Divorcing parties and their attorneys take great care to reach a realistic valuation as to real property – hardly an easy feat.

What constitutes a realistic valuation for real property has, however, become even more difficult gauge in light of the pandemic, and legislation passed in response thereto.

In the early days of the lockdown, many homes were pulled off the market, with homeowners in certain states wary of (and in other states, including New York, unable to) host open houses.

Now, with certain of those same states entering into phased reopening and with a second stimulus bill on the table, there is talk of legislation that would lift the SALT Tax Cap, potentially driving another big shift in housing markets in New York and other high-income states.

What Is the SALT Tax and to Whom is it Relevant?

The SALT deduction is a tax provision that allows taxpayers who itemize their taxes to write off state and local taxes, including property taxes.

This much is nothing new. In fact, ability to deduct nearly all state and local taxes was part of the federal income tax code when it was first created, in 1913.

In certain states where property taxes range into the tens of thousands, the SALT deduction was, for many years, a significant source of savings for homeowners.

What Is the SALT Tax Cap?

In January 2018, the SALT deduction was eliminated by the Tax Cuts and Jobs Act, Republican-backed legislation that capped state and local deductions at $10,000 for all SALT income, property, and sales taxes combined.

Previously, there was no limit.

For many residents of high-income states like New York, which on average take high deductions for state and local taxes, the change was significant, and there was great concern about how the new cap on deductions would affect residential property sales.

How Might the Pandemic Impact New York’s SALT Tax Cap?

On May 15, 2020, the House passed the HEROES Act, the $3 trillion dollar follow up to this year’s first stimulus bill, the CARES Act. Among the many provisions therein is one that would suspend the SALT Tax Cap entirely for two years. With the Cap suspended, houses in areas with high property taxes become more marketable, since potential buyers can use the deduction to offset the financial impact of their purchase.

Before it becomes law, however, the HEROES Act must make its way through the Senate where, it is widely speculated, the two-year suspension of the SALT Tax Cap will be removed. Although many believe suspension of the Cap would provide the housing market with a much-needed boost, others see it as yet another tax break for the wealthy. More importantly, the states that would benefit most (those with the highest property taxes) are largely “blue” states, and the Republican-controlled Senate is in no rush to come to their aid.

Accordingly, it remains to be seen how the housing market will respond to the pandemic, and whether or to what extent legislation, such as the SALT Tax Cap and proposed suspension thereof, may impact that response. In the meantime, divorcing couples and others in New York looking to value their homes face as much, if not more, uncertainty than ever.

While New York State may slowly be “reopening,” New York courts continue to operate almost exclusively on a virtual basis. As a result, the Covid-19 Pandemic continues to impact the courts decisions in matrimonial cases. One example of Covid-19’s continued impact is highlighted in a recent case out of New York Supreme Court entitled Chu v. Lin.

In Chu v. Lin, Justice Matthew Cooper opened his decision with recognition to New York State courts commitment and ability to continue operations on a virtual platform. However, he further highlighted the difficulties that come with operating on such a platform, especially in high conflict matrimonial cases such as Chu v. Lin, where the conflict between the parties was only further incensed by the Covid-19 pandemic.

The plaintiff-father filed two separate applications due to the defendant-mother’s failure to comply with various court orders. The first application was brought seeking to compel the defendant-mother to comply with the parental access schedule that the court had put in place as well as compel the defendant-mother to vacate the former marital residence in order to effectuate the closing of the home in accordance with a previous so-ordered stipulation. The second application brought by the plaintiff-father sought to hold the defendant-mother in contempt for her failure to abide by the courts previous orders.

The court, through the virtual platform and without the need to hold a virtual evidentiary hearing, was able to resolve the issue of parental access during the Covid-19 pandemic in order to restore the plaintiff-father’s access to his children. However, the court found its ability to enforce the parties’ so-ordered stipulation and force the defendant-mother to vacate the martial residence in the middle of a pandemic to be a more challenging decision.

The court noted that the parties had previously entered into the so-ordered stipulation whereby they agreed to put the marital residence, their only marital asset, on the market as the parties lacked the financial means to continue to pay the mortgage and the carrying charges. In accordance with the so-ordered stipulation, the parties placed the marital residence on the market and later entered into a contract of sale with a third party purchaser, which required the home be vacant at the time of the closing. Despite the contract of sale and the various postponements of the closing date, the defendant-mother refused to vacate the marital residence, which was placing the closing in jeopardy and both the parties at risk to be sued for damages from the third-party purchasers.

While the court acknowledged that the defendant had in fact violated a lawful court order and that her actions had prejudiced the rights of plaintiff, Justice Cooper stated, “it strikes me as highly problematic, and perhaps even impermissible, to conduct a virtual hearing in a proceeding that could result in defendant being sentenced to jail.” The court identified an array of issues in holding a virtual contempt hearing including, but not limited to, the impossibility of the defendant’s need for a Mandarin interpreter to take place over Skype for Business, the inability of attorneys and clients to converse privately and the courts inability to control the virtual “courtroom” in the same manner he would if this proceeding was able to be held in person. The court noted that a contempt proceeding “is far too serious a proceeding to operate under these less than optimum conditions.”

In addition to finding a virtual contempt hearing problematic, the court also stated that the potential of the defendant being sent to jail as a result of a contempt finding was problematic. The plaintiff had requested that the defendant be sent to jail until she abide by the court’s order and vacate the former marital residence. However, the court stated “it would be unthinkable to incarcerate anybody for an offense like this during the COVID-19 outbreak, with the serious threat of infection rendered even more acute by the inevitable conditions of incarceration.” The court further highlighted the effort being made to decrease the population of the jails not increase the population.

The court further denied the plaintiff’s request to compel the defendant to vacate the former marital residence. The court noted that it was reluctant to force defendant out of the former marital residence as the defendant claimed that she and the parties’ children would end up in the streets in the middle of a pandemic. Regardless of whether the court found the defendant’s claims to be truthful, the court, pursuant to Executive order 202.8, found that it was unable to evict the defendant from the premises.

Although the Covid-19 pandemic influenced the court’s finding that a contempt proceeding was impossible and that the defendant could not be forced out of the former marital residence, the court found that the defendant could be held financially accountable for her behavior. As such, court held that the plaintiff’s share of the proceeds would be increased and the defendant’s share would be decreased in accordance with whatever loss in the selling price was attributable to defendant preventing the closing from taking place on April 20, 2020. The court further found that defendant would be solely liable for all damages sought by the purchaser or any other aggrieved third party due to her refusal to vacate the residence.

In closing, the court stated, “[w]hatever the virtues of virtual justice, I remain convinced that a case such as this is better suited for disposition in an old-fashioned, brick and mortar courthouse.”

Jaspan Schlesinger is committed to helping our clients make their way through this very trying time. Our offices are monitoring the courthouse operations and are available via email, phone, or video-conferencing to answer your questions and concerns. The material in this blog is meant only to provide general information and is not a substitute nor is it legal advice to you. Readers of this article should seek specific legal advice from legal counsel of their choice. In the event that you need legal assistance, please contact Hanna E. Kirkpatrick at hkirkpatrick@jaspanllp.com or (516) 393-8259 or Samantha M. Guido at sguido@jaspanllp.com or (516) 393-8250.

Matrimonial and family law matters, always a difficult endeavor for both lawyers and clients, have become even more so with the rapid rise of the novel coronavirus pandemic. This blog will explain the many changes in the way New York courts, particularly those in Nassau, Suffolk and Queens, are handling these cases during this trying time.

The New York State court system is among the busiest in the world. While many other jurisdictions have transitioned entirely to electronic case filing systems, New York has not done so. E-filing is only available in some counties and, as a result, many cases, including matrimonial cases, require hard copy filings of all papers. Thus, our courts have never been in a position to operate remotely on a full-scale basis, a necessity now that social contact and physical visits to the court house have been widely curtailed.

On March 22, 2020, the court system’s initial response to the pandemic was announced by Chief Administrative Judge Lawrence Marks. Judge Marks barred all new filings of any kind, in any court, with the exception of certain matters deemed essential or emergent. As it relates to family law and matrimonial proceedings, the following matters were designated essential:

1. Emergency family offense petitions /temporary orders of protection in Family Court.

2. Orders to show cause and stipulations on submission in Family Court.

3. In Supreme Court, temporary orders of protection (including but not limited to those relating to domestic violence) and emergency applications related to the coronavirus.

4. Any other matters the court deems “essential” on a case-by-case basis.

Except for these limited types of cases and filings, current and prospective litigants were left without judicial recourse.

Each county then developed its own mechanisms for dealing with essential filings. On March 26, 2020, Nassau courts, in keeping with the policy of limiting personal contact and encouraging social distancing, announced that all matters would be processed and heard in the Nassau County court house at 260 Old Country Road, with a rotating roster of judges to hear each type of matter. In-person filings were strongly discouraged. Matrimonial proceedings were to be conducted via Skype, with the judge, each attorney, and possibly the parties appearing from separate locations.

Suffolk courts followed suit, designating the same types of matrimonial and family law matters as essential. Additionally, all matters were consolidated in the John P. Cohalan Court Complex in Central Islip with a skeleton staff of dedicated court officers and clerks assigned to the building.

On April 8, 2020, Judge Marks issued a directive expanding court access by instituting a virtual court model beginning on April 13th. His order directed courts to render decisions on fully submitted motions, and to identify and conference, by Skype or telephone, cases that might be the subject of possible resolution.

In response, the Nassau County Supreme Court set up a protocol for conferences with the court for pending matters. Each matrimonial Judge was given a dedicated email address specifically for that purpose. Additionally, a form was made available on the court website for attorneys to use to request a court conference. If a request is granted, the assigned judge e-mails a Skype link to the attorneys, and parties may be directed to attend. These conferences may or may not be on the record in the court’s discretion.

Suffolk County soon followed suit with dedicated emails for matrimonial judges, all of which are publicly available on the court’s website. Queens and New York counties set up similar protocols to allow attorneys to request conferences in pending matters.

Subsequently, Judge Marks directed that, effective May 4th, parties would be permitted to file new motions in (again) only pending cases, and opposition or reply papers in connection with motions filed prior to the pandemic. Despite the unavailability of the official e-filing system in certain counties, the directive provides that all filings must be done electronically and provides for the use of an alternative electronic delivery system (EDDS) in cases that are not presently maintained through the e-filing system. User instructions for EDDS are available on the courts’ website.

Justices Jeffrey Goldstein and Andrew Crecca, the supervising judges of the matrimonial parts in Nassau and Suffolk, respectively, have kept practitioners apprised of the courts’ operations through virtual town halls. Both have advised that the matrimonial judges of their counties have been hearing hundreds of cases through virtual means. In Nassau, judges are reaching out to counsel on previously submitted motions in the hopes of resolving the matters without further delay. If unsuccessful, these judges are working on decisions with such swift efficiency that Judge Goodstein advised that the pre-existing backlog of motions will be all but eliminated.

As to the filing of new motions in pending cases, Nassau judges require the parties to first request permission before moving, after which a conference will be held before the motion may be filed. If the subject of the motion cannot be resolved during the conference, all motion papers must be served electronically. Then, both parties must consent to use of the official e-filing system by filing a request on EDDS, after which all motion papers will be electronically filed.

Judge Goodstein also addressed whether post-judgment applications will be permitted, given that cases in which a judgment has been entered may not be considered pending. Fortunately for litigants in Nassau, the answer is yes. As such, where a payor spouse has lost his job, he/she can seek relief by a post judgment motion. Similarly, if a payor spouse opts for self-help by stopping or reducing support or maintenance payments, the payee spouse can seek relief.

Courts in Nassau will also entertain as essential and/or emergent new proceedings concerning issues of parental access to children, for example where informal visitation schedules have been upended because of concerns over Covid-19. However, parents who seek to abrogate custody agreements based on pandemic-related concerns would be wise to heed the advice of Judge Jeffrey Sunshine, presently the statewide administrative judge for matrimonial matters, who opined in the New York Law Journal that conduct by a non-compliant parent or parents during the pandemic will be considered in any future applications when the courts reopen on a wider scale. (NYLJ 3/27/20).

Suffolk, by and large, follows the same protocol described above with the exception that judges there do not require permission to file a new motion in a pending matter, and at present will continue to use EDDS with the county-wide use of the ECF system on the horizon. Queens and New York counties at this time do not seem to have uniform protocols, perhaps because each lacks a supervising matrimonial judge. However, those counties are entertaining motions on pending matters, conferences on active cases and emergency orders to show cause.

Just to illustrate how quickly changes are occurring within the New York court system, on the eve of this article’s publication it was announced that courts in several upstate counties will be opening on May 18, though with strict health guidelines in place. None of these changes affect our downstate courts.

Clearly, navigating the court system has become more complex than ever before. Given the ever changing nature of matrimonial and family law proceedings during this pandemic, and the fact that that COVID-19 is expected to impact our lives for months to come, it is essential that litigants have competent counsel.

Jeffrey D. Lebowitz is a retired NYS Supreme Court Justice who for many years presided over the Matrimonial term in Queens County. He is presently Special Counsel at Jaspan Schlesinger LLP. Retired Justice Lebowitz is a member of the NYSBA Family Law Executive committee and a member of the Statewide Matrimonial Practices committee, chaired by the Honorable Jeffrey Sunshine. He appeared on the Super Lawyers list in 2019. He can be reached at jlebowitz@jaspanllp.com or (516) 746-8000.

On May 7, 2020, a Bronx County Family Court Judge held that the Coronavirus pandemic in and of itself was no excuse for a parent to engage in self-help and prohibit a parent from exercising court ordered parenting time.

In Matter of S.V. v. A.J., the father brought a motion before the court seeking to enforce a January 16, 2020 order directing that he have alternate weekend visitation with the parties’ children. The mother failed to produce the children from weekend visitation on the weekends of March 27, April 10, and April 24. Instead, the parties arranged through their respective counsel for daily video conference visits between the father and the children.

The father, who lived in a two-story home in New Jersey, argued that he has been practicing social distancing and has not tested positive for COVID-19. The mother argued that the visits were suspended once New York and New Jersey issued “stay at home” orders in March, 2020. The mother opposed the father’s request for in-person visits due to the risk of spreading the Coronavirus. She argued that it would be “irresponsible” to make parents comply with court-ordered in-person visitation because it may impact the children’s safety. Further, the mother argued that the exchanges between the parties must occur at a precinct given the history between the parties, which further endangers the parties’ and the children’s safety. The attorney for the children did not oppose the in-person visits so long as social distancing and other safety measures were being followed.

The court granted the father’s motion and held that in-person visitation was to commence immediately. The court stated,

We are now in a time of disruption, fear, uncertainty, and uncharted territory, and the Court appreciates how this stressful time may impact families, particularly those in conflict. However, to the greatest extent possible, we must ensure stability and comfort for children.

The court went further to state,

While public health crises such as the one we face may impact children’s lives, and all of our lives, in many ways and for an unknown period of time, there is a presumption that continued connection and time with both parents is critical and in the best interest of children.

Finally, and perhaps most impactful, the court stated,

This pandemic is not to be used to limit access by a parent or to flout valid orders of the court. Rather, valid orders of the court must be followed during this crisis unless a parent can articulate a specific health or safety risk, and can demonstrate to the court that suspension of visits is warranted, which may be a heavy burden. In any event, in such a case a parent must then affirmatively move the court for emergency relief in order [sic] suspend any visitation order and may not resort to self-help by failing to produce children for visits.”

As shown above, the court made clear – a parent cannot simply decide not to produce a child for an exchange of parenting time in violation of a court order and blame the Coronavirus as an excuse. While we are living in a time of uncertainty, as the Court in S.V. stated, a parent must show that a suspension of visits is warranted and outweighs the benefits of continued connection and time with both parents. This does not, however, mean that parents cannot enter into an agreement limiting the number of exchanges and put into place certain precautions to limit exposure to the disease. While we continue to face unprecedented times, it remains vital that parents keep effective communication channels open in order to make joint decisions that will serve the best interest of their children.

Jaspan Schlesinger is committed to helping our clients make their way through this very trying time. Our offices are virtually open and we are monitoring the courthouse operations and are available via email, phone, or video-conferencing to answer your questions and concerns. The material in this blog is meant only to provide general information and is not a substitute nor is it legal advice to you. Readers of this article should seek specific legal advice from legal counsel of their choice. In the event that you need legal assistance regarding custody matters during COVID-19, please contact Marissa Pullano at mpullano@jaspanllp.com or (516) 393-8297 or Samantha Guido at sguido@jaspanllp.com or (516) 393-8250