Legal Question in Real Estate Law in New York

Re: Tough Question

Some additional items to consider:

1. Your brother's "bad" credit situation may be substanially improved given the equity interest he now has in the coop premises. Thus, He may may be eligible for a mortgage, w/o need of your co-signing or guaranteeing, the mortgage. Also, the mortgage sum could include enough money to pay you off, your share, and pay off or down his outstanding debt, if your brother's income is sufficient to carry the monthly payments. If his income is inadequate to cover, sale of the premises would seem to be the obvisous choice.

2. In the event He & You sell to HIM, the "flip" and other taxes, charges and sale costs, would be "equally shared by both you, (whether directly or indirectly). However, all the taxes and costs of the sale, would proabley be "deductible from any "captial gains" tax that has accrued and may be passable onto you both, with a base going back to the orginal purchase costs, more than twenty years ago.

In addition, please note: generally, there is no flip tax on a "transfer" from the decedent to the "Estate" of the decedant, since for "legal" purposes, the "Estate" and the decedant is the same, "person" or entity. Thus, the Estate could be the title holder, until such time as you both work out (with your lawyer/s broker, accountant, etc.,) how to best work out disposition of your mother's bequest.

Good luck,

Phroska L. McAlister,ESQ

Re: Tough Question

You can't leave the coop in your late mother's name and finance it. Right now, title is in your brother and you as executors of your mother's will. At the very least, you and your brother would need to sign the UCC financing statement and security agreement and recognition agreement to do the financing. How the note would be handled would be up to the lender, but this is a mess in any event since you would still have some exposure to loss (if the apartment were not maintained, or if monthly maintenance charges were not paid, or if there were an assessment for capital repairs to the building, you would have personal liability).

One would have to review the coop's bylaws and the proprietary lease to see whether the flip tax could be assessed. Flip Taxes are a fertile field of litigation and there are many instances in which a coop's failure to cross the t's and dot the i's has resulted in the flip tax being invalidated.

For example, if your mother's will left the coop (or her residual estate) to your brother and you in equal shares and the will has been probated, then a transfer of the apartment to the two of you is deemed an transfer by operation of law. The coop is not entitled to a transfer fee when this happens, though odds are you'll need to sue for it. If you and your brother were to strike a deal on the side that provides you will surrender your interest in the apartment before the estate transfers it out, then, likewise, your brother would become the owner of the apartment by operation of law and the coop gets no flip tax. Of course, you'd have to paper the deal so that your right to secure your one half of the apartment's value is preserved. If your brother has found a lender that will give him the money, then this is the way you should go. You should engage counsel who is familiar with coop law and litigation (hint! hint!).

Feel free to call me at 212-692-5545; I make house calls, too (I'm a Nassau County resident).

This post is not legal advice and does not create an attorney-client relationship. It is a comment on the legal question posed by the poster and should not be relied upon unless and until an attorney-client relationship is entered into. Doing so would require at least signing an engagement letter.

Re: Tough Question

I mostly agree with Kevin, but add some comments. On Mom'sdeath the property automatically became yours and your brothers. How do you satisfy the mortgage company on ownership? Is the proposed mortgage to be in the name of the estate? Does the Will allow this to be done? What about possible state and federal estate taxes. How are questions on this answered? Will you be taking title insurance? If so, they will have many questions? I trust there will be no fraud involved, such as taking everything in Mom's name as if she were still alive. I suggest talking to a NY attorney familiar with these matters.