How To Commit Malpractice Without Even Trying: Spotting Trouble Before It Happens

The Theodore Roosevelt Inn of Court
How To Commit Malpractice
Without Even Trying:
Spotting Trouble Before It Happens
Nassau County Bar Association
Wednesday, October 19, 2011
6:00 p.m.
LIST OF ATTACHMENTS
Page
1.
Agenda for Presentation
3
2.
Biographies of Presenters
4
3.
Participating Students
11
4.
Outline of Presentation
13
5.
Statutes, Rules and Regulations Referenced in Presentation
22
a.
Judiciary Law § 497 (Attorneys fiduciary funds;
interest-bearing accounts)
23
b.
22 NYCRR Part 1400 (Procedure for Attorneys in
Domestic Relations Matters)
26
c.
22 NYCRR Part 1215 (Written Letter of Engagement)
32
d.
N.Y. Real Prop. Law § 442-d (Actions by Real Estate
Brokers for Commissions)
34
e.
IRS Regulation 4895
35
6.
Real Estate Contract Used in Skit
2
36
How To Commit Malpractice Without Even Trying:
Spotting Trouble Before It Happens
October 19, 2011
AGENDA
I.
Opening Remarks by Attorneys
1.
2.
3.
4.
II.
25 Minutes
Rona Platt (Rules Regarding Regis tration and Escrow and Matrimonial
Rules)
6 Minutes
Bob Kroll (Taking Title and Closing
Condition of Premises)
10 Minutes
Matt Flanagan (The Issues Which Will
Arise in the Legal Malpractice Action)
7 Minutes
Rona Platt (Entitlement of the Real
Estate Broker)
2 Minutes
Introduction to Skit
10 Minutes
Hon. Andrea Phoenix
III.
Skit
15 Minutes
IV.
Presentations by Students & Additional Comments
By Attorneys
40 Minutes
V.
1.
Rona Platt and Arielle Albert
10 Minutes
2.
Bob Kroll and Lauren Matti
10 Minutes
3.
Matt Flanagan, Sherry Hsuan Yu
Lin and Jeff Weiner
15 Minutes
Question and Answer Session
3
10 Minutes
BIOGRAPHIES
4
Hon. Andrea Phoenix
Andrea Phoenix is a Nassau County District Court Judge. She is also an
Acting County Court Judge. Judge Phoenix was elected in November 2006. She
presides over a civil part as well as the Nassau County Mental Health Court. Prior
to taking the bench, Judge Phoenix was an attorney in private practice; she was an
active member of the New York State Law Guardian Panel and concentrated in the
area of Family Law.
In 2002, Judge Lawrence Brennan sponsored her to become a member of
the Theodore Roosevelt Inn of Court. Judge Phoenix is currently active in the Inn,
as well as in a host of other professional and community organizations. Notably,
she is a past president of the Nassau County Women’s Bar Association and the
Women’s Bar Association of the State of New York; she is the first African
American to hold both positions. In the coming year, she is to become the first
African American President of the New York Chapter of the Association of
Family and Conciliation Courts.
5
Rona L. Platt, Esq.
In 2009, Ms. Platt joined the General Counsel’s Office of Wright Risk Management
Company, LLC, where she handles insurance regulatory matters, along with general legal
matters, for companies in the WRM America Holding Company family. Prior to joining
Wright Risk, Ms. Platt was the supervising attorney for Congdon, Flaherty, O’Callaghan,
Reid, Donlon, Travis & Fishlinger’s Insurance Law Group, where she represented the
interests of carriers in all aspects of insurance coverage litigation, from pretrial matters
through appeals, and assisted carriers in reaching coverage determinations. Her practice
areas also included reinsurance, commercial litigation and legal malpractice defense. In
her present position, she assists the WRM and its clients with drafting and evaluation
construction specifications to ensure appropriate risk transfers, reviewing policies to
ensure protection of insureds, drafting policy forms, and regulatory issues, including
licensing and rate and form approval by insurance departments throughout the country.
Ms. Platt is a member of the Association of Corporate Counsel, New York State Bar
Association, Nassau County Bar Association, Theodore Roosevelt American Inn of
Courts and the New York Chapter of the National Association of Insurance Women
(“NAIW”). She is a Special Professor of Law at Hofstra University School of Law and a
member of the Amicus Curiae Committee of the Defense Association of New York
(“DANY”). In 2008, 2009, and 2010, Ms. Platt was named as a New York Metro Area
Super Lawyer ® in the area of Insurance Coverage.
Ms. Platt has lectured extensively before a wide variety of audiences, including insurers,
attorneys, and municipal and school officials on issues relating to insurance coverage and
risk transfer, as well as employment practices, hazing and civility in sports. She is a
speaker for the New York State Bar Association and the National Business Institute.
Ms. Platt has been admitted to the New York State Bar, as well as the United States
District Courts for the Eastern and Southern Districts of New York, since 1995, the
District of Columbia Bar since 1996, and the Second Circuit Court of Appeals since
1997. She received her baccalaureate degree from Hofstra University in 1985, where she
was elected to the Omega Chapter of Phi Beta Kappa, and her juris doctorate, with
distinction, from Hofstra University School of Law, in 1994, where she was an Associate
Editor of the Hofstra Law Review and a member of the 1993 -1994 National Moot Court
team.
6
S. Robert Kroll, Esq.
S. Robert Kroll holds a B.A. Degree from Hofstra College
(1955) and his LLB Degree from Brooklyn Law School.(1958, and
was admitted to practice in New York in 1958 and Florida in
1982. He is also a member of the bars of the United States
District Courts for the Eastern, Southern and Northern
Districts of New York, Circuit Court of Appeals for the
Second Circuit and the United States Supreme Court
From 1967 he has been engaged in the general practice of
law either as a partner (Medowar & Kroll) or as a sole
practitioner. The emphasis of his practice has been on real
estate and commercial law.
A long time member of the Nassau County Bar Association,
he has served a term as director and been chair of the
Community Relations and Real Estate Committees.
S. Robert
Kroll is also a member of the New York State Bar Association,
Nassau Lawyers Association, the Jewish Lawyers Association
and a member of the Theodore Roosevelt American Inn of Court.
He also serves as an arbitrator for the program presently
administered in Nassau County District Court as well as a
volunteer arbitrator in Small Claims.
In addition, he has participated as a principal speaker
at the Bar Association of Nassau County program on the
subject FROM THEORY TO PRACTICE, REAL ESTATE TRANSACTIONS,
October 8, 1997, and as a principal speaker, Bar Association
of Nassau County program 10/30/69 and 11/1/69, subject
CREDITOR, DEBTORS AND BANKRUPTS, including the subjects of
trial, trial preparation, discovery, motions, commercial
preferences, jury and non-jury procedures, trial procedures,
evidence, witnesses, court fees and enforcement of money
judgments.
His governmental and public service activities include
prior representation of New York State Senator James J. Lack
(Second Senatorial District) as district counsel and New York
State Senator Norman J. Levy, Eighth Senatorial District, as
aide and counsel. From November, 1966 until April, 1993 he
served
as
a
member
of
the
New
York
State
Public
Transportation Safety Board and has just been appointed to
serve as a member of the MTA Inspector General Management
Advisory Board.
7
Mr. Kroll has been active in both political and civic
capacities, having served as Republican Committeeman, Nassau
County, 19th Assembly District, 49th Election District, 1982
to 2004, past Vice President, Merrick Republican Club, past
treasurer
for
various
political
candidates;
currently
treasurer for Receiver of Taxes, Town of Hempstead- Donald
Clavin. He has also served as a past director of the Merrick
Chamber of Commerce and is a past president and director of
Merrick Jewish Centre, Past Master of Sunrise Masonic Lodge #
1069, F & A.M, now Spartan Lodge, past president of the
Rotary Club of Merrick-Bellmore, a member of the Merrick
Kiwanis Club, past member of Rapport, and a past member and
past counsel to the W.C. Mepham Alumni Association.
8
Matthew K. Flanagan, Esq.
Matthew Flanagan is a partner in the Jericho law firm of Catalano, Gallardo &
Petropoulos, where his practice is devoted almost exclusively to the defense of attorneys
in legal malpractice actions. He has extensive trial and appellate experience in that area,
and has successfully argued appeals in the United States Court of Appeals for the Second
Circuit, the New York State Court of Appeals, and the Appellate Divisions for the First,
Second and Third Departments. He has lectured on legal malpractice prevention, civil
procedure and ethics before the New York State Bar Association, the Nassau County Bar
Association, and the Suffolk Academy of Law.
Mr. Flanagan has been awarded a rating of AV PreeminentTM by MartindaleHubbell, and was named one of the top professional liability attorneys on Long Island in
2010 and 2011 by LexisNexis Martindale-Hubbell and Long Island Pulse Magazine.
He has handled the following reported legal malpractice/attorney liability cases,
all of which have resulted in the dismissal of the claims against the attorney-defendant
(the names of the defendant-attorneys have been omitted):
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Breytman, 30 Misc.3d 1219 (A), 2011 WL 40791 (Kings Co.,
2011);
Engler v. Kalmanowitz, 60 A.D.3d 540, 876 N.Y.S.2d 366 (1st
Dept. 2009);
Beagle Developers, LLC, 63 A.D.3d 607, 882 N.Y.S.2d 79 (1st
Dept. 2009);
Kim, No. 04 Civ. 3755, 2007 WL 1649902 (S.D.N.Y. 2007);
Goldberg v. Lenihan, 38 A.D. 3d 598, 832 N.Y.S.2d 68 (2d Dept.
2007);
Gumbs, 35 A.D.3d 362, 828 N.Y.S.2d 103 (2d Dept. 2006);
Blaize-Sampeur v. McDowell, 2006 WL 3903927, RICO
Bus.Disp.Guide 11,184 (E.D.N.Y.2006);
Lory, 17 A.D.3d 541, 793 N.Y.S.2d 499 (2d Dept. 2005)
Mann v. Rusk, 14 A.D.3d 909, 788 N.Y.S.2d 686 (3d Dept. 2005)
Jedlicka, 14 A.D.3d 596, 787 N.Y.S.2d 888 (2d Dept. 2005)
Knecht, 15 A.D.3d 626, 789 N.Y.S.2d 904 (2d Dept. 2005)
Teachers Placement Group v. Konrad, 2/17/05 N.Y.L.J. p. 20, col.
3 (Nass. Co., 2005)
Pistilli, 10 A.D.3d 353, 780 N.Y.S.2d 293 (2d Dept. 2004)
Lyons, 8 A.D.3d 347, 777 N.Y.S.2d 912 (2d Dept. 2004) lv to
appeal den., 4 N.Y.3d 705, 794 N.Y.S.2d 300 (2004)
Ferdinand, 5 A.D.3d 538, 774 N.Y.S.2d 714 (2d Dept. 2004), lv to
appeal den., 3 N.Y.3d 609, 786 N.Y.S.2d 812 (2004) (Table)
Artese, 2 Misc.3d 1008, 784 N.Y.S.2d 918, 2004 WL 749885
(Nassau Co., 2004)
D’Amato, 83 Fed.App. 380, 2003 WL 22976108 (2d Cir. 2003)
9
•
•
•
•
•
•
•
•
D’Amato, 83 Fed.App. 359, 2003 WL 22955858 (2d Cir. 2003)
O'Brien, 290 A.D.2d 544, 737 N.Y.S.2d 297 (2d Dept. 2002)
Albin v. Pearson, 289 A.D.2d 272, 734 N.Y.S.2d 564 (2d
Dept.2001)
Andino, 287 A.D.2d 425, 730 N.Y.S.2d 864 (2d Dept. 2001)
Macholz, 279 A.D.2d 557, 719 N.Y.S.2d606 (2d Dept. 2001), mot.
for lv to
appeal dismissed, 96 N.Y.2d 853 (2001)
Reilly v. North Shore New Group, 12/11/01 N.Y.L.J. p. 21, col. 6
(Suffolk Co., 2001)
Firestar Estates South, Inc., 9/26/01 N.Y.L.J., p. 25, col. 3 (Nassau
Co. 2001)
Best v. Law Firm of Queller and Fisher, 278 A.D.2d 441, 718
N.Y.S.2d 397 (2d Dept. 2000), cert. denied sub nom Best v. Sears
Roebuck & Co., 534 U.S. 1080, 122 S.Ct. 812, 151 L.Ed.2d 696
(2002).
He has also handled the following significant attorney liability cases:
•
•
•
•
•
Rudolf, 8 N.Y.3d 438, 835 N.Y.S.2d 534 (2007)
Goldman, 445 F.3d 152 (2d Cir. 2006)
Nesenoff, 12 A.D.3d 427, 786 N.Y.S.2d 185 (2d Dept. 2004)
Pollicino v. Roemer and Featherstonhaugh P.C., 260 A.D.2d 52
(3d Dept. 1999)
Gravel, 297 A.D.2d 620, 747 N.Y.S.2d 33 (2d Dept. 2002)
Mr. Flanagan is admitted to practice before the Courts of the State of New York,
the United States District Courts for the Southern and Eastern Districts of New York, and
the United States Court of Appeals for the Second Circuit. He is a member of the
American Bar Association, New York State Bar Association, the Nassau County Bar
Association and the Theodore Roosevelt American Inn of Court.
10
PARTICIPATING STUDENTS
11
The following second year law students from Hofstra Law School participated in the
presentation:
Arielle Albert
Sherry Hsuan Yu Lin
Lauren Matti
Jeff Weiner
12
OUTLINE OF PRESENTATION
13
I.
Rules Regarding Registration and Escrow and Matrimonial
Rules
1. Registration with OCA
a.
Judiciary Law § 468-a
i. attorneys must register biannually
ii. failure to do so “shall constitute conduct prejudicial to the
administration of justice and shall be referred to the
appropriate appellate division of the supreme court for
disciplinary action” N.Y. Jud. Law § 468-a(5).
b.
Can you recover fees if you are not registered? YES Benjamin
v. Koeppel, 85 NY2d 549 [1995](the appropriate remedy is
provided for by statute – referral to appellate division for
disciplinary action); see also In the Matter of Scarsella, 195
AD2d 513 [2d Dept. 1993](also holding that the issue was
rendered academic by the attorney’s subsequent compliance
with registration requirements).
2. IOTLA Accounts (aka IOLA Accounts)
a.
Judiciary Law § 497
i. IOLA is an unsegregated interest bearing deposit account
which is set up to receive “qualified funds”. N.Y. Jud. Law
§ 497(1).
ii. “Qualified Funds” are funds received by attorney in a
fiduciary capacity (such as an escrow agent), which, in the
attorney’s judgment, are either too small in amount or not
reasonably expected to be held long enough to generate
sufficient interest income to justify the expense of
administrating a segregated account. N.Y. Jud. Law §
497(2).
3. Deposits required?
a.
Exceptions to Jud Law deposit requirement for qualified funds
i. Deposit into separate interest bearing account for the
particular client or matter, with interest going to client.
N.Y. Jud. Law § 497(4)(c)(i)
ii. Deposit into interest bearing account with provision by
bank or lawyer for computation earned by each client’s
funds and payment thereof to the client. N.Y. Jud. Law §
497(4)(c)(ii)
b.
22 NYCRR §1200 - Rule 1.15(d)(2) “lawyers shall make
accurate entries of all financial transactions in their records of
receipts and disbursements, in their special accounts, in their
ledger books or similar records, and in any other books of
account kept by them in the regular course of their practice,
which entries shall be made at or near the time of the act,
condition or event recorded.”
14
B. Are written retainers required in matrimonial actions?
1.
22 NYCRR §1400.1
i. Applicable to representation of client for “divorce,
separation, annulment, custody, visitation, maintenance,
child support, or alimony, or to enforce or modify a
judgment or order in connection with any such claims,
actions or proceedings” 22 NYCRR § 1400.1
ii. Is this such an action? Sale of house – some firms bill
separately, unless client otherwise agrees in writing; but is
part of the matrimonial action.
2.
22 NYCRR §1400.3
i. Must be written
ii. Contents of retainer mandated:
iii. Copy of executed agreement must be given to the client
iv. Copy of the executed agreement must be filed with the
court within 10 days of execution.
v. If no retainer, not entitled to payment. Mulcahy v. Mulcahy,
285 AD2d 587 [2d Dept. 2001]; see also Grald v. Grald,
____-AD2d____ [2d Dept. 2006]; Wagman v. Wagman, 8
AD3d 263 [2d Dept. 2004]
C. Billing in matrimonial actions
1.
22 NYCRR § 1400.2
i. bills must be send no less frequently than every 60 days
ii. Bills must itemized
iii. If no bill, no payment Mulcahy v. Mulcahy, 285 AD2d 587
[2d Dept. 2001]; see also Grald v. Grald, ____-AD2d____
[2d Dept. 2006]; Wagman v. Wagman, 8 AD3d 263 [2d
Dept. 2004]
D. Can you get paid out of escrow funds?
E. Failure to specify the escrowing banks in the contract – not mandatory
II.
Entitlement of the Real Estate Broker
i. Cannot receive any compensation on real estate deal unless
licensed real estate broker. N.Y. Real Prop. Law § 442a.Galbreath-Ruffin Corp. v. 40th &3rd Corp., 19 NY2d 354 [1967];
Poznanski v. Wang, _____ AD3d ____ [2d Dept. 2011]
ii. Both the corporation and the individual need to be licensed N.Y.
Real Prop. Law § 440-a.
iii. Payment demanded by certified check
15
III.
Taking Title
Question: How important is it to designate in contract and follow in closing documents
the relationship of the grantees to each other?
2. The purchasers have not designated how they wish to take title- as tenants
in common or jointly with the right of survivorship. Their attorney has not
explained to them the significance of how title can be taken and the seller’s
attorney has drawn the deed following the contract language. What if the
purchasers were not husband and wife, but rather brother and sister?
Caveat: EP&TL 6-2.2 A disposition of real property to a
husband and wife creates in them a tenancy by the entirety, unless
expressly declared to be a joint tenancy or a tenancy in common.
See Beudert-Richard v\s Richard, 72 A.D. 3rd 101, 894 N.Y.S. 2d
22, where the Court ignored the grantee language and enforced the
parties' intent;. The same applies to a cooperative apartment which
is a stock interest (personal property). See: cases cited in
McKinney's commentary to EP&TL 6-2,2, year 2009 notations
a. Sole owner
i.
can alienate property alone- no other consents required
ii.
can devise by will
iii.
on death, property will pass by intestacy absent will to the
contrary
b. Tenants in common
i.
each tenant has an undivided interest in the property equal
to his ;pro rate share (ie. two tenants- 1/2 each; three
tenants-[ 1/3 each, etc.)
ii.
each co-tenant can alienate his/her share, devise by will or
have property pass by intestacy- but only their share
iii.
to pass full title, all co-tenants need to join in deed; if any
are deceased need to deal with their estate
c. Joint tenants- husband and wife- tenancy by the entirety
i.
generally designated by husband's name, then wife's name,
with a legend such as "his wife" or "as husband and wife"
or " as tenants by the entirety"
ii.
to alienate property both need to join in deed (or mortgage)
iii.
neither tenant may on his/her own eliminate the
ownership rights of the other
iv.
on death the surviving tenant becomes the sole owner,
obtaining ownership of the pre-deceased co-tenant's interest
by operation of law
16
v.
upon divorce the tenancy by the entirety is converted by
operation of law into a tenancy in common See: Goldman
vs Goldman, 95 N.Y. 2d 120, 711 N.Y.S. 2d 128; Kahn vs.
Kahn, 43 N.Y. 2d 203, 401 N.Y.S. 2d 47
d. Other entities
i.
title can be taken in other entities, such as in corporate or
limited liability company form, in a partnership of trust
ii.
to sell or mortgage the property need to comply with the
technical requirements of the entity owning same
a.
corporation- corporation resolution,
compliance with corporate charter and bylaws, clear state franchise tax
b.
other entities- compliance with restrictions,
if any, consents, etc
c.
trusts- same as well as awareness of trust
purpose and real estate transactions not to
frustrate or violate trust purpose.
e.. Which choice?
i.
must discuss with client
ii.
most husbands and wives will take title as tenants by the
entirety so as to provide automatic ownership in the
survivor of the two of them
iii.
if this is done, interest of deceased co-owner is a part of
his/her taxable estate for estate tax purposes
(a)
remember that the marital deduction
should eliminate any estate tax thereon
between spouses both federal and state
(b)
estate beneficiary receives a stepped-up
basis in inherited property i See rule for
estates of decedents who were lucky enough
to die in 2010. Former step-up basis rules
probably apply to estates of decedents who
die in 2011.
iv.
what is business or profession of purchasers? Will it
subject purchaser to financial liability which could extend
to judgment collection as against real estate?
f. Judgment or malpractice?
i.
events in the future may very well answer this question
ii.
random examples:
(a)
sisters take title as tenants in common;
one dies intestate with two infant children;
what happens to the property?
(b)
title taken in trust form without reviewing
restrictions in the trust document which later
17
iii.
IV.
prove to be contrary to purchasers intent
when purchase made
see NYLJ article July 15, 2011, outside counsel article,
HAS THE LAW OF LEGAL MALPRACTICE
CHANGED; discusses privity as an element of legal
malpractice unless special circumstances appear. What are
special circumstances? How about a married couple taking
title as tenants in common in error instead of by the entirety
and upon one spouse's intestate death infant children inherit
a portion thereof by intestacy?
Closing Condition of Premises
Question: In what condition does the seller have to deliver the premises at closing or
possession?
2. Purchasers’ attorney did not ask that the removed ceiling lighting fixtures
be replaced with some sort of lighting, such as “builder’s fixtures”.
a.. Contract provides that premises is purchased "as is" (par. 12) except
for whatever representations are made therein.
b. Standard is the representation (par 16e) that the plumbing heating, air
conditioning system and appliances be in working order. Consider
adding that the roof and basement be free of leaks. Other that that,
what you see is what you get
c. Make sure that if the contract provides for seller(s) to remove other
than personal property not normally included in the sale that
replacement thereof be considered.
d. Contract provides for possession at closing. If there is post-closing
possession by sellers, consider cost to purchasers, such as interest on
purchasers' mortgage and adjust therefore. Make sure that sellers'
representations survive until possession.
e. Is failure to deal with this issue a lack of judgment or malpractice?
V.
The Issues Which Will Arise in the Legal Malpractice Action
A.
The Threshold Issue: is there an Attorney-Client Relationship?
An attorney-client relationship may arise by words and actions of the
parties, Moran v Hurst, 32 AD3d 909, 822 NYS2d 564; C.K. Industries
Corp. v C.M. Industries Corp., 213 AD2d 846, 623 NYS2d 410. Where
there is an explicit undertaking to perform a specific task, an attorneyclient relationship is established, Wei Cheng Chang v Pi, 288 AD2d 378,
733 NYS2d 471; Volpe v Canfield, 237 AD2d 282, 654 NYS2d 160;
Sucese v Kirsch, 199 AD2d 718, 606 NYS2d 60.
An individual's unilateral beliefs and actions, standing alone, do not confer
18
upon him or her the status of client, Jane Street Co. v Rosenberg & Estis,
P.C., 192 AD2d 451, 597 NYS2d 17. The existence of an attorney-client
relationship does not depend on a formal retainer or the payment of a fee,
Moran v Hurst, supra; Hansen v Caffry, supra; Jane Street Co. v
Rosenberg & Estis, P.C., supra; see also Priest v Hennessy, 51 NY2d 62,
431 NYS2d 511, 409 NE2d 983 (payment of fee by third party does not
create attorney-client relationship between attorney and payor).
B.
The Scope of the Attorney’s Duty.
Once an attorney is retained, what is the scope of his or her duty?
The duty of an attorney may be limited by the nature and scope of the
retainer agreement or written letter of engagement that was given to the
client pursuant to 22 NYCRR 1215.1 or 1400.3 (applicable in matrimonial
actions). Under 22 NYCRR 1215.1(b) and (c), letters of engagement and
retainer agreements must explain the scope of the legal services to be
performed. Where a written retainer agreement plainly indicates the
specific purpose of the representation, an attorney will generally not be
held liable in malpractice for failing to explore legal issues outside the
scope of the agreement, AmBase Corp. v Davis Polk & Wardwell, 8
NY3d 428, 834 NYS2d 705, 866 NE2d 1033. Thus a law firm whose
retainer agreement stated that it was being retained to litigate the amount
of a corporation's tax liability could not be held liable for failing to advise
the client that it might not be the entity that is primarily liable for the tax
debt, id.
The scope of an attorney's duty to a client is ordinarily a question of law
for the court, Thompson v Seligman, 53 AD3d 1019, 863 NYS2d 285
Question: When an attorney is retained for a real estate transaction, does
he or she have to:
Review the terms of the contract with the client?
Advise the client of the mortgage contingency clause?
Advise the client regarding the client’s ability to get a mortgage or
get a mortgage within the time provided in the mortgage
contingency clause?
Advise the client regarding mortgage rates?
Advise the client to get an appraisal?
Advise the client to get an engineer’s inspection?
Question: Under what circumstances is an attorney liable to individuals
other than his or her client?
C.
The Elements of an Action for Legal Malpractice
19
“In an action to recover damages for legal malpractice, a plaintiff must
demonstrate that the attorney ‘failed to exercise the ordinary reasonable
skill and knowledge commonly possessed by a member of the legal
profession’ and that the attorney’s breach of this duty proximately caused
plaintiff to sustain actual and ascertainable damages.” See Rudolf v.
Shayne, Dachs, Stanisci, Corker & Sauer, 8 N.Y.3d 438, 442, 835
N.Y.S.2d 534, 536 (2007) [quoting McCoy v. Feinman, 99 N.Y.2d 295,
301-302 (2002)].
With regard to the element of causation, in most negligence cases, a
plaintiff is required to show only that defendant's negligence was a
substantial factor in bringing about the injury, but in legal malpractice
cases, the plaintiff is required to satisfy a more demanding test by proving
that, “but for” defendant's negligence, plaintiff would have obtained a
more favorable result in the underlying litigation or would not have
sustained the claimed loss in the underlying transaction. Waggoner v
Caruso, 14 NY3d 874, 903 NYS2d 333, 929 NE2d 396.
Question: What is the effect of a violation of the Rules of Professional
Conduct?
Although they may be relevant, the Disciplinary Rules (superseded by the
New York Rules of Professional Conduct, effective April 1, 2009) and
former Ethical Considerations do not create duties that can give rise to a
malpractice cause of action that would otherwise not exist at common law,
Shapiro v McNeill, 92 NY2d 91, 677 NYS2d 48, 699 NE2d 407; Guiles v
Simser, 35 AD3d 1054, 826 NYS2d 484 (attorney's sexual encounters
with plaintiff-client, while unethical, not malpractice absent showing of
negligence in legal representation and resulting loss); see New York Rules
of Professional Conduct, Preamble: A Lawyer's Responsibility, ¶12. Thus,
a conflict of interest constituting a violation of the New York Rules of
Professional Conduct (formerly Code of Professional Responsibility) does
not by itself support a malpractice cause of action, Kimm v Chang, 38
AD3d 481, 833 NYS2d 429. However, a malpractice cause of action was
held to lie where defendant attorney represented both sides of a transaction
and allegedly withheld critical information from plaintiff client, Sitar v
Sitar, 50 AD3d 667, 854 NYS2d 536, and where the law firm's divided
loyalties impaired its professional judgment and caused it to recommend
that the client, an insurer, provide coverage even though the insurance
policies had expired, Ulico Cas. Co. v Wilson, Elser, Moskowitz, Edelman
& Dicker, 56 AD3d 1, 865 NYS2d 14.
A lawyer may not seek prospectively to limit his or her malpractice
liability to a client by contract or otherwise. See New York Rules of
Professional Conduct, Rule 1.8(h)(1).
20
What Damages are Recoverable?
The damages recoverable in a legal malpractice action include any loss
“within the range of probable contemplation,” Trimboli v Kinkel, 226 NY
147, 123 NE 205. The damages must be the “actual and ascertainable”
losses resulting from the attorney's negligence, Zarin v Reid & Priest, 184
AD2d 385, 585 NYS2d 379. There can be no recovery for emotional
distress occasioned by the attorney' s malpractice, Andrewski v Devine,
280 AD2d 992, 720 NYS2d 423; Green v Leibowitz, 118 AD2d 756, 500
NYS2d 146.
21
STATUTES, RULES AND
REGULATIONS REFERENCED IN
PRESENTATION
22
JUDICIARY LAW §497
Attorneys fiduciary funds; interest-bearing accounts
1. An “interest on lawyer account” or “IOLA” is an unsegregated interest-bearing deposit
account with a banking institution for the deposit by an attorney of qualified funds.
2. “Qualified funds” are moneys received by an attorney in a fiduciary capacity from a
client or beneficial owner and which, in the judgment of the attorney, are too small in
amount or are reasonably expected to be held for too short a time to generate sufficient
interest income to justify the expense of administering a segregated account for the
benefit of the client or beneficial owner. In determining whether funds are qualified for
deposit in an IOLA account, an attorney may use as a guide the regulation adopted by the
board of trustees of the IOLA fund pursuant to subdivision four of section ninety-seven-v
of the state finance law.
2-a. “Funds received in a fiduciary capacity” are funds received by an attorney from a
client or beneficial owner in the course of the practice of law, including but not limited to
funds received in an escrow capacity, but not including funds received as trustee,
guardian or receiver in bankruptcy.
3. A “banking institution” means a bank, trust company, savings bank, savings and loan
association, credit union or foreign banking corporation whether incorporated, chartered,
organized or licensed under the laws of this state or the United States, provided that such
banking institution conducts its principal banking business in this state.
4. (a) An attorney shall have discretion, in accordance with the code of professional
responsibility, to determine whether moneys received by an attorney in a fiduciary
capacity from a client or beneficial owner shall be deposited in non-interest, or in interest
bearing accounts. If in the judgment of an attorney any moneys received are qualified
funds, such funds shall be deposited in an IOLA account in a banking institution of his or
her choice offering such accounts.
(b) The decision as to whether funds are nominal in amount or expected to be held for a
short period of time rests exclusively in the sound judgment of the lawyer or law firm.
Ordinarily, in determining the type of account into which to deposit particular funds held
for a client, a lawyer or law firm shall take into consideration the following factors:
(i) the amount of interest the funds would earn during the period they are expected to be
deposited;
(ii) the cost of establishing and administering the account, including the cost of the
23
lawyer or law firm's services;
(iii) the capability of the banking institution, through subaccounting, to calculate and pay
interest earned by each client's funds, net of any transaction costs, to the individual client.
(c) All qualified funds shall be deposited in an IOLA account unless they are deposited
in:
(i) a separate interest bearing account for the particular client or client's matter on which
the interest will be paid to the client; or
(ii) an interest bearing trust account at a banking institution with provision by the bank or
by the depositing lawyer or law firm for computation of interest earned by each client's
funds and the payment thereof to the client.
(d) Notwithstanding the deposit requirements of this subdivision, no attorney or law firm
shall be liable in damages nor held to answer for a charge of professional misconduct for
failure to deposit qualified funds in an IOLA account.
5. No attorney or law firm shall be liable in damages nor held to answer for a charge of
professional misconduct because of a deposit of moneys to an IOLA account pursuant to
a judgment in good faith that such moneys were qualified funds.
6. a. An attorney or law firm which receives qualified funds in the course of its practice
of law and establishes and maintains an IOLA account shall do so by (1) designating the
account as “(name of attorney/law firm IOLA account)” with the approval of the banking
institution; and (2) notifying the IOLA fund within thirty days of establishing the IOLA
account of the account number and name and address of the banking institution where the
account is deposited.
b. The rate of interest payable on any IOLA account shall be not less than the rate paid by
the banking institution on similar accounts maintained at that institution, and the banking
institution shall not impose on such accounts any charges or fees greater than it imposes
on similar accounts maintained at that institution.
c. With respect to IOLA accounts, the banking institution shall:
(i) Remit at least quarterly any interest earned on the account directly to the IOLA fund,
after deduction of service charges or fees, if any, are applied.
(ii) Transmit to the IOLA fund with each remittance a statement showing at least the
name of the account, service charges or fees deducted, if any, and the amount of net
interest remitted from such account.
(iii) Transmit to each attorney or law firm which maintains an IOLA account a statement
showing at least the name of the account, service charges or fees deducted, if any, and the
24
amount of interest remitted from such account.
(iv) Be permitted to impose reasonable service charges for the preparation and issuance
of the statement.
(v) Have no duty to inquire or determine whether deposits consist of qualified funds.
7. a. Payment from an IOLA account to or upon the order of the attorney maintaining
such account shall be a valid and sufficient release of any claims by any person or entity
against any banking institution for any payments so made.
b. Any remittance of interest to the IOLA fund by a banking institution pursuant to this
section shall be a valid and sufficient release and discharge of any claims by any person
or entity against such banking institution for any payment so made, and no action shall be
maintained against any banking institution solely for opening, offering, or maintaining an
IOLA account, for accepting any funds for deposit to any such account or for remitting
any interest to the IOLA fund.
8. Nothing contained in this section shall be construed to require any banking institution
to offer, accept or maintain IOLA accounts.
9. All papers, records, documents or other information identifying an attorney, client or
beneficial owner of an IOLA account shall be confidential and shall not be disclosed by a
banking institution except with the consent of the attorney maintaining the account or as
permitted by any law, regulation or administrative requirement.
10. An attorney or law firm that can establish that compliance with subdivision six of this
section has resulted in any banking service charges or fees shall be entitled to
reimbursement of such expense from the interest on lawyer account fund by filing a claim
with supporting documentation with the fund.
CREDIT(S)
(Added L.1983, c. 659, § 2. Amended L.1988, c. 677, §§ 1 to 3.)
25
Part 1400. Procedure for Attorneys in Domestic Relations Matters
Section 1400.1. Application
This Part shall apply to all attorneys who, on or after November 30, 1993, undertake to
represent a client in a claim, action or proceeding, or preliminary to the filing of a claim,
action or proceeding, in either Supreme Court or Family Court, or in any court of
appellate jurisdiction, for divorce, separation, annulment, custody, visitation,
maintenance, child support, or alimony, or to enforce or modify a judgment or order in
connection with any such claims, actions or proceedings. This Part shall not apply to
attorneys representing clients without compensation paid by the client, except that where
a client is other than a minor, the provisions of section 1400.2 of this Part shall apply to
the extent they are not applicable to compensation.
Sec. filed Oct. 11, 1994; amd. filed July 8, 1994 eff. June 16, 1994.
Section 1400.2. Statement of client's rights and responsibilities
An attorney shall provide a prospective client with a statement of client's rights and
responsibilities in a form prescribed by the Appellate Divisions, at the initial conference
and prior to the signing of a written retainer agreement. If the attorney is not being paid a
fee from the client for the work to be performed on the particular case, the attorney may
delete from the statement those provisions dealing with fees. The attorney shall obtain a
signed acknowledgement of receipt from the client. The statement shall contain the
following:
UNIFIED COURT SYSTEM OF THE STATE OF NEW YORK
STATEMENT OF CLIENT'S RIGHTS AND RESPONSIBILITIES
Your attorney is providing you with this document to inform you of what you,as a client,
are entitled to by law or by custom. To help prevent any misunderstanding between you
and your attorney please read this document carefully.
If you ever have any questions about these rights, or about the way your case is being
handled, do not hesitate to ask your attorney. He or she should be readily available to
represent your best interests and keep you informed about your case.
An attorney may not refuse to represent you on the basis of race, creed, color, sex, sexual
orientation, age, national origin or disability.
You are entitled to an attorney who will be capable of handling your case; show you
courtesy and consideration at all times; represent you zealously; and preserve your
confidences and secrets that are revealed in the course of the relationship.
You are entitled to a written retainer agreement which must set forth, in plain language,
26
the nature of the relationship and the details of the fee arrangement. At your request, and
before you sign the agreement, you are entitled to have your attorney clarify in writing
any of its terms, or include additional provisions.
You are entitled to fully understand the proposed rates and retainer fee before you sign a
retainer agreement, as in any other contract.
You may refuse to enter into any fee arrangement that you find unsatisfactory.
Your attorney may not request a fee that is contingent on the securing of a divorce or on
the amount of money or property that may be obtained.
Your attorney may not request a retainer fee that is nonrefundable. That is, should you
discharge your attorney, or should your attorney withdraw from the case, before the
retainer is used up, he or she is entitled to be paid commensurate with the work
performed on your case and any expenses, but must return the balance of the retainer to
you. However, your attorney may enter into a minimum fee arrangement with you that
provides for the payment of a specific amount below which the fee will not fall based
upon the handling of the case to its conclusion.
You are entitled to know the approximate number of attorneys and other legal staff
members who will be working on your case at any given time and what you will be
charged for the services of each.
You are entitled to know in advance how you will be asked to pay legal fees and
expenses, and how the retainer, if any, will be spent.
At your request, and after your attorney has had a reasonable opportunity to investigate
your case, you are entitled to be given an estimate of approximate future costs of your
case, which estimate shall be made in good faith but may be subject to change due to
facts and circumstances affecting the case.
You are entitled to receive a written, itemized bill on a regular basis, at least every 60
days.
You are expected to review the itemized bills sent by counsel, and to raise any objections
or errors in a timely manner. Time spent in discussion or explanation of bills will not be
charged to you.
You are expected to be truthful in all discussions with your attorney, and to provide all
relevant information and documentation to enable him or her to competently prepare your
case.
You are entitled to be kept informed of the status of your case, and to be provided with
copies of correspondence and documents prepared on your behalf or received from the
court or your adversary.
27
You have the right to be present in court at the time that conferences are held.
You are entitled to make the ultimate decision on the objectives to be pursued in your
case, and to make the final decision regarding the settlement of your case.
Your attorney's written retainer agreement must specify under what circumstances he or
she might seek to withdraw as your attorney for nonpayment of legal fees. If an action or
proceeding is pending, the court may give your attorney a “charging lien,” which entitles
your attorney to payment for services already rendered at the end of the case out of the
proceeds of the final order or judgment.
You are under no legal obligation to sign a confession of judgment or promissory note, or
to agree to a lien or mortgage on your home to cover legal fees. Your attorney's written
retainer agreement must specify whether, and under what circumstances, such security
may be requested. In no event may such security interest be obtained by your attorney
without prior court approval and notice to your adversary. An attorney's security interest
in the marital residence cannot be foreclosed against you.
You are entitled to have your attorney's best efforts exerted on your behalf, but no
particular results can be guaranteed.
If you entrust money with an attorney for an escrow deposit in your case, the attorney
must safeguard the escrow in a special bank account. You are entitled to a written escrow
agreement, a written receipt, and a complete record concerning the escrow. When the
terms of the escrow agreement have been performed, the attorney must promptly make
payment of the escrow to all persons who are entitled to it.
In the event of a fee dispute, you may have the right to seek arbitration. Your attorney
will provide you with the necessary information regarding arbitration in the event of a fee
dispute, or upon your request.
Receipt Acknowledged:
___________________________________ Attorney's signature
___________________________________ Client's signature
___________________________________ Date
orm 1400.2-1(1/95)
UNIFIED COURT SYSTEM OF THE STATE OF NEW YORK
STATEMENT OF CLIENT'S RIGHTS AND RESPONSIBILITIES
(To be used only when representation is without fee)
28
F
Your attorney is providing you with this document to inform you of what you, as a client,
are entitled to by law or by custom. To help prevent any misunderstanding between you
and your attorney please read this document carefully.
If you ever have any questions about these rights, or about the way your case is being
handled, do not hesitate to ask your attorney. He or she should be readily available to
represent your best interests and keep you informed about your case.
An attorney may not refuse to represent you on the basis of race, creed, color, sex, sexual
orientation, age, national origin or disability.
You are entitled to an attorney who will be capable of handling your case; show you
courtesy and consideration at all times; represent you zealously; and preserve your
confidences and secrets that are revealed in the course of the relationship.
You are expected to be truthful in all discussions with your attorney, and to provide all
relevant information and documentation to enable him or her to competently prepare your
case.
You are entitled to be kept informed of the status of your case, and to be provided with
copies of correspondence and documents prepared on your behalf or received from the
court or your adversary.
You have the right to be present in court at the time that conferences are held.
You are entitled to make the ultimate decision on the objectives to be pursued in your
case, and to make the final decision regarding the settlement of your case.
You are entitled to have your attorney's best efforts exerted on your behalf, but no
particular results can be guaranteed.
If you entrust money with an attorney for an escrow deposit in your case, the attorney
must safeguard the escrow in a special bank account. You are entitled to a written escrow
agreement, a written receipt, and a complete record concerning the escrow. When the
terms of the escrow agreement have been performed, the attorney must promptly make
payment of the escrow to all persons who are entitled to it.
Receipt Acknowledged:
___________________________________ Attorney's signature
___________________________________ Client's signature
___________________________________ Date
rm 1400.2-2 (12/94)
Sec. filed Oct. 11, 1994; amds. filed: July 8, 1994; Jan. 31, 1995 eff. Jan. 1, 1995.
29
Fo
22 NYCRR 1400.2, 22 NY ADC 1400.2
Current through amendments included in the New York State Register, Volume XXXII,
Issue 40, dated October 5, 2011.
Section 1400.3. Written retainer agreement
An attorney who undertakes to represent a party and enters into an arrangement for,
charges or collects any fee from a client shall execute a written agreement with the client
setting forth in plain language the terms of compensation and the nature of services to be
rendered. The agreement, and any amendment thereto, shall be signed by both client and
attorney, and, in actions in Supreme Court, a copy of the signed agreement shall be filed
with the court with the statement of net worth. Where substitution of counsel occurs after
the filing of the net worth statement, a signed copy of the attorney's retainer agreement
shall be filed with the court within 10 days of its execution. A copy of a signed
amendment shall be filed within 15 days of signing. A duplicate copy of the filed
agreement and any amendment shall be provided to the client. The agreement shall be
subject to the provisions governing confidentiality contained in Domestic Relations Law,
section 235(1). The agreement shall contain the following information:
RETAINER AGREEMENT
1. Names and addresses of the parties entering into the agreement;
2. Nature of the services to be rendered;
3. Amount of the advance retainer, if any, and what it is intended to cover;
4. Circumstances under which any portion of the advance retainer may be refunded.
Should the attorney withdraw from the case or be discharged prior to the depletion of the
advance retainer, the written retainer agreement shall provide how the attorney's fees and
expenses are to be determined, and the remainder of the advance retainer shall be
refunded to the client;
5. Client's right to cancel the agreement at any time; how the attorney's fee will be
determined and paid should the client discharge the attorney at any time during the course
of the representation;
6. How the attorney will be paid through the conclusion of the case after the retainer is
depleted; whether the client may be asked to pay another lump sum;
7. Hourly rate of each person whose time may be charged to the client; any out-of-pocket
disbursements for which the client will be required to reimburse the attorney. Any
changes in such rates or fees shall be incorporated into a written agreement constituting
an amendment to the original agreement, which must be signed by the client before it
30
may take effect;
8. Any clause providing for a fee in addition to the agreed- upon rate, such as a
reasonable minimum fee clause, must be defined in plain language and set forth the
circumstances under which such fee may be incurred and how it will be calculated.
9. Frequency of itemized billing, which shall be at least every 60 days; the client may not
be charged for time spent in discussion of the bills received;
10. Client's right to be provided with copies of correspondence and documents relating to
the case, and to be kept apprised of the status of the case;
11. Whether and under what circumstances the attorney might seek a security interest
from the client, which can be obtained only upon court approval and on notice to the
adversary;
12. Under what circumstances the attorney might seek to withdraw from the case for
nonpayment of fees, and the attorney's right to seek a charging lien from the court.
13. Should a dispute arise concerning the attorney's fee, the client may seek arbitration;
the attorney shall provide information concerning fee arbitration in the event of such
dispute or upon the client's request.
Sec. filed Oct. 11, 1994; amds. filed: July 8, 1994; Feb. 24, 1997; Jan. 12, 2001 eff. June
1, 2001.
22 NYCRR 1400.3, 22 NY ADC 1400.3
Current through amendments included in the New York State Register, Volume XXXII,
Issue 40, dated October 5, 2011.
31
Part 1215. Written Letter of Engagement
Section 1215.1. Requirements
(a) Effective March 4, 2002, an attorney who undertakes to represent a client and enters
into an arrangement for, charges or collects any fee from a client shall provide to the
client a written letter of engagement before commencing the representation, or within a
reasonable time thereafter:
(1) if otherwise impractible; or
(2) if the scope of services to be provided cannot be determined at the time of the
commencement of representation.
For purposes of this rule, where an entity (such as an insurance carrier) engages an
attorney to represent a third party, the term client shall mean the entity that engages
the attorney. Where there is a significant change in the scope of services or the fee to
be charged, an updated letter of engagement shall be provided to the client.
(b) The letter of engagement shall address the following matters:
(1) explanation of the scope of the legal services to be provided;
(2) explanation of attorney's fees to be charged, expenses and billing practices; and
(3) where applicable, shall provide that the client may have a right to arbitrate fee
disputes under Part 137 of this Title.
(c) Instead of providing the client with a written letter of engagement, an attorney may
comply with the provisions of subdivision (a) of this section by entering into a signed
written retainer agreement with the client, before or within a reasonable time after
commencing the representation, provided that the agreement addresses the matters set
forth in subdivision (b) of this section.
Section 1215.2. Exceptions
This section shall not apply to:
(a) representation of a client where the fee to be charged is expected to be less than
$3,000;
(b) representation where the attorney's services are of the same general kind as previously
rendered to and paid for by the client;
(c) representation in domestic relations matters subject to Part 1400 of this Title; or
32
(d) representation where the attorney is admitted to practice in another jurisdiction and
maintains no office in the State of New York, or where no material portion of the services
are to be rendered in New York.
33
NY. REAL PROPERTY LAW § 442-d
§ 442-d. Actions for commissions; license prerequisite
No person, copartnership, limited liability company or corporation shall bring or maintain
an action in any court of this state for the recovery of compensation for services rendered,
in any place in which this article is applicable, in the buying, selling, exchanging, leasing,
renting or negotiating a loan upon any real estate without alleging and proving that such
person was a duly licensed real estate broker or real estate salesman on the date when the
alleged cause of action arose.
CREDIT(S)
(Formerly § 442-e, added L.1922, c. 672. Amended L.1924, c. 579, § 8. Renumbered §
442-d, L.1926, c. 831. Amended L.1927, c. 107, § 1; L.1998, c. 324, § 26, eff. July 14,
1998.)
34
IRS Publication 4895
If you acquired property from a decedent who died in 2010, special rules may apply in
determining tax items including basis, gain, loss, holding period, and character for the
property. Section 301(c) of the Tax Relief, Unemployment Insurance Reauthorization,
and Job Creation Act of 2010, P.L 111-312, allows the executor of the estate of any
decedent who died in 2010 to elect not to have the estate tax rules apply and instead to
have a modified basis carryover regime apply. This election could impact the amount of
tax you owe. The rules governing how to make this election and the effect of making an
election are under development and will be issued at a later date. Once these special rules
have been developed, Publication 4895, Tax Treatment of Property Acquired From a
Decedent Dying in 2010, will be issued.
As of April 18, 2011, you may not know whether the executor for the estate of the
decedent will elect not to have the estate tax rules apply to the decedent’s estate. As a
result, if you acquired property from a decedent who died in 2010 and you sold the
property in 2010, you may need to file, by April 18, 2011, an extension to file your
income tax return, estimate the gain or loss from such a sale, and make any other
estimates for the acquired property necessary to compute tax. Under these circumstances,
if you owe additional tax because the estimate turns out to be incorrect, penalty relief will
be available if the estimate was based on a reasonable interpretation of the law. Interest,
however, will accrue. You should consult with your tax advisor if you have any questions
about how to estimate these amounts, or about filing extensions and computing any tax
due with the request for extension.
35
Residential Contract of Sale 11-2000
Jointly prepared by the Real Property Section of the New York State Bar Association, the New York State Land Title Association, the Committee on Real Property Law
of the Association of the Bar of the City of New York and the Committee on Real Property Law of the New York County Lawyers’ Association
WARNING: NO REPRESENTATION IS MADE THAT THIS FORM OF CONTRACT FOR THE SALE AND PURCHASE OF REAL ESTATE
COMPLIES WITH SECTION 5-702 OF THE GENERAL OBLIGATIONS LAW (“PLAIN LANGUAGE”).
CONSULT YOUR LAWYER BEFORE SIGNING THIS AGREEMENT
NOTE: FIRE AND CASUALTY LOSSES AND CONDEMNATION
This contract form does not provide for what happens in the event of fire, or other casualty loss or condemnation before the title closing. Unless different provision is
made in this contract, Section 5-1311 of the General Obligations Law will apply. One part of that law makes a Purchaser responsible for fire and casualty loss upon
taking possession of the Premises before the title closing.
Residential Contract of Sale
Contract of Sale made as of August 1, 2011
Lottie Loser and Lenny Loser, his wife (1)
BETWEEN
Address:19 Inna Court Road, Lawyersville, New York 11500
Social Security Number/Fed. I.D. No.(s):xxx xx xxxx
hereinafter called “Seller” and
Shirley Sucker and Sarah Sucker (2)
Address: 3B Flatiron Street, Flushing, New York 98765
Social Security Number/Fed. I.D. No.(s): xxx xx xxxx
hereinafter called “Purchaser”
The parties hereby agree as follows:
1. Premises. Seller shall sell and convey and Purchaser shall
purchase the property, together with all buildings and improvements
thereon (collectively the “Premises”), more fully described on a
separate page marked “Schedule A”, annexed hereto and made a part
hereof and also known as: Street Address: 19 Inna Court Road,
Lawyersville, New York 11500
Excluded from this sale are furniture and household furnishings and all
ceiling lighting fixtures
(3)
Tax Map Designation: Section 8, Block 411, Lot 711
Together with Seller’s ownership and rights, if any, to land lying in
the bed of any street or highway, opened or proposed, adjoining the
Premises to the center line thereof, including any right of Seller to any
unpaid award by reason of any taking by condemnation and/or for any
damage to the Premises by reason of change of grade of any street or
highway. Seller shall deliver at no additional cost to Purchaser, at
Closing (as hereinafter defined), or thereafter, on demand, any
documents that Purchaser may reasonably require for the conveyance
of such title and the assignment and collection of such award or
damages.
3. Purchase Price. The purchase price is
$ 1,250,000.00
payable as follows:
(a) On the signing of this contract, by Purchaser’s good check payable
to the Escrowee (as hereinafter defined), subject to collection, the
receipt of which is hereby acknowledged, to be held in escrow
pursuant to paragraph 6 of this contract (the “Downpayment”):
$ 125,000.00
2. Personal Property. This sale also includes all fixtures and
articles of personal property now attached or appurtenant to the
Premises, unless specifically excluded below. Seller represents and
warrants that at Closing they will be paid for and owned by Seller,
free and clear of all liens and encumbrances, except any existing
mortgage to which this sale may be subject. They include, but are not
limited to, plumbing, heating, lighting and cooking fixtures,
chandeliers, bathroom and kitchen cabinets and counters, mantels,
door mirrors, switch plates and door hardware, venetian blinds,
window treatments, shades, screens, awnings, storm windows, storm
doors, window boxes, mail box, TV aerials, weather vane, flagpole,
pumps, shrubbery, fencing, outdoor statuary, tool shed, dishwasher,
washing machine, clothes dryer, garbage disposal unit, range, oven,
built-in-microwave oven, refrigerator, freezer, air conditioning
equipment and installations, wall to wall carpeting and built-ins not
excluded below (strike out inapplicable items).
(c) By a purchase money note and mortgage from Purchaser to Seller:
$
All as presently exist.
(b) By allowance for the principal amount unpaid on the existing
mortgage on the date hereof, payment of which Purchaser shall
assume by joinder in the deed
(4)
$
750.000.00
(d) Balance at Closing in accordance with paragraph 7:
$ 375.000.00
4. Existing Mortgage. (Delete if inapplicable) If this sale is subject to
an existing mortgage as indicated in paragraph 3(b) above:
(a) The Premises shall be conveyed subject to the continuing lien of the
existing mortgage, which is presently payable, with interest at the
rate of 12.5 (5)
percent per annum, in monthly
installments of $ 3,500.00
which include principal,
interest and escrow amounts, if any, and with any balance of
principal being due and payable on Augist1, 2020.
(b) To the extent that any required payments are made on the existing
mortgage between the date hereof and Closing which reduce the
unpaid principal amount thereof below the amount shown in
paragraph 3(b), then the balance of the price payable at Closing
under paragraph 3(d) shall be increased by the amount of the
payments of principal. Seller represents and warrants that the
amount shown in paragraph 3(b) is substantially correct and
agrees that only payments required by the existing mortgage
will be made between the date hereof and Closing.
(c) If there is a mortgagee escrow account, Seller shall assign it to
Purchaser, if it can be assigned, and in that case Purchaser
shall pay the amount in the escrow account to Seller at
Closing.
(d) Seller shall deliver to Purchaser at Closing a certificate dated
not more that 30 days before Closing signed by the holder of
the existing mortgage, in form for recording, certifying the
amount of the unpaid principal, the date to which interest has
been paid and the amounts, if any, claimed to be unpaid for
principal and interest, itemizing the same. Seller shall pay the
fees for recording such certificate. If the holder of the existing
mortgage is a bank or other institution as defined in Section
274-a of the Real Property Law it may, instead of the
certificate, furnish a letter signed by a duly authorized officer,
employee or agent, dated not more then 30 days before
Closing, containing the same information.
(e) Seller represents and warrants that (i) Seller has delivered to
Purchaser true and complete copies of the existing mortgage,
the note secured thereby and any extensions and modifications
thereof, (ii) the existing mortgage is not now, and at the time of
Closing will not be, in default, and (iii) the existing mortgage
does not contain any provision that permits the holder of the
mortgage to require its immediate payment in full or to change
any other term thereof by reason of the sale or conveyance of
the Premises.
5. Purchase Money Mortgage. (Delete if inapplicable) If there is
to be a purchase money mortgage as indicated in paragraph 3(c)
above:
(a) The purchase money note and mortgage shall be drawn by the
attorney for Seller in the form attached or, if not, in the
standard form adopted by the New York State Land Title
Association. Purchaser shall pay at Closing the mortgage
recording tax, recording fees and the attorney’s fees in the
amount of $
for its preparation.
(b) The purchase money note and mortgage shall also provide that
it is subject and subordinate to the lien of the existing
mortgage and any extensions, modifications, replacements or
consolidations of the existing mortgage, provided that (i) the
interest rate thereof shall not be greater than
percent per annum and the total debt service thereunder shall
not be greater than $
per annum, and (ii) if
the principal amount thereof shall exceed the amount of
principal owing and unpaid on the existing mortgage at the
time of placing such new mortgage or consolidated mortgage,
the excess is to be paid to the holder of such purchase money
mortgage in reduction of the principal thereof. The purchase
money mortgage shall also provide that such payment to the
holder thereof shall not alter or affect the regular installments,
if any, of principal payable thereunder and that the holder
thereof will, on demand and without charge therefore, execute,
acknowledge and deliver any agreement or agreements further
to effectuate such subordination.
6. Downpayment in Escrow.
Seller’s attorney (“Escrowee”) shall hold the Downpayment in
escrow in a segregated bank account at their respective banks.
(6)
(b)
(c)
(d)
(e)
(f)
until Closing or sooner termination of this contract shall pay over or
apply the Downpayment in accordance with the terms of this
paragraph. Escrowee shall hold the Downpayment in a(n) noninterest-bearing account for the benefit of the parties. If interest is
held for the benefit of the parties, it shall be paid to the party
entitled to the Downpayment and the party receiving the interest
shall pay any income taxes thereon. If interest is not held for the
benefit of the parties, the Downpayment shall be placed in an IOLA
account or as otherwise permitted or required by law. The Social
Security or Federal Identification numbers of the parties shall be
furnished to Escrowee upon request. At Closing, the Downpayment
shall be paid by Escrowee to Seller. If for any reason Closing does
not occur and either party gives Notice (as defined in paragraph 25)
to Escrowee demanding payment of the Downpayment, Escrowee
shall give prompt Notice to the other party of such demand. If
Escrowee does not receive Notice of objection from such other
party to the proposed payment within 10 business days after the
giving of such Notice, Escrowee is hereby authorized and directed
to make such payment. If Escrowee does receive such Notice of
objection within such 10 day period or if for any other reason
Escrowee in good faith shall elect not to make such payment,
Escrowee shall continue to hold such amount until otherwise
directed by Notice from the parties to this contract or a final, nonappealable judgment, order or decree of a court. However,
Escrowee shall have the right at any time to deposit the
Downpayment and the interest thereon with the clerk of a court in
the county in which the Premises are located and shall give Notice
of such deposit to Seller and Purchaser. Upon such deposit or other
disbursement in accordance with the terms of this paragraph,
Escrowee shall be relieved and discharged of all further obligations
and responsibilities hereunder.
The parties acknowledge that Escrowee is acting solely as a
stakeholder at their request and for their convenience and that
Escrowee shall not be liable to either party for any act or omission
on its part unless taken or suffered in bad faith or in willful
disregard of this contract or involving gross negligence on the part
of Escrowee. Seller and Purchaser jointly and severally (with right
of contribution) agree to defend (by attorneys selected by
Escrowee), indemnify and hold Escrowee harmless from and
against all costs, claims and expenses (including reasonable
attorneys’ fees) incurred in connection with the performance of
Escrowee’s duties hereunder, except with respect to actions or
omissions taken or suffered by Escrowee in bad faith or in willful
disregard of this contract or involving gross negligence on the part
of Escrowee.
Escrowee may act or refrain from acting in respect of any matter
referred to herein in full reliance upon and with the advice of
counsel which may be selected by it (including any member of its
firm) and shall be fully protected in so acting or refraining from
action upon the advise of such counsel.
Escrowee acknowledges receipt of the Downpayment by check
subject to collection and Escrowee’s agreement to the provisions of
this paragraph by signing in the place indicated on the signature
page of this contract.
Escrowee or any member of its firm shall be permitted to act as
counsel for Seller in any dispute as to the disbursement of the
Downpayment or any other dispute between the parties whether or
not Escrowee is in possession of the Downpayment and continues
to act as Escrowee.
The party whose attorney is Escrowee shall be liable for loss of the
Downpayment.
7. Acceptable Funds. All money payable under this contract unless
otherwise specified, shall be paid by:
(a) Cash, but not over $1,000.00
(b) Good certified check of Purchaser drawn on or official check
issued by any bank, savings bank, trust company or savings
and loan association having a banking office in the State of
New York unendorsed and payable to the order of Seller, or as
Seller may otherwise direct upon reasonable prior notice (by
telephone or otherwise) to Purchaser.
(c) As to money other than the purchase price payable to Seller at
Closing, uncertified check of Purchaser up to the amount of
$500.00; and
(d) As otherwise agreed to in writing by Seller or Seller’s attorney.
8. Mortgage Commitment Contingency. (Delete paragraph if
inapplicable. For explanation, see: NOTES ON MORTGAGE
COMMITMENT CONTINGENCY CLAUSE.)
(a) The obligation of Purchaser to purchase under this contract is
conditioned upon issuance, on or before 15 days (7) after a
fully executed copy of this contract is given to Purchaser or
Purchaser’s attorney in the manner set forth in paragraph 25 or
subparagraph 8(j) (the “Commitment Date”), of a written
commitment from an Institutional Lender pursuant to which
such Institutional Lender agrees to make a first mortgage loan,
other than a VA, FHA or other governmentally insured loan, to
Purchaser, at Purchaser’s sole cost and expense, of
$ 750,000.00
for a term of at least 30
years
(or such lesser sum or shorter term as Purchaser shall be
willing to accept) at the prevailing fixed or adjustable rate of
interest and on other customary commitment terms (the
“Commitment”). To the extent a Commitment is conditioned
on the sale of Purchaser’s current home, payment of any
outstanding debt, no material adverse change in Purchaser’s
financial condition or any other customary conditions,
Purchaser accepts the risk that such conditions may not be met;
however, a commitment conditioned on the Institutional
Lender’s approval of an appraisal shall not be deemed a
“Commitment” hereunder until an appraisal is approved (and if
that does not occur before the Commitment Date Purchaser
may cancel under subparagraph 8(e) unless the Commitment
Date is extended). Purchaser’s obligations hereunder are
conditioned only on issuance of a Commitment. Once a
Commitment is issued, Purchaser is bound under this contract
even if the lender fails or refuses to fund the loan for any
reason.
(b) Purchaser shall (i) make prompt application to one or, at
Purchaser’s election, more than one Institutional Lender for
such mortgage loan, (ii) furnish accurate and complete
information regarding Purchaser and members of Purchaser’s
family, as required, (iii) pay all fees, points and charges
required in connection with such application and loan, (iv)
pursue such application with diligence, and (v) cooperate in
good faith with such Institutional Lender(s) to obtain a
Commitment. Purchaser shall accept a Commitment meeting
the terms set forth in subparagraph 8(a) and shall comply with
all requirements of such Commitment (or any other
commitment accepted by Purchaser). Purchaser shall furnish
Seller with a copy of the Commitment promptly after receipt
thereof.
(c) (Delete this subparagraph if inapplicable) Prompt submission
by Purchaser of an application to a mortgage broker registered
pursuant to Article 12-D of the New York Banking Law
(“Mortgage Broker”) shall constitute full compliance with the
terms and conditions set forth in subparagraph 8(b)(i),
provided that such Mortgage Broker promptly submits such
application to such Institutional Lender(s). Purchaser shall
cooperate in good faith with such Mortgage Broker to obtain a
Commitment from such Institutional Lender(s).
(d) If all Institutional Lenders to whom applications were made deny
such applications in writing prior to the Commitment Date,
Purchaser may cancel this contract by giving Notice thereof to
Seller, with a copy of such denials, provided that Purchaser has
complied with all its obligations under this paragraph 8.
(e) If no Commitment is issued by an Institutional Lender on or before
the Commitment Date, then, unless Purchaser has accepted a
written commitment from an Institutional Lender that does not
conform to the terms set forth in subparagraph 8(a), Purchaser may
cancel this contract by giving Notice to Seller within 5 business
days after the Commitment Date, provided that such Notice
includes the name and address of the Institutional Lender(s) to
whom application was made and that Purchaser has complied with
all its obligations under this paragraph 8.
(f) If this contract is canceled by Purchaser pursuant to subparagraphs
8(d) or (e), neither party shall thereafter have any further rights
against, or obligations or liabilities to, the other by reason of this
contract, except that the Downpayment shall be promptly refunded
to Purchaser and except as set forth in paragraph 27.
(g) If Purchaser fails to give timely Notice of cancellation or if
Purchaser accepts a written commitment from an Institutional
Lender that does not conform to the terms set forth in subparagraph
8(a), then Purchaser shall be deemed to have waived Purchaser’s
right to cancel this contract and to receive a refund of the
Downpayment by reason of the contingency contained in this
paragraph 8.
(h) If Seller has not received a copy of a commitment from an
Institutional Lender accepted by Purchaser by the Commitment
Date, Seller may cancel this contract by giving Notice to Purchaser
within 5 business days after the Commitment Date, which
cancellation shall become effective unless Purchaser delivers a copy
of such commitment to Seller within 10 business days after the
Commitment Date. After such cancellation neither party shall have
any further rights against, or obligations or liabilities to, the other
by reason of this contract, except that the Downpayment shall be
promptly refunded to Purchaser (provided Purchaser has complied
with all its obligations under this paragraph 8) and except as set
forth in paragraph 27.
(i) For purposes of this contract, the term “Institutional Lender” shall
mean any bank, savings bank, private banker, trust company,
savings and loan association, credit union or similar banking
institution whether organized under the laws of this state, the United
States or any other state, foreign banking corporation licensed by
the Superintendent of Banks of New York or regulated by the
Comptroller of the Currency to transact business in New York
State; insurance company duly organized or licensed to do business
in New York State; mortgage banker licensed pursuant to Article
12-D of the Banking Law; and any instrumentality created by the
United States or any state with the power to make mortgage loans.
(j) For purposes of subparagraph 8(a), Purchaser shall be deemed to
have been given a fully executed copy of this contract on the third
business day following the date of ordinary or regular mailing,
postage prepaid.
9. Permitted Exceptions. The Premises are sold and shall be conveyed
subject to:
(a) Zoning and subdivision laws and regulations, and landmark,
historic or wetlands designation, provided that they are not violated
by the existing buildings and improvements erected on the property
or their use;
(b) Consents for the erection of any structures on, under or above any
streets on which the Premises abut;
(c) Encroachments of stoops, areas, cellar steps, trim and cornices, if
any, upon any street or highway;
(d) Real estate taxes that are a lien, but are not yet due and payable; and
(e) The other matters, if any, including a survey exception, set forth in
a Rider attached.
10. Governmental Violations and Orders.
(a) Seller shall comply with all notes or notices of violations of
law or municipal ordinances, orders or requirements noted or
issued as of the date hereof by any governmental department
having authority as to lands, housing, buildings, fire, health,
environmental and labor conditions affecting the Premises.
The Premises shall be conveyed free of them at Closing. Seller
shall furnish Purchaser with any authorizations necessary to
make the searches that could disclose these matters.
(b) (Delete if inapplicable) All obligations affecting the Premises
pursuant to the Administrative Code of the City of New York
incurred prior to Closing and payable in money shall be
discharged by Seller at or prior to Closing.
11. Seller’s Representations.
(a) Seller represents and warrants to Purchaser that:
I. The Premises abut or have a right of access to a public
road;
II. Seller is the sole owner of the Premises and has the full
right, power and authority to sell, convey and transfer the
same in accordance with the terms of this contract;
III. Seller is not a “foreign person”, as that term is defined for
purposes of the Foreign Investment in Real Property Tax
Act. Internal Revenue Code (“IRC”) Section 1445, as
amended, and the regulations promulgated thereunder
(collectively “FIRPTA”);
IV. The Premises are not affected by any exemptions or
abatements of taxes; and
V. Seller has been known by no other name for the past ten
years, except:
(b) Seller covenants and warrants that all of the representations
and warranties set forth in this contract shall be true and
correct at Closing.
(c) Except as otherwise expressly set forth in this contract, none of
Seller’s covenants, representations, warranties or other
obligations contained in this contract shall survive Closing.
12. Condition of Property. Purchaser acknowledges and represents
that Purchaser is fully aware of the physical condition and state of
repair of the Premises and of all other property included in this sale,
based on Purchaser’s own inspection and investigation thereof, and
that Purchaser is entering into this contract based solely upon such
inspection and investigation and not upon any information, data,
statements or representations, written or oral, as to the physical
conditions, state of repair, use, cost of operation or any other matter
related to the Premises or the other property included in the sale,
given or made by Seller or its representatives, and shall accept the
same “as is” in their present condition and state of repair, subject to
reasonable use, wear, tear and natural deterioration between the date
hereof and the date of Closing (except as otherwise set forth in
paragraph 16(e), without any reduction in the purchase price or claim
of any kind for any change in such condition by reason thereof
subsequent to the date of this contract. Purchaser and its authorized
representatives shall have the right, at reasonable times and upon
reasonable notice (by telephone or otherwise) to Seller, to inspect the
Premises before Closing.
13. Insurable Title. Seller shall give and Purchaser shall accept
such title as any reputable Title Company doing business in the State
of New York shall be willing to approve and insure in accordance
with its standard form of title policy approved by the New York State
Insurance Department, subject only to the matters provided for this
contract.
14. Closing, Deed and Title.
(a) “Closing” means the settlement of the obligations of Seller and
Purchaser to each other under this contract, including the payment
of the purchase price to Seller, and the delivery to Purchaser of a
Bargain and Sale Deed with covenant against grantors acts in proper
statutory short form for record, duly executed and acknowledged, so
as to convey to Purchaser fee simple title to the Premises, free of all
encumbrances, except as otherwise herein stated. The deed shall
contain a covenant by Seller as required by subd. 5 of Section 13 of
the Lien Law.
(b) If Seller is a corporation, it shall deliver to Purchaser at the time of
Closing (i) a resolution of its Board of Directors authorizing the sale
and delivery of the deed, and (ii) a certificate by the Secretary or
Assistant Secretary of the corporation certifying such resolution and
setting forth facts showing that the transfer is in conformity with the
requirements of Section 909 of the Business Corporation Law. The
deed in such case shall contain a recital sufficient to establish
compliance with that Section.
15. Closing Date and Place. Closing shall take place at the office of
sellers’ attorney or lending institution or its attorneys within Nassau or
Suffolk County.
on or about October 11, 2011
at 2:00 P.M.
16. Conditions to Closing. This contract and Purchaser’s obligation to
purchase the Premises are also subject to and conditioned upon the
fulfillment of the following conditions precedent:
(a) The accuracy, as of the date of Closing, of the representations and
warranties of Seller made in this contract.
(b) The delivery by Seller to Purchaser of a valid and subsisting
Certificate of Occupancy or other required certificate of
compliance, or evidence that none was required, covering the
building(s) and all of the other improvements located on the
property authorizing their use as a one family dwelling at the date of
Closing, shed, pool and deck excepted. (8)
(c) The delivery by Seller to Purchaser of a certificate stating that
Seller is not a foreign person, which certificate shall be in the form
then required by FIRPTA or a withholding certificate from I.R.S. If
Seller fails to deliver the aforesaid certificate or if Purchaser is not
entitled under FIRPTA to rely on such certificate, Purchaser shall
deduct and withhold from the purchase price a sum equal to 10%
thereof (or any lesser amount permitted by law) and shall at Closing
remit the withheld amount with the required forms to the Internal
Revenue Service.
(d) The delivery of the Premises and all building(s) and improvements
comprising a part thereof in broom clean condition, vacant and free
of leases or tenancies, together with keys to the Premises.
(e) All plumbing (including water supply and septic systems, if any),
heating and air conditioning, if any, electrical and mechanical
systems, equipment, and machinery in the building(s) located on the
property and all appliances which are included in this sale being in
working order as of the date of Closing.
(f) If the Premises are a one or two family house, delivery by the
parties at Closing of affidavits in compliance with state and local
law requirements to the effect that there is installed in the Premises
a smoke detecting alarm device or devices.
(g) The delivery by the parties of any other affidavits required as a
condition of recording the deed.
17. Deed Transfer and Recording Taxes. At Closing, certified or
official bank checks payable to the order of the appropriate State, City
or County officer in the amount of any applicable transfer and/or
recording tax payable by reason of the delivery or recording of the
deed or mortgage, if any, shall be delivered by the party required by
this contract to pay such transfer and/or recording tax, together with
any required tax returns duly executed and sworn to, and such party
shall cause any such checks and returns to be delivered to the
appropriate officer promptly after Closing. The obligation to pay any
additional tax or deficiency and any interest or penalties thereon shall
survive Closing.
18. Apportionments and Other Adjustments; Water Meter and
Installment Assessments.
(a) To the extent applicable, the following shall be apportioned as
of midnight of the day before the day of Closing:
(i) taxes, water charges and sewer rents, on the basis of the
fiscal period for which assessed; (ii) fuel; (iii) interest on the
existing mortgage; (iv) premiums on existing transferable
insurance policies and renewals of those expiring prior to
Closing; (v) vault charges; (vi) rents as and when collected.
(b) If Closing shall occur before a new tax rate is fixed, the
apportionment of taxes shall be upon the basis of the tax rate
for the immediately preceding fiscal period applied to the latest
assessed valuation.
(c) If there is a water meter on the Premises, Seller shall furnish a
reading to a date not more than 30 days before Closing and the
unfixed meter charge and sewer rent, if any, shall be
apportioned on the basis of such last reading.
(d) If at the date of Closing the Premises are affected by an
assessment which is or may become payable in annual
installments, and the first installment is then a lien, or has been
paid, then for the purposes of this contract all the unpaid
installments shall be considered due and shall be paid by Seller
at or prior to Closing.
(e) Any errors or omissions in computing apportionments or other
adjustments at Closing shall be corrected within a reasonable
time following Closing. This subparagraph shall survive
Closing.
19. Allowance for Unpaid Taxes, etc. Seller has the option to
credit Purchaser as an adjustment to the purchase price with the
amount of any unpaid taxes, assessments, water charges and sewer
rents, together with any interest and penalties thereon to a date not
less that five business dates after Closing, provided the official bills
therefor computed to said date are produced at Closing.
20. Use of Purchase Price to Remove Encumbrances. If at
Closing there are other liens or encumbrances that Seller is obligated
to pay or discharge, Seller may use any portion of the cash balance of
the purchase price to pay or discharge them, provided Seller shall
simultaneously deliver to Purchaser at Closing instruments in
recordable form and sufficient to satisfy such liens or encumbrances
of record, together with the cost of recording or filing said
instruments. As an alternative Seller may deposit sufficient monies
with the title insurance company employed by Purchaser acceptable
to and required by it to assure their discharge, but only if the title
insurance company will insure Purchaser’s title clear of the matters or
insure against their enforcement out of the Premises and will insure
Purchaser’s Institutional Lender clear of such matters. Upon
reasonable prior notice (by telephone or otherwise), Purchaser shall
provide separate certified or official bank checks as requested to
assist in clearing up these matters.
21. Title Examination; Seller’s Inability to Convey; Limitations of
Liability.
(a) Purchaser shall order an examination of title in respect of the
Premises from a title company licensed or authorized to issue title
insurance by the New York State Insurance Department or any
agent for such title company promptly after the execution of this
contract or, if this contract is subject to the mortgage contingency
set forth in paragraph 8, after a mortgage commitment has been
accepted by Purchaser. Purchaser shall cause a copy of the title
report and of any additions thereto to be delivered to the attorney(s)
for Seller promptly after receipt thereof.
(b) (i) If at the date of Closing, Seller is unable to transfer title to
Purchaser in accordance with this contract, or Purchaser has other
valid grounds for refusing to close, whether by reason of liens,
encumbrances or other objections to title or otherwise (herein
collectively called “Defects”), other than those subject to which
Purchaser is obligated to accept title hereunder or which Purchaser
may have waived and other than those which Seller has herein
expressly agreed to remove, remedy or discharge and if Purchaser
shall be unwilling to waive the same and to close title without
abatement of the purchase price, then, except as hereinafter set
forth, Seller shall have the right, at Seller’s sole election, either to
take such action as Seller may deem advisable to remove, remedy,
discharge or comply with such Defects or to cancel this contract;
(ii) if Seller elects to take action to remove, remedy or comply with
such Defects, Seller shall be entitled from time to time, upon Notice
to Purchaser, to adjourn the date for Closing hereunder for a period
or periods not exceeding 60 days in the aggregate (but not
extending beyond the date upon which Purchaser’s mortgage
Commitment, if any, shall expire), and the date for Closing shall be
adjourned to a date specified by Seller not beyond such period. If
for any reason whatsoever, Seller shall not have succeeded in
removing, remedying or complying with such Defects at the
expiration of such adjournment(s), and if Purchaser shall still be
unwilling to waive the same and to close title without abatement of
the purchase price, then either party may cancel this contract by
Notice to the other given within 10 days after such adjourned date;
(iii) notwithstanding the foregoing, the existing mortgage (unless
this sale is subject to the same) and any matter created by Seller
after the date hereof shall be released, discharged or otherwise
cured by Seller at or prior to Closing.
(c) If this contract is cancelled pursuant to its terms, other than as a
result of Purchaser’s default, this contract shall terminate and come
to an end, and neither party shall have any further rights, obligations
or liabilities against or to the other hereunder or otherwise, except
that: (i) Seller shall promptly refund or cause the Escrowee to
refund the Downpayment to Purchaser and, unless cancelled as a
result of Purchaser’s default or pursuant to paragraph 8, to
reimburse Purchaser for the net cost of examination of title,
including any appropriate additional charges related thereto, and the
net cost, if actually paid or incurred by Purchaser for updating the
existing survey of the Premises or of a new survey, and (ii) the
obligations under paragraph 27 shall survive the termination of this
contract.
22. Affidavit as to Judgments, Bankruptcies, etc. If a title examination
discloses judgments, bankruptcies or other returns against persons having
names the same as or similar to that of Seller, Seller shall deliver an
affidavit at Closing showing that they are not against Seller.
23. Defaults and Remedies.
(a) If Purchaser defaults hereunder, Seller’s sole remedy shall be to
receive and retain the Downpayment as liquidated damages, it being
agreed that Seller’s damages in case of Purchaser’s default might be
impossible to ascertain and the Downpayment constitutes a fair
and reasonable amount of damages under the circumstances
and is not a penalty.
(b) If Seller defaults hereunder, Purchaser shall have such
remedies as Purchaser shall be entitled to at law or in equity,
including but not limited to, specific performance.
24. Purchaser’s Lien. All money paid on account of this contract,
and the reasonable expenses of examination of title to the Premises
and of any survey and survey inspection charges are hereby made
liens on the Premises, but such liens shall not continue after default
by Purchaser under this contract.
25. Notices. Any notice or other communication (“Notice”) shall be
in writing and either:
(a) sent by either of the parties hereto or by their respective
attorneys who are hereby authorized to do so on their behalf or
by the Escrowee, by registered or certified mail, postage
prepaid, or
(b) delivered in person or by overnight courier, with receipt
acknowledged, to the respective addresses given in this
contract for the party and the Escrowee, to whom the Notice is
to be given, or to such other address as such party or Escrowee
shall hereafter designate by Notice given to the other party or
parties and the Escrowee pursuant in this paragraph. Each
Notice mailed shall be deemed given on the third business day
following the date of mailing the same, except that any Notice
to Escrowee shall be deemed given only upon receipt by
Escrowee and each Notice delivered in person or by overnight
courier shall be deemed given when delivered, or
(c) with respect to paragraph 7(b) or paragraph 20, sent by fax to
the party’s attorney. Each Notice by fax shall be deemed given
when transmission is confirmed by the sender’s fax machine.
A copy of each Notice sent to a party shall also be sent to the
party’s attorney. The attorneys for the parties are hereby
authorized to give and receive on behalf of their clients all
Notices and deliveries. This contract may be delivered as
provided above or by ordinary mail.
26. No Assignment. This contract may not be assigned by
Purchaser without the prior written consent of Seller in each instance
and any purported assignment(s) made without such consent shall be
void.
27. Broker. Seller and Purchaser each represents and warrants to the
other that it has not dealt with any broker in connection with this sale
other than Quick Make a Buck Realty, Inc., by Hal Homrwrecker
(9)
(“Broker”) and Seller shall pay Broker any commission earned
pursuant to a separate agreement between Seller and Broker. Seller
and Purchaser shall indemnify and defend each other against any
costs, claims and expenses, including reasonable attorney’s fees
arising out of the breach on their respective parts of any
representation or agreement contained in this paragraph. The
provisions of this paragraph shall survive Closing or, if Closing does
not occur the termination of this contract.
28. Miscellaneous.
(a) All prior understanding, agreements, representations and warranties,
oral or written, between Seller and Purchaser are merged in this
contract; it completely expresses their full agreement and has been
entered into after full investigation, neither party relying upon any
statement made by anyone else that is not set forth in this contract.
(b) Neither this contract nor any provision thereof may be waived,
changed or cancelled except in writing. This contract shall also
apply to and bind the heirs, distributees, legal representatives,
successors and permitted assigns of the respective parties. The
parties hereby authorize their respective attorneys to agree in
writing to any changes in dates and time periods provided for in this
contract.
(c) Any singular word or term herein shall also be read as in the plural
and the neuter shall include the masculine and feminine gender,
whenever the sense of this contract may require it.
(d) The captions in this contract are for convenience of reference only
and in no way define, limit or describe the scope of this contract and
shall not be considered in the interpretation of this or any provisions
hereof.
(e) This contract shall not be binding or effective until duly executed
and delivered by Seller and Purchaser.
(f) Seller and Purchaser shall comply with IRC reporting requirements,
if applicable. This subparagraph shall survive Closing.
(g) Each party shall, at any time and from time to time, execute,
acknowledge where appropriate and deliver such further
instruments and documents and take such other action as may be
reasonably requested by the other in order to carry out the intent and
purpose of this contract. This subparagraph shall survive Closing.
(h) This contract is intended for the exclusive benefit of the parties
hereto and except as otherwise expressly provided herein, shall not
be for the benefit of, and shall not create any rights in, or be
enforceable by any other person or entity.
(i) If applicable, the complete and fully executed disclosure of
information on lead-based paint and/or lead-based paint hazards is
attached hereto and made a part hereof.
Continued on Rider attached hereto. (Delete if inapplicable)
a. description
(10)
b.
1952 survey
c.
d.
co for original construction
rider
(11)
In Witness Whereof, this contract has been duly executed by the parties hereto.
Lottie Looser,
Seller
Shirley Sucker, Purchaser
Lenny Looser, r Seller
Sarah Sucker,
Attorney for Seller: Maureen Moneygrabber, Esq.
Attorney for Purchaser: Robert Rookie
Address:
Address:
Tel.:
Fax:
Tel.:
Purchaser
Fax:
Receipt of the Downpayment is acknowledged and the undersigned
agrees to act in accordance with the provisions of paragraph 6 above.
Maureen Moneygrabber, Esq and Robert Rookie,
.Escrowees
Contract of Sale
PREMISES
TITLE NO.
Section
Block
Lot
County or
Town
Street Number
TO
NOTES ON MORTGAGE COMMITMENT CONTINGENCY CLAUSE
for
RESIDENTIAL CONTRACT OF SALE
1.
2.
3.
4.
WARNING: The mortgage Commitment contingency clause for the Residential Contract
of Sale is a bar association form that attempts to provide a mechanism that makes the
rights and obligations of the parties clear in sale of residences in ordinary circumstances.
It should be reviewed carefully by Seller and Purchaser and their attorneys in each and
every transaction to make sure that all the provisions are appropriate for that transaction.
Negotiated modifications should be made whenever necessary.
Under the clause, the obligation of Purchaser to purchase under the contract of sale is
contingent on Purchaser’s obtaining a mortgage Commitment letter from an Institutional
Lender within the number of days specified for the amount specified. This refers to
calendar days. Seller’s attorney should state his/her calculation of the Commitment Date
in the letter delivering the executed contract to Purchaser’s attorney, to prevent confusion
later. Purchaser should promptly confirm or correct that date. In applying for a loan,
Purchaser should inform its lender of the scheduled date of Closing in the contract and
request that the expiration date of the Commitment occur after the scheduled dated of
Closing. Purchaser must comply with deadlines and pursue the application in good faith.
The Commitment contingency is satisfied by issuance of a Commitment in the amount
specified on or before the Commitment Date, unless the Commitment is conditioned on
approval of an appraisal. If the Commitment is conditioned on approval of an appraisal
and such approval does not occur prior to the Commitment Date, Purchaser should either
cancel the contract or obtain an extension of the Commitment Date. If the Commitment is
later withdrawn or not honored, Purchaser runs the risk of being in default under the
contract of sale with Seller.
If there are loan terms and conditions that are required or would not be acceptable to
Purchaser, such as the interest rate, term of the loan, points, fees or a condition requiring
sale of the current home, those terms and conditions should be specified in a rider.
This clause assumes that initial review and approval of Purchaser’s credit will occur
before the Commitment letter is issued. Purchaser should confirm with the lender that
this is the case before applying for the Commitment.
5.
6.
7.
8.
If, as has been common, the Commitment letter itself is conditioned on sale of Purchaser’s home
or payment of any outstanding debt or no material adverse change in Purchaser’s financial
condition, such a Commitment will satisfy the contract contingency nonetheless, and Purchaser
will take the risk of fulfilling those Commitment conditions, including forfeiture of the
Downpayment if Purchaser defaults on its obligation to close. Under New York case law, a
defaulting Purchaser may not recover any part of the Downpayment, and Seller does not have to
prove any damages. If Purchaser is not willing to take that risk, the clause must be modified
accordingly.
Purchaser may submit an application to registered Mortgage Broker instead of applying directly
to an Institutional Lender.
This clause allows Seller to cancel if a Commitment is not accepted by Purchaser by the
Commitment Date, unless Purchaser timely supplies a copy of the Commitment, to allow Seller
the option to avoid having to wait until the scheduled date of Closing to see if Purchaser will be
able to close. Seller may prefer to cancel rather than to wait and settle for forfeiture of the
Downpayment if Purchaser defaults. Because of Seller’s right to cancel, Purchaser may not
waive this contingency clause. This clause means that Purchaser is subject to cancellation by
Seller even if Purchaser is willing to risk that he/she will obtain the Commitment after the
Commitment Date. Some Purchasers may not want to be subject to such cancellation by Seller.
Purchaser may want to add to paragraph 21(c) that Purchaser’s reimbursement should include
non-refundable financing and inspection expenses of Purchaser, which should be refunded by
Seller if Seller willfully defaults under the contract of sale (alternative: If Seller is unable to
transfer title under the contract of sale).
9-25-00
Joint Committee on the Mortgage Contingency Clause:
Real Property Section of the New York State Bar Association
Real Property Law Committee of the Association of the Bar of the
City of New York
Real Property Committee of the New York County Lawyers Association
RIDER TO RESIDENTIAL CONTRACT OF SALE
PREMISES: 19 Inna Court Road, Lawyersville, New York 11500
29. In the event of a default by the purchaser under the terms of this contract, the amount deposited
hereunder shall be retained by the seller as liquidated damages by reason of the fact that the parties cannot
estimate true damages, and this contract shall be null and void and neither party shall have any further claim
against the other. In the event the down payment hereunder is less than ten (10%) per cent, damages are
liquidated at ten (10%) per cent of the purchase price herein.
30. The seller covenants and agrees to deliver possession of the premises to the purchaser at closing.
(12)
31. Supplementing paragraph 9 of this contract, this contract is subject to any state of facts that an
accurate survey may show, provided same does not render title unmarketable. This sale is also subject to the
usual public utility easements and all covenants, restrictions and reservations, if any, contained in former
instruments of record, provided same are not violations of the existing building(s) and use(s).
32. In the event that a check is given as the down payment hereunder as is set forth in paragraph 3 of the
printed contract, and the same is dishonored for any reason by the bank upon which it is drawn, then the seller,
in addition to any other rights and remedies which he may have, may at this option, declare this contract null
and void and at an end, and thereupon the seller shall be relieved and released from all obligations thereunder.
33. The parties hereto acknowledge that their respective counsel are attorneys in fact and agents for said
clients, and acts, letters and agreements by and between counsel shall be binding upon the parties to this
agreement. (13)
34. The purchaser shall have the right to have the premises inspected for the purpose of determining the
existence of termite or wood destroying insect active infestation or damage. The cost of said inspection shall be
borne by the purchaser. In the event such active infestation or damage is found, a copy of the report issued by
the inspector or other written notice shall be served upon the seller's attorney by certified mail, return receipt
requested, within ten (10) days from the date hereof. Upon receipt of such notice by the seller's attorney, the
seller may do one or the following:
(a) treat the condition at his own cost and expense, in which event the purchaser agrees to
consummate this transaction pursuant to the further terms hereof; or
(b) terminate this contract by refunding the sums paid hereunder by the purchaser. Notice of the
seller's intent to exercise either option shall be served upon the purchaser's attorney within ten (10) days after
receipt of the infestation or damage report. In the event the purchaser shall fail to have the premises inspected
or fail to serve said written notice post marked no later than ten (10) days from the date hereof, the purchaser
shall be deemed to have waived the provisions of this rider paragraph and this contract shall otherwise remain
in full force and effect.
35. In amplification of paragraph 7(b) of the printed contract concerning acceptable closing proceeds, in
addition to the certified check limitation set forth in paragraph 7(b), net funds payable at the closing of title
herein may be by certified check(s), bank checks, tellers checks and cashiers checks as may be approved by
sellers attorney in advance of the closing. Said checks shall be drawn to the order of the seller(s) or as the
seller(s) shall in advance designate. Checks payable to the purchaser(s) or third party checks shall not be
accepted. Said checks shall be drawn on a bank located within the State of New York. In the event the
purchaser(s) or purchasers' lending institution tenders checks which are not in conformance herewith, the
purchasers shall be responsible for all expense caused by the delay in having said checks certified, including but
not limited to legal fee of seller's attorney. Checks accepted by the sellers at closing are accepted subject to
collection and the purchasers shall remain responsible to the sellers for all sums due at closing until clearance
of the proceeds of the sale. This provision shall survive delivery of the deed. The provisions hereof shall
supersede all other contract provisions for payment of funds at closing to the extent they are inconsistent
herewith. SELLER(S) HEREWITH ADVISE PURCHASER(S) THAT THE SELLER(S) ARE ADVISED
BY THEIR ATTORNEY THAT CONSIDERABLE DIFFICULTY HAS ARISEN WITH RESPECT TO
SOME MORTGAGE LENDERS TENDERING OUT OF STATE AND UNACCEPTABLE CHECKS
FOR MORTGAGE PROCEEDS AT CLOSING. THOSE CHECKS WILL NOT BE ACCEPTED
UNDER ANY CIRCUMSTANCES. TENDERING OF CHECKS OTHER THAN AS CALLED FOR
HEREIN SHALL BE DEEMED A BREACH OF THIS CONTRACT.
36. Attached hereto as a separate rider page is the statutorily required lead-based paint and lead-based paint
hazards rider. The parties acknowledge that the same is a binding part of this contract. In the event that the
purchaser(s) inspect the subject premises for the purpose of risk assessment, for lead-based paint or for leadbased paint hazards, they shall make the inspection within the time set forth below. Should they fail to make
such inspection within the time provided for herein below, their right to do so is waived. In the event any such
inspection discloses an adverse condition the seller(s) shall have the option to remediate the same at the sole cost
and expense of the seller(s) and this contract shall then be fully performed by the parties pursuant to its terms, or
in the alternative, the seller(s) shall have the option to cancel this contract and make a refund of all sums paid to
the seller(s) on account of this contract. With respect to the timing of the various steps herein, the following
schedule shall control:
a. Purchaser(s) shall make the inspection within ten (10) days from the date of this contract.
b. In the event any condition requiring remediation is found, purchaser(s) shall notify seller(s) attorney,
in writing, within ten (10) days after the making of such inspection, furnishing a full copy of the inspection
report(s).
c. Within ten (10) days of the receipt of said report(s) by the seller(s) attorney the seller(s) shall advise the
purchaser(s) attorney that the seller(s) shall remediate the condition at their sole cost and expense and proceed
with the sale, or that the seller(s) opt to cancel this contract as is provided for herein.
37. Notwithstanding any other provision of the mortgage contingency clause of the printed contract,
purchaser undertakes that the closing herein shall take place within the County of Nassau, the county in which
the premises is located, or other county acceptable to the seller.
38. The sellers' acceptance of funds tendered at closing as payment of all or part of the sums due from the
purchaser(s), from either the purchaser(s), the purchaser(s) lending institution, purchaser(s) agent or any other
source shall in no way relieve the purchaser(s) from the obligation to pay the sums due at closing. In the event
that any of the funds tendered are dishonored the purchaser(s) shall remain liable for said sum together with all
costs of the seller(s) in collecting the same, including reasonable attorneys fees. The purchaser(s) hereby
guarantee all checks and payment(s) made and delivered at closing for payment of the sums due. The
purchaser(s) agree(s) that in the event any portion of the payment proceeds is dishonored, the seller(s) has/have
the option to commence an action to impress a trust upon the property which has been conveyed pursuant to
this contract. This paragraph shall survive delivery of the deed.
39. In the event the purchasers cannot with due diligence obtain the mortgage called for herein, the
sellers reserve the right to either obtain same for the sellers or furnish a purchase money mortgage therefore,
and in either event the terms will be those currently prevailing for a 30 year self-amortizing mortgage with
interest at seventeen (17%) per cent. (14)
40. Notwithstanding the provisions of paragraph 16(e) of this contract, said representation shall survive to
the date of possession should possession be given after closing of title.
41. Seller(s) shall pay the New York State Transfer Tax due on the transfer of title plus any other tax
normally and usually paid by the seller(s). Purchaser(s) shall pay the Peconic Bay Tax, if applicable, and any
other tax normally and usually paid by the purchaser(s). (15)
42. In amplification of the printed contract, seller(s) shall not be obligated to provide certificates of
occupancy , certificates of completion or permits for any deck, pool, awning or shed upon the subject
premises. The seller(s) shall not be obligated to expend more than $1,000.00 to obtain a certificate of
occupancy, certificate of completion or permit for the remainder of the subject premises or to cure any
violations that may exist as against the subject premises at the time of closing. In the event the same cannot be
obtained by said expenditure of said sum, the seller(s) shall have the option of canceling this contract and
returning to the purchaser(s) the down payment made hereunder. The purchaser(s) may waive the provisions
of this paragraph. (16)
(OMIT THIS HEADER AND ONE OF THE FOLLOWING PARAGRAPHS 43:) (17)
43. The parties acknowledge being advised by their respective attorneys as to the existence of the
"property condition disclosure act" contained in Article 14 of the Real Property Law. The sellers have not
delivered the said disclosure statement to the purchasers. The sellers shall give a credit of $500.00 to the
purchasers at closing of title which shall be the limit of sellers’ liability.
43. In the event that the seller(s) has (have) executed and delivered a real property disclosure statement
to the buyer(s), the buyer(s) shall execute the same and it shall be attached to this contract. In addition, in the
event the buyer(s) has (have) obtained an engineers report or any other inspection report dealing with the
subject premises, a true and complete copy of the same shall be delivered to the seller(s) at the time of the
execution of this contract, and the disclosure statement shall, be deemed amended accordingly by
incorporating by reference said report(s).
44. In the event the purchaser(s) obtain(s) a mortgage from any institution, broker or individual which
does not have funds in hand to close this mortgage and issue certified checks at the time scheduled for the
closing ( for example, a funding company or closing attorney or agent requiring the receipt of wired funds on
the date of closing, or approval of a HUD-1 form, or other situation wherein the closing funds are not actually
available at the time scheduled for the closing), the purchaser(s) agree to schedule a closing for not later than
10:00 AM on the date ultimately scheduled for the closing. The purchaser(s) agree to pay to the attorney for
the seller(s) a fee of $300.00 per hour for each and every hour or part thereof for “wait time” , which “wait
time” is defined as the time from which all closing procedures have been completed to the time the actual
certified or bank checks are delivered to the sellers.
45. The purchaser(s) is (are) informed that mold or other microscopic organisms may exist in or about
the subject premises and that the same may cause, including but not limited to, physical, allergic and/or
respiratory reactions or other problems, particularly in persons with immune system problems, young children
and/or elderly persons. The purchaser(s) acknowledge and agree to accept full responsibility and risk for any
matters that may result from the presence of such condition and agree to hold harmless and indemnify the
sellers from any liability, recourse or claims arising therefrom. The sellers represent that they are not aware of
any such condition. The sellers agree that the purchaser(s) may conduct an inspection for the existence of
such substances at the premises, at the expense of the purchaser(s), within ten (10) days from their receipt of an
executed copy of this contract. In the event any such condition is found, the purchaser(s) will furnish a copy of
the said report of their inspection within fifteen (15) days of their receipt of an executed copy of this contract.
The seller(s) shall have the option to remediate the condition at the sole cost and expense of the seller(s) or
cancel this contract, making a full refund of the down payment paid by the purchaser(s). The purpose of this
contract provision is solely to place the purchaser(s) on notice to conduct their own due diligence regarding this
matter by using appropriate and qualified experts.
46. It has come to the attention of the seller(s) that in some cases title insurers (hereinafter designated
as underwriters) have declined to recognize a binding agency relationship for all closing matters between the
underwriter and the title agency or closer, which title closer is sometimes appointed by the title abstract
company or otherwise, and have refused to recognize and stand behind certain commitments made by said
title closer and abstract company at closing. Therefore it is agreed that in the event the purchaser obtains
title insurance or has any title representative at closing to facilitate the closing, issue title insurance, take
escrow deposits or otherwise, the purchaser will either obtain said insurance directly from and have a
representative of the underwriter of the policy used by the purchaser at closing, obtain and furnish at closing
a letter from the underwriter that the abstract company or title agent used by the purchaser has authority to
bind the underwriter for all matters arising at the closing or, in the absence of either of the foregoing, the
purchaser(s) do hereby indemnify and hold harmless the sellers from any and all defaults of the abstract
company and their title closer relative to this closing. In the event the title closer, abstract company or
underwriter requires any escrow at closing, the escrow agreement shall be drawn on the form of the title
underwriter and, among other things, shall specifically designate the abstract company or its representative
to represent the underwriter for all closing purposes and any escrow funds shall be payable directly to the
order of the underwriter. This provision of contract shall survive the closing.
47. In the event that a “seller’s concession” is either included in the terms of this contract, as executed,
or subsequently agreed to by the parties, the purchaser shall obtain the consent of the lender and any insurer
of the lender, such as the FHA, any other governmental insurer or otherwise, and the same shall be included
on the HUD-1 form produced by the lender at closing. In addition, the purchaser shall be responsible for
any additional transfer taxes due or imposed due to the seller’s concession. In the event the sellers concession
does not appear on the HUD-1 form generated by the lender at closing the parties shall close title as if the said
seller’s concession has not been made a part of the contract. Should the purchaser fail to close the purchaser
shall be deemed in breach of this contract and forfeit the down payment made hereunder and be responsible
for liquidated damages as otherwise set forth herein.
FORM OF ESCROW AGREEMENT IN THE EVENT ESCROW IS REQUIRED AT CLOSING OF TITLE
ESCROW AGREEMENT
Re: Premises:______________________________________________
Sellers(s): _________________________________________________
Purchaser(s): ______________________________________________
Date: _______________
WHEREAS closing of title in the above-referenced matter took place on the date of this agreement, and
____ a, the seller did not deliver possession of the premises to the purchaser at the closing of title either
because the contract of sale provided for possession of the premises to be delivered by the seller following the
closing or the purchaser has agreed that the seller may remain in possession following the closing, and/or
____ b. the title closed with the seller’s obligation surviving the closing to
____________________________________________________________________________________________
____________________________________________________________________________________________
____________________________________________________________________________________________
____________________________________________________________________________________________
_______________________________________________________________,
NOW, and in consideration of the closing having been completed and the purchaser agreeing that the seller
may remain in possession of the premises post closing, [in the event sub-paragraph (a) above is checked, with
adjustments having been made to the date of possession specified below], and/or in the event that the seller has the
obligation to comply with the provisions set forth above [in the event sub-paragraph (b) above is checked], it is
agreed as follows:
1. The seller has deposited the sum of $__________ with his/her/their attorney to be used in reduction of the
purchase price in the event the purchaser is entitled to payment pursuant to this agreement.
2. The seller may remain in possession of the premises through and including
_________________________, at which time the premises must be delivered to the purchaser vacant and broom
clean and in the condition called for in the contract of sale.
3. In the event the seller does not deliver possession of the premises as called for above, the purchaser is
entitled to a payment of the sum of $___________ for each and every day that the seller remains in possession of
the premises after the date specified above.
4. In the event the seller vacates the subject premises on or before the above date and otherwise complies
with this agreement [in the event sub-paragraph (b), above, is completed], said escrow shall be released to the
seller. In the event the seller has not delivered the premises as called for by this agreement the seller shall be
obligated to the purchaser in the appropriate amount, to be paid from the escrow fund on deposit.
5. The obligation of the escrowee shall be limited to the amount of the escrow deposit. The seller shall be
responsible to the purchaser for any additional sums due as a result of the breach of this agreement.
6. The funds escrowed shall not be released to seller until the purchaser has inspected the vacated premises at
the time of actual possession and the reasonable cost of any repairs and/or remediation required for the delivery of
possession pursuant to the contract of sale and this agreement have been paid from the escrow fund.
7. Notwithstanding any other provision of contract or this agreement, in the event seller does not deliver
possession of the premises pursuant to this agreement, the purchaser shall have the right to enforce the eviction of
the seller and recover possession of the premises from the seller pursuant to any and all remedies provided for in
law or equity. Said remedies shall be non-exclusive and nothing in this agreement or the contract of sale shall be
deemed to create a landlord-tenant relationship between the parties.
8. In the event a dispute arises between the parties to this agreement, each agrees at the request of any other
party, to submit the dispute to an alternative dispute resolution procedure, if any is so available within the county
wherein the subject property is located. If there is no such program available the parties agree to arbitrate the
dispute before the American Arbitration Association within the county in which the subject property is located.
The seller and purchaser shall initially share equally in the cost of the alternative dispute resolution procedure or
arbitration. The unsuccessful party shall be responsible for counsel fees and disbursements of the successful party.
9. The attorney for the seller may represent the seller in any suit or proceeding concerning the escrow
deposit.
Seller:
Purchaser:
____________________
____________________
____________________
____________________
Escrowee and
Attorney for Seller: ____________________