MORTGAGE FORCLOSURE

If you are considering a real estate short sale of your home, you should be aware that you may receive a form 1099-C for the amount of the lender's losses. This is considered loan forgiveness in the eyes of the IRS. If you have other assets such as saving and you are not insolvent, you may end up being responsible to pay ordinary taxes on the amount of the 1099-C. If you settle a debt with a creditor for less than the full amount owed, you may be required to report this forgiven debt as regular income, with certain important exceptions. The forgiven debts include money owed after foreclosure or property repossession or credit accounts that you don't pay. There are exceptions noted below. If a lender forgives or writes off $600 or more of a debt's principal (the amount not including interest or fees) must send you and the IRS a Form 1099-C at the end of the year. When you file your tax return for the tax year in which your debt was written off, the IRS will require that you report the amount on the form as income. While you may not have received this form from the creditor, the creditor may have submitted one to the IRS anyway. If you don’t list the income on your tax return and the IRS has the information of the transaction on file, you could get a tax bill or, worse, an audit notice. This could end up costing you more than just the original tax bill. There are several exceptions stated in the Internal Revenue Code. For example, you do not have to report the income on your tax return if the write off of the debt is intended as a gift, you discharge the debt in bankruptcy, or you were insolvent before the creditor agreed to settle or write off the debt. Also The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief. You should consult a qualified tax and legal counsel to see if these circumstances apply.

MORTGAGE FORCLOSURE

What is a short sale? You may hear the term "short sale" by a real estate agent in different fashions, i.e. this is short sale because the seller is accepting less than the asking price, this is a short sale because the seller is accepting less than the fair market value, etc. But for terms of mortgage foreclosure, a short sale is when the seller and the lender agree for the seller to sell the house, either to the lender or a third party, and the lender will accept less than amount due on the mortgage. The lender usually forgives the difference and considers the debt repaid but there is no guarantee that a lender who accepts a short sale will not legally pursue a borrower for the difference between the amount owed and the amount paid. More on this in later blogs.

UNEMPLOYMENT INSURANCE BENEFITS - MISCONDUCT

This came up the other day with a client so I am posting this again. Naturally, you can be fired by your employer for misconduct. But the level of "misconduct" that the employer claims you were engaged in may be different than the level of "misconduct" that would deny you unemployment insurance benefits. You must look at the two issues as being two different issues. When you have been discharged, and seek unemployment benefits, only to be denied because your employer alleged misconduct: remember to request a hearing. The hearing is not whether or not you should get your job back but whether you are entitled to job benefits. The allegations of your employer may be disputed by you but again, the standard of misconduct that you are held to for benefits can be different than the standards utilized by your former employer. Under Section 593.3, if a claimant lost employment prior to the filing of his claim through misconduct in connection with his employment, he is disqualified from benefits beginning with such loss of employment and ending when he has worked in subsequent employment and earned remuneration at least equal to five times his weekly benefit rate. In addition, any wages earned in employment which ended due to misconduct in connection with that employment cannot be used to establish a valid original claim for benefits. (See Field Memo 2-99 for further detail. The term "misconduct" is not defined in the statute. However, the Court of Appeals in Matter of James(34 NY 2d 491; A-750-1775) has indicated that "misconduct" is any volitional act or omission which is detrimental to an employer's interests. Subsequent Appeal Board decisions have indicated that "misconduct" may include acts or omissions off the job as well as on the job, if adverse effect on the employer is demonstrated. Notwithstanding the broad concept of misconduct now applied, there remain circumstances which would not justify the imposition of a disqualification for misconduct, including:

Mere inefficiency,

Inadequate performance as the result of inability or incapacity,

Inadvertence or ordinary negligence in isolated instances,

Good faith errors in judgement or discretion.

On the other hand, even inadequate performance may be misconduct if it can be shown that it resulted from gross negligence, indifference, or recurrent carelessness.

MORTGAGE FORCLOSURE

I recently attended a seminar on mortgage foreclosure workouts and will be discussing same in upcoming blogs. One thing of note - the typical foreclosure action in New York State, from service of papers to foreclosure sale, takes around 500 days. In Nassau County, around two years. In upstate New York, the process is quicker. Most foreclosure actions, at the moment, are in Queens, Nassau and Suffolk.

DISPUTES WITH SCHOOL BOARDS

Recently, I received an adverse decision in an appeal to the New York State Education Department in which the Interim Commissioner, stated in dictum, that the federal guidelines contained in ERIC, the Education Resources Information Center of the United States Department of Education, was not binding on New York State School Boards. This is not true and, obviously, must be subject to an appeal if possible. Here is a quote from Identifying and Implementing Educational Practices Supported By Rigorous Evidence: A User Friendly Guide U.S. Department of Education
Institute of Education Sciences National Center for Education Evaluation and Regional Assistance, December 2003, Prepared for the Institute of Education Sciences Grover J. Whitehurst, Director :
"The field of K-12 education contains a vast array of educational interventions - such as reading and math curricula, schoolwide reform programs, after-school programs, and new educational technologies - that claim to be able to improve educational outcomes and, in many cases, to be supported by evidence. This evidence often consists of poorly-designed and/or advocacy-driven studies. State and local education officials and educators must sort through a myriad of such claims to decide which interventions merit consideration for their schools and classrooms. Many of these practitioners have seen interventions, introduced with great fanfare as being able to produce dramatic gains, come and go over the years, yielding little in the way of positive and lasting change - a perception confirmed by the flat achievement results over the past 30 years in the National Assessment of Educational Progress long-term trend.
The federal No Child Left Behind Act of 2001, and many federal K-12 grant programs, call on educational practitioners to use "scientifically-based research" to guide their decisions about which interventions to implement. As discussed below, we believe this approach can produce major advances in the effectiveness of American education. Yet many practitioners have not been given the tools to distinguish interventions supported by scientifically-rigorous evidence from those which are not. This Guide is intended to serve as a user-friendly resource that the education practitioner can use to identify and implement evidence-based interventions, so as to improve educational and life outcomes for the children they serve."

MORTGAGE FORCLOSURE

Click on the title above to view an excellent video presentation from the New York State Bar Association offering practical tips and advice for homeowners facing mortgage foreclosure.

LANDLORD/TENANT MATTERS IN NASSAU COUNTY

A word of caution regarding stipulations. In Housing Court, it can be a mad rush of many matters to be heard that day: the lawyers are in a rush, the landlords, the tenants, the court, the clerks. In most cases, the matter is settled through a stipulation. But make sure it is written up carefully and that you, either the landlord or the tenant, and their counsel, make the terms clear to everyone. The courts have held that a stipulation is a contract and that the law favors stipulations. Unless a stipulation is invalid due to fraud, collusion, mistake, accident, duress, or unconscionability, or is contrary to public policy or ambiguity suggesting the words did not represent the agreement, parties will not be relieved from the consequences.

UNEMPLOYMENT INSURANCE BENEFITS - VOLUNTARY SEPARATION

Employee and employer have argument. Employee asks "Do you want me to give my two weeks notice?" and employer says "You can leave now" and pays employee salary for that day. Employee is denied benefits by Department of Labor on the grounds of voluntary separation. Hearing is held and I argue that employee's statement was not a resignation. A decision is reached in favor of employee but on the ground that the determining factor was that the employer paid only up until that day and did not give "two weeks" pay. So the voluntary separation, in effect, became a termination because the two week notice period was shortened by the employer. Now, what if the employer gave the employee two weeks notice and employee said "No, just give me my money for today, I'm leaving".

NEW CONSUMER PROTECTION BILL

An important consumer protection bill, authored by Senator Brian X. Foley (D – Blue Point), became law following signing by Gov. Paterson. The legislation (S. 3331B) cracks down on auto warranty scams that have been widely reported throughout New York State. For months, New Yorkers have been the targets of telemarketers selling bogus auto warranties. The legislation prevents the deceptive solicitation of vehicle warranty policies. It makes it illegal for a person or business to make misleading solicitations for a motor-vehicle warranty where the solicitor erroneously implies there is a current warranty relationship. The bill was sponsored in the Assembly by Assemblyman Ken Zebrowski (D – Rockland). The legislation passed unanimously in both the Senate and Assembly. It takes effect immediately.

UNEMPLOYMENT INSURANCE BENEFITS - UNIONS & WILLFUL MISREPRESENTATIONS & MISCONDUCT

Here's a concern for union employees. You are charged by your employer for misconduct and your union negotiates a settlement wherein you resign and keep your pension and other benefits. This may negate your eligibility for unemployment insurance on the grounds that you voluntarily resigned. Perhaps if you feel your union is not adequately representing you, you should consult with an attorney before you sign the union negotiated settlement.

A DAY IN LANDLORD & TENANT COURT/ELDER LAW

Yesterday, while representing tenants in Landlord/Tenant court, two things of interest came up:

1. Tom Suozzi's office has produced a booklet on obtaining financial and other assistance for the elderly and home bound. Contact the Nassau County Department of Social Services, 60 Charles Lindbergh Blvd., Uniondale, NY 11553-3656 for a copy.

2. Landlords seem to be getting tougher, not only in negotiating settlements for non-payment, but also as to who they will rent to. Be wary of housing discrimination - if you feel you have been a victim, contact The Nassau County Commission on Human Rights, 240 Old Country Road, Suite 606, Mineola, New York 11501 (516) 571-3662. Remember, housing discrimination based on your race, color, national origin, religion, sex, family status, or disability is illegal by federal law. If you have been trying to buy or rent a home or apartment and you believe your rights have been violated, you can file a fair housing complaint. The Office of Fair Housing and Equal Opportunity, Department of Housing and Urban Development has an on-line form or call toll-free 1 (800) 669-9777.

MORE ON DIVORCE AND RELOCATION

So what happened in scenario 2? Another long expensive matrimonial. Husband and wife tried too save expenses by negotiating the terms of their agreement and giving it to the lawyers. What the lawyers drafted and what they gave to the parties, upon my review, were not what they thought was in it. Wife had established residency in ABC State and had separation agreement filed in ABC State. Husband moves to XYZ state but was of course forced to retain a lawyer from ABC State and continually travels from XYZ State to ABC State to have visitation. Sometimes Wife travels with children to XYZ State. Both parties are extremely unhappy and Husband has stated he intends to file for a divorce. But where?

MORE ON DIVORCE AND RELOCATION

So what happened in scenario 1? A long expensive divorce action. Wife had established residency in ABC State for divorce action and one day, while Husband was visiting Wife and children, was served with divorce papers. Jurisdiction was firmly established in ABC State. Husband was forced to retain a lawyer from ABC State and had to continually travel from New York to ABC State to have visitation and participate in the 7 year plus divorce.

MORE ON DIVORCE AND RELOCATION

Here is scenario 2. Husband and wife and children live in New York. Husband and wife begin to have problems. Husband and wife enter into separation agreement in New York which permits wife, who has family in ABC State, to move to ABC State. Wife moves to ABC State. Husband moves to XYZ State. Now what?

MORE ON DIVORCE AND RELOCATION

Here is scenario 1. Husband and wife and children live in New York. Husband and wife begin to have problems. Wife, who has family in ABC State, says to husband that the problem is she needs to be with family in ABC State. Wife & husband move to ABC State. Husband, however, can only reside in ABC State during weekends as husband works in New York and cannot transfer his business to New York. After residency time of ABC State is obtained, Wife sues Husband for divorce seeking custody, support, etc. Husband is in shock. How could this have been prevented?

DIVORCE - A DIFFERENT BALLGAME

Following yesterday's post - let us mention relocation - when one parent moves or wants to move. This becomes a custodial issue when the "custodial" parent wants to move away with a child, often out-of-state, which of course disrupts the parenting schedule now in place. If the "non-custodial" parent objects, there is an issue for the court. The jdge may permit this relocation based on what's best for the child. Sometimes of course, a parent will simply take a child and move to another state, or even another country, without the other parent's consent or court permission, and then a very heavy litigation will develop. I bring this issue up, in light of yesterday's discussion, and because of a blog which is worth repeating - and although it is talking about the situation in Philadelphia, I believe the situation is the same here in Nassau County:

"Wednesday, September 23, 2009
The New Economic Realities of Family Court

I have had a hiatus from The Legal Intelligencer blog, but I am now comfortably situated at Duane Morris and Eckert Seamans Cherin & Mellott is lucky to have my friend, Mike Meehan, and many of my former Wolf Block partners as members.

Thanks to Meehan, I recently spoke with Judge Margaret Murphy at Family Court in Philadelphia. Murphy explained to me that the economy has had a big impact on decisions in Family Court. Just as the economy has hit us all, parties in Family Court have suffered from layoffs, work hour reductions, changes in benefits and decreased retirement assets. Murphy said she isn’t necessarily seeing a change in the volume of cases, which always seems remarkably high. Rather, the economy has changed the types of the disputes that she hears relating to child and spousal support and equitable distribution.

It’s not just that support payments are being reduced because of income changes. Other aspects of support are also affected by economic circumstances. By way of example, an issue arising with frequency is school choice. Parents unable to agree on the school that a child will attend often seek judicial intervention. In the past, arguments focused on what type of private or parochial school would most benefit the child. With layoffs and changes in income, Murphy is seeing more parents financially unable to pay for any private school. In other settings, one parent may agree to provide support while a child attends college. More and more parents are unable to afford this form of agreed upon support. Sometimes it is a simple inability to pay because of a lost job. Other times, a lender may refuse to allow a parent to co-sign a student loan because of the parent’s decreased income or because real estate values are so depressed as to make the parent non-creditworthy.

The loss of medical coverage, either because of a lost job or because job benefits are cut, is occurring more frequently. For example, if a parent loses a job and thus loses health coverage, the cost of COBRA can be exorbitant, particularly when coupled with a loss of income. The loss of medical coverage affects not only well-care checkups of dependent children, but other types of treatment as well, such as orthodontic treatment. While Murphy routinely refers dependent children to the CHIP program, parents may have little choice but to go without health care or elective medical treatment for children.

According to Murphy, the economy also is changing the dynamics of equitable distribution calculations. Businesses that were at one time flourishing, or at least profitable, may be subject to significant reductions in value, thereby changing the equation for the division of marital property.

The same is true for depressed real estate values. In the past, refinancing was a method of choice to divide the marital home, allowing one spouse’s interest to be purchased by the other through refinancing. With decreased property values and less credit available, refinancing is not always an option. As a consequence, Murphy said she is seeing more marital homes being marketed for outright sale. The sale of the marital home in a depressed market brings on its own set of problems, as sales may be slow and at reduced sale prices. Some families may own vacation property, which replicates the problems in the division of the marital home. The vacation home market is challenging for the additional reason that the market is driven by buyers who can afford the luxury of a second home – a relative rarity in this economy. Families also have been hit hard by the expenses that come with second homes, such as increased taxes in some states and the costs of maintaining these properties.

All of us shuddered to watch our retirement accounts decline last year. Murphy calls these passive declines. Passive declines in IRAs and 401K plans have had a decided effect on equitable distribution. In the past, if one party to the marriage had established a sizeable retirement account, alimony could be reduced or the marital estate partitioned based on the assets in the account. Although few and far between, Murphy has seen parties claim that these declines were not passive, and that the accountholder should have foreseen the economic collapse and invested more conservatively.

In short, the economy is having a significant impact in the way in which issues are heard in Family Court. As the economy establishes its footing, no doubt these issues will be revisited under yet another set of changing economic circumstances.

Charlotte E. Thomas
Duane Morris LLP
cthomas@duanemorris.com

Posted at 11:44 AM in Charlotte E. Thomas, Courts, Family Law |"
Copyright The Legal Intelligencer Post

MATRIMONIAL ISSUE - NY DIVORCE JUDGMENT CHANGES TO ANOTHER STATE

This problem has come up several times so let's begin slowly with the law. A New York judgment of divorce is obtained. One ex-spouse moves away to another state. What happens? Here first is a discussion from lawyers.com which accurately describes the issue of a sister state recognizing the divorce decree of another state:

"All states treat a divorce decree as valid as long as one spouse fulfilled the state law requirements in the state where that spouse filed for divorce. Usually that means that the spouse must have been a resident of the state for a certain period of time prior to filing for divorce. Sister states must recognize a divorce decree as valid when it is based on the Full Faith and Credit Clause, but they may also treat a decree as valid based on the legal principle of comity.

Full Faith and Credit
Under the Full Faith and Credit Clause of the United States Constitution, a state must recognize the public acts, records and judicial proceedings of every other state. It requires that any final judgment entered by the courts of a state acting consistent with state laws and with constitutional requirements, must be recognized and enforced in every other state.

Comity
Even if the Full Faith and Credit Clause does not apply to a divorce case, such as when it is proven that the spouse who filed for divorce had not met the residency requirements of the state where the divorce decree was granted, a sister state court may give recognition to the judgment of another state as a matter of comity. Comity is where a court recognizes a sister state court order, as a matter of courtesy, when it is not compelled to do so.

For example, divorce decrees entered in states allowing for jurisdiction on the basis of mere residence may be recognized elsewhere as a matter of comity. A decree given recognition as a matter of comity can have the same effect as one given full faith and credit."

FOR NASSAU COUNTY ATTORNEYS - TODAY ONLY

Wednesday Sept. 23, 2009 - 12:00-2 p.m. at the Nassau County Bar Association

Just as they often go unshod... so, too, lawyers often neglect taking care of the very matters they zealously urge their clients to address. This lunchtime program will offer advice about health care proxies and an opportunity for you to execute one of your own. For judges, court personnel and NCBA member attorneys. Contact Mindy SantaMaria at 516-747-4070 x.210 or msantamaria@nassaubar.org

A NOTE TO LAWYERS - KEEP TIME AND OTHER RECORDS

I had a hearing the other day as to whether a legal paper was actually served. The attorney who was in charge of the mailing of the legal paper, on my cross-examination, testified that he kept no time records, no calendar, no book keeping records, all of which was admitted by the judge on the issue of credibility. Now the Appellate Division has held that to be afforded a presumption of mailing, the party must present proof of actual mailing or proof of a standard office practice or procedure designed to ensure that items are properly addressed and mailed. Also, Rule 1.5 and Rule 1.15 of the Code of Professional Conduct require attorneys to keep accurate records. Also, if you carry malpractice insurance (which attorneys should and the attorney who testified did not), the carrier will require you to have a record keeping system. My advice to other counsel - keep records, even if you charge a flat fee. My advice to clients - make sure your counsel keeps accurate records!

UNEMPLOYMENT INSURANCE BENEFITS - WILLFUL MISREPRESENTATIONS & MISCONDUCT

This came up the other day and fits in with yesterday's discussion on willful misrepresentations and allegations of misconduct. Please keep copies of all job evaluations and warning notices you receive...sometimes, after you receive them, you may want to contact an attorney to see what the proper response should be. But, in any event, if you are later terminated and seek benefits, but are denied, your hearing will be delayed as your attorney will need to see these evaluations, etc. before the hearing. If they are not already in the file, they will have to be subpoenaed and this causes further delay.