.
15 minutes to 5 days
An appraisal will make sure that the home is worth the full purchase price.
You and your agent will walk through the home to make sure the house is in the same condition that it was when you agreed to buy it and to confirm that any agreed-upon repairs have been completed.
Without mortgage paperwork, closing is fairly straightforward.
2. Buying a home with a mortgage loan can take 45+ days
If a buyer takes out a mortgage, it can be a much longer process from the offer to the moment a buyer gets the keys to their new home. After making an offer, most buyers should add 7 to 10 days to their timeline to inspect the property and negotiate any major items that appear from the inspection. The Purchase and Sale agreement is then slated to be signed about 10 to 14 days after an accepted offer. At this time, the buyer usually is expected to apply for a mortgage.
Once a buyer applies for a mortgage, lenders typically need 3 to 4 weeks to issue a mortgage commitment. Why? Well, the lender sends an appraiser to go out to the home and determine the market value of the home so the lender isn’t granting a loan on a home that’s not worth the purchase price. In addition, the lender needs a number of documents from the buyer, proving assets and income. These documents are submitted for a thorough review process before a lender will issue a mortgage commitment.
So, between an offer and the mortgage commitment, a buyer is typically looking at about 35 to 40 days. The process varies in every state; a local real estate agent and a mortgage broker will be able to provide a more precise timeline.
What happens after the mortgage commitment? Sometimes there are additional conditions on the commitment that a buyer needs to satisfy before the lender can mark the loan “clear to close”—like a gift letter for a monetary grant from a relative, for example. Because of new TRID disclosure rules - the guidelines that dictate what information mortgage lenders need to provide to borrowers and when they must provide it - it can take two weeks to close on a home after the mortgage commitment. This would add 14 days to a 35 to 40-day timeline. While a lender can sometimes close earlier than this, TRID rules require at least 3 business days for the disclosure documents prior to closing. At closing, a buyer will sign the mortgage documents and the official transfer of the property will take place. Buyers will often get the keys at closing, although some sellers will wait a couple of hours until the transaction is on record with the registry of deeds before giving the buyers the keys to the home.
So, from offer to keys, most buyers who are taking out a mortgage should anticipate 50 to 60 days to closing. There are some lenders who boast that they can close earlier—and sometimes they can. However, to be on the safe side, a buyer should not expect to close in less than 45 days.
Your agent will support you through the homebuying process. Take advantage of their neighborhood expertise and industry knowledge. They’ll be aware of housing market trends and potential red flags. They’ll help you make a good offer and assist with the negotiating process.
One week or less
A mortgage pre-approval confirms that the lender or mortgage broker has reviewed your finances and is willing to lend a specific amount of money.
Begin touring homes
Few days to a few months
Find out how much house you can afford and begin touring for homes in your desired neighborhoods.
Make an offer and negotiate
A few days
Work with your agent to determine how much to offer and which contingencies, if any, to include. You can check the home value estimate online and ask your agent for a comparative market analysis (CMA). This will show the list and final sale prices for similar homes that recently sold in the area. Some sellers will have an offer-review date, while others will be open to any offers that come in. When negotiating, consider raising your earnest money, waiving contingencies, or proposing an earlier closing date.
Get a home inspection
3-7 days to schedule, a few hours to inspect
If all goes well and the seller accepts your offer, you should schedule a home inspection.
Conduct a final walkthrough
1 hour, day before closing
A final walkthrough ensures the house is in the same condition as when they agreed to purchase it, and any agreed-upon repairs to the property have been fulfilled. If something isn't right, the buyer should ask the seller to fix the problem before the sale is closed.
Close on the house and get the keys
A few hours
Once you and the seller agree on the terms, you’ll enter the closing process, or escrow, which usually takes 30 to 45 days. You’ll likely be in very close communication with your agent, lender, and escrow agency during this time.
3. Buying a short sale property can take at least three months
Contrary to their name, short sales can take many, many months. In the best-case scenario, expect at least three months. In the worst case, well, it could take a very long time. Often buyers don’t apply for the mortgage until after the seller’s lender gives approval of the short sale. This approval can take a month at the earliest to get. If you would like to purchase a short sale property, make sure to have flexibility in your timeline as the length of the process can vary greatly due to a number of factors.
For buyers willing to wait, a short sale offers a number of benefits such as low pricing and favorable financing terms.
A step-by-step process for buying a short sale property
Find an experienced agent
Finding a great agent is key to most real estate purchases, especially short sale transactions.