Tag Archives: Hudson Valley

Pawling Public Radio: This Side of the Law:The Simple Truth, Dangers of Guaranteeing a Loan in the State of New York

This Side of the Law:The Simple Truth, Dangers of Guaranteeing a Loan in the State of New York

Pawling Public Radio: This Side of the Law: Berlandi Nussbaum & Reitzas LLP Hudson Valley | New York | Attorneys

By: Joshua T. Reitzas
Partner – Berlandi Nussbaum & Retizas LLP
April 28, 2013


Thinking about signing a personal guarantee? Perhaps on behalf of a corporation because the company cannot afford to stand on its own without your assistance?  Or on behalf of a family member whose credit is terrible?  Or even a friend? Well, definitely think again.

Last week, I had the unique privilege of actually arguing in Court the exact opposite sides of the same underlying issue: whether a guarantor has the right to assert a defense on a personal guarantee.  Two different clients, argued in two different types of courts (New York’s version of a “Business Court” and its regular Court), two different types of judges (different demeanor), and a couple of days apart.  In the end, there was only one decision rendered.  New York holds a guarantor strictly liable and defenses, almost always, will likely not be entertained.

What people really need to better understand is that signing personal guarantees may affect them both when the loan is considered in default, as well as when things are status quo (i.e. payments are being made timely).  In a default situation, it is more likely than not that a Lender will file suit.  Further, if the Guarantor sets forth a defense (i.e. answers the complaint), a summary judgment motion will presumably then be filed or at least one should be filed in my opinion (assuming the case was properly made out prior to suit).  This basically means that the Lender will ask the Court for a judgment immediately without having the expense of a trial.  All that would be needed is for the Lender to prove its prima facie case evidencing (a) that the loan was made, (b) that the unconditional and irrevocable Guarantee exists, and (c) the Borrower under the loan has defaulted (i.e. nobody paid the bill).

Assuming the Lender makes this showing, the burden would then shift to the party opposing the motion to produce evidentiary proof sufficient to establish the existence of material issues of fact remaining for trial. In sum, all a Lender needs to do is show the Court the underlying note (i.e. the actual loan document), the actual copy of the Guarantee (i.e. the physical document) and proof that the underlying loan was not paid back (i.e. account statements from the Lender’s financial records and supported by a proper affidavit).  This is a very tough obstacle for any Guarantor to overcome.  In fact, New York is so harsh that even if a Guarantor could assert a defense, it may be completely disregarded.

Now, keep in mind that Guarantees will often times include language in the document expressly mandating that Guarantors waive the right to any possible defense(s), offset(s), or counterclaim(s).  As mentioned earlier, even in the absence of specific waiver language, New York has held Guarantors liable.  So if you are thinking about signing that Guarantee, we suggest that you first analyze the gravity of the situation upon signing a Guaranty – do you really know what you are getting in for?

In one of our cases, the Guarantor purchased a $17,000,000 home and placed ownership into a corporate entity and then executed a Guarantee with respect to the mortgage.  We advised the Lender to pursue a money judgment and not to do a residential foreclose (so as to avoid any possible right to a modification of the loan that may exist otherwise). This is absolutely within the right of a Lender to select the type of remedy in New York.

Finally, Guarantors should be somewhat reticent about executing Guarantees, as the underlying obligation must be accounted for on all bank applications and/or personal financial statements.  Recently, we discovered that a client’s business credit line (which the client personally guaranteed) was not included on a recent bank loan application.  Thank goodness we caught it.  If we did not, the bank may have brought some serious allegations against our client for possible misrepresentation on the loan application.

We recommend that if you are thinking about signing a Guarantee, you first consult with an attorney to know exactly what you are getting in for.  And if you elect not to do so, we suggest reading this article again and again to make sure you completely understand what you may be faced with in the future.

Always feel free to call or write if you have any questions.

Berlandi Nussbaum & Retizas LLP

New York | Hudson Valley



Berlandi Nussbaum & Reitzas LLP

Hudson Valley | New York | Attorneys

Pawling Public Radio:This Side of the Law: What is Your Home “Worth”?

This Side of the Law: What is Your Home “Worth”?

 Pawling Public Radio: BNR LLP – Law Firm NYC | Hudson Valley

By: Brian L. Berlandi
Partner – Berlandi Nussbaum & Retizas LLP

April 8, 2013

We all know the saying….”Your home is only worth what a buyer will pay for it.” That is ever-so-true in today’s market, where buyers appear to have more leverage than sellers. Those of us who bought homes 5-6 years ago, before the real estate bubble popped, now find ourselves struggling just to sell the same home at a 20-30% discount off our original purchase price. Buyers are being picky and negotiating hard for the prices they want to pay, and banks are employing far more stringent criteria on lending, making it harder and harder for buyers to even get loans.

Even when a buyer is otherwise qualified for a loan (i.e. has a good credit score, stable income, etc.), we are still seeing banks not approve the loan because the home to be purchased does not appraise high enough to meet the necessary loan-to-value ratio. Take a simple example that we see often at BNR:

  • Mr. and Mrs. Sellers want to sell their home in Dutchess County, which they purchased in 2005 for $400,000. They put it on the market with a real estate broker, listing it at $400,000.
  • 18 months go by with no offers, and the Sellers reduce the price 2 or 3 times such that it’s currently listed at $340,000.
  • Finally, Mr. and Mrs. Buyers come along.
  • The Buyers love the home and very much want to buy it, but not for any price near $340,000.
  • The Sellers are very eager to sell (because they already have their eye on a new condo in South Carolina), and after a lengthy negotiation, the parties agree on a $250,000 sales price and sign a Contract for Sale.
  • The Buyers then work with a mortgage broker who submits their loan application to XYZ Bank based out of Plano, Texas.
  • XYZ Bank agrees to make a loan the Buyers on an 80% loan-to-value ratio (or 80% LTV), meaning that, assuming the value of the house is $250,000, XYZ Bank will loan the Buyers 80% of the value (i.e. $200,000). The remaining 20% (i.e. $50,000) will have to be paid by the Buyers out-of-pocket.
  • As part of underwriting the loan, XYZ Bank then sends Mr. Real Estate Appraiser from Long Island to the property to appraise the value of the home and to ensure that it does, in fact, have a value of $250,000.
  • Mr. Appraiser has never heard of Dutchess County before, never mind been here. He has no knowledge of the local market, nor of the appropriate and relevant comparable sales in the neighborhood against which to compare the Sellers home.
  • Nonetheless, he plugs Dutchess County into his GPS, finds the home, does his walk-around, gets back in his car, and heads back to Long Island.
  • The next day, he provides a report to XYZ Bank that states, based on his opinion, the Sellers home has a value of only $235,000.
  • The Buyers then call the Sellers and tell them they have to lower the price (again) because the house is not “worth” $250,000, it’s only “worth” $235,000.
  • The Sellers have a fit and say “no way”.
  • The deal dies, and the Sellers are faced with the decision of either putting the home back on the market, or giving up and just staying put in the home (i.e. South Carolina will have to wait…..)

This scenario has become oh-so-typical. In the end, both parties are disappointed. The Sellers haven’t sold the home they want/need to sell, and the Buyers have not purchased the home they fell in love with.

In the end, it all came down to what the house was “worth.”

So what could have been done differently to create a better outcome? Here are a few tips to consider…

  1. If you are the Sellers, consider hiring a good, local real estate broker who really knows your market well and will price your home appropriately. While you may certainly suffer from the disappointment of selling your home for less than what you purchased it for, a good real estate broker will keep your expectations in line.
  2. If you are the Buyers, consider working with a local bank (and we have many in Dutchess County) who knows the market well and knows what homes in this area are “worth”. If you elect to use a large, national banking institution, at least consider using one that regularly makes loans to home buyers in this market (and there are a few of them out there too). Choosing XYZ Bank in Plano, Texas can be a recipe for disaster.
  3. Lastly, whether you are the Sellers or the Buyers, insist that the Buyers bank utilize an appraiser who knows the market well, who has done many appraisals in your local area, and who can competently assess what your home is “worth” by examining the appropriate and relevant comparable sales in the neighborhood.

Berlandi Nussbaum & Reitzas LLP | Hudson Valley | New York | Attorneys



Pawling Public Radio: Three Ways to Avoid Liability for Alcohol Served at Association-Sponsored Social Activities

Pawling Public Radio

This Side of the Law: Three Ways to Avoid Liability for Alcohol Served at Association-Sponsored Social Activities

Pawling Public Radio: BNR – Law Firm NYC | Hudson Valley

By Jay Nussbaum
Partner Berlandi Nussbaum & Reitzas LLP
January 17, 2013

Organizing social activities like pool parties, cookouts, and holiday parties is a big part of managing a community association. They bring members together and foster a sense of commu­nity. But association-sponsored social activities can be risky, too, if you serve alcohol.

If a member, employee, or guest drinks too much and gets into an accident, the victims—including the person who caused the accident—may sue the associa­tion and/or manager. And in many states, they’ll have a good chance of winning. The easiest way to avoid liability for alcohol- relat­ed accidents is to not serve alcohol at social events you sponsor. Many community associations are now doing this, making all social gatherings “dry”—that is, alcohol free.

But if you do decide to serve alcohol at association-sponsored social events, you can take steps to minimize your exposure to liability. Here are three things you can do:

Pawling Public Radio: Three Ways to Avoid Liability for Alcohol Served at Association-Sponsored Social Activities

  • Have the right kind of insurance coverage. Your general liability policy may already have a clause giving you “limited liquor liability” or “host liquor lia­bility” coverage. These clauses protect you against lia­bility for accidents caused by people who have consumed liquor you served. If you don’t have this coverage, and you plan to serve alcohol at association-sponsored social events, you should get it.PRACTICAL. POINTER: If you have only one activity a year at which you serve alcohol—say, at a holiday party—consider saving money by getting limited liquor liability coverage just for the single event, rather than having it added on to your policy for year-round coverage.
  • Don’t charge fee for admission or alcohol. Just having the right kind of insurance coverage isn’t good enough. If you charge money for the drinks you serve, the limited liquor liability clause won’t help you much. It won’t cover you for injuries for which the association might be held liable as a result of its:
    • Causing or contributing to the intoxication of any person;
    • Furnishing alcohol to an underage person;
    • Furnishing alcohol to an already intoxicated per­son; or
    • Violating any law in the provision of alcohol.

A limited liquor liability clause isn’t intended to cover those in the business of selling, serving, or provid­ing alcohol.  So if you want to serve alcohol at a social function, don’t charge for it. That way, you won’t be con­sidered to be in the business of selling, serving, or pro­viding alcohol, and your limited liquor liability clause should cover you in case there’s an accident.Don’t charge an entry fee, either. Some insurance companies might say that even though you’re not charging money for the alcohol itself, charging for entry into an event at which alcohol is served is the same as being in the business of selling, serving, or pro­viding alcohol. If that’s what they con­clude, they won’t cover you for any accidents that happen. So err on the side of caution and don’t charge an entry fee.

  • Hire professionals to serve the alcohol. An alternative is to “subcontract” the provision of alcohol to a professional, licensed organization that uses trained bartenders. Having a professional bartender can help protect you because bartenders are trained to spot minors and to know when to stop serv­ing guests who are intoxicated—tasks your employees won’t be able to do as well.The other big advantage of subcontracting out the provision of alcohol is that professional companies carry liquor liability insurance to shield them—and you—from liability. Insist that the company you hire name you on its insurance policy as an “additional insured” for the association-sponsored social event. Getting an outside firm to serve the liquor is the way to go, as long as it’s insured and the association is named on the policy as an additional insured. 

Pawling Public Radio: BNR – Law Firm NYC | Hudson Valley

Pawling Public Radio: Three Ways to Avoid Liability for Alcohol Served at Association-Sponsored Social Activities



Pawling Public Radio: This Side of the Law

This Side of the Law (Listen to the Radio Broadcast)

October 24, 2012


Brian Berlandi

Partner – Berlandi Nussbaum & Retizas LLP

Pawling Public Radio: BNR LLP – Law Firm NYC | Hudson Valley

People have long and often said that the best thing about a small town is that “it’s a small town.” I have always found that to be the case with Pawling, where friends and acquaintances can be found on every street corner, at all times of the day, and where people truly care about their neighbors’ well-being. These are the biggest reasons why I was intent upon BNR maintaining an office in Pawling when we formed the firm in the summer of 2011.

BNR is a general practice law firm, which offers our clients a wide variety of legal services, including entertainment law, commercial litigation, congressional investigations, commercial and residential real estate, corporate law, election law, mergers and acquisitions, employment law, intellectual property, tax, and criminal defense (federal and state). As devoted as BNR is to providing high-quality legal services, we are equally committed to improving the way in which clients pay for legal services.  Therefore, we offer a variety of creative fee alternatives to better align our interests with those of our clients. I invite you to visit our website to learn more about our practice and our attorneys. www.bnrllp.com

Although headquartered in mid-town Manhattan, BNR maintains an office in Pawling at 527 Route 22 – across the lobby from Rose & Kiernan Insurance Agency, and in the northern section of the same building in which the Pawling Central School District offices are located.

Moving forward, BNR is delighted to be working with Pawling Public Radio to provide a monthly legal column about new and interesting legal issues on a variety of topics. We hope you will find them compelling. Of course, we welcome any suggestions or requests for topics that are important or relevant to you!

Please don’t hesitate to stop into our office any time to visit, or to have a cup of coffee, or to just say hello, or to discuss any legal needs you may have. We love seeing our friends, and we can never have enough of them! We have already had the pleasure and privilege of working with so many of you, and we would be delighted for the opportunity to help even more of you.

Pawling Public Radio: This Side of the Law |BNR Berlandi Nussbaum & Reitzas LLP Attorneys of New York, Hudson Valley& New Jersey

Garnish Member’s Salary to Collect Past Due Assessments Without Having to Foreclose

Creditors’ Rights & Commercial Litigation

Garnish Member’s Salary to Collect Past Due Assessments Without Having to Foreclose


Jay Nussbaum
Berlandi Nussbaum & Reitzas LLP

Legislatures nationwide have been seeking ways to make it harder for community associations to foreclose on members who owe money to the association. Because of a few high-profile cases, the political climate is such that many of these state legislatures may succeed. But your association still needs to collect assessments, fines, and late fees in order to operate. So what can you do to collect without having to resort to the drastic measure of foreclosure? One thing you can do if you’ve already gotten a money judgment in court against the member and you know where the member works- is to garnish the member’s salary. Often called “wage garnishment,” this allows you to collect a certain percentage of the member’s net salary until the judgment is paid off. It’s available to collect past due assessments, fines, and late fees in every state except Texas, North Carolina, South Carolina, and Pennsylvania.  Garnishing wages is the most effective tool associations have to collect money owed to them, according to Paul Williams of ACA International. We’ll give you the basics on wage garnishment and the six steps you must take to garnish a member’s wages.

Garnishment Basics

Garnishment specifics vary from state to state. But in nearly all states, you must first have a court judgment that orders the member to pay you money. The procedure after you get the judgment will depend on the laws of your state, but it usually involves your filling out court forms and giving them to your county sheriff to deliver to the member’s employer. (In legal terms, this is called “serving” the employer. See the box on p. 27 for tips on how to find the employer). Once the sheriff serves the employer, the employer will take out money from the member’s paycheck and send you a check, either directly or through the sheriff. It’s illegal for the employer to ignore the garnishment forms or to fire the member because of them, says Williams. Federal law limits the amow1t you can garnish. In most cases, you can’t collect more than 25 percent of a person’s net weekly earnings after taxes, Social Security, and other required deductions are taken out. Some state laws also limit how much you can garnish. For example, in New York, you can get only 10 percent, and in Wisconsin, you can get only 20 percent, says Williams.

PRACTICAL POINTER: Consult your attorney if you want to garnish the salary of a federal employee or an active member of the military, Williams warns. Different rules apply that often involve specific and highly complex forms and procedures, and if you fail to follow them precisely, your garnishment request will be denied, he says.

Can You Do It Yourself?

It’s smart to use an attorney or a collection agency when you garnish a member’s wages, says Williams. But some managers handle wage garnishment on their own. Consider these factors in making your decision:

  • Complexity of garnishment procedure in your state. For example, if you must file the forms in court, as some states require, you may need an attorney.
  • Size of your community. If your community is large or you manage many  communities, it’s probably cost effective to use an attorney or a collection agency.
  • Experience with other legal processes. If you’re comfortable filling out legal papers, you might be able to garnish wages on your own.

Is It Worth It?

Before filling out the garnishment forms and paying the court or sheriff’s fee, evaluate whether garnishment is worth your time and money, says Robin Hein, a Georgia attorney. With small judgments, it’s often not worth it, explains John McMillan, a Florida attorney. Figure out how much it will cost to garnish, including your time. If this amount exceeds the judgment, don ‘t garnish, says McMillan.

Here are the factors to consider:

  • Amount of judgment. There’s no cutoff point as to how much a member must owe for you to garnish his wages, says McMillan. But as a general rule, if the judgment is less than a few hundred dollars, it’s probably not worth it, he says. For example, if you have a $300 judgment and garnishment fees cost $1 00, it’s not worth it to garnish. On the other hand, if a member owes you a few thousand dollars, it’s probably worth the work.
  • Fees. Depending on your state, the fees may end up costing more than the judgment. For example, in Florida, you must pay a $100 deposit (refundable only if the sheriff can’t serve the employer) and a sheriff’s fee, says McMillan. But in California, according to Brian Stevens, a California collections expert, you pay only $7 for the garnishment forms and $25 for the sheriff.
  • Type of job. In some situations, you can predict that the member will quit the job once his salary is garnished, says Stevens. For example, a restaurant busboy probably won’t stick arow1d if his wages are garnished, he says. Look at how long the member has been at the job, the job’s skill level, and whether the nature of the job would make it likely that the member would leave it.
  • Member’s salary. Sometimes the employee’s salary is too low and you won’t be able to garnish, says Williams. Federal and state laws prevent you from garnishing the salary of a person whose weekly earnings arc below a certain level. Sometimes you won’t know the member’s salary, says Hein, until after the sheriff serves the forms and the employer calculates how much to withhold.
  • Location of member’s job. If the member’s job is in another state, you’ll have to file more legal forms. You’ll also have to sue the member by filing a judgment in that state’s court.


Here are the six basic steps you’ll need to take to garnish a member’s wages:

Step #1: Get Forms for Garnishing Wages

When you get a court judgment, tell the court clerk you want to “execute,” or enforce, the judgment by garnishing the member’s wages. Ask the clerk what forms you need, the fees involved, and what steps to take, says Williams. If your judgment is mailed to you, you’ll have to go to the court to get the forms you need and ask about the fees, he says. The forms you need will vary from state to state. For example, in many states, like Tennessee and California, you’ll need to get what’s known as a “writ of  execution.”  In Arizona, you’ll need a “writ of garnishment.” In some states, like Florida, you’ll need both. In Georgia, you’ll need an “affidavit for continuing garnishment” and a “summons of continuing garnishment.”

Step #2: Fill Out Forms

Fill out the forms required in your state. The forms authorize the employer to withhold money from the member’s paycheck for you. You may need the following information to fill out the forms: the name and current address of the member (if he’s no longer living in the community), the member’s Social Security number, the member’s employer, the amount of the judgment, the fees, and so on. You can get most of the information from your court judgment. When filling out the forms, make sure you get the name of the member’s employer right. Don’t use a shorthand version, says Hein. If the employer isn’t accurately named in the forms, it may be legally able to refuse to garnish the member’s wages.

Step #3: File Forms with Court, if Required

Depending on what state and county you’re in, you might have to file the forms with the court. For example, in Georgia and California, you must do this. But in New York, you can just fill out the forms and give them to the sheriff-no court fi ling is required. If you must file the forms, you ‘ll need to pay a court fee. In some states, you must first try to collect on the judgment on your own and/or wait until the member has a chance to appeal tJ1e judgment before you can file garnishment forms, Williams notes. For example, in West Virginia, you must wait 20 days after getting a judgment before fi ling the forms. In California, you must wait 30 days for a small clain1s filing, says Stevens.

Step #4: Give Forms to Sheriff to Serve Employer

Once you file the forms in court (if required), give the completed copy of the forms to your county sheriff. Your sheriff or  Marshall will then serve the garnishment forms on the employer. Depending on how busy the sheriff is, it may take a week or so before he serves the forms, says Stevens. Once the sheriff serves the employer, says Stevens, the employer must comply with the garnishment order.

In most states, the clerk of the court will then notify the member of the proposed garnishment. In some states, like Florida, you don ‘t  have to notify the member, says McMillan. In other states, like Colorado, you must serve the forms on the employer and the member yourself. If your state requires you to serve the forms yourself, ask your attorney for help or ask the clerk of the court how to serve the forms. Depending on your state, the employer will either pay you directly or send payment to the court, which will then send you a check. Or the employer will send the check to the sheriff, who will then send the check to you. You’ll get a check either every month or every other month.

In some states, like Colorado, you can garnish for only a certain time period. Then you must re-file new garnishment forms. In many states, though, you need only one set of garnishment forms, and you may continue to garnish an individual’s salary until the judgment is paid off.

Step #5: Pay Fee to Sheriff

You must pay a sheriff If’s fee to cover costs. For example in New York, the sheriff ‘s fee is approximately $60. Once the forms are served, don’t r—- ————————, expect a refund, even if the member offers to settle and you never actually garnish wages. After all, the sheriff’s job is to serve the forms, not to ensure collection of the money.

Step #6: Collect Money Each Month

Once the sheriff serves the employer, the employer may have to wait a certain number of days, depending on your state’s Jaw, before taking the money out of the member’s wages. For example, in California, an employer must wait I 0 days after getting the garnishment forn1s, says Stevens. In other states, an employer must wait 30 days, says Williams. This gives the member a chance to challenge the garnishment. For example, he may claim that the garnislm1ent imposes an undue hardship on him because he can’t support his family. After the waiting period is over, the employer should begin taking money from the member’s paycheck (assuming that the member doesn’t challenge the garnishment). But if the member has other judgments against him that are already being garnished, they will take priority.

How to Track Down Where Member Works

To garnish a member’s wages. you must find out where the member works. Here are a few ways of doing this.

Prejudgment discovery. Because you’ll first have to get a judgment against the member before you can garnish his wages. you’ll have an opportunity during the lawsuit’s discovery process to find out where he works. says Georgia attorney Robin Hein. Whether in a  deposition (where your attorney gets to ask the member questions face to face). or interrogatories (written questions that the member answers and sends back to your attorney in writing). ask the member if he has a job and. if so. where he works. These questions are usually permissible at this stage of a lawsuit. says Hein.

Employer and phone number. If you call the employer the member told you about during the lawsuit and he no longer works there. ask if the employer’s human resources department has a forwarding phone number for the member’s current employer. Be sure to get the full  company name so that you have the correct formal name to put on the garnishment forms.

Employment supervisor. If the employer’s human resources department doesn’t have forwarding information for the member. his former supervisor may have the information. says Brian Stevens, a California collections expert.

Social Security number. If you know the member’s Social Security number you may be able to pull his credit report. Sometimes the person’s present employment is listed on the report, says Stevens. But Stevens warns that credit reporting bureaus have specific rules about the reasons for which they’ll allow you to see credit reports, so you’ll have to check with the bureau, your collection agency, or your attorney.

Emergency contacts. If you have emergency contacts for the member. You can call them and ask in a polite tone where you can reach the member. Says Stevens. “Sometimes this works:· he says, “and the person will tell where you can find the member:· If the person asks who you are, you can identify yourself. says Stevens. Be careful what you say about the member when you call the employer or other contacts. Be professional and don’t mention that you’re collecting money the member owes the association, says Hein. The member could sue you for slander or defamation-that is, saying untrue things that damage his reputation.

How to Avoid Violating Fair Debt Collection Practices

Creditors’ Rights & Commercial Litigation

How to Avoid Violating Fair Debt Collection Practices Act When Trying to Collect Member Debts


Jay Nussbaum
Berlandi Nussbaum & Reitzas LLP

When a member doesn’t pay her monthly assessment or other money she owes the association, it’s often up to the manager to try to collect what’s owed. But a manager can inadvertently run into trouble when trying to collect a member debt. A federal law- the Fair Debt Collection Practices Act (the Act)-govems what a manager may legally do. And it’s easy to violate the Act without realizing it. We’ll explain how the Act applies to managers, and what they must do to comply with it. Check with your attorney before implementing any of the suggestions given here, because many states have their own debt collection laws that managers must follow also.

Who Must Comply with Act?

The Act was passed to bar “debt collectors” from harassing debtors. It applies to anyone who regularly collects or attempts to collect debts owed to someone else, says California attorney Jon H. Epsten. lt doesn’t apply to a creditor that’s trying to collect its own debts-for example, an association that sends a member a demand for a past-due assessment. Does the Act apply to managing agents of community associations? There are conflicting opinions on this issue, says California attorney Sandra Gottlieb. She

knows of one case where the manager was found liable for failing to comply with the Act but has seen other cases turn out differently. Many times it depends on what a court thinks of the facts of the particular case. So the safest course for all managers to take is to comply with tbe Act, says Gottlieb.

What Collections Are Covered by Act?

The Act applies only to situations where the member is a person, not where it’s a corporation, partnership or trust, or other entity, says Epstcn. So if the association is seeking to collect an association debt from, say, a corporation that owns a unit in the community, it needn’t comply with the Act, he points out. Also, some federal courts have ruled that community association assessments aren’t “debts” at all. If your association is located in a part of the country covered by these federal court rulings, the Act doesn’t apply to efforts to collect a past-due assessment from a member. Check with your attorney to learn more about

the law in your locality.

Penalties for Violating Act

The penalties for violating the Act can be harsh. First, the member is entitled to what’s called ” actual damages. “This includes not only any financial loss the member can prove but also things like emotional distress and slander. In fact, to win a case under the Act, the member doesn’t have to prove financial damages at all. Second, the member can collect up to $1 ,000 in what’s called “additional damages.” If the debt collector is sued in a class action (which is a lawsuit brought by many people who claim to have been harmed by the same person in the same way), the debt collector could have to pay $1 ,000 to each person suing it, up to $500,000 or l percent of the debt collector’s net worth, whichever is less. Because many managers pursue hundreds of debts at a time, the possibility of being sued in a class action is quite real, warns California attorney Debora Zumwalt. Gottlieb knows of one association manager who was sued in a class action and had to pay $229,000. Finally, the member can collect her attorney’s fees and any costs.

PRACTICAL POINTER: One violation is all that’s needed to be potentially liable under the Act, says Epsten. The member doesn’t have to prove repeated violations or an ongoing course of inappropriate conduct.

How to Comply with Act

Here are I 0 dos and don’ts for complying with the Act:

  1. Disclose intentions to member in your first communication with her. In the debt collector’s first communication with the member, whether it’s by telephone or letter, he must say that he’s calling or writing to collect a debt and that any information he obtains will be used for that purpose. Then, in all subsequent communications, the debt collector must say that he’s calling or writing to collect a debt.  Epsten suggests adding the following statement to all initial letters: “This is a communication from a debt collector attempting to collect a debt, and any information obtained will be used for that purpose.” And he suggests adding the following statement to all subsequent letters: “This is a communication from a debt collector.
  2. Don’t contact member at unusual time. A debt collector shouldn’t contact the member to talk about the debt, either before 8:00 AM or after 9:00 PM or at any other time he knows to be inconvenient for her, unless she has given written permission to do so.
  3. Don’t contact member at work. If a debt collector knows that the member’s employer prohibits her from accepting personal calls at work, he may not call her there. Sometimes the debt collector isn’t sure if the employer has such a policy. In that case, it’s better  to err on the side of caution and not call the member at work. If the member provides a work number as a contact number for communicating about the debt, it’s okay to call her there, says Gottlieb.
  4. Deal with member’s attorney if she has one. If the member is represented by an attorney with regard to the debt- for example, if the member has declared bankruptcy-the debt collector must deal directly with the attorney. The debt collector is allowed to deal directly with a member who’s represented by an attorney only if her attorney fails to respond within a reasonable amount of time to his attempts to contact her, or if the attorney gives written permission to deal directly with the member.
  5. Don’t continue to contact member if she refuses to pay debt and says to stop calling and writing. If the member refuses to pay the debt and tells the debt collector that she wants him to cease communications with her, he must stop. At that point, he may contact the member only to tell her:
    1.  That he’ll no longer be trying to collect the debt;
    2. That he’s considering other options and what those options are; or
    3. Specifically, what he’s going to do-for example, bring a lawsuit against her to collect the debt. say or imply that he has started a lawsuit if he hasn’t. Nor should he say anything else that’s misleading, warns Zumwalt. The Act forbids any false, deceptive, or misleading communications. And the test a court will use to decide whether a communication was misleading is to decide whether the communication would mislead the least sophisticated person, she says.
  6. Don’t do anything that would harass member. The Act specifically says that debt collectors may not do anything that would have the natural effect of harassing, oppressing, or abusing the member. Among the types of behavior to avoid, according to Epsten, are using obscene or abusive language, publishing a list of delinquent members in the community newsletter, threatening violence, making an excessive number of calls, or sending an excessive number of letters.
  7. Include validation notice in first written communication, or send one within five days of first oral communication. A validation notice must accompany the debt collector’s first written communication or be sent within five days of his first oral communication, says Gottlieb. A validation notice is a written document that states the amount of the debt, the name of the creditor, and the following three legally required statements:
    1. Unless the member disputes the debt within 30 days of receiving the validation notice, the debt collector will assume that the debt is valid.
    2. lf the member notifies the debt collector in writing within 30 days of receiving the validation notice that the debt isn’t valid, the debt collector will get verification of its validity and mail that verification to her. (This verification will usually be backup data from the association or its management company, says Gottlieb.)
    3. For validation notices involving a creditor that isn’t the original creditor, the debt collector must also state that he’ll provide the member with the name and address of the original creditor if the member requests it in writing within 30 days of receiving the validation notice. If the member requests either verification or the name of the original creditor, the debt collector must suspend all collection activity until he gives her that information.
  8. Don’t have conversations with anyone but debtor or debtor’s attorney. With the exception of the association’s board members and attorney, a debt collector isn’t allowed to talk about the debt with anyone but the debtor or the debtor’s attorney. Debt collectors are often contacted by people other than the member to talk about the debt. Most of the time, these calls are perfectly legitimate, such as when an adult child of an elderly member calls. But unless the member has said it’s okay, a debt collector may not talk about the member’s debt with anyone other than the member or her attorney. If the debt collector gets a call from someone else, he should politely tell the caller that he’s not at liberty to discuss the matter, but if the member wants to give him permission to do so, the caller should have her write a letter to that effect. For the same reason, if the debt collector calls the member and has to leave a message, either with a person or on an answering machine, he shouldn’t mention that the call has to do with collecting a debt, advises Zumwalt. As far as the community newsletter is concerned, if the manager and not the association publishes it, the manager shouldn’t publish the names of members who are the subject of debt collections.
  9.  Debt collectors may contact someone other than member to find out where member is. If a debt collector is trying to locate the member, he can contact anyone he thinks might know the member’s whereabouts. But he must follow five rules:
    1. He must identity himself;
    2. If asked, he must identity his employer;
    3. He must state that he’s calling to confirm or correct location information about the member;
    4. He mustn’t mention that the member owes a debt; and
    5. He mustn’t contact the person more than once  unless the person asks him to or unless he feels that the information the person gave him is wrong or incomplete and the person now has the correct information. But if the debt collector knows that the member is represented by an attorney with regard to the debt, he can ‘t contact other people for location information, says Epsten.
  10. Don’t use envelopes that indicate correspondence is from debt collector. The Act prohibits debt collectors from marking their envelopes with anything that would expose the fact that the correspondence is from a debt collector. Most likely it’s okay to have the name of the management company or the company’s logo on the envelope, as long as it doesn’t imply that the Jetter has to do with a debt, says Epsten. But, for example, don’t include in the return address the words “Collection Department” or similar wording, he says. Also, the Act prohibits corresponding with the member by postcard.


• Fair Debt Collection Practices Act: 15 USC §§ 1692a-1692e


Pawling Public Radio: Our Town: BNR is AOK

Our Town: BNR is AOK

Pawling Public Radio: BNR – Law Firm NYC | Hudson Valley

August 15, 2012


There is nothing more inspiring for small town America than experiencing the renewed confidence that comes with new businesses or business expansions taking place within its borders. One such expansion is the new office location of the law firm of Berlandi Nussbaum & Reitzas LLP (BNR) at 517 Rt. 22, in the village of Pawling. Currently undergoing a complete renovation of their office space, which will accommodate several attorneys, they are a general practice firm offering legal services in corporate transactions, litigation, real estate, banking, media & entertainment, intellectual property, tax and trusts and estates, among other areas.

Brian Berlandi, a well known Pawling personality, will be situated in this new office space, having decided that the commute to his New York City office was too much wear and tear on a regular basis.  He described the new Pawling space as the Hudson Valley office of a firm that is national in scope with offices in several locations.  It is from this locale that regional and local clients will be serviced.

Berlandi,  a former partner with Daniels & Porco, decided that it was time to have his own name on the door…”be his own boss and control his own destiny,”…a move that occurred when the firm opened for business July 1, 2011. Brian is a corporate attorney, handling all corporate transactions, banking, IP, technology and health care. He grew up in Boston, attended Bowdoin College as an undergraduate and Boston College Law School, graduating in 1999 and working for many years in several big firms in New York City.

Along with his wife Katie, (granddaughter of the late Dr. and Mrs. Norman Vincent Peale) he currently resides in Sherman with their daughters Amelia and Eloise, and son John. Moving back to the area in 2004 was a “coming home” for Katie, but Brian, describing himself as  “a country boy at heart…just loves the Pawling area,” and donates his time to the community as Vice President of the Pawling Fire Department, and Captain of the Mizzentop Engine Company.

Following an open house celebrating BNR’s newest location Thursday, Aug 16, at Petite on East Main Street from 5-8 p.m., Brian may be reached at 212-804-6329 x501. The BNR website has wonderful information about the firm and the services they offer, and can be found at www.bnrllp.com

Berlandi Nussbaum & Reitzas LLP – Law Firm -Hudson Valley, New York, Manhattan, New Jersey, Connecticut and Washington DC


BNR Open House


Open House Page



Still Sitting on the Sidelines?

Commercial Real Estate, Mortgage Financing, Law

Jay Nussbaum

Berlandi Nussbaum & Reitzas LLP
July 13, 2012

Anecdotally at least, there seem to be a lot of commercial real estate investors, developers, etc., who finally like where prices are, like the way returns are penciling out, and are eager to move forward, but haven’t ripped off their warm-ups and gotten into the game because they don’t know where to access mortgage financing.

I’m thinking about this today because I just represented a very aggressive lender on a nice $5.5M loan secured by a 600-unit apartment building in the Southeast. The buyer was very savvy, and realized that conventional financing wasn’t going to be available for his deal because the property he was buying was only 60% leased at the time of acquisition. So instead of wasting his time and losing the deal—or worse, never going to contract at all out of fear of the mortgage market—he wisely found a bridge lender that jumped at the deal. Sure, that’s a more expensive way to go than conventional financing, but it enabled him to buy the property, and after he turns it around (he estimates 12 to 24 months) he’ll refinance out into a conventional loan.

Sure beats sitting around grumbling about the lack of available financing.

Mortgage Lender Error

Commercial Real Estate, Mortgage Financing, Law

Jay Nussbaum

Berlandi Nussbaum & Reitzas LLP

Mortgage Lender Error

When boxing promoter Don King used to crow, “Only in America,” it was a hopeful, if self-serving, proclamation that anything is possible in America for those dedicated to improving their stations in life. Unfortunately, in today’s America, in the wake of the historic mortgage industry implosion of 2008 that served to tear the mask off the banking industry only to reveal a well-capitalized Barney Fife running things, that same statement serves as a grim warning that can, and probably someday will, bumble its way into your financial world too.

Case in point: Our firm recently handled a foreclosure defense that was entirely bank-driven. The ludicrous story began when our client’s lender initiated a letter to our client stating that the client ‘might be eligible for a mortgage modification’ on his condominium apartment in Manhattan. Our had no need for a mortgage modification, but as any logical businessman would do under the circumstances, he figured there was nothing to lose by taking the bank up on its offer and submitting an application. Remember those words: “nothing to lose”.

Immediately after his application was submitted, he was told by the bank that, because he now had a modification application pending, the bank would no longer accept loan payments on his mortgage. For our client, this didn’t require any action of any kind, because when he first closed on his loan he set up an automatic payment whereby he authorized the bank to simply withdraw funds from his account every month. So the client took no action at all, but the bank—which still had the authority to withdraw monthly payments from the account—elected not to. This would have been fine, if not for the fact that the bank then foreclosed on our client based on those very same “missed” payments. And here’s where it gets really weird.

Two days after the bank foreclosed on our client, it sent him a letter denying his mortgage modification application, and then, a little less than a month later, sent him another letter saying that the bank had not yet made a decision on his mortgage modification application. Only in post-2008 America.

At this point, because of all the conflicting information, the poor man had no idea what was going on or what to do. Was he being foreclosed on by his bank? Was he still being considered for a mortgage modification?

Naturally, he tried calling the bank to find out what was going on. He tried the foreclosure department; he tried the legal department; he tried the mortgage modification department; he even tried the misnomer of all misnomers, the customer service department. No one knew what was going on. No one knew what the department down the hall from them was up to. No one had the authority to make a decision or even to get a decision-maker for him to talk to.

Meanwhile, letters kept coming. Another letter arrived denying his mortgage modification application (again)…followed by FIVE letters, each saying that the application remained under review…followed by two more letters saying the application had been denied…followed by another EIGHT letters saying that it remained under review. (Incidentally, not a single letter was signed by any individual, whom we would’ve been able to call to discuss the matter, nor, we were told, was anyone at the bank able to receive incoming emails. In short, it was not only a tragically dysfunctional system, it seems intentionally designed to be that way.)

My firm fought the foreclosure for nearly two years. For nearly two years, the case crawled phlegmatically through an overburdened court system. My client spent money; the bank spent money. Still, no one ever stepped forward from the bank with any knowledge, authority or interest in discussing the case, explaining what had happened or how to fix things. (Because throughout the case, our client remained financially capable of fixing whatever was wrong, if only someone at the bank would tell us what had caused all of this.)

Finally, we reached the point where a hearing was scheduled to determine whether the bank had even served my client the right way to begin the lawsuit. As a courtesy, we asked the bank’s attorneys to meet with us to talk about the case, and fortunately, by that time, they had hired a law firm that was willing to communicate, unlike the foreclosure mill that had been handling the case up to that point.

We met with them, and demonstrated, point by point, how irresponsibly their client had behaved for the past two years. At the end of the meeting, we offered to let them save face by dropping the case before walking into the hearing on jurisdiction, where they would surely lose.

They accepted our offer, and dropped the case.

So let’s look at the scorecard. The bank sued for foreclosure in October, 2010, for reasons that we have still never learned. Two years have passed. Both sides have paid lawyers. The bank has alienated an affluent, excellent borrower and client. And that bank is, today, in exactly the same place, legally, as they had been in two years earlier, except that they have not received loan payments for almost two years. Today, as I write this, the bank has still refused to engage in any type of substantive conversation with us.

Why? Because the bank is too big, automated and disorganized to make a phone call. Only in America.

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