Sullivan County Real Estate Blog Archives

Gas Drilling Moratorium is not Force Majeure

Gas drilling in Sullivan County It has been almost eight years now since the gas lease rush really started here in upstate New York, and land owners fell over themselves to sign lucrative leases with various gas drilling companies for the mineral rights deep below their properties. (Some of these leases were ten years, but the majority that I have seen and heard about were five, with an “option” for more.)

But then New York State stepped in and declared a moratorium which stopped all gas drilling dead in its tracks. Many landowners thought that they had basically been paid for doing nothing, and the clock on the wall was counting down the length of the lease.

However people do not like to lose money, especially people who own big companies with lots of attorneys on retainer.

They had thought of a scenario such as this.

Most of the lease contracts have a Force Majeure” clause. Force Majeure means “unavoidable occurrence outside the control of both parties”. The gas companies argued that the moratorium should trigger the Force Majeure clause and essentially freeze the contracts at that point in time until the suspension has been lifted.

I ran across a gas lease issue during a deal where the buyer was attempting to purchase a house via an FHA loan with a gas lease attached. FHA’s setbacks and guidelines are stricter than the lease stipulated. The lease’s minimum setbacks were 150 feet from the dwelling, while FHA requires at least 200 feet.

It may seem like a bizarre stumbling block. A 50 foot differential on an obscure FHA rule about a potential gas well despite a statewide indefinite ban on drilling? Real estate deals fall through every day for just such ridiculousness. Ask any real estate agent. They would love to regal you with tales of lost deals over asinine and incompressible reasons. All of us have these battle scars. Common sense takes a back seat to procedure way to often in the mortgage/bank business.

Well what saved this deal? Actually it was an FHA underwriter with a bit of commons sense, but what persuaded him was a recent ruling from the Northern District Court. On two separate cases they have ruled that the NYS halt on fracking does not fall under Force Majeure. The clock really is still ticking, and on many of these leases, time is already up.

The lease on the property I was selling is up in Aug. 2015. After seeing the big picture, the underwriter determined that the chance of a gas well drilled within that 50 foot radius in the next four months was remote enough not to kill the deal. We closed last week.

The Eggshells of the Mortgage Process

Sullivan County Real Estate We are seven years post Lehman collapse, and the real estate market nationally (and locally) has without question rebounded off the lows. Buyers have confidence once again that purchasing a home is a fiscally sound move, and what they buy today won't be worth less tomorrow. Second home buyers are buying again here in Sullivan County. Short sales, and REO sales for the first quarter of 2014 are down. It has been four years since these numbers have been down. We are climbing out of the worst housing crash in thirty years–slowly but surely.

The problem is the powers that be in our various lending institutions still have a nasty hangover from the care free subprime days of the 2K decade. And in a classic case of over-correction have tightened lending restrictions and have introduced policies that make you scratch your head, (or hurl mental obscenities) it really depends on the day.

Last week I had a buyer get turned down for a loan from the underwriter. The last step of the mortgage minefield. The whole notion of the underwriter annoys me. I know it is probably some hard working guy (or girl) with a family and a mortgage of their own, but this aura of anonymity and secrecy that banks keep around their underwriter is irritating. It reminds of the silhouetted figure that Howie Mandel would call in "Deal of no Deal." The Banker, sitting in a windowless room denying loans with a gavel and a cackle. The mortgage Nazi. No loan for you.

Anyway, the reason my buyer got turned down for his mortgage, was because a friend paid back a loan from a few years ago in the amount of $5,000. My buyer deposited it into his account. Seems harmless enough right?

Now keep in mind this 5K was not needed to cover the balance of the purchase price, or closing costs, or anything else. He was going conventional on a 250K property, and hadmore than enough. He did want to furnish the place, and had asked his friend to repay the loan so he could by furniture. Innocent enough.

The problem arose when the underwriter asked for proof that he had lent the money three years prior. My buyer had lent the money in cash, from a now closed investment account, and there was no way to prove he had lent him the money. The underwriter classified it as "gift money" and slammed the proverbial gavel. No loan for you.

This is after appraisals, surveys, inspections and endless paperwork– all the hoops that the bank asked him to jump through. All for naught because of a stupid 5K deposit, THAT MAKES NO DIFFERENCE IN THE NUMBERS. It is beyond absurd.

My buyer is not totally dead in the water. On Friday he spoke to another bank who told him this is not an issue, and he is moving forward with the new lender.

But if the underwriter could just look at the big picture for a minute. Even if his friend lent him 5K for furniture, how does that suddenly make him a bad candidate for this loan? As soon as the deal closed, the buyer could have bought $5,000 worth of furniture on a high interest credit card, or on a department store card, or borrowed the money then. The bank has no control over that. It is the lack of common sense that is so aggravating.

So I guess the lesson here is be VERY careful about what goes into and out of your account during the mortgage process. Do not make any large purchases, and do not deposit any large amounts of money. Big Brother really is watching–at least for that brief period of time.

Youth Center Easter Egg Hunt

I had a rare Saturday off this past weekend, so I got to go with my kids to the annual Easter egg hunt at the Delaware Valley Youth Center in Callicoon. It was a lot of fun. The mad dash for eggs from a hundred plus youngsters all over the field was a sight to see.

Youth Center Easter Egg Hunt

They put the kids in different age groups so the younger ones have a chance to get some eggs. The whole thing was pretty well organized. Once again I was impressed with the Youth Center. There was also a meet and greet with a photo op from with the Easter Bunny. My kids were a bit too suspicious of a big furry bunny to get too close, but they loved running around collecting eggs. My daughter even made the paper.

For those of you who are unfamiliar with it, The Delaware Youth Center is over the bridge past Pecks Market on Main Street in Callicoon. They have a play area with slides and swings for the younger kids. They have a skate park, tennis and basketball courts, a softball field with bleachers, and a nice sized swimming pool. They also have a jogging path/exercise circuit with workout equipment.

Programs include a soccer and t-ball league, a Zumba class, and various other fundraising activities, including a Halloween dance, and a summer 5K run along the Delaware River.

The center is kept going by memberships and donations. By joining you get use of all the facilities. Individual memberships are $45.00 and family memberships are $100.00. The center also gratefully accepts donations of any size. All members of the board of directors are 100% volunteer, and spend quite a bit of time and effort to help make this a great place for all kids–whether they are year round or summer residents.

Click here for the Delaware Youth Center website.

For seasonal residents it is a nice place to visit a handful of times throughout the summer, and spend an hour or so pushing the kids on the swing, or watching them run around on the slides and jungle gym, before heading off for an ice cream cone. The center is happy to accommodate these types of visitors. However like I said, they gratefully accept any and all donations, large and small, so even if you are the casually user who visits infrequently, consider donating a few bucks to the center. It goes to a really good cause, and it is COMPLETLEY tax deductable.

Do Not Feed the Deer

Sullivan County Deer Population During my weekend showings I was at a house where the homeowner had put out what looked like corn for the deer. And then I saw a post on Facebook where some well intentioned good Samaritan was urging people to put out feed for the “starving” deer. And yesterday at Agway I saw piles of bagged food for deer. I am surprised that this is being done. Frankly I thought people knew better.

I understand it’s human nature to want to help these animals during a tough winter like this, and seeing gaunt deer stumble through your yard can be difficult to watch. However interfering with mother nature has numerous consequences

First of all it is illegal. As of July 28th 2010 the NYS DEC passed a law banning the feeding of white tail deer and elk in New York State. And there are a number of good reasons why.

1) Disease: Deer are foragers, who although do travel in groups, in a natural environment are spread out. Once you get a bunch of deer crowded together, the food can get contaminated by feces, saliva and urine. This in turn can harbor all sorts of infectious disease causing critters. If you think the skinny deer in your backyard looks sad now, Google chronic wasting disease in whitetail deer. This disease can only get passed from animal to animal when they are in close proximity. Which they rarely do in their natural habitat.

We all know that deer are one of the major culprits for harboring the ticks that carry Lyme. Again getting a bunch of deer all together is like a tick’s Shangri-La. Research has shown that reducing the deer population in an affected area to a level of 8 – 12 deer per square mile virtually eliminates ticks and Lyme Disease in humans. (Sullivan County is well above those numbers, which brings me to my next point.)

2) Overabundance: Although exact numbers are impossible to achieve most experts agree that the deer population in New York State is at an all time high. And there may be as many as ten times the amount of deer there was when the Lenape inhabited our area. Currently white tail deer in NY have no natural predator. Wolves used to be the deer’s natural population control, however they were wiped out when they realized a cow was an easier mark and a better dinner than a deer. Since then, hunting and natural selection are the only things that are used to keep the population in check. If we start giving the deer free winter meals, the numbers will grow even larger.

And you may say, so what if there are more deer? Who are they harming? Well they have the potential to harm our entire Eco-system. Although many of our forests are already developed, any new young plant or sapling no longer stands a chance against the size of the herd. Our woods used to be filled with thick under brush and mountain laurel, which in turn hid birds, and other smaller animals. Now many of our wooded areas almost look like a city park. If anyone has tried to grow an unfenced garden, then you know what I am talking about.

I now suspect that just as a deer herd used to live in mortal fear of its wolves, so does a mountain live in mortal fear of its deer.” — Aldo Leopold, A Sand County Almanac

They are a nuisance on the roads as well. I am pretty confident that you will not be able to find a person who has lived full time in Sullivan County for at least a year, who has not hit a deer with their car. It is a daily occurrence here. Annually the number of deer related accidents in New York State is around 67,000. That is almost 200 a day!

And a car is one thing. But our scenic roads are a favorite for the motorcyclists in the summer months. Hitting a deer on a motorcycle is a tragic event. And it happens all too often.

So although the softer hearts amongst us may feel the urge to put out food, or cover their ears on the first day of hunting season, let’s try to remember that Mother nature had things under control long before we came along, and the last thing she needs is our “help.”

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