USA – NEW YORK Law and Practice Contributed by: Lindsey E. Haubenreich, Joseph P. Heins, Timothy P. Moriarty and Kimberly R. Nason, Phillips Lytle LLP
2.6 Important Areas of Law for Investors Federal and state tax law is important for an investor to consider to determine the tax con - sequences of any transaction. In addition, it is important for an investor to have an understand - ing of New York Business Corporation Law, Part - nership Law and/or Limited Liability Company Law so that the investor can properly determine which type of entity should be used to acquire title to real property. Finally, to confirm that the property is acceptable for the use contemplated by the investor, it is important for the investor to have an understanding of federal and state envi - ronmental law as well as local zoning and land use rules and regulations. If the real property is residential rental property, it is also important for an investor to have an understanding of New York landlord–tenant laws. 2.7 Soil Pollution or Environmental Contamination As an owner or operator of a real estate asset, the buyer could be held strictly, jointly, and sev - erally liable for preexisting soil pollution or envi - ronmental contamination pursuant to state and federal laws. Therefore, typical allocations of environmental risk in purchase and sale agree - ments are tailored to the intent of the parties, the site conditions, and the actual or potential presence of contaminants of concern. Under the federal Comprehensive Environmen - tal Response, Compensation, and Liability Act (CERCLA), current owners and operators of a property are, except in limited circumstances, strictly liable for all response and remediation costs regarding hazardous wastes and sub - stances that were released on a property, unless a statutory defense is established. These include acts of God or war, acts of third parties, and landowner liability protections, such as the inno - cent landowner defense, bona fide prospective
purchaser defense, and contiguous property owner defense. If the buyer spends money to clean up the con - tamination caused by others, there are contri - bution claims available under state and federal laws. 2.8 Permitted Uses of Real Estate Under Zoning or Planning Law A buyer can ascertain the permitted uses of a parcel of real estate by undertaking an analysis of the applicable zoning map and code to iden - tify the zoning district of the parcel in question and the uses permitted by right in that district, as well as the uses permitted upon issuance of a special use permit. In addition, a buyer should review the applicable zoning code to determine the associated bulk requirements. Further back - ground is often available in a municipality’s land use/comprehensive plan. 2.9 Condemnation, Expropriation or Compulsory Purchase Governmental taking through eminent domain or condemnation is a possible risk in this juris - diction. While there is only a slight risk that a governmental taking will occur, it appears more prevalent along rights of way to accommodate roadway-widening projects or the installation of public utilities. The governmental taking process in New York State is codified in the New York Eminent Domain Procedure Law, and allows for condemnation by the filing of an appropriate map with the appli - cable county clerk (at which time the property set forth in the map vests in the governmental agency), or filing of petition to condemn, which seeks an order allowing the filing of an acquisi - tion map. The title vests in the condemning party upon the filing of the acquisition map.
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