Category Archives: real estate law

Why Black Homeowners in Brooklyn Are Being Victimized by Fraud

Broadies Byas was deceived into signing away the deed to her townhouse in Bedford Stuyvesant, Brooklyn, after she fell behind on her mortgage payments, federal prosecutors said.

 

 

Broadies Byas’s home is a hidden gem. From the outside, it looks unassuming, if somewhat neglected.

But past the porch of the Victorian townhouse a rich interior reveals itself: tall ceilings, a mahogany staircase, stained glass doors and picture frames virtually untouched since the home was built in 1856.

The house, in the Bedford-Stuyvesant neighborhood in Brooklyn, has an even more remarkable story — Ms. Byas’s father, a teacher who was born into a family of former slaves in South Carolina, bought it in 1957 for $7,500.

But now the house is going through a tumultuous chapter. Ms. Byas, 54, is working to reclaim it after she was duped into signing away her property deed, according to federal prosecutors. Though the house is worth about $1.2 million, she gave it up, unwittingly, for a mere $120,000.

“I pride myself as a true New Yorker — angry, skeptical, not trusting,” Ms. Byas said. “But I felt like the stupidest person on the planet.”

A booming real estate market in Brooklyn is fueling a crime that law enforcement authorities say has taken hold in largely African-American neighborhoods that are being gentrified — deed theft, which involves deceiving or sometimes coercing a homeowner into signing forms that transfer ownership of a property.

In many cases, a homeowner is made to believe the documents involve some type of financial assistance, but in fact turn out to be the property deed.

Bedford-Stuyvesant and Crown Heights, both known for their collection of largely intact townhouses that cost a fraction of what similar homes sell for in Manhattan, have become hotbeds for deed theft, according to law enforcement authorities. Homeowners in Prospect Heights, Brownsville and East New York have also been targeted.

Real Estate Shell Companies Scheme to Defraud Owners Out of Their Homes

Of the nearly 3,000 deed fraud complaints recorded by the city since 2014, 1,350 — about 45 percent — have come from Brooklyn, according to data compiled by the city’s Department of Finance. (The borough accounts for roughly 30 percent of the city’s housing units.)

The authorities believe the problem may be more widespread since homeowners may not realize right away that they have been victimized.

“It’s just a drop in the bucket,” Eric Gonzalez, the Brooklyn district attorney, said at a recent town hall meeting in Bedford-Stuyvesant. “It’s really hot in the real estate market in Brooklyn. People want to steal our homes.”

In Ms. Byas’s case, which led to the arrest of a man and his son, the aim was to flip her home and try to resell it to buyers who have been flocking to central Brooklyn seeking more affordable homes in lower-income neighborhoods.

ImageHomeowners in largely African-American neighborhoods, like Bedford-Stuyvesant in Brooklyn, have become targets of deed theft.  
Credit…Elias Williams for The New York Times

Those orchestrating the schemes often hide behind limited liability companies and shell companies, making it difficult for homeowners to determine if they are being swindled and by whom.

“By the time a homeowner realizes what has happened, the home may have already been sold or mortgaged multiple times,” said Christie Peale, executive director of the Center for N.Y.C. Neighborhoods, a nonprofit organization that helps homeowners.

Even though rising property values in neighborhoods like Bedford-Stuyvesant have provided homeowners with more equity, many remain cash poor.

As they grow older or lose a spouse, their homes can accumulate liens stemming from unpaid property taxes or water and sewage charges, making them vulnerable to fraudsters who often search public records to identify homeowners under financial stress.

“Deed theft has become a common tool of career criminals and unscrupulous real estate developers to illegally obtain real estate, most often with the goal of selling it at a huge profit in high-demand housing markets,” Letitia James, the state attorney general, said in an email.

Dairus Griffiths, 65, has been mired in a five-year legal battle to recoup his home in Bedford-Stuyvesant after he was ensnared in a scheme and ended up giving up the house, which was worth $1.3 million, for $630,000.

Mr. Griffiths was facing foreclosure after a tenant stopped paying rent, causing him to fall behind on his mortgage payments.

Not long after foreclosure proceedings began, a man named Eli Mashieh approached Mr. Griffiths claiming to run August West Development, a real estate firm in Queens, according to Theresa Trzaskoma, Mr. Griffiths’s lawyer.

He told Mr. Griffiths that he was going to lose his house and offered him a cash advance, Ms. Trzaskoma said. Feeling pressured and fearful that he would soon be evicted, Mr. Griffiths signed a document selling his home for $630,000, believing it was a preliminary sales agreement that he would have the chance to reconsider.

After talking to his daughter, Mr. Griffiths did try to cancel the sale, but when he called Mr. Mashieh he refused, saying it was a done deal. Mr. Mashieh obtained a default judgment and the sale eventually went through.

Image

A brownstone building under renovation in Bedford-Stuyvesant. 
Credit…Elias Williams for The New York Times

But Daniel Richland, a lawyer for Mr. Mashieh, disputed Mr. Griffiths’s claims and said a court had effectively ruled that the sale was legitimate.

Some homeowners may not even know that their deeds have been stolen, the authorities say. Documents proving the sale of a property are recorded by the city registrar’s office, but not necessarily checked to ensure that they are legitimate. Owners might continue paying the mortgage for a property they no longer own.

“It is, in fact, easier to steal ownership of a home than actually burglarizing it,” said Travis Hill, who oversees real estate fraud for the state attorney general’s office.

Recovering a home whose deed has been illegally transferred can be difficult unless there is clear proof of wrongdoing, like a forged signature. In one case, the authorities arrested a man accused of committing fraud because the signature on a deed came from someone who had been dead for years.

It is also challenging to determine whether the person had entered a bad, but not necessarily fraudulent, financial deal. “It’s often a very hard line to straddle,” said Noelle Eberts, a lawyer at the New York Legal Assistance Group who represents Ms. Byas.

In Ms. Byas’s case, two men, Herzel Meiri, 64, and his son, Amir, set up a limited liability company called Launch Development.

The two men instructed employees to search online for financially distressed properties in Brooklyn, Queens and the Bronx, according an indictment filed by federal prosecutors in Manhattan. Ms. Byas was among 60 homeowners the two men, along with five other accomplices, were accused of swindling.

The men described themselves as foreclosure specialists who helped property owners with loan modifications or promised that they would be able to transfer their properties to trusted relatives to avoid losing their homes.

Homeowners were encouraged to sign documents that were later used as proof they had agreed to sell their homes to Launch Development, prosecutors said.

The company also deceived banks into approving the sale of homes by providing falsified documents, including paperwork edited or completed after homeowners had signed them.

“Launch Development resold many of the homes, which were purchased at fraudulently deflated prices, for an enormous profit,” the indictment read.

The Meiris pleaded guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of 30 years in prison. Herzel Meiri was sentenced to 10 years’ imprisonment in August 2018, and Amir Meiri to five years’ imprisonment in November 2018.

Ms. Byas’s ordeal began in 2008, after she learned she had multiple sclerosis and could no longer work. By 2014, she owed about $69,000 in unpaid mortgage payments and other bills and was facing foreclosure.

She believed a second mortgage would prevent her from losing her home.

One day, a young man rang her doorbell claiming he worked for Homeowners Assistance Services of New York, an organization specializing in foreclosures that turned out to be linked to Launch Development.

He was polite, had a cherubic face and was someone Ms. Byas said she would feel comfortable inviting to a cookout. “When you’re in a panic, you think, ‘I can’t believe my luck,’” she said.

After several visits from the man, Ms. Byas was taken by a private car service to Launch Development’s offices in Queens, where she described being, at various turns, cajoled or pressed into signing reams of documents. Instead of a loan agreement, she had signed a deed document, giving away the title to her home.

In total, the company schemed to buy her home for $120,000, about 10 percent of the property’s value. She was able to show that she had been swindled because the check came from Launch Development, which had been on the radar of law enforcement authorities.

Still, five years later, the title to her property is in the hands of the government and she is waiting to hear when she will get it back.

“We were living the American dream,” Ms. Byas said. “This is a house that your ancestors worked for. They came from nothing.”

Real Estate Shell Companies Scheme to Defraud Owners Out of Their Homes

7-Year Fight to Reclaim a House Stolen in the Wave of a Pen

Think You Own Your House? Check the Deed

Source: The New York Times – By Oct. 21, 2019
Kimiko de Freytas-Tamura was previously based in London, where she covered an eclectic beat ranging from politics to social issues spanning Europe, the Middle East and Africa. Born and raised in Paris, she speaks Japanese, French, Spanish and Portuguese. @kimidefreytas  Facebook
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What property rights do I have if I’m in a common law relationship?

Property right in a common law relationship

When it comes to the division of property in Ontario after a common law relationship comes to an end, many people believe that they benefit from the same legal rights as any married couple, especially when children are involved.

It’s true to say that legal rights pertaining to children will be the same as if you were married, however, the biggest difference between married and unmarried couples is that you’re not automatically entitled to make any claim to the property you’ve shared and possibly contributed to, nor do you have an automatic right to live in the home that you have resided in.

Property right in a common law relationship

When am I entitled to make a claim on a property owned by my common law partner?

Firstly, you would need to be considered to be in a common law relationship according to the Family Law Act and then you would need to provide evidence to prove monetary or another contribution, such as your time, which significantly bettered the household and benefited your common law partner. You may also have a claim if you can establish that the manner in which you operated as a couple greatly prejudiced you while benefiting the other side; thereby entitling you to have an interest in their property.

How do I know if I’m in a common law relationship?

The rules around this vary from province to province but in Ontario, this usually comes down to the length of the relationship and whether any children are involved. If there are no children involved, you are required to have lived together for at least three years before being deemed to be in a common law relationship and where there are children from the relationship, this time may be reduced to one year, although every case is different.

How can I prove my contribution to the household?

This is where the division of property becomes more complex in a common law relationship scenario as the responsibility falls upon the non-owner of the property to provide evidence of their contribution.

Most people in this situation will need to consult a lawyer to represent them in court as it becomes a matter of contract law as opposed to family law. If you feel as though you’ve made a valuable contribution, monetary or otherwise, over the course of the relationship, there are essentially two claims that you might be able to bring to court; unjust enrichment and constructive trust, both of which have different factors that need to be proved for the judge to make an award.

Protecting your interests

Whether you’re in a relationship and about to move into a property owned by your partner or, already in this situation and concerned about protecting your interests, there are ways in which you can be proactive and feasibly avoid the need for court should the worst happen.

Cohabitation Agreements can be drawn up by an experienced family lawyer, outlining how property should be divided if the relationship were to break down. Although this might seem like an awkward conversation at the time, once you and your partner have come to an understanding about where you both stand, it’s much less stressful to address it at the start of a relationship than it is when things may have become strained. You can get a sample cohabitation agreement but you will each need your own lawyer to advise on what your legal rights and obligations are under it for it to be legally binding in Ontario.

If you’re already going through the process of separation from a common law partner, the other arrangement that you could make is a Separation Agreement. As long as the parties are able to agree, a well drafted agreement sets out how the property is to be divided and can again save on time and money in going to court, but it is also enforceable by court should the need arise (again, so long as each party has made full financial disclosure and had independent lawyers acting for them).

Need advice on your particular situation?

If you want to understand how to best protect your assets or you need some help determining what you might be entitled to, contact our team today to book your free consultation with a member of our Family Law team.

Epstein & Associates, Barristers and Solicitors – Posted on August 12, 2019

 

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Don’t underestimate the value of a real estate broker when buying or selling a house

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Buying or selling a house on your own sounds like an easy task, but anyone who has tried it, quickly learns how difficult it can be and how much the experience of a licensed real estate broker can simplify the process.

“In a way, anyone can sell a house, but it doesn’t mean that you will have an easy transaction or get a fair price,” said Daniel Dagenais, a Realtor® in Pointe-Claire and president of the Greater Montreal Real Estate Board’s (GMREB) Board of Directors. “There’s no point in selling your house and feeling like you’re king because you did the transaction yourself and didn’t pay any commission, but you actually sold it for cheaper than it’s worth.”

Dagenais outlined several key attributes that real estate brokers bring to the table when it comes time to buy or sell a house.

Brokers set fair prices for buyers and sellers

Real estate brokers in Quebec have access to the listings not only of houses for sale, but also those with the prices of houses that have already sold and those that have expired. Armed with that information and their own experience, they can quickly establish the right price for a house.

“The best price for a house is not necessarily the highest price, but is a fair price,” said Dagenais. “Sometimes buyers are not well educated about the market and they see something for sale and they end up paying too much money. I think this happens with buyers who are not using a broker.”

Brokers negotiate on behalf of their clients

Negotiating a closing price when buying or selling a home can be stressful. Real estate brokers conduct many transactions throughout the year and are emotionally detached when negotiating on their client’s behalf.

“A lot of people think they know how to negotiate,” said Dagenais. “This may be the case, but even for a good negotiator, a broker acts as a middleman who has a certain distance in the process. When you have a Realtor® making an offer and he’s asking another Realtor® to respond, it’s much easier than for the Realtor® trying to negotiate directly with a buyer or seller who becomes way too involved emotionally.”

Brokers have specialized knowledge of legal requirements

There is a lot of legal paperwork required to complete a real estate transaction that can overwhelm someone not trained how to do it properly. As part of their training to obtain their license in Quebec, real estate brokers spend a full 45 hours learning the intricacies of filling out the necessary forms to buy and sell a house.

“Filling in the forms properly is crucial. If you make one little mistake, maybe you don’t put the comma in the right place, it could jeopardize the transaction, create a lawsuit or just create dissatisfaction,” noted Dagenais. “We might have only a few hours to get an answer back so it has to be on the spot and you have to be very comfortable with all aspects of filling in the forms properly.”

Brokers are highly trained

Before they can buy or sell houses, real estate brokers must undergo close to 400 hours of training that takes about four or five months to complete. They must then pass a government-regulated exam in order to get their license. Before 2010, the exam was multiple-choice, but now students have to write long-form answers. To keep up with changes in the industry, brokers are also required to take 18 units of continuing education every two years, which amounts to 18 to 36 hours of additional training.

Brokers follow a code of ethics

Real estate brokers must act ethically in their dealings with the public and any who fail to do so can be fined by the Discipline Committee of the Organisme d’autoréglementation du courtage immobilier du Québec.

Dagenais also noted that real estate brokers are subject to a code of ethics and are covered by professional liability insurance that provides financial protection to consumers in case of unintentional fault, error, negligence or omission committed by a broker.

Brokers have access to specialized technology

From drone photography to virtual reality, the real estate industry follows the latest tech trends to help bring buyers and sellers together, but their biggest technological strength is their extensive database system of properties for sale.

“The most important tool is the database system that allows us to see all of the data of all the properties,” said Dagenais. “We can really evaluate properties on the market.”

Brokers are part of a network

Real estate brokers represent both buyers and sellers and work with each other to bring the two together.

“The key really is collaboration and we have an industry that is providing all the tools for collaboration. For real estate brokers, it’s kind of unique that when you accept a mandate to sell a property, you also include a portion of your compensation that you will give to a competitor who brings you the buyer. The high level of collaboration between brokers is really a unique feature of Quebec’s real estate industry.’’

“When you hire a real estate broker, you are really hiring 13,000 brokers,” said Dagenais, alluding to the number of brokers working in Quebec, “plus the visibility and access to Centris.ca with close to 100,000 available properties.”

Source:   Mark Stachiew, Special to National Post | February 22, 2017 

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5 tips for finding the right lawyer

In many respects lawyers are similar to any other trade or profession that you will need to retain as part of your investing business. There are good lawyers and bad lawyers. However, unlike a carpenter or a painter, it’s very difficult for most people to recognize if their lawyer is underperforming.

In fact, you may not even know that you’re using a bad lawyer until many years later, if ever. This is because most people do not have sufficient experience dealing with lawyers to be able to differentiate the bad from the good. 

To help ensure that you’re getting your money’s worth, here are some things to keep in mind when looking for a lawyer (or evaluating your current lawyer):

1. Find a lawyer who works with property investors – or better yet, who is a property investor

A good lawyer is a problem solver. Like a sick patient and a doctor, you come to the lawyer with a legal problem and they resolve it. A great lawyer will solve problems you may not even know you have yet.

A lawyer who is familiar with the business of property investing will be able to be proactive and offer solutions and ideas as to how to protect and further your business interests without you having to first identify a problem for them.  As an added bonus, lawyers who act for investors have a solid network and can often put clients in need together to make deals happen.

2. Find someone you like

Ideally, you want to build a long-term relationship with your lawyer and have them become an integral part of your business operations. Finding someone you like and who has a compatible personality goes a long way in helping to build that long-term relationship.

3. You get what you pay for

Lawyers who practice exclusively in residential real estate law typically operate on low margins and rely on volume to pay the bills. In order to maintain low margins these lawyers often rely heavily on their clerks and fall back on the title insurance that you’re buying to cut corners on analysis. You may pay less hiring the cheapest lawyer on the block, but you’ll almost inevitably end up getting less value for your money at the end of the day.

4. Avoid Yes-Men and Yes-Women

Many people come to a lawyer to help solve a problem and already have a pre-conceived notion of what the solution should be. Many lawyers are willing to go to great lengths to appease their clients in order to win their business, and avoid pointing out the folly in their client’s thinking in order to avoid angering the client.You’re paying for your lawyer’s opinion and advice; make sure you find a lawyer that gives you an honest analysis and doesn’t simply tell you what you want to hear.

5. Get online

In this day and age every lawyer worth their salt has an online presence. Read their bio online and find out what experience they have and which professional associations they are involved with. If you’re lawyer practices litigation, look to websites such as Canlii.ca to see if they’ve been involved in important cases and what those cases entailed.

Matt Maurer practices commercial litigation at Minden Gross LLP in Toronto (mindengross.com/our-people/details/matt-maurer). He regularly advises property investors and real estate professionals in all aspects of their businesses and specializes in dispute resolution. 

Source: Canadian Real Estate Wealth – 04 Jun 2015

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Joint tenancy can help avoid probate fees but not necessarily capital gains tax.

Joint tenancy can help avoid probate fees but not necessarily capital gains tax. 

Q: I have joint tenancy with my mother on two properties—a condo in Toronto and a cottage in Kawartha Lakes. She passed away in June 2014. I am keeping both properties. My accountant says that he can count the condo as my mom’s primary residence, but I have to pay capital gains tax on the cottage even though we have joint tenancy. I thought that with the right of survivorship, I didn’t need to pay capital gains tax? He says I am wrong. Can you please tell me what you think?

Kim

A: The Canadian Inheritance Study by Decima Research estimates that about $1 trillion in inheritances will be received by Canadian Boomers in the next 20 years. So your estate planning conundrum is becoming increasingly common, Kim.

When property is owned by more than one party, it is frequently held in joint tenancy with the right of survivorship. Spouses typically hold property as joint tenants, whereby upon the death of the first, the asset passes directly to the survivor and does not make up part of the estate of the deceased. More and more, I am seeing elderly parents holding property in joint tenancy with their children, which has pros and cons.

One of the pros is that the time and cost to administer an estate may be reduced. In particular, assets held in joint tenancy that pass to a survivor typically avoid probate fees. Probate fees in Canada can be as high as 1.5% of an estate (Ontario) and must be paid on certain assets in order to validate the will and permit the estate trustee to distribute assets to the beneficiaries. Other provinces have lower, flat fees and probate is less of a financial concern.

One of the many cons is that capital gains tax issues may arise.

In some cases, Kim, when someone gifts an asset to another person, there is capital gains tax that arises at the time of transfer. This is because when you transfer an asset to a third party—or any part thereof—even if money hasn’t changed hands, you are generally deemed to have sold it at fair market value.

In your case, it could likely be argued that the gift of half of your mother’s condo and cottage was not an outright gift, but rather, a case of a resulting trust. Assuming your mother was the sole owner at the time of transfer, used the properties herself and paid the ongoing maintenance costs, case law may suggest that the presumption of advancement did not apply and you were technically holding half the properties in trust for your mother. Accordingly, capital gains tax would not apply at the time of transfer. Though the properties may have been legally held jointly by the two of you, the properties were still beneficially your mother’s until her death.

Ask a Planner: Leave your question for Jason Heath »

Every Canadian is entitled to have one principal residence that grows in value tax-free. Your mother had two properties, meaning that one of them was growing in value on a tax-deferred basis. On your mother’s death, she would be deemed to have sold the two properties and one sale would be taxable, regardless of her holding the properties jointly with you. Capital gains tax would be payable at that time.

So I’m sorry to report that your accountant is correct, Kim. There is capital gains tax payable on one of your mother’s properties. You have discretion as to which property you deem to be her principal residence and you may be able to designate one property as her principal residence for some period of time and one property for another period of time. In other words, if she owned her condo for 20 years and her cottage for 10 years, you might deem her condo to be her principal residence for the first 10 and her cottage for the second 10, in particular if the cottage was worth more and/or rose more in value.

In this example, half the condo capital gain would be taxable and the cottage capital gain would be tax-free. In this way, you can at least retroactively minimize the capital gains tax payable.

Another important point is that if your mother didn’t pay capital gains tax when she gifted the properties to you, which I assume she didn’t, the properties may technically be subject to probate and the resulting cost of probate fees. This is because these assets still technically belonged to your mother on her death and likely should have made up part of her estate for probate purposes.

Capital gains tax is a fact of life, Kim. And in this case, a fact of death. Although it’s unfortunate to pay it, it’s better than the alternative—having an investment that has not gone up in value or worse yet, has lost money.

Jason Heath is a fee-only, advice-only Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto, Ont. He does not sell any financial products whatsoever.