HOW TO LOSE $1,729,631
Over the last two months, several clients ( prior to hiring me) lost a combined total of $1,729,631 because (for whatever their reason), they failed to file their real estate documents publicly with the county recorder. Their property rights as evidenced by various deeds, trusts, assignments, land contracts, mortgages, and liens, simply went unnoticed. Most of the properties were lost to the taxing authorities or through foreclosure, because the clients were never notified of a property auction. Other properties were sold or mortgaged to third parties who had no idea that my clients also had prior property claims. Whatever the cause, $1.7 million is an alarming figure when the solution against such loss is so easy.
Nationwide, state property laws encourage, but do not require, anyone with property interests to record them in their county recording office. Recording real estate transfer documents protect against situations where the same property interest is transferred multiple times, (ie. seller grants a mortgage for the same property to two different lenders). State laws all but determine which party’s interest prevails based upon when a deed, a mortgage or other documented interest is filed with the recording office. The laws predominantly favor those who properly record their property interests over those who don’t.
NOTICE TO THE WORLD
Recording real estate documents into a property’s ‘ chain of title ’ provides “notice to the world” (known as “constructive notice”) of one’s property interest. By not appearing in the title chain, interested parties will not receive legal notices concerning the property, such as tax notices or lien filings. More importantly, in almost all instances, good faith purchasers, lenders and other lien holders who are unaware of prior outstanding, but unrecorded property interests, have superior claims when challenged by property owners who failed to record their property interest.
WHO AND WHAT SHOULD BE FILED
The list is not exhaustive, but generally all real estate deeds need to be filed. Where land contracts are concerned, it is important that the buyer have a Memorandum of Land Contract recorded. Too often is the case where a seller has sold a property out from underneath a land contract buyer, all because no evidence of the sale was ever recorded with the county. Most title or closing agents will file real estate transfer documents as part of their business for a small fee. Lastly, mechanic liens, judgment liens or claim of liens against a property need to be recorded in a timely manner to be effective. If you are unsure about filing requirements, contact a real estate attorney.
CONCLUSION: SHOW UP!
Remember, in order to protect your property interests against title claims or loss, it’s important that your real estate documents show up in the public records 100% of the time.
About the Author: Since 1990, attorney David Soble has represented lenders, loan servicers, consumers and business owners in real estate, finance and compliance matters. For over 25 years, he has been involved in thousands of real estate transactions and has successfully negotiated and saved millions for his business and consumer clients.
With the steady influx of property investors seeking to stake their claim in the phoenix that is Detroit , comes various investment property management challenges. Listed here are 5 common problems that new real estate entrepreneurs face when moving to sever the property rights of a delinquent property owner or tenant:
1. The Tenant / Occupant Won’t Leave. Avoid ‘self- help.’ Landlord ‘self-help’ for locking out an occupant is, with rare exception, illegal and has serious financial and legal consequences. The same is true for investors who seek to extinguish a mortgage or land contract . An eviction action is required when the former homeowner or perhaps event their tenant, remains in the property after the foreclosure redemption expires. The mere fact that the redemption period has expired does NOT give the lender rights to enter the property. Shutting off utilities or changing door locks is considered ‘self help” and can expose an investor to liability in actions of trespass, property damage, and even emotional distress.
Solution: Legally sever the possessory interest by filing an action for eviction and secure a judgement and writ for eviction. I know of several cases where an investor is ready to close on the sale of their property, only to be sued by a former owner or tenant whose legal interest in the property had not been properly extinguished.
2.The Former Property Owner or Occupant Files Bankruptcy . Equally as serious as landlord ‘self help’ is when a creditor violates an automatic stay after the tenant or homeowner files bankruptcy. An automatic stay halts all collection activities and this includes eviction and foreclosure actions. The ‘stay’ has to be lifted by a federal court order. Creditors, such as landlords and mortgagees, who knowingly violate a bankruptcy stay face severe fines, sanctions, and attorney fees. They may even have to pay damages.
Solution: Once notified of an occupant’s bankruptcy, stop any and all collection efforts until you have a signed order “lifting the stay”. When in doubt, consult with legal counsel.
3. Failing to Understand Choices of Rights and Remedies. Investors, particularly those who purchase out of state properties, should know what type of property interest they hold and the legal rights that the interest affords. In Michigan, mortgage holders do not have a fee simple interest in a property, only a lien interest. So when a former property owner abandons the collateral, an investor cannot legally sell the home until they foreclose out the homeowner’s interest or unless they obtain a Deed in Lieu of foreclosure.
More importantly, investors need to know which legal process to use in order to accomplish a specific goal. For instance, in a land contract matter, a judicial sale can be used to preserve a deficiency for a vendee’s default, whereas a land contract forfeiture gives the land contract vendor possession only.
Solution: Investors should consult with a real estate attorney licensed in the state where they plan to invest and clarify their legal rights before they engage in purchasing investment properties or pursuing legal action.
4. Property Tax Foreclosure . It is not uncommon for investors to run up against property tax foreclosure deadlines as delinquent taxes are an inherent part of purchasing distressed properties. Until proper due diligence is performed, it makes little economic sense to initiate any legal actions for foreclosure, eviction or forfeiture, if the property would only be lost to tax sale before an investor’s legal action is completed.
Solution: Perform a title search and make arrangements to pay the taxes before initiating legal action.
5. Deeds in Lieu of Foreclosure . A Deed in Lieu of Foreclosure (“DIL”) is a deed executed by the homeowner that satisfies a loan in default in exchange for the mortgage holder to forgo the foreclosure process. However, taking a DIL without performing a title search or without drafting the proper supporting documents is rife with problems.
First, a DIL is similar to quitclaim deed in that the mortgagee takes title to the property with all liens, encumbrances and assessments that the former property owner incurred on the property. Sometimes the amount of liens are so excessive that it makes more sense for the investor to foreclose on the property and pursue a deficiency action against the former property owner.
Second,, specific legal provisions are required in the DIL documents, without which, an investor can experience difficulties foreclosing out subordinate lien interests or in obtaining title insurance for a later sale of the property.
Solution: Perform a title search and if you plan to take a DIL, don’t do so without having a qualified attorney first prepare DIL documents.
6. Boilerplate or Self -Generated Documents. There is an old adage that ‘ a contract is valid until someone legally challenges it.’ Property investors are often surprised to learn that their self- prepared documents may actually violate federal or state laws. Unfortunately they only discover this at court placing their own legal interests in jeopardy. Indiscriminately using online or “boilerplate” forms to prepare a land contract, private mortgage, or lease back can be legally hazardous. For instance, selling back a property to a former homeowner raises federal compliance issues under RESPA (Real Estate Settlement Procedures Act) and leasing back a property to a former homeowner creates a landlord / tenant relationship that ironically requires the investor to obtain a certificate of occupancy and make city required repairs on the former homeowner’s home.
Solution: Rely on an experienced real estate lawyer to review and draft the state- specific contracts that will be used in property transactions. It will reduce future legal headaches, losses, and uncertainties.
Conclusion: Don’t be the ‘Test Case.” When in doubt of how to legally proceed with severing a former property owner’s rights, it is best for the new real estate investor to seek out an experienced real estate lawyer.
About the Author: Since 1990, attorney David Soble has represented lenders, loan servicers, consumers and business owners in real estate, finance and business matters. He has been involved in thousands of real estate transactions and has successfully negotiated and saved millions for his business and consumer clients alike.
When clients are confronted with a complex legal problem that has a lot of moving parts, it can be difficult for them to ‘see the forest through the trees’. I offer clients overwhelmed by a complicated real estate or finance problem, the following 5 items to consider so they can effectively tackle their source of stress.
1. Get organized. Staring at a pile of miscellaneous documents can weigh on one’ moral and motivation. Take the time to sort important paperwork in manilla folders. For example organize papers by a vendor, an antagonist, chronologically, by subject or concern, by contract, loan(s) or lease(s). You’ll feel better once you’re organized and you’ll help your advisors address the problem more quickly.
2. Define the “what” “when” and “how”. Complex matters often have a series of tangled and interrelated problems. Write down all the problems that present themselves in a particular situation. Then define how you intend to solve each problem. There may be several ways to approach each problem. List them. Ask yourself, “what can I do to create any movement that will make me happy with my progress?” Now realistically define the time frame that you expect to address and be done with the problem.
3. Prioritize. Resolving complex problems requires one to prioritize each step or action necessary for a resolution. Prioritize and strategize what has to occur first before you can move ahead to the next task.
4. Don’t make quick decisions. Never let anyone, particularly the antagonist in your situation, push you into making a decision. Consider the “24 Hour Rule”. Take 24 hours to weigh the pros and cons of a decision. Remember, complex problems took time to create. Take time to think about the consequences of a decision.
5 Give yourself a break. Ruminating about a problem 24/7 does not solve the problem. In fact it can stress your physical and mental health. Think about all of the good decisions that you have made in the past under stress. Eat well, rest and exercise for a clear head.
A mentor once told me that successful problem solving is like eating a whale –you have to eat it one bite at a time. Envision setting a table to feast on your problem — calmly organize your documents, define the problem(s), and prioritize your proposed solutions using realistic time frames that will make you happy with your progress.
Keeping Control of Aging Parent’s Property
Greater longevity for Americans has expanded the population aged 75 and over. The U.S. Census Bureau states that the number of people reaching their 80s and beyond will sharply increase in the ensuing decades and as elderly parents age, more financial responsibilities are placed upon the shoulders of their adult children. Senior housing issues are a genuine concern for adult children who want to ensure that their elderly parents can maintain personal dignity, safety and a sense of control while still living in their home. Homes too, are filled with much sentimental values and memories and these must be respected.
Here are several financial and housing considerations adult children should explore so that their parents can remain in their home:
A reverse mortgage is a residential loan specifically designed for seniors. A reverse mortgage allows the homeowner to convert a portion of the home’s equity into cash, while eliminating the possibility of having to sell the home. Aside from the fact that a reverse mortgage will deplete assets left to potential heirs, they must be paid off in the event the owner leaves the home for a year or more. So in the event that an elderly parent will have to move to a different housing environment because of illness, the entire loan balance becomes due if the parent fails to return to their primary residence within one year.
Reverse mortgages generally require that the homeowner pay annual property taxes and in my experience this is a source of many senior homeowner defaults. So before obtaining a Reverse Mortgage, one should consult with a real estate or elder care law attorney.
Conversion to Rental Property
One option that is often overlooked by adult children is leasing the home to family members. This provides some security that the home will be well maintained and cared for by a relative or close friend while one’s parent still remains in the home. As with any business transaction proper due diligence should be taken with regards to drafting a lease agreement. Consult with an attorney for a thorough agreement.
Professional Home Maintenance
Hiring a professional property maintenance company is one way to make sure that the home is maintained both mechanically and visually, reducing the physical demands of upkeep on one’s parent. Having maintenance services will also free up the time and energy needed to attend to a parent’s physical care. Another consideration is that a well -maintained home is much easier to sell at a later date when necessary.
Make sure that the property management company is licensed and bonded. In many states a real estate agent can provide property management services without holding any additional licensing. But property management is a profession unto itself. It’s best to confirm that an agent devotes a large majority of their business to home preservation and even better to hire a property management company that is referred by a trusted source.
Professional Personal Assistance
Most seniors want to live as independently in their homes for as long as possible. There are options that exist to make this as convenient and dignified for senior homeowners. Housekeepers can do the heavy cleaning, a visiting nurse can do home check ups and attend to other medical issues. Seniors can even receive meals delivered daily. Unskilled Home Care Services are increasingly popular these days, but adult children should perform a thorough background check on such services. See below.
Protect Seniors From Scams Targeted at Homeowners
The U.S. Federal Trade Commission (“FTC) regularly reports scams that are focused on senior citizens. Senior homeowners are easily targeted because they are often isolated from their neighbors and become easy ‘prey.” Advise family members to never give out any sort of information over the phone or to respond to door to door solicitations. Assist them with checking their bank records and credit reports often and to offer immediate assistance if their are any warning signs of abuse or fraud.
David Soble is the principal of Soble PLC and founder of Proven Resource LLC . He has been a real estate and finance attorney for over 25 years and as a member of the National Care Planning Council (NCPC) he focuses on senior issues as they relate to real estate and finance.
Assisting loved ones who begin to lose their ability to think clearly and make rational decisions is not easy. It’s not uncommon for some elderly to become unable to make sound decisions about a variety of issues including finances , health care and managing themselves at home. Below are a few legal options for children of aging parents to consider when assisting a loved one.
A Power of Attorney grants legal authority to an individual to make decisions on behalf of another. Laws for creating a Power of Attorney vary from state to state. They can be limited to specific issuesor broadened to handle many issues such as personal and financial matters, including real estate . In Michigan , a Power of Attorney addressing the sale or refinance of real estate must be filed in the county records where the property is located.
A person can use an advance directive to make provisions for health care decisions in case that person becomes unable to make such decisions. There are two main types of advance directives : a Living Will and Durable Power of Attorney for Health Care . In some cases, a hybrid of these two directives can be established.
This is a signed, witnessed document called a declaration or directive which instruct an
to withhold or withdraw medical intervention from its signer if the signer’s condition is terminal and is unable to make decisions about medical treatment.
Durable Power of Attorney for Health Care
This is a signed, witnessed document in which the signer designates an agent to make health care decisions on behalf of the signer if the signer is temporarily or permanently unable to make such decisions. The agent in this case will have the authority to decide if health care will be provided, withheld or withdrawn from the signer.
Only a Power of Attorney that specifically addresses real estate will give the agent of the signor, usually an adult child, the authority to deal with a mortgage, loan or disposition of real estate while the signor is living. The other ‘directives’ concern health care and related health issues. All three are significant to good asset planning and protection.
Consider speaking with a qualified attorney to learn more.
March 17, 2015
By: Bill Bischoff
Chances are you’ve spent plenty of your free time thinking about the money you’ll have available at retirement. But what have you done to plan out your estate? The sad truth is that most of us — some 70% of adult Americans — have neglected to write a will. Some think their assets are just too puny to worry about, others worry that the costs of writing a “last will and testament” are too high. But wills aren’t just vehicles for the wealthy or the morbid. If you’ve got a family and a home — not to mention a savings account — you should definitely have one. Cost is no excuse. While the average will drawn up by a lawyer typically runs from $500 to $1,000, you can get a simple will at a legal clinic for as little as $75 or create your own with an online vendor for even less. For most people, the first time in your life that a will becomes imperative is when you have children. Forget about your assets for a minute. In the terrible event that you and your spouse die at the same time without a will, it falls to a probate court judge to name a guardian for your minor children — not a pleasant prospect. That is why it is a crucial first step to name a guardian for your minor kids. Our experts recommend naming an alternate guardian in the document, as well, in case something happens to your first choice.
Writing a will, of course, is also your chance to clarify who gets what in your estate. Before you can do that, however, you have to tally up your assets. That includes your house, your investment portfolio, the value of your retirement plan account(s), and the payout(s) from any life insurance coverage . After adding these things up, most folks discover that they are worth more than they initially suspected. Find your new home now ... Address, City, Zip Price Advertisement Once you’ve got your assets listed, you can decide what you want to leave to whom and who will be executor of your estate. One important caveat: Make sure that the beneficiaries listed in your will match the beneficiaries you name for your insurance policy and for your 401(k) and any other retirement accounts. If not, the beneficiaries named in these other documents will be the ones who actually get the money. Now, if you want to do any more complex estate planning, chances are you’ll have to set up a trust, which isn’t cheap.
They cost as much as $2,000 to $3,000 or more. The primary reason people go to this kind of trouble is to protect their heirs from having to pay hefty estate taxes that can turn their carefully built nest egg into chicken feed. Or to protect their heirs from themselves if they are — to put it kindly — not very financially astute. Remember: for every dollar you leave behind over the unified federal gift and estate tax exemption amount ($5.43 million for 2014), the IRS will take 40 cents for the federal estate tax. Once you have a will in place, don’t forget to update it regularly. You’ll need to amend it whenever there is a big change in your family’s circumstances — a birth, a death or marriage, or even if you move out of state. A will might seem like a hassle, but that is nothing compared with the hassles your heirs will experience if you die without one.
Detroit, Michigan, January 30, 2015
According to numerous “real estate investing” or “note buying” websites (A Google search of real estate “note buying” prompted over 19 million results), real estate investing is “fun” and “easy," which it can be, but not without “work.” Proven Resource managing attorney reviews important steps investors can take to protect their investments.
Investing in real estate mortgage notes and flipping properties can be financially rewarding. According to numerous “real estate investing” or “note buying” websites (A Google search of real estate “note buying” prompted over 19 million results), it’s even “fun” and “easy.” Perhaps it can be, but not without “work.” As seasoned real estate and note investors know, buying real estate notes and distressed property can be a great source of income, but as in the Bank of America matter above, it can also a be source of problems.
Here are 5 things real estate and note investors can do in order reduce headaches before rushing in to acquire income producing commercial or residential properties:
1. Audit the loan file. It's good business to have an attorney or compliance professional review loan documents before purchasing a note. Any legal defenses that a borrower has against a lender, they can have against the loan assignee or note buyer. Have a professional review loan documents such as federal loan disclosures, deeds, legal descriptions, issue an opinion on potential title defects and verify back property taxes and IRS liens. Note buyers want to buy a note, not a lawsuit.
2. Understand the implications of invoking certain loan provisions. For instance, in commercial loans, it's common to have provisions for an Assignment of Rents. This means that the note holder can require tenants currently at a property to make payments directly to the investor in the event of a landlord - borrower’s default. This sounds straightforward until one considers that in most jurisdictions, note holders who exercise the right to collect rents become responsible for property repairs even when the investor does not yet own the property. Tenants could withhold rent from the investor until prior neglected repairs, such as a roof repair, are addressed. It can be quite costly especially when tenants in distressed properties often request rent abatement.
3. Don’t ignore title insurance. Note buyers usually have three options to make their investment profitable. If they can’t modify an existing note, taking a deed in lieu from a property owner, or initiating a foreclosure action are they only ways to take legal title to sell a property. In both instances, having title insurance is very important. Taking a deed in lieu from a borrower without having title insurance can be folly since any and all liens on the property will be transferred to the grantee. Starting a foreclosure action without knowing what’s on title could expose the property to IRS liens that affect the investor’s clear title. At the very least, perform a title search.
4. Make sure the entity acquiring a note or property is in compliance with state and federal law before taking any action against a tenant or borrower. For instance, evicting a tenant without a recorded title interest can be legally challenged. It’s the same for investors who issue notices of loan default. Recording one’s legal interest in a property is paramount. It’s also important that incorporated investors register their business with the state in which their investment property sits, otherwise their authority to enforce provisions concerning their own investment can be challenged. Finally, make sure all collection and default notices comply with federal and state laws.
5. Expect ‘push back’ and time delays. Making properties profitable or collecting timely payments does not happen right away. True, there are times when a borrower agrees to a loan modification, brings themselves current or even refinances off the note, but these instances are uncommon. Instead, anticipate little, if any, tenant or borrower response to correspondence and prepare for eviction, foreclosure or even bankruptcy actions.
Detroit, Michigan (PRWEB) November 28, 2014
On November 24, 2014, the FBI Detroit Field Office issued an official press release that it had arrested 16 people in a telemarketing and real estate ponzi scheme netting the offenders over $20 million from 290 victims nationwide, who thought they were investing in bank owned homes. According to the authorities, telemarketers lied about the values of the homes, telling investors that they were purchasing homes worth many times more than the current sales prices.
It seems that every year law enforcement exposes an unscrupulous real estate or mortgage scam, but what is even more incredulous is that there are people willing to purchase real estate over the telephone. The old adage is true: “A fool and his money are soon parted.”
Here are 5 things to seriously examine before purchasing investment property:
1. Visually inspect the subject property. In real estate, variables such as property location and structural integrity, affect value. A physical inspection of the property is imperative. If it’s too inconvenient to personally visit an asset, hire an independent, licensed professional appraiser to assign a property value .
2. Order a property title search. Every property comes with its own unique title history. Mortgages, delinquent taxes, assessments, and judgments are but a few types of liens that will directly impact a purchaser’s ownership rights. Order a title search from a reputable title company or get a ‘ title opinion ” from a real estate attorney.
3. Investigate participants. State and federal law require licensing for most real estate services and activities that involve real estate investments, sales, or loans. When in doubt, contact state licensing authorities to see if an activity is regulated or contact a real estate attorney for an opinion.
4. Funding. When purchasing property, use a title or escrow company to disburse purchase funds to a seller, even in a cash transaction. Title companies will also provide title insurance to verify property ownership, address property liens, confirm property taxes and itemize money disbursements in a transaction.
5. Documentation. Real estate transactions involve many documents that include, but are not limited to sales agreements, deeds, mortgages, discharges, liens, settlement statements, authorizations and resolutions. Review these documents with a real estate agent , or a real estate attorney. Most importantly, never endorse any documents that are blank or contain incomplete or blank fields. Never relinquish original documents without retaining copies.
Successful real estate investing requires patience and reliable information. Rushing into a transaction without thoroughly performing one’s own due diligence or hiring experienced professionals to do the same is an open invitation to deep financial disappointment.
Earlier this month, CNBC news reported that nationally, consumers and business owners are at greater risk of losing their assets as the number of foreclosures and repossessions have spiked. The need for payment modifications and more flexible loan guidelines persists. Here are 5 tips debtors should review when contemplating a consumer or business loan modification:
Earlier this month, CNBC news reported that nationally, consumers and business owners are at greater risk of losing their assets as the number of foreclosures and repossessions have spiked. The need for payment modifications and more flexible loan guidelines persists. Here are 5 tips debtors should review when contemplating a consumer or business loan modification :
“Fraud is the daughter of greed.” ― Jonathan Gash
David Soble Esq., Detroit, Michigan October 30, 2014
Federal consumer protection agencies regularly warn consumers about scams involving everything from the recent false Ebola charities to student loan scams. But nowhere are the warnings more prevalent and the loss of citizens' hard -earned money so great, as when it comes to the various cons surrounding real estate and property loans. Because of the high dollar value of real estate, these scams tend to be sophisticated. Those people who consider themselves too smart or “immune” from any real estate scam need only consider the sophisticated schemes like that of the infamous Bernie Madoff . “Successful and smart” investors in his funds are still reeling from their own investment horror stories.
Here are 5 popular real estate scams that cause severe financial distress to unwitting participants:
1. Lease Scraping.
The rental market is hot as bank credit has tightened and home sale inventory remains low. The recent "Great Credit Recession" saw millions lose their homes to foreclosure. Con artist take advantage of this high demand for rentals by “scraping” the contact information of legitimate home rental listings and divert rental inquiries to fake web sites and telephone numbers. They take rental deposits on vacant properties that they do not own, from prospective tenants under pressure to secure a place to live. The con disappears once the true home owner returns but not until they've fleeced deposit money and monthly 'rental payments.' Solution: Verify ownership to a property with the county recording office before paying a complete stranger any money.
2. Home Sale Scams .
Using the advance technology of the internet, scammers “lift” legitimate real estate agent listings as well as the agent's telephone numbers and license numbers. Similar to lease scraping, con artist target homes that sit vacant for a long period of time such as a foreclosed or a vacation home. They often pose as real estate agents and collect deposit monies from prospective home buyers eager to secure homes priced “below market." Solution: Verify the identity of a real estate agent through their main sales office and write checks to the agent's broker only.
3. Tenant Scams.
Homeowners who fail to sell their home may opt to lease their property instead. Pressured for any cash flow, they rent their home to people with substandard credit or choose to ignore documentation that would otherwise be red flags in less hurried situations. Frustration and financial heart ache soon follow once they stop receiving rent. Bad tenants can remain in a home months after they stop paying rent, costing landlords not only thousands in back rent, but on utilities such as water bills, home repairs and legal fees. Solution: Novice land lords should have income and credit documentation verified by a reputable property management company not affiliated with a homeowner's real estate agent.
4. Exacting up front fees for residential loans or mortgage modifications.
Scam artists pressure applicants for up front fees to process mortgage loans or for loan modifications. In cases of the former, there are very few exceptions where a loan applicant should ever pay money in advance. Homeowners should never pay for a lender's commitment to lend. In the case of mortgage modifications, federally regulated lending institutions never require monies in advance to process a loan modification request. Solution: When in doubt, loan or loan modification applicants should contact their state's mortgage regulatory agency or state attorney general.
5. Real Estate Seminars.
"Free" real estate seminars are back in droves after the Great Recession . They're hosted by “legendary" real estate personalities with captivating stories, purporting to teach house “flipping” to innocent pensioners eager to make “millions” in investment properties. Buy enough of their CD's, books, or coaching classes and thousands of dollars later a student might be lucky enough to have the “expert” invite them to participate in a real estate deal. Solution: Don't attend these seminars with your wallet. Check out local real estate investment clubs that does not require its participants to buy anything.
About the Author: Since 1990, attorney David Soble has represented thousands of consumers, businesses and lending institutions in their real estate and finance matters. His writings are based upon his clients' past experiences.
"Some debts are fun when you are acquiring them, but none are fun when you set about retiring them.” -Ogden Nash
It's quite a feeling to pay down or pay off lingering credit card debt especially after negotiating a high balance account down to something that is more affordable. But before one rushes to pay on a “settled” account, among the best ways to pay off debt is by taking these 5 precautions:
1. Beware of verbal agreements.
Before paying on an account, have the credit card representative or collector email or mail a letter that specifies the terms of the account payoff. The settlement letter should be dated, signed by an identifiable representative, state a daily interest, and have an expiration date. Its more than likely that without a written confirmation of payment terms, ones payment will be applied to an account differently than what was intended.
2. Have a third- party disburse funds.
In instances involving a real estate closing, it's best to present the title company or closing attorney with a written copy of the proposed negotiated loan payoff. Instead of paying the money directly to the creditor have the closing agent disburse the appropriate funds to the creditor from the proceeds of the transaction. Otherwise, in some states it could take up to 90 days before a creditor issues a receipt or releases a lien. When a closing agent disburses funds based upon the negotiated payoff, the amount can be verified as paid on the closing paperwork.
3. Always reference the account number.
These days Its common for people to have several credit accounts with the same creditor. So when sending in a payment, put the corresponding account number on the check or attach a settlement check to the written payoff. When in doubt, write the intended purpose for a payment right on the check memo.
4. Stick to the schedule.
In circumstances where a debt modification or forbearance agreement is involved, stick to the payment schedule as agreed. Avoid sending lump sum payments in advance, or monies that don't match with the agreed upon payments Forbearance and modification agreements by their very nature are exceptions to most lenders loan accounting systems and payments that don't match a payment schedule will create confusion, no matter how good the intentions.
5. Follow -up and keep a receipt.
Pull a credit report within a reasonable time after making final payments to confirm that the account is reported as “paid,” “settled for less than original balance,” or “closed”.
Most importantly, retain a copy of the payment receipt with the payoff letter and file it away for the future. Murphy's law will be sure to work the day after a receipt is discarded. It's best to keep the receipt until all three credit bureaus reflect a once troubled account as "paid".
1. Divorce. Generally, in a divorce, a divorce decree or separation agreement will shift monthly credit obligations from one ex-spouse to another. Contrary to common belief, these court orders do not release either spouse of the underlying joint credit obligation. Only ones' creditor can do that. So when one ex- spouse fails to make a payment to a joint creditor, a creditor can still sue both parties to the loan obligation for a loan default . Suggestion: In the event of an ex-spouse's default, go back to court and try to enforce the divorce decree. Also, make sure to monitor the monthly payments carefully, and review a credit report frequently. Unless a creditor provides a written release, which seldom happens, be vigilant.
2. Loan Guaranty . Many lenders and banks will require an individual to personally guarantee a loan. A loan guarantor cannot unilaterally revoke a loan guaranty. Tearing up or providing a written revocation of one's personal guarantee has little effect, except to agitate the creditor. A guaranty only expires when the subject loan is paid off, or when both parties to a loan agreement mutually rescind or revoke the guaranty in writing. Careful: Make sure one's loan guaranty specifically references the date and amount of the loan so that there is no confusion that when the loan is paid off, the corresponding guaranty is extinguished. Lenders have been known to attach otherwise old extinguished guarantees to newer or outstanding unrelated multiple loan obligations.
4. Zombie debt . Each year, billions in unpaid bad consumer debt is written off by lenders. Often the right to collect on this bad debt is sold to collection companies. Some debt is so old that it is considered worthless. It is out of "statute'. This means that the legal right and time to collect such old debt has expired by law, and the debtor can no longer be pursued on the debt. Collection companies that purchase old debt do so in hopes to receive even a small payment from an unsuspecting debtor. This small payment resets the time limitation for collection back to the beginning and the obligation, or "zombie debt", rises again.
Forfeiture vs. foreclosure of land contracts in Michigan? 5 things to considerWhen a buyer defaults on a land contract, the seller can generally pursue one of two legal remedies: forfeiture or foreclosure. Both remedies have advantages and disadvantages. In general, forfeiture is faster, cheaper and easier than foreclosure but does not allow you to accelerate the debt or obtain a deficiency judgment. Forfeitures are summary proceedings filed in District Court governed by MCL 600.5701, et. seq . and MCR 4.202. Foreclosure takes longer and is more costly, but may be appropriate when the buyer is chronically delinquent or when the seller wants to pursue a deficiency judgment. Foreclosures are governed by MCL 600.3101 et. seq. and MCR 3.410 and are filed in Circuit Court. Below are five things for vendors to consider when deciding whether to pursue forfeiture or foreclosure as a remedy for default under a land contract
In short, if you are a vendor on a land contract and your vendee is in default, think carefully based on the language of the land contract, the value of the property and your particular situation as to whether forfeiture or foreclosure is the right remedy for you. The above are just some of the things to consider when pursuing remedies against a land contract vendee in default.
About the Author. Since 1990, attorney David Soble has represented lenders, loan servicers, consumers and business owners in real estate, finance and business matters. He has been involved in thousands of real estate transactions and has successfully negotiated and saved millions for his business and consumer clients alike.
When a legal matter arises, most people seek legal representation from a licensed attorney well- versed in the area of law that addresses their problem. But there are no laws against pursuing a matter without an attorney, and not all matters actually require professional guidance. Here are 5 reasons why you may not even need an attorney:
1. You proceed Pro Per or Pro Se. These latin terms mean that one is advocating on one's own behalf before a court, rather than being represented by a lawyer. If you feel confident that you can educate yourself about the relevant area of law that concerns you, then perhaps you could represent yourself in either civil or criminal court. When proceeding "pro se", you will be held accountable for adhering to the court procedures and decorum in the applicable jurisdiction. Your tasks will include conducting proper legal analysis, preparing and writing proper legal pleadings and conducting the legal research and discovery necessary to prevail in your matter. You will still be responsible for filing fees, fees for depositions and other items related to handling your matter. If you are not sure what "discovery" involves...look it up! There's no better time to start your pro se status than the present.
2. You hire a paralegal. A paralegal is a good person to seek help from if you have a matter that requires a lot of standard forms to complete. For instance, in a bankruptcy or a probate matter, the paralegal is limited to advising their client with filling in the answers to the legal questionnaires. A paralegal is similar to a physician assistant for a doctor. They are trained professionals who are legally limited to perform certain tasks. Like a real estate agent, or financial adviser, a paralegal cannot provide legal advice and can lose their license if they do so.
3 Your matter could be heard in Small Claims Court. In a small claims matter only the actual parties can represent themselves in civil matters. In most jurisdictions, the amount of the controversy is limited and ranges from $2500 to $5000 dollars. If you have seen Judge Judy, Okra, Kevin, or Evelyn on T.V., then you already have an idea of the less formal and more simple procedures found in a small claims court, with hopefully much less drama. But the small claims court is a great venue for people to seek redress and receive a binding judgment. When considering the costs and benefits of using an attorney, sometimes it's best to pursue the maximum amount in a small claims action even if it doesn't satisfy the total balance of the amount disputed.
4. You consider mediation. There is a recent trend in the law known as "alternative dispute resolution." In an attempt to save on costly litigation lay people and companies will often go to one attorney for assistance even though the parties may have opposing interests. While an attorney can represent both sides with proper written disclosures, the parties that I have known to use one attorney, leave unhappy. A more cost effective alternative is to use a trained mediator. A mediator is usually an attorney who is well versed in the law. They are supposed to be impartial, and depending on what the parties to mediation agree, the mediators opinion can be binding. Even if the parties choose not to have a binding decision, a mediator's analysis is often a good indication of what outcome one can expect in a court of law.
5. You have time and the fortitude. Pursuing or defending a legal matter can be exhausting, both financially and emotionally, and this is usually when one retains an attorney. So consider the best use of your time. Could you be earning more investing your time into your own work instead of taking on larger and less familiar tasks? Do you have the emotional fortitude to withstand professional assaults on the integrity of your position? If you have the time and an iron stomach then you should consider pursuing your own claim.
Having an attorney is similar to hiring a real estate agent. In a real estate deal, one can sell their own home and save substantially on a sales commission. But the benefit of having a real estate agent is more than just about commission or having someone sticking a sign on your lawn or place a lock box on your door. A good agent performs so many administrative tasks behind the scenes. But most importantly, the agent acts as a professional buffer between a buyer and a seller. Not everyone has the emotional constitution to deal with criticism or unhappiness surrounding the sale or purchase of a their home. The real estate agent takes on the burden of softening the emotional blows and focusing on all the "working parts" needed to move a deal forward. That is what an attorney does for their clients, but on a higher level of the risk - reward equation.
Conclusion. There are times when using an attorney may not be necessary. But try not to cite "money" as the reason to forgo proper legal representation since there are different types of affordable fee arrangements that attorneys can structure for clients. If you are ever in doubt of your legal rights, absolutely no one but a licensed attorney (practicing in the area of law that concerns you) can advise you of your legal rights and remedies.) Attorneys, like most professionals, can briefly give you time to discuss and assess your matter and advise you accordingly. Only then should the options enumerated above be considered.
About the Author: Since 1990, David Soble has represented lenders, loan servicers, consumers and business owners on residential and commercial real estate, finance and compliance issues. He has been involved in thousands of real estate transactions, being responsible for billions in real estate loan portfolios throughout his career.
Recently, a $37 Million Dollar default judgment against an Alabama restaurant owner was set aside by the Alabama Supreme Court. A default judgment is awarded when a defendant to a civil suit fails to answer a legal complaint in a timely fashion. In such cases, the court is unable to make a ruling based upon the law or the facts of a case. Until the Alabama court found that the plaintiff had failed to properly notify the defendant of the law suit, there was little doubt that this Alabama defendant was sitting on pins and needles awaiting the outcome of this case.
Here are 6 things a consumer or business owner should consider in the event a default judgment is filed against them:
1. Have the judgment set aside. Without extenuating circumstances, it can be very difficult for a judge to set aside a default judgment. Most courts are reluctant to enter a default judgment against a defendant without first ensuring that the defendant had multiple opportunities to respond to a law suit. Therefore, in instances where a judgment debtor was unaware that a judgment had been taken against them, its best to file a request to set aside the judgment within a reasonable period of time from the date that they discovered the judgment. Time is not on a judgment debtor's side.
2. Make contact before collection activities start. The party with the judgment is called a judgment creditor, and the party that has the judgment filed against them is known as the judgment debtor. Once a judgment is taken, the judgment creditor can begin activities to collect on their judgment. This includes, but is not limited to, taking a creditor's exam to determine where any of the defendants assets are located, garnish or attach a debtor's wages, bank accounts or even seize a debtor's property. Before things become even more financially painful, debtors should contact the judgment creditor as soon as possible to work on a settlement or repayment plan. Be advised that when judgments are fresh, creditors may feel “emboldened” and are less inclined to negotiate favorable terms. But as time passes the value of an uncollected judgment can diminish and creditors tend to be more flexible with terms.
3. Ignore it. Statistics show that not all judgment creditors actively pursue the debt owed to them once a judgment is obtained. I am aware of one bank that has stacks of judgments against borrowers that sit piled in a drawer. Still even when a judgment creditor fails to actively pursue their judgment, the judgment alone can still impact a debtor's daily finances. Judgments are reported to the credit reporting agencies and negatively affect credit scores. Having a judgment can increase the cost of borrowing or can be a reason for credit denial. An outstanding judgment can affect a job opportunity since many employers equate having unpaid judgments with poor character. So while it may seem that one can just ignore a judgment, experienced creditors know it is only a matter of time before a significant money judgment can make things financially difficult for a debtor; so much so that a judgment debtor will feel compelled to resolve their collection matter.
4. Time. The right to collect the money on a judgment has an expiration date that depends upon the type of case that was initially brought, or where the judgment was obtained. This means that while a judgment debtor may not hear from a judgment creditor for years, the creditor still has rights to collect on their outstanding judgment balance with interest. If a judgment has aged and is set to expire, the creditor can still file an extension of the judgment with the court. For example if a judgment is set to expire in 7 years, in the 7th year, a creditor can renew the judgment with the court for a term equal to the original judgment, or in this example, another 7 years. In these next 7 years, the creditor might take a more aggressive collection efforts, especially if the debtor's finances have improved since the time from when the original judgment was taken. So don't wait. This writer feels its best to try and cut a deal with a judgment creditor when a debtor's finances are still at their worst.
5. Consider payment options. More often than not, settling a judgment does not require a lump sum payment on the original judgment balance. True, judgment creditors are less likely to negotiate on fresh judgments, but their outlook tends to change with time. Contrary to common belief, debtors can offer to make payment arrangements on a filed judgment to avoid having their accounts or paychecks garnished or property seized. Making payment arrangements means that there is a written agreement on how monthly or partial payments will be applied to the judgment balance before the first payment on a plan is made. An experienced legal practitioner can negotiate a plan and work on cutting post judgment interest and fees. They can usually negotiate a better deal than the terms of the original judgment.
6. Bankrupt. Some judgment debtors would rather file bankruptcy instead of paying on a judgment. But depending upon the nature and size of one's debt and income, not all judgments can be liquidated through federal court. If a debtor makes a reasonable income, they may have to repay a portion of their judgment through a reorganization of their liabilities. In certain circumstances a judgment can never be forgiven in bankruptcy. For instance, if the underlying judgment was part of a lawsuit that alleged fraud, then the debt is not forgivable. Also, if the judgment is for a defaulted student loan or certain IRS matters, these judgments cannot be discharged.
A filed default judgment means that at some point, both parties to a law suit have incurred substantial financial or emotional capital, or both. When considering the above listed items, it's best for judgment debtors to seek professional legal representation and develop a viable legal or economic strategy for addressing their judgment.
Aggressive debt buyers make big business out of purchasing and collecting on old credit card, medical, and charged- off consumer debt. Recently, California passed its new Debt Buyers Fair Practices Act in part because old consumer debt accounts that have been bought and sold by debt buyers multiple times are a source for much consumer confusion and abusive debt practices. The California act requires, among other things, that collectors must provide a chain of title for such accounts, disclose when they are barred from legally enforcing an old debt, and it restricts how bad debt is reported to the credit rating agencies.
These recent legal developments are encouraging but are specific to California residents only. Listed below are 5 things consumers can do under current federal law before and even after a debt buyer escalates their collection efforts into a lawsuit:
1. Get a Receipt.
If a debt buyer / collector files a lawsuit against a consumer, they must show the court that they purchased the debt from the original creditor. They have to essentially provide a receipt for the purchase in the form of an affidavit, bill of sale, or assignment of the consumer's specific account. A copy of a credit application or past statements is not sufficient. Be alert: the affidavit of transfer of ownership is from the original creditor, not the debt buyer.
2. Request Documentation.
Under the Fair Debt Collect Practices Act, consumers have 30 days from contact by a collector about a debt, to dispute the validity of the debt. Once disputed, the collector has to provide evidence that supports the validity of the debt. Consumers should review any documentation with caution. Be alert: Don't mistake receipt of excessive documentation as valid documentation. Seek assistance from a qualified legal professional if there is uncertainty.
3. Consider Aging.
If an account is old, then the debt buyer may be prevented from filing a lawsuit to collect. Check your state's Statute of Limitations, because even if the account is valid, lawsuits to collect the debt can be "time barred". Be alert: Consumers should take extra caution not to reactivate a time barred account by making a payment on account. Once 're-activated" the Statue of Limitations is no longer a valid defense. When uncertain, seek legal counsel on the proper way to proceed.
4. Monitor Communication.
Federal law restricts how debt collectors can communicate with a debtor. They cannot discuss a debt matter with a third party (such as an attorney) unless you have authorized them to do so. They cannot use harassing language, provide misleading information or call at unreasonable hours or places of work. Stay alert: Consumers should never ignore written communication from a debt collector as there are serious timing considerations that if ignored could cause a consumer to lose their rights. Most importantly, always respond to a filed law suit because a debt, while otherwise invalid, could be enforceable if a debt buyer secures a default judgement against a consumer who fails to respond.
5. Knowledge and Action.
Few debt collectors are successful without being persistent, intimidating, and assertive. Unscrupulous collectors have been known to make their communications appear as if it comes from a court, looks like a lawsuit or legal summons, which is illegal. However, they count on consumers to be intimidated into paying on accounts they would not otherwise be legally responsible to pay. Stay alert: Consumers who pro-actively challenge the validity of a debt are most apt to discourage or even defeat a collection lawsuit because a debt buyer would rather focus their attention on easier accounts.
I actually cut out and saved this article from the August 27, 2004 USA Today because at the time, this tag line struck me funny.
It foreshadowed the things to come....
Americans hang on to bigger, better lifestyles
Incomes Flat, but people still buying homes, cars
Since the beginning of the decade, their homes have gotten substantially bigger and more expensive. Almost half of all homes, about 46%, have six or more rooms. More than 15% have eight rooms or more.
Almost one in five families have three or more cars. And more workers are opting out of carpools and mass transit to drive to work alone.
But this lifestyle comes at a cost when incomes are stagnating and housing prices are soaring.
In a separate report on poverty and income, the Census Bureau reported that median household income, when adjusted for inflation, remained flat last year. ( Related story: Poverty rises in USA )
But the survey of how Americans live finds that more than 22% of homeowners spent at least 35% of their income on housing in 2003, up from 19% in 2000. And 38% of renters spent as much, up from 33% in 2000.
"Our wages stopped growing, but our wants kept going," says Robert Lang, a demographer who heads the Metropolitan Institute at Virginia Tech.
"People will just suffer a little and pay a bigger mortgage to hold on to their dreams," he says.
The latest snapshot of American life comes from the Census Bureau's American Community Survey. The annual survey of 800,000 households asks the same questions as the Census that is taken every 10 years. The 2003 numbers offer a look at how the nation has changed in the wake of recession and terrorist attacks, and they hint at social trends shaping the decade.
"Even though the economy took a dive, the initial shock of 9/11 has worn off," says William Frey, a demographer at the Brookings Institution in Washington. "People are buying bigger homes, more cars."
Riding record-low interest rates, housing prices have skyrocketed. The percentage of homeowners who live in houses valued at more than $500,000 doubled since 2000, to more than 6%.
And one in eight homeowners live in homes valued at $300,000 to $499,999.
About half still live in homes that cost less than $150,000, the typical price range for working-class families and young couples buying their first homes. But that number has dropped sharply from almost 64% in 2000.
Even in North Dakota, which has the lowest housing value in the nation, prices rose. The median value of a house there went up 10% to $81,796 since 2000. Nationally, the median value rose 22% to $147,275.
The survey reflects other changes:
• The percentage of homes without telephone service rose to 3.8%, from 3% in 2000, which reflects the increased dependence on cellular phones.
"A lot of dorms have no phone service now," Lang says. "Kids go to college, and not one of them has a real phone. They're all cells."
• The educational level is on the rise. More than a quarter of the population has a bachelor's degree or higher. And the percentage of high school graduates continues to climb, up 2 percentage points to 83.6%.
The ratio of college grads to high school dropouts has increased. There are 1.62 college grads for every dropout, up from 1.35 in 2000.
This "brains-to-brawn" ratio reflects the shift from a blue-collar to a knowledge economy, Frey says.
• Americans are spending about the same 24 minutes commuting to work, but almost 78% are driving alone, up from 76.3% in 2000. The exception is so-called "exurban" counties across the USA, such as Pasco County, north of Tampa, and McHenry and Kane counties outside Chicago. They experienced significant increases in commuting times.
Use of other forms of transportation, from walking to riding a bus, dropped. But the percentage of people working from home increased slightly.
• All racial groups are growing, except for whites who are not Hispanic. Whites make up 76.1% of the population, down from 77.3% in 2000. They're expected to make up half of the population within 50 years.
• The foreign-born population continues to grow but so does the share of immigrants becoming citizens: 41.4%, up almost 1 percentage point since 2000.
Because naturalized citizens can vote, there has been a push to encourage naturalization before the upcoming presidential election.
• Veterans, who have taken center stage in the race for the White House, make up a relatively large share of several battleground states such as Maine, New Mexico, Florida, Nevada and Arizona.
• Although still in the minority at 48.9%, men make up a growing share of the population. Frey attributes the change to male-dominated immigration flows from Latin America.
This August is National Will Month. It precedes September's National Preparedness Month and somehow, National "What Will Be Your Legacy" Month manages to fit snugly between the two. In truth, there is never a better time than "now" to be prepared and create an estate plan to protect one's family and assets. Yet, while responsible people agree with the importance of having a plan, it's something that people still like to delay. Their reasoning is that “they'll do it when they get older” or “when they accumulate 'real' assets.”
Having the protection of an estate plan is akin to installing a roof on one's house. A new roof adds value to a property because it protects a dwelling and its contents. It's not 'sexy', it can be expensive, but it's very necessary.
Here are 3 reasons to have an estate plan regardless of your station in life:
1. Control. If you own something of value and you want the item(s) to be left to someone you care about, a Will is needed to ensure your wishes are honored. An heirloom, money, or even certain conduct can be addressed by an estate plan. Having a Will gives you the control to select who gets the assets that you own at the time of death.
2. Money. When you or your family starts to accumulating more assets, you are building an “estate” that ultimately needs to be distributed. Even modest estates have to probated without a Will, and Probate can be expensive.
3. Protection. Estate plans are about more than just protecting the welfare of “small children”. Having a plan to address outstanding debts or ensure college funding can be important. Who will have to continue to pay on a remaining mortgage, or who gets the family home? These questions and others, are efficiently addressed by having a plan.
The real impact of having a comprehensive plan is felt after a death. However, even in life, comprehensive estate plans have estate plans contain advance directives , such as a Living Will, that can, and do make a huge difference for our clients and their families.
American Public Media, Marketplace Money
Here’s a handful of student loan numbers for you. According to the Consumer Financial Protection Bureau, current student loan debt is nearing $1.2 trillion. An estimated 7 million borrowers are now in default; behind on $100 billion in debt.
All of which adds up to a juicy market for companies looking to cash in on people with student debt troubles.
This week, Illinois Attorney General Lisa Madigan filed suit against two student-loan debt-settlement companies. The suits allege that Broadsword Student Advantage and First American Tax Defense tricked borrowers into paying upfront fees for student loan help the companies didn’t provide.
According to one of the filings, First American Tax Defense promised enrollment in a fake “Obama Forgiveness Program.”
Madigan said these companies run ads that entice people excited to call, “and what they really find out is that these are scam artists [who] want their money.”
In a 2013 report , the National Consumer Law Center found that “a new ‘student loan debt relief’ industry has sprung up in response to the demand for borrower assistance and the dearth of reliable resources.”
“There’s a lot of debt, it’s very confusing,” said NCLC attorney Persis Yu. “I think some borrowers are desperate and they are turning to places that look like they might be an easy fix.”
She says many of these debt-settlement companies mischaracterize government programs as their own.
They charge borrowers as much as $1600 for services, like debt consolidation, that are available from the government for nothing.
“What’s making this possible is a lack of awareness of repayment options,” said Mark Kantrowitz, student financial aid expert from Edvisors.com.
He says the government should run an ad campaign of its own, so students with debt know what help is available for free.
If you are struggling to pay back your federal student loans, here are your options:
How to spot a scam:
If you think this sounds like a repeat from national headlines about the U.S. Housing Crisis in 2007, you're not too far off base, or perhaps you are. It's happening on the other side of the globe; this time in China. Check out today's story from NPR Morning Edition:
China's Booming Real Estate Market Finally Begins To Slide
After years of stunning growth, China's go-go real estate market is now in retreat.
Prices fell last month in 79 out of 100 cities, according to the China Real Estate Index run by SouFun Holdings, a real estate website. Land sales dropped nearly 30 percent this spring from a year earlier.
Real estate has been one of the engines driving the world's second-largest economy, which is why economists in China and around the world are watching the market closely these days.
Among the harder hit cities are mid-sized provincial ones like Wuxi, in eastern China's Jiangsu province, about an hour's bullet train ride from Shanghai. Drive into town at night and you'll pass rows of 25- to 30-story apartment blocks with just a handful of the apartments illuminated.
"There's nothing you can do," says Huang Jiqiang, an agent with Central Plains Real Estate here. He says supply and demand are completely out of whack.
"Now all the new housing complexes are dropping their prices and doing promotions because there are just too many homes. There aren't that many buyers and the pool of buyers is getting smaller and smaller. Homes are still under construction out there."
Huang says prices in Wuxi, which has a population of nearly 5 million, have already dropped 15 to 20 percent this year. He estimates it would take nearly 2 1/2 years to sell off all of Wuxi's current housing stock.
In private comments leaked online, an official with one of China's biggest developers, Vanke, estimated the city's unsold inventory was actually double that, almost five-years-worth of empty apartments. By all accounts, the culprits are overbuilding, inflated prices and almost no local demand.
"Every local family has at least two or three apartments, so they have already enough space to live," says Huang, sitting in a noisy office on a recent, rainy morning. "If an outsider wants to buy a new apartment, they can't afford it. A 970-square-foot apartment on average costs more than $116,000. The way they see it, that's a lot of financial pressure."
That's especially true in a city where the average annual salary is just $8,200.
Wuxi has been trying to lure in people from elsewhere to prop up the market.
Buy a 650-square-foot apartment and the government will throw in a much-coveted local residency permit, which entitles your children to public schooling among other benefits. So far, Huang says, that's not enough.
"Many clients are still waiting and seeing and hoping there will be further price cuts from the current levels," he says.
It isn't just small, middle-class apartments that lie dormant. So do many luxury compounds. Wuxi is building a new city to the east of downtown. Employees at one development, Country Garden, say half of the compound's $600,000-plus, stone villas are sold, but after more than a year, they're still empty. The only sound in Country Garden is of water pouring from the mouths of fish statues into a pond.
Oliver Rui, who teaches finance at China Europe International Business School in Shanghai, says the housing glut is driven by a political system that has rewarded local officials for economic growth over everything else.
"If they want to be promoted into the next level of the political hierarchy, they have to show the GDP growth rate is better than their neighbors," Rui says. "What is the easiest way to increase the GDP growth? It's through investment, through real estate."
That's true even if the real estate doesn't actually sell. Rui says Chinese officials are banking that migrants from the countryside will move to the cities and buy up the empty apartments, but he doubts that will happen without a big price drop. That's because, Rui says, it would take a Chinese person 15 years of earnings — without spending money on anything else — to pay for a home, a ratio that's at least double the international standard.
Rui doesn't expect the market to crash. He says the government has many tools — from cutting interest rates to lifting restrictions on home purchases — that can prevent free fall.
Sam Crispin, who has spent two decades following China's real estate sector, thinks prices will gradually drop and people, eventually, will buy. He cites the history behind Shanghai's Pudong New Area, which had huge vacancy rates in the 1990s.
"The whole of Pudong was a bit of a basket case," Crispin says, sitting in an office in the area's Lujiazui financial district, overlooking the cruise ship terminal along Shanghai's muddy Huangpu River. "Fifteen years ago not many people wanted to make the move, but now we see some of the most desirable, most expensive real estate here in Pudong. It's been a massive success for Shanghai."
Of course, Shanghai is a prestigious, coastal city and a magnet for the wealthy and ambitious, dramatically different from Wuxi. As for Crispin, earlier this year, he moved home to England for family reasons.
He says no one should read too much into this, but he's sold all but one of his properties in China. He says he's looking for better rent revenue.
"I can see the capital growth is slowing and it's time to go and invest elsewhere where there might be better income," Crispin says.
Seems like a good time to diversify.
It’s not every day that five government agencies, including the Federal Reserve and the FDIC, all come out with the same warning on the same day. That’s what happened this morning, and it amounted to a collective "watch out" to banks over homeowners ability to pay back lines of credit in the next few years.
Back in the early 2000s, right up to 2008, a lot of people took out lines of credit on their homes – this is where you can borrow money and use your house as collateral. They’re known as HELOCs (Home Equity Lines of Credit).
“Anybody who had a breath, any house still standing, seemed to be eligible for these kinds of loans,” recalls Nicolas Retsinas, senior lecturer in real estate at Harvard Business School.
HELOCs can typically last 10 years in what’s called a “draw period,” where people can continue to draw on the line of credit. After 10 years, they can’t draw any longer and they have to start paying back the principal. Starting about now, 10 years have gone by. Now it’s time to pay up.
“This is another bill coming due from the lending binge of the early 21st century,” says Retsinas. A bill that, according to the Office of the Comptroller of the Currency, now totals around $218 billion, of which $199 billion will be due by 2018.
If homeowners haven’t been paying down the principal, the change in bills may be substantial when they have to start doing so.
“We’re seeing that payments can go up 100 percent or even 200 percent or higher,” says Bob Piepergerdes, director of retail credit risk at the Office of the Comptroller of the Currency.
Given median incomes are lower than they were in 2007 and unemployment is higher, some borrowers may experience problems paying up.
“There is some risk of repayment so we’re asking institutions to evaluate where their borrowers are,” says Piepergerdes. And then he needs them to prepare accordingly
“The good news,” he says, “is that institutions have taken action.” The guidance put out by different agencies “is really to set forth the expectations of what we would like to see institutions do from a risk management stand point, but the institutions have been preparing for this for as long as we’ve been talking about it.”
JPMorgan Chase, for example, says it’s stocked up on reserves and is reaching out to customers.
“We are looking for ways to limit payment shock for our customers by being hyper-focused on communicating options to them,” the bank, which holds $49 billion in HELOCs, of which $29 billion will require higher payments through 2017, said in a statement. “We want to make sure customers are making enough of a payment so when they go into the repayment period of the principal it’s a step up not a leap up.” The bank estimates that more than half of the $29 billion will refinance or pay off before payments jump higher.
Overall, the largest lenders have reduced exposure by 20 percent through refinancing.
Homeowners would be advised to dig out their old loan agreements and look at the fine print, says Bob Davis, Executive Vice President at the American Bankers Association. “That’s one thing consumers ought to do right now, they ought to look at the payments they may have to make,” Davis says, “and if they want to change the loan arrangement and pay off their home equity line of credit by refinancing, they ought to be aware of their access to credit and whether their credit rating will allow them to.”
On June 25, 2014, The U.S. Treasury Department, through the Office of the Comptroller of the Currency (“OCC”), issued a press release that banks nationwide are making riskier loans in an effort to compete with other banks. The OCC is charged with regulating and supervising all national U.S. Banks, and this latest comment shows its concern over banks loosening their credit and underwriting standards for all types of loans that include commercial lending.
For some, relaxing loan credit standards to accommodate small business is welcome news, but for those financial and legal professionals still helping business owners clean up from the commercial loan mess after 2008, this federal “notification” comes too soon off the heels of the Great Recession that supposedly ended in 2009.
Small business certainly needs access to capital, but in preparation for the next financial debacle, here are 3 precautions business owners should strongly consider when taking a commercial loan:
1. Never sign blank documents or sign documents without reading them. Sounds simple, right? Numerous business clients come to me with a common bank problem: they failed to read the fine print or quickly signed paperwork that their loan officer pushed, often in a rush, in front of them. Also, make and keep copies of any loan paperwork that you endorse, before it leaves your control.
2. Verbal promises are meaningless. If the loan officer makes verbal representations as a means to induce a business to take a loan, the business needs to get any promises in writing. This is especially true with loan renewals, loan extensions or modifications. Everything that is important to the loan relationship must be documented. Don't be fooled into signing on terms that you are unhappy with, in anticipation that any significant verbal representations will be reduced to writing at a later date. I have news for you: they won't.
3. Hire a legal professional before you sign any loan term sheets, agreements, loan guarantees, renewals, extensions, or modifications. You can't afford not to have an attorney experienced in commercial lending review your loan agreements. Who do you think created the loan agreements for your bank? The old adage: “An ounce of prevention is worth a pound of cure,” is an understatement when it comes to ensuring your livelihood.
"Mastery" means a highly developed skill in or knowledge of something. Some big thinkers believe that one cannot master anything until they have successfully performed a required task over 10,000 times. So it comes as no surprise that successful real estate sales people are those who have "mastered" the art of maneuvering the ever challenging mine fields common in the business of selling real estate. A person who buys or sells an average of three homes in their lifetime is at a distinct disadvantage when engaging with a professional real estate sales person.
When it comes to buying or selling real estate, here are 5 common misconceptions that people have when working with successful professional real estate sales representatives:
1. They believe the real estate sales process is always "rushed." Don't be tempted by agent statements that in many real estate circles have become "cliche." Some agents will represent that they have a buyer in order to get a listing, and once they secure the listing agreement, the prospect disappears. "My prospect is leaving out of town" or "is in town for only a day" is meant to compel a showing or rush a signature. Odds are that the prospective purchaser does not have a Leer Jet waiting for them on the tarmac. Remember, professional real estate agents are commissioned sales people with an agenda that sometimes causes them to "oversell" their own client. Never feel rushed to sign any documents without understanding the terms and consequences of an agreement.
2. They confuse the number of real estate listings with the importance of closings. The number of listings an agent has does not necessarily reflect the agent's experience in getting tough deals closed. Ask a prospective agent how many deals they have closed over the past years. It's a great indicator of how they and their staff deal with problems that almost invariably arise in real estate. No matter how glitzy the marketing efforts, selling real estate must equate into real estate closings – otherwise what's the point?
3. They accept agent referrals without further evaluation. The real estate transaction requires a number of services from third-party providers. Title insurance companies insure the legal title to the property for owners. Mortgage applications can be originated in the same office as the real estate company. Federal law requires that any affiliation between a real estate broker and a third party provider to a transaction be disclosed. However, experienced agents have providers that they frequently use and are not required to disclose, such as an on-going business relationship. Take for instance, home inspectors (always have the property inspected) who determine the overall condition of a property for a buyer. They are largely dependent upon referrals from agents. Therefore, buyers should ask the nature of the agent's relationship with their referral in order to avoid later disappointment should they find an opinion or service was improperly influenced.
4. They accept legal advice from agents. Disclaimer: There are highly experienced agents who are as knowledgeable as some attorneys on how the law treats real estate, but they are smart enough to reserve comments on the law with clients. This is because agents that fail to heed the distinction between advising on real estate marketing and dispensing legal advice sooner or later find themselves in hot water for practicing law without a license. Agent opinions regarding the legal consequences of property title, legal relationships, and legal definitions cannot be relied upon. Don't assume than an agent has any "legal knowledge" just because they handle large amounts of paperwork common in real estate deals. The sure-fired litmus test for when to seek competent legal advice is when an agent or other party to the transaction says "you don't need to get an attorney."
5. They feel they're stuck in their agency agreement. Once a seller signs a listing agreement or a buyer hires a buyer's agent, a legal relationship is created. However, in most cases, the relationship can be terminated long before the agency agreement was written to expire. People often confuse an agreement's expiration date with the agent's legal protection period. The protection period is the time where an agent is entitled to their full commission should a seller or buyer close a transaction with someone the agent had found during the existence of the agreement. This prevents people from taking advantage of an agent's hard work and commonly extends 180 days from the date the relationship between the agent and client terminates.
Numerous variables affect the successful outcome of a real estate deal. Having an experienced professional tops the list. Good agents know how to usher a deal through completion with as little friction as possible. But the most satisfying deals are done when all parties to a transaction are kept well- informed and have reasonable expectations about the outcome as set by their advisers.
This is a wonderful piece by Michael Gartner, editor of newspapers large and small and president of NBC News. In 1997, he won the Pulitzer Prize for editorial writing. It is well worth reading, and a few good chuckles are guaranteed. Here goes...
My father never drove a car. Well, that's not quite right. I should say I never saw him drive a car.
He quit driving in 1927, when he was 25 years old, and the last car he drove was a 1926 Whippet.
"In those days," he told me when he was in his 90s, "to drive a car you had to do things with your hands, and do things with your feet, and look every which way, and I decided you could walk through life and enjoy it or drive through life and miss it."
At which point my mother, a sometimes salty Irishwoman, chimed in:
"Oh, bull shit!" she said. "He hit a horse."
"Well," my father said, "there was that, too."
So my brother and I grew up in a household without a car. The neighbors all had cars -- the Kollingses next door had a green 1941
Dodge, the VanLaninghams across the street a gray 1936 Plymouth, the Hopsons two doors down a black 1941 Ford -- but we had none.
My father, a newspaperman in Des Moines , would take the streetcar to work and, often as not, walk the 3 miles home. If he took the streetcar home, my mother and brother and I would walk the three blocks to the streetcar stop, meet him and walk home together.
My brother, David, was born in 1935, and I was born in 1938, and sometimes, at dinner, we'd ask how come all the neighbors had cars but we had none. "No one in the family drives," my mother would explain, and that was that.
But, sometimes, my father would say, "But as soon as one of you boys turns 16, we'll get one." It was as if he wasn't sure which one of us would turn 16 first.
But, sure enough, my brother turned 16 before I did, so in 1951 my parents bought a used 1950 Chevrolet from a friend who ran the parts department at a Chevy dealership downtown.
It was a four-door, white model, stick shift, fender skirts, loaded with everything, and, since my parents didn't drive, it more or less became my brother's car.
Having a car but not being able to drive didn't bother my father, but it didn't make sense to my mother.
So in 1952, when she was 43 years old, she asked a friend to teach her to drive. She learned in a nearby cemetery, the place where I learned to drive the following year and where, a generation later, I took my two sons to practice driving. The cemetery probably was my father's idea. "Who can your mother hurt in the cemetery?" I remember him saying more than once.
For the next 45 years or so, until she was 90, my mother was the driver in the family. Neither she nor my father had any sense of direction, but he loaded up on maps -- though they seldom left the city limits -- and appointed himself navigator. It seemed to work.
Still, they both continued to walk a lot. My mother was a devout Catholic, and my father an equally devout agnostic, an arrangement that didn't seem to bother either of them through their 75 years of marriage.
(Yes, 75 years, and they were deeply in love the entire time.)
He retired when he was 70, and nearly every morning for the next 20 years or so, he would walk with her the mile to St. Augustin's Church. She would walk down and sit in the front pew, and he would wait in the back until he saw which of the parish's two priests was on duty that morning. If it was the pastor, my father then would go out and take a 2-mile walk, meeting my mother at the end of the service and walking her home.
If it was the assistant pastor, he'd take just a 1-mile walk and then head back to the church. He called the priests "Father Fast" and "Father Slow."
After he retired, my father almost always accompanied my mother whenever she drove anywhere, even if he had no reason to go along. If she were going to the beauty parlor, he'd sit in the car and read, or go take a stroll or, if it was summer, have her keep the engine running so he could listen to the Cubs game on the radio. In the evening, then, when I'd stop by, he'd explain: "The Cubs lost again. The millionaire on second base made a bad throw to the millionaire on first base, so the multimillionaire on third base scored."
If she were going to the grocery store, he would go along to carry the bags out -- and to make sure she loaded up on ice cream. As I said, he was always the navigator, and once, when he was 95 and she was 88 and still driving, he said to me, "Do you want to know the secret of a long life?"
"I guess so," I said, knowing it probably would be something bizarre.
"No left turns," he said.
"What?" I asked
"No left turns," he repeated. "Several years ago, your mother and I read an article that said most accidents that old people are in happen when they turn left in front of oncoming traffic..
As you get older, your eyesight worsens, and you can lose your depth perception, it said. So your mother and I decided never again to make a left turn."
"What?" I said again.
"No left turns," he said. "Think about it.. Three rights are the same as a left, and that's a lot safer. So we always make three rights."
"You're kidding!" I said, and I turned to my mother for support.
"No," she said, "your father is right. We make three rights. It works." But then she added: "Except when your father loses count."
I was driving at the time, and I almost drove off the road as I started laughing.
"Loses count?" I asked.
"Yes," my father admitted, "that sometimes happens. But it's not a problem. You just make seven rights, and you're okay again."
I couldn't resist. "Do you ever go for 11?" I asked.
"No," he said " If we miss it at seven, we just come home and call it a bad day. Besides, nothing in life is so important it can't be put off another day or another week."
My mother was never in an accident, but one evening she handed me her car keys and said she had decided to quit driving. That was in 1999, when she was 90.
She lived four more years, until 2003.. My father died the next year, at 102.
They both died in the bungalow they had moved into in 1937 and bought a few years later for $3,000. (Sixty years later, my brother and I paid $8,000 to have a shower put in the tiny bathroom -- the house had never had one. My father would have died then and there if he knew the shower cost nearly three times what he paid for the house.)
He continued to walk daily -- he had me get him a treadmill when he was 101 because he was afraid he'd fall on the icy sidewalks but wanted to keep exercising -- and he was of sound mind and sound body until the moment he died.
One September afternoon in 2004, he and my son went with me when I had to give a talk in a neighboring town, and it was clear to all three of us that he was wearing out, though we had the usual wide-ranging conversation about politics and newspapers and things in the news.
A few weeks earlier, he had told my son, "You know, Mike, the first hundred years are a lot easier than the second hundred."
At one point in our drive that Saturday, he said, "You know, I'm probably not going to live much longer."
"You're probably right," I said.
"Why would you say that?" He countered, somewhat irritated.
"Because you're 102 years old," I said..
"Yes," he said, "you're right." He stayed in bed all the next day.
That night, I suggested to my son and daughter that we sit up with him through the night
He appreciated it, he said, though at one point, apparently seeing us look gloomy, he said: "I would like to make an announcement. No one in this room is dead yet"
An hour or so later, he spoke his last words:
"I want you to know," he said, clearly and lucidly, "that I am in no pain. I am very comfortable. And I have had as happy a life as anyone on this earth could ever have."
A short time later, he died.
I miss him a lot, and I think about him a lot. I've wondered now and then how it was that my family and I were so lucky that he lived so long.
I can't figure out if it was because he walked through life, Or because he quit taking left turns. "
Life is too short to wake up with regrets. So love the people who treat you right. Forget about the ones who don't. Believe everything happens for a reason. If you get a chance, take it & if it changes your life, let it. Nobody said life would be easy, they just promised it would most likely be worth it."
Since the Great Recession of 2008, consumers and business owners have found their credit lines all but frozen or even closed by their banks. But recently there are signs that the credit pendulum is swinging back now that real estate values are starting to increase in many areas of the country. The Wall Street Journal reported the noticeable increase in equity loans in their May 2014 article, "Borrowers Tap Their Homes at a Hot Clip". Lenders are creeping back –looking to tap into newly revealed real estate equity. Consumers and business owners are looking for ways to consolidate debt with an equity line of credit (“ELOC”) What a perfect opportunity...or is it? Here are 4 things to consider before taking an ELOC from reinvigorated banks:
1. New Exposure. Proponents of consolidating credit card debt and other personal loans with an ELOC like to state that consolidation improves one's credit score because it provides regular fixed monthly installment payments while reducing monthly outlay. True, installment loans and ELOCs are treated more favorably by credit bureaus, but an ELOC is secured by the equity of collateral such as a car, business assets, or most importantly, real estate. Credit cards and personal loans do not secure collateral and therefore, in the event of a default, significant assets such as real estate or a car are not at risk. Borrowers increase the exposure of their assets to collection by using an ELOC.
2. New Tripwires. Banks and lenders experienced huge losses with ELOCs in the recent past and have “tightened -up” their lending agreements since 2008. The newer line of credit agreements contain more restrictive default provisions. For instance, a bank can freeze a credit line or call your obligation due in the event of a “global default”. This means that even though one is current on payments with their line of credit, a default on any other credit cards or obligations can trigger a "default tripwire'. For those borrowers who say that would never happen to them, consider the past 6 years.
3. More Restrictions. ELOCs contain balloons. This means that while monthly payments on an ELOC can be spread out over 240 months (20 years) or 360 months (30 years), the loan balance is due in 60 months or five years. Proponents of ELOCs state that by consolidating loans with a ELOC, debtors can pay off their loans faster by having a fixed payment over a fixed time period. But balloon payments prevent the loan from fully amortizing and, as explained earlier, banks can call these loans due even earlier, creating more financial difficulty for the borrower. If the main purpose of taking out an ELOC is to consolidate credit card debt, consider other options for paying down credit card balances.
4 . Federal Student Loans. When consolidating federal student loans into an ELOC, or for that matter into a private student loan, debtors will lose certain protections such as a graduated loan repayment, forbearance, or deferment. However, federal student loans are not discharge-able in a bankruptcy, where as consolidation loans, (secured or unsecured) can be discharged. Take note that in the event of a default, no matter how the loan is categorized (secured or unsecured, federal or private) most good lenders are motivated to collect repayment, and so provided that a debtor has a temporary hardship, they should consider payment arrangements or a forbearance agreement.
As with all bank loans, terms and provisions that control the lending relationship are recited in a loan agreement. Before signing, read and understand the agreement. Loan agreements by their very nature are long and the terminology is foreign to most borrowers. Get an explanation about your obligation from an objective third party – namely an attorney experienced in lending law. There is an adage, “if you think hiring a professional is expensive, wait until you hire an amateur”. If the consolidation effort ever goes bad, be assured that the debtor will be called upon to pay.
Author: Kaitlin Funaro, MarketPlace Media
We’ve all seen the late night infomercials promising to lift us out of a mountain of crushing debt: It’ll only take a phone call. Just three minutes of your time. And you, too, could be debt free forever.
You don’t need to consult with your financial adviser to figure out that calling that 1-800 number probably isn’t going to solve all of your money woes.
But is there a safe and practical way to consolidate a big chunk of consumer debt?
Gerri Detweiler, the director of consumer education for Credit.com says absolutely. You just need to know where to look.
Debt consolidation vs. credit counseling
“A lot of those ads that you see are not actually companies that will consolidate your debt,” Detweiler says.
"They’re credit counseling agencies and they will work with your creditors to get you on one monthly payment, lower your interest rate and lower your payments but they aren’t actually paying off your debt like a true consolidation loan would do.”
Instead, a debt consolidation loan is one new loan that will pay off all your existing debt, put you on a fixed monthly payment with a set plan for when the debt will be gone. “With a consolidation loan you know, in three, four or five years this loan will be paid off.”
So where do you get one?
Oh, how things have changed. Traditionally if you wanted a consolidation loan you’d have to apply through your bank or credit union or even tap into your home equity.
"But that industry has changed dramatically in the past few years thanks to the P2P, or peer-to-peer lenders, who take money from investors like you and me and lend it to other people who need to consolidate their debt.”
You can save money, Detweiler says, by using a P2P lender because the interest rates typically are much lower.
How to spot a scam
We’re used to doing everything online these days but when it comes to giving out personal financial information here’s one area where we need to be extra careful.
“There are sites out there that look very professional and they typically promise money with very little in terms of credit standards,” Detweiler says.
“What they’re doing is they’re gathering your personal information and turning around and selling it to scammers. Even if you don’t get a loan from them there’s a good chance that in a year or two you’re going to start hearing from debt collectors who are telling you that they’re going to have you arrested or sue you in court for paying this debt, whether or not you took out the debt.”
If you’re considering consolidation for student loans you need to be even more cautious. Head directly to the Department of Education for information and bypass any other companies who claim they can consolidate your student loans.
“The big risk with consolidating student loans is you may lose some of the protections you have right now with federal student loans including graduated repayment, deferment and forbearance,” she says.
“If you consolidate a federal student loan with a private student loan you lose those protections.”
Speedometer confusion, By Seth Godin - Entrepruner /Author / Motivator of New World Economy
The number on the speedometer isn't always an indication of how fast you're getting to where you're going.
You might, after all, be driving in circles, really quickly.
Campbell's Law tells us that as soon as a number is used as the measurement for something, someone will get confused and start gaming the number, believing that they're also improving the underlying metric, when, in actuallity, they're merely making the number go up.
Here are a few measurements that are often the result of speedometer confusion:
Book sales vs. Impact
Money vs. Happiness
Twitter followers vs. Anything
Money raised vs. Votes earned
Weight vs. Health
Income vs. Skill
Facebook likes vs. Liked
Tenure vs. Competence
Length vs. Quality
Faster? How about better?
Although the economy appears to be on the mend, many business owners still struggle. Especially those with commercial loans taken between 2007 and 2009. They either received, or will receive bank demands that their loans are now due in full. Commercial loans typically have 5 year maturities and most banks will not provide more than a one year loan extension of the maturity date to pay back a loan. For example a business owner who took a loan out in 2008 with a 2013 maturity, and received a one year extension is most certainly feeling intense pressure from their bank to pay back the money --this year!
There are 3 realistic options that a business owner should consider when their bank demands payment of the loan in full:
1. Pay off the loan. In today's restrictive banking climate refinancing sounds much easier than it really is. Banks infrequently rewrite their own commercial loans upon maturity. This is because the financial position of many small businesses has diminished since 2007. Also lending guidelines were more' flexible' then, with commercial properties reportedly having higher values. So unless a business owner has a load of cash to pay off the loan, refinancing with the same bank is almost impossible, and securing funds from an outside bank is increasingly difficult.
2. Negotiated Exit. Be assured that if a loan has matured and the borrower is not prepared to pay if off, the bank will begin a lawsuit. Defending a law suit can be expensive, but in most cases it will only delay the inevitable. Absent real legal defenses for bank misconduct or the mishandling of a loan, the best approach for a business owner is to negotiate a realistic "exit" from the bank with the assistance of experienced counsel. There are a numerous variables for consideration when negotiating a forbearance or settlement agreement, so unless a business owner is familiar with bank work out or special asset protocol, retain an experienced attorney.
3. Reorganization. Chapter 11 reorganization can be expensive, but it is an excellent remedy for business owners when a bank acts in bad faith or has become a relentless and unreasonable collector despite all of the borrower's repayment efforts. . A Chapter 11 bankruptcy should be a final option, but it will halt collection actions and enable a business owner to restructure its business debt under court supervision. Chapter 11 legal practice is highly specialized and complex so seek a business bankruptcy attorney who can demonstrate past results.
There are few choices a business owner can make when their bank issues a demand for repayment: refinance, fight, negotiate or file business bankruptcy. Doing nothing however, is unacceptable. It's an all -around recipe for financial disaster, and while a business owner may experience temporary paralysis upon receipt of a bank demand, weigh the options, seek experienced representation and take action.
When Is It Acceptable to Forgo Payments to Your Creditor or Landlord?
Credit card, loan and lease agreements contain terms that regulate the debtor / creditor or landlord / tenant relationship. Not surprisingly a large portion of these contracts are dedicated to the creditor's or landlord's rights in the event that the debtor or tenant defaults under the terms of an agreement.
Unfortunately, a job loss, a reduction in income, an illness or other unforeseeable event can cause a payment default. In other cases, a lender's or landlord's action or inaction can make it difficult for one to continue making payments. But no matter the reason, without receipt of timely payments, its certain that one's creditor will declare a default. Sure, the easiest way to cure a default is to catch up on back payments. But here are 3 situations when it is inadvisable to send money after a "default" is declared:
1. Settlement Proposal. When a debt collector calls and offers to settle a past due balance for a reduced amount, make sure that they provide the terms of the offer in writing no matter how appealing the settlement. Don't be pressured by their arbitrary deadlines into paying over the phone without first reviewing written settlement terms. With today's technology, obtain the settlement and release through email. Otherwise, they can use "snail mail." Review the written offer and if agreeable, make payment over the telephone. Making a payment based upon a debt collector's verbal representation is unacceptable and if you do, don't be surprised to learn that your original outstanding balance was reduced by the payment, and nothing further.
2. Landlord -Tenant Dispute. When a landlord repeatedly fails to address a problem under the terms of the lease, withholding rent may be the only leverage a tenant feels they have. But a tenant's failure to make monthly payments is legal grounds for eviction. If a tenant feels compelled to withhold rent because of a legitimate issue, then the best method to show good faith is for the tenant to set up an escrow account at their bank or credit union. Designate the account as the rent account for the landlord's benefit. Maintaining an account without verifiable deposits is pointless. In the event of an eviction, this demonstrates to a judge that payments are being made under the terms of the lease but that the landlord's corrective action is necessary. (By the way, if it gets this far, its time to find a new rental.)
3. Mortgage Lender. When a mortgage company declares the mortgage in default, this means the borrower is in jeopardy of losing their home to foreclosure. But once a default is declared, all back payments and any applicable administrative fees become due. Sending in partial payments will not cure the default, nor will it stop a scheduled foreclosure sale unless the lender or its attorney has agreed to accept the partial payments. Seek out legal assistance to help you negotiate a payment plan to reinstate your mortgage.
One item common to all three of the above scenarios is the need to have written documentation of the original agreements and all subsequent agreements in writing. Read and understand the terms that bind the parties. Remember, don't accept explanations about terms and conditions of a contract from the very party that at a later date could be one's adversary. Finally, too many times people fail to read the provisions of the initial agreement thinking that the terms therein will not apply to them, yet they act surprised when these same terms are enforced against them.
About the Author: Since 1990, David Soble has represented lenders, loan servicers, consumers and business owners on residential and commercial real estate, finance and compliance issues. He has been involved in thousands of real estate transactions, being responsible for billions in real estate loan portfolios throughout his career. He has over 24 years of real estate and lending law experience to support his tempered cynicism. Disclaimer: You should not rely or act upon the contents of this article without seeking advice from your own attorney.
I recently met two successful business partners in the real estate investment business. They were frustrated about a real estate transaction they have been involved in for a while. They proceeded to tell me how many hours they spent on doing the legal research that ultimately brought them to my conference table. They said they spend an estimated 300 hours of their time researching whether they had a case or not. That's 300 hours! After reviewing their documents, the time it took for me to tell them that they did indeed have a legitimate legal concern and claim? 45 minutes.
Why is this so important? Let's assume the 300 hours is pretty accurate. At the bare minimum they make $100,000 per year. With 2080 hours a year, that means a person makes about $50 hourly. 300 x 50 is $15000. One investor could have used their time more wisely and spent the equivalent of 10% of this money with an expert, who would not have only reviewed the matter, but given a professional legal opinion regarding ready and available courses of action.
Imagine what better deals these partners could have found using their 300 hour on research, due diligence, and networking.
One deal would more than adequately have paid for the cost of a legal opinion multiple times over.
My point: Bathroom surgery can be messy and expensive. The scenario above brings new meaning to the adage..."if you think dealing with a professional is expensive, just wait until you hire an amateur. "
Believe it or not, house flipping is back with the housing recovery. And while there’s money to be made from flipping houses, there's also money to be made from selling things to would-be flippers. Flipping workshops are crowded again.
At a recent workshop just outside Baltimore on a recent Saturday, Terry Royce, who’s been flipping houses for seven years, was sharing some of his secrets. Everything from how to find a seller, or a buyer, even time management tips.
“I always like to say, this is work, stuff gonna go wrong," he said later. "It is. And it’s the reality.”
It was Royce’s first workshop. He charged $97 for a morning seminar and afternoon bus tour of some homes that are being flipped.
Zane Watkins was among those on the bus. He said he’d been to four or five other workshops, one that cost him and his wife $300 and ended with a hard sell for another series of seminars.
“They had three different versions of the package,” he recalled. “One was like $10,000, and $15,000 and $22,000 that you would pay overall.”
The Better Business Bureau rates these types of workshops. It's now tracking 130 of them.
“Of that, only one is a BBB accredited business with an A," said spokeswoman Katherine Hutt. "We have one that has a B+, 13 that have Cs and all the rest have Ds or Fs.”
Hutt said the BBB gets several hundred complaints a year from consumers saying they didn’t get what they paid for from flipping workshops. And, when they tried to get their money back, they ran into a brick wall. Hutt said, just like buying a home, when it comes to flipping workshops, it’s buyer beware.
“Where is -As is” is a real estate term whereby the subject property is being sold in its present condition or current state. A Purchaser is taking a property with the understanding that there will be no “moving, cutting, shifting, replacing, redoing, changing, repairing, relocating, or refacing” anything related to the property. However, it is a mistake for a Purchaser to think that since they are buying a property in its current state, that they should forgo a property inspection or waive receipt of a Seller 's Property Disclosure.
A property inspection may reveal property conditions unknown by a Seller or worse, known but undisclosed by the Seller. Unless a purchaser is an experienced builder or contractor, its important to always have a property inspection. Defects discovered through a property inspection may help with price negotiations regardless of a Seller's intention to sell "as is".
In Michigan residential sales, Sellers must always provide the Purchaser with a Seller's Disclosure, and I strongly encourage commercial real estate purchasers to receive the same. Depending on how a Seller completes the disclosure, if a Purchaser discovers defects that are inconsistent with a Seller's earlier representations, there could be grounds for Seller liability for misrepresentation.
People who were shown a picture of their "future selves" tend to save more (by 20%) than those who are shown pictures of their current selves. Studies show that as a person's wealth increase, empathy decreases. Unreal...Love Ted Talks!
Does your landlord report to the credit bureau?
WASHINGTON, July 6, 2013 – In today’s economy, it’s a universal truth: a good consumer credit score is one thing that most if not all people consider to be of great importance. Or if they don’t, they certainly should. That’s because our individual credit scores can have an effect on numerous significant aspects of our lives including our finances, our jobs and even the homes in which we will live, either by renting or making mortgage payments.
Speaking of renting, did you ever consider the relationship between your landlord and credit bureaus? Did you know that they can both actually have an effect on your credit score?
It is true that landlords can make reports to the credit bureaus . In 2011, one of the major credit reporting agencies in the country started including residential rental payment data in credit reports. This paved the way for millions of consumers to improve their credit with regular timely rental payments.
In response to this, months later, a number of websites started offering related services to assist consumers wishing to take advantage of their rental payments to help increase their credit scores.
This is quite significant because the U.S. Census Bureau estimates that there are about 100 million renters in the country, approximately one-third of the total population of the United States. So it is becoming obvious that there is a real need to help show the true potential credit rating of people who pay their rent on time.
Pay your rent, help boost your credit score
There are several ways by which your regular and on-time rental payments can help improve your credit. For example, RentBureau, under the credit reporting agency Experian, uses rental payment data to help people who are not credit users to increase their credit score.
Similarly, information from PRBC (formerly Payment Reporting Builds Credit Consumer Reports), such as bill payment data on rent, cable, insurance and even daycare provider payments, is being included in credit scores.
These kinds of services aim to help consumers who were previously neglected but creditworthy, but did not have the usual forms of credit, like bank credit cards, personal loans or mortgages.
The importance of credit monitoring
If you are among the estimated 100 million renters in the country, it would probably make sense to perform regular credit monitoring. Why? Well, the landlords may also be checking your credit report as they generally want to know your credit scores too.
According to Kathy Braddock , co-founder of independent real estate firm Rutenberg Realty in New York, it is “perfectly normal” for landlords to request a credit report from prospective renters, so they “can see where their standing is in the financial community.”
With this in mind then, it would be quite helpful if consumers made checking their credit scores a regular habit.
On credit reports and credit scores
If you’re looking for other reasons to check your credit report, consider this: Millions of other people do it, so you most probably should too. In fact, the Consumer Financial Protection Bureau, a watchdog agency formed in July 2012 under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, reports that credit reporting companies issue over“3 billion consumer reports a year and maintain files on more than 200 million Americans.”
Credit reporting companies perform a number of tasks, such as monitoring the number and types of credit accounts consumers use, how long these have been open, and whether or not consumers have made timely bill payments. They can also create reports that show your credit history, unpaid balances and other things that potential landlords (and lenders) may want to know.
Checking your credit report regularly will also be useful because if you detect any errors in it, you can report them and have them corrected immediately. This is important. Many times, errors in credit reports can also mean you have become a victim of identity theft or credit scams, which can lead to a world of other problems.
Other ways to help improve your credit score
Aside from paying your rent on time and regularly checking your credit reports, here are other things you can do that may help raise your credit score:
In the end, whether you are renting or not, it pays to monitor your credit and do all you can to help raise your credit score.
By Trevor Toski, Proven Resource Research Analyst
1 - Flipboard Manages all of your magazine subscriptions and newspapers into an easy to use, streamlined interface found all in one place. Articles and excerpts are conveniently arranged and organized by topic.
2 - Evernote This app acts as a centralized hub of data that is connected to all of your devices, allowing access from any device you own. Photos, documents, voice reminders, and more can be stored here.
3 - Mint.com Your own personal accountant in your pocket. Mint.com keeps tracks of your monthly balances, transaction history, and financial information without the hassle of paper receipts.
5 - Park Me Right: Car Locator There's nothing quite like getting lost amidst a forest of vehicles when trying to find where you parked. This app, using a combination of GPS and camera functions, will find your car for you.
When it comes to signing a loan contract, whether it be for real estate , a lease, a car, boat or any type of service, most people will sign a contract with the intention of complying with its terms. In the event a borrower defaults on a loan agreement , one of the more potent provisions in a lender's arsenal of legal remedies is to pursue the borrower on their personal loan guaranty.
A loan guaranty is an agreement by which one person assumes the responsibility of assuring payment of another's debts or obligations . A guarantor can be an individual or a company. In the event of default , the guarantor will be called upon to make the payments, pay the entire loan balance, or step in to perform the required service. Under a loan guaranty, a guarantor, if not the borrower, is not obligated on a loan until a default is actually declared by the lender.
There are four ways to limit a guarantor's legal and financial exposure, and all parties to the agreement must agree to the terms of the guaranty before signing. The four ways to limit exposure under a loan guaranty are:
1. Place a limit on the amount of the guaranty. For example, the guarantor agrees to be responsible for the first $100,000 of a $500,000 loan.
2 . Reduce the amount of the loan guaranty over time. For instance, the guarantor will not be held responsible for the loan once the borrower has performed on the note for a specified period of time, say 48 months. Or after the first three years, the amount of the guaranty is reduced by $X amount of dollars.
3. Make the guaranty enforceable against the guarantor only after the lender has sought all other legal remedies against the borrower. Only then is the guarantor responsible for the amount that the bank could not collect from the borrower.
4. Multiple loans. Guarantors should use caution if and when a borrower has multiple loans with a particular bank. Make sure that the guaranty specifies the loan obligation that it intends to secures. There should be no confusion that when a loan is paid off the obligation is extinguished. Otherwise it is feasible that the guaranty could continue to secure any of the remaining multiple loans.
On a final note, tearing up a signed loan guaranty while standing in the middle of a bank lobby does not relieve a guarantor from their obligation.
Agreeing to be a loan guarantor is a serious legal and financial responsibility. It is a legal arrangement that should not be entered into lightly. It's exciting to be approved for a long awaited business loan or equity line of credit. Defaulting on a loan is the last thing business owners and consumers contemplate when borrowing money, yet the provisions written in the loan agreement are there in the event that one does. Seek competent legal representation before you close your loan . Always remember that bank attorneys drafted the loan documents.
About the Author: Since 1990, David Soble has been a real estate and finance attorney in Ohio and Michigan. He advises national banks, lenders, loan servicers, consumers and business owners on residential and commercial real estate, finance and compliance issues. He has been involved in thousands of real estate transactions, being responsible for billions in real estate loan portfolios throughout his career. And while he may at times seem overly harsh, he has 23 years of real estate battle scars to support his tempered cynicism.
Tackling a legal or financial problem can wear on one's psyche. Proven Resource managing attorney explains how to address the issues that commonly weigh people down.
Nothing is worse than learning that a potential client has ignored a legal or financial problem that could have been easily resolved had they just paid attention to some lender correspondence, or had entrusted their issue to the right professional. True, sometimes this is easier said than done . When it comes to what the Federal Reserve Chairman Ben Bernanke calls "the worst financial crisis in modern history," there is little that struggling business owners or consumers could have done to prepare them for their financial or legal challenges. People experiencing overwhelming financial or legal matters are quite often stuck battling some degree of depression or anxiety.
Here are 5 professional recommendations that will help loosen the vise of "economic" and "legal" depression, and increase the prospects for a positive resolution to one's legal or financial problem:
1. Stop ignoring your mail. Creditors are required by law to send written notices informing delinquent borrowers of important legal rights and critical time limits to exercise these rights. Missing a deadline could cause one to forfeit these various rights and defenses. Recognize that it is much more difficult to reverse a judgment or re-open a legal proceeding than it is to initially respond to a complaint. Take for instance, a mortgage default; certain federal and state time lines allow a borrower to have their mortgage modification request re -evaluated even after it was denied at the underwriting level. Miss that cut-off date and it is near impossible to reapproach the lender.
2. Answer your phone. It sounds counter - intuitive, but instead of letting numerous creditor calls go unanswered, only to increasing one's anxiety, answer the collection call once and tell the caller to stop calling pursuant to federal law ( Fair Debt Collection Practices Act ). Should a debt collector call after that first warning they expose themselves to a lawsuit. Instead of focusing on the fear and anxiety redirect the negative energy into developing a plan to seek professional assistance.
3. Develop a plan. Nothing makes lenders and collectors feel better about a delinquent file than when the borrower offers up a realistic plan on how they will repay a loan. Filing bankruptcy should be the last consideration. It benefits neither party. Take some time to sketch out a repayment plan. In matters more serious than some late medical bill or credit card payments, say a mortgage or commercial loan , it is better to make a timely and reasonable proposal to the lender before they unilaterally proceed to invoke their legal remedies and impose even less favorable terms.
4. Get organized. Take correspondence and documents and sort them by creditor. Stack them in chronological order and separate them into manila folders. This will make meetings with an adviser more efficient. Most importantly, going forward, keep a written log of who said what and when. Never discount a written log because it keeps creditors and collectors accountable for their words and actions.
5. Find the right expert . The Martindale Directory is a legal directory that lists over 100 areas of law and another 81 sub specialties. Understand that not all lawyers are the same. A divorce attorney is not a real estate attorney and a real estate attorney may not be a commercial real estate attorney. The right professional will help you develop a plan of action suitable for one's situation. Now is not the time to become one's own "jail house" lawyer. It takes years of experience to refine legal skill and knowledge. Time is not a luxury when it comes to addressing imminent financial or legal hardship.
Conclusion: Recognize that life is not static. Ghandi once said, "Every worthwhile accomplishment, big or little, has its stages of drudgery and triumph: a beginning, a struggle and a victory." Move forward by taking just one of the five steps listed above. Be assured that things will only improve once action is taken.
About the Author: Since 1990, David Soble has been a real estate and finance attorney in Ohio and Michigan. He advises national banks, lenders, loan servicers, consumers and business owners on residential and commercial real estate, finance and compliance issues. He has been involved in thousands of real estate transactions, being responsible for billions in real estate loan portfolios throughout his career. He has 23 years of real estate and lending law experience and the battle scars to support his tempered cynicism.
Teresa Giudice Fraud Update: ‘Why Is This Happening To Me?’ ‘RHONJ’ Star Wonders [VIDEO]
on September 29 2013 11:19 PM
“The Real Housewives of New Jersey” star Teresa Giudice tearfully wondered why she and her husband are facing legal prosecution on Andy Cohen’s “Watch What Happens: Live” Sunday night. She and her husband Giuseppe “Joe” Giudice are accused of bank fraud, bankruptcy fraud, mail fraud and mortgage fraud, among other charges in a 39-count indictment returned by a federal grand jury on July 29.
After “RHONJ” was shown on Bravo Sunday night, the reality-television star spoke out for the first time on “WWHL” since she and her husband entered pleas of not guilty to the slew of fraud charges pending against them. When the host asked Giudice how she felt about the allegations and the possibility of jail time, she broke down in tears.
“You go through things in life, I don’t know why, I mean I’m asking, ‘Why is this happening to me?’” she said.
Giudice said her daughters gave her strength: “I can’t fall apart, Andy, I mean my daughters -- they mean the world to me,” she said. The couple have three daughters together: Gia, 12; Gabrielle, 9; and Milania, 8.
The 41-year-old reality-TV star was even able to find a silver lining in the 39-count indictment that could reportedly get them 50 years in jail: “Maybe it’s something my daughters could learn from.”
Although it is possible the Giudices could face jail time, Alfredo F. Mendez, director of the white collar criminal law and governmental investigations practice at Abrams Fensterman in New York, told the International Business Times in a phone interview , that the number “50” is arbitrary and not definite.
“Sentencing is tricky and sophisticated in the federal courts,” the legal expert said, adding that any sentence “could be less,” assuming either or both are convicted. And, obviously, they must be found guilty “beyond a reasonable doubt” to be given time in the slammer.
“Intent is a key element the government has to prove beyond reasonable doubt to convict someone,” Mendez said.
Detroit, Michigan (PRWEB) August 29, 2013
The Statute of Frauds is based on old English law and requires that certain contracts be in writing in order to be enforceable against the parties to the contract. The statute applies to real estate sales and transfers or leases for more than a year. The Statute of Frauds is a misnomer and instead should be called the statute "against" frauds since its purpose is to memorialize a transaction to writing, preventing confusion and fraud.
But "getting it in writing" is not always easy. Sometimes people become a party to a contract because they feel rushed or simply take "the word" of the other party or agent. Disagreements abound between strangers, professionals and family members alike, when real estate agreements are not reduced to writing.
Here are 5 steps that buyers, sellers, landlords, tenants, real estate agents, investors, borrowers, and lenders can take to reduce legal contention when working with a real estate agreement:
1. Real estate closings. Reduce surprises at a real estate closing by asking for a preliminary closing package, including a settlement statement, several days before the scheduled closing. Another name for a preliminary closing package is an "attorney's package". A lender, mortgage broker, title company or real estate agent should always comply with the request to provide for advanced documentation.
2. The walk-through. A new home buyer should always go through a final walk- through in advance of a home closing. Likewise, a tenant should do a walk -through with a check list noting any and all repairs or issues with the premises. Never take someone's word that a noted repair will be done. Have the responsible agent put it in writing with a time set for completion. Make sure to retain a copy of the checklist.
3. Loans. When applying for a mortgage, applicants are required to receive a written estimate of their anticipated loan costs. Known as a Good Faith Estimate of Settlement Charges ("GFE"), it must be sent to applicants within 3 days of making an application, and its purpose is to allow the consumer to compare the mortgage fees from different mortgage companies as well as to prevent sticker shock. Unless there are problems with a loan applicant's initial qualifications, the terms of the final loan should be relatively similar to the final loan approval, and the terms of the loan should remain the same at the closing.
4. Modifications. Changes to an original loan term, real estate purchase or lease agreement require both parties to sign and agree to the proposed changes. These signed changes are evidenced on a amendment or addendum. Changes to a written contract must be agreed to by both parties and evidenced by their signatures in order for the change to be valid. Sometimes, just a term or date may be changed. In that case, both parties need to initial the changes.
5. Specificity. When reviewing a real estate agreement (or any contract for that matter) if there are any ambiguous terms, it's best to take the time up front and get specific with a term or provision so as to reduce headaches and confusion later. For instance, a landlord may provide that a leased apartment is for three tenants. Name each tenant. A home buyer may be unsure if a household item they like in a home will be included in the purchase. They should specify it in the offer. Don't rely on oral promises. Rely on the written word.
Conclusion. Reducing an agreement to writing is important not because people aren't honest, but for when things don't go as planned. When there is a problem, the parties can refer to the contract and what was meant and memorialized in writing. Each day numerous lawsuits are filed on behalf of parties that dispute the meaning and intent of written contract provisions. So imagine the legal problems and financial angst generated by disagreements surrounding an oral real estate agreement. Taking the steps as discussed above will ensure a smooth outcome to one's real estate transaction.
Real Estate and Finance Attorney David Soble Warns: Small Business Owners and Consumers Must Stop Agreeing To These 5 Contract Provisions
Detroit, Michigan (PRWEB) August 01, 2013
When it comes to signing a contract, whether it be for real estate , a loan, a lease, a car, boat or any type of service, most people will sign a contract with the intention of complying with its terms.
They enter into a contract feeling that its provisions would never apply to them, because they have no intention of defaulting. But in the event of unforeseen circumstances, these terms and provisions are meant for when one defaults.
Here are the five harshest provisions commonly found in financing agreements. They are listed in no particular order of severity, but suffice to say, a borrower should avoid having these terms included within the contract if they can. If they can't, a solution is suggested on how to reduce the intended consequences of such provisions.
1. Prepayment penalty ("PPP"). Essentially, this term makes one pay an additional percentage of the loan balance when paying the balance off in advance of the intended due date. For instance, a 3% prepayment penalty on $100,000 means that a fee of $3000 is owed to the lender. What a waste.
Solution: If the lender insists upon having a prepayment penalty, then limit the time for which the term is valid. Limit a prepayment penalty for the first 3 years or negotiate a penalty that gets reduced in every passing year. For example, a 5% PPP in the first 2 years, gets reduced to 3% for the next 2 years, and 1 % thereafter. The best solution is to have no PPP, or wait until the time for the PPP expires.
2. Balloon Payment. Having a balloon payment on a loan or promissory note means that the loan may be amortized over a specified time, but the entire balance is due prior to the loan being fully amortized. For instance, a $50,000 loan with a 30 year amortization and a 5 year balloon, means that the payments are spread over 30 years, but the remaining balance on the $50,000 is due in 60 month. Failure to pay the balloon payment means that the borrower is in default.
Solution: Try to extend the balloon out for a longer period, say, a 10 year balloon instead of a 5 year balloon. Also condition the balloon's effect on consistent payment history: the balloon is extended to another time, or goes away all together if all payments are paid timely. Please note: A PPP provision can exist even when there is a balloon payment provision, but the PPP cannot be charged when paying off a balance pursuant to the balloon requirements itself.
3. Guaranty. A guaranty is a provision. A guarantor is an individual or company that signs an obligation on behalf of another bound to a contract, usually to ensure that the primary borrower will perform under the contract's terms. In the event that the borrower fails to perform a service or make payments, the guarantor will be called upon to make the payments, pay the entire loan balance, or step in to perform the required service. Being a guarantor is different than being a co-maker (discussed in item 4). Neither status is good. but a guarantor is not obligated on a loan until a default is actually declared by the lender.
Solution: Limit exposure as a guarantor by agreeing to be liable for a service or balance for a specified amount. For instance, a guarantor can guaranty only the first $100,000 of a $700,000 loan, or negotiate a fading guaranty which means that the exposure is reduced as time goes by. "After 5 years, the guaranty is null and void or reduced by half the original balance." Another solution is to have the guarantor liable only when the lender has exhausted all legal options against the original borrower and has failed to collect.
4. Co-Maker. Co-makers are basically joint borrowers on an obligation. If one borrower doesn't pay, then the other remains liable for the debt. There are no requirements for a lender to pursue and exhaust all legal remedies against one co-maker before pursuing the other. The lender can pick and choose who to pursue; one or both. It also doesn't matter that one co-maker may get all the benefit of a contract (known as consideration) while the other may have received nothing from the contractual relationship.
Solution: Co-makers or co-signers are jokingly called "idiots with pens". That;s harsh. But there are times when a co-maker is needed, such as on a student loan or car note. The best solution is to reduce the time frame in which the co-maker's liability remains in effect, or base the provision on performance. For example, when one borrower pays timely for 24 months, then the co-maker shall be released from the obligation.
5. Negative Amortization. Negative amortization occurs when there is an increase in the principal loan balance because the monthly payments are deficient and fail to cover the monthly interest. The remaining balance of interest due is added to the principal balance. A provision against negative amortization can be included in a contract and a default can be declared.
Solution: Negative amortization can occur if the borrower needs a lower payment for a short period of time. Ask the lender to modify the loan to accommodate a lower payment. If not, then the lender may spread out the difference in interest over several payments at a later date. Also, one can ask to extend the time before a default would be declared.
There are many scenarios concerning the above listed provisions and their impact. In some instances, the easiest way to prevent against a lender from invoking a material default is to simply "cure" a the default, or have the lender waive the default, by giving the borrower a "second chance". Times remain difficult for some lenders, just as it does for businesses. Understanding the implications of contract provisions is the first step to crafting and negotiating terms that one can live with when endorsing a contract. Terms that may or may not ever apply to one's own situation.
Many feel desperate for help.
But be leery of debt settlement groups, you may end up further in debt.
"Basically, this company was saying "ok, you have all this debt and we can settle it for approximately 45% of the debt,"" said US Postal Inspector Robert Clark.
That is the pitch some debt settlement firms are making to consumers.
"They tell the customers stop making the monthly payments to the creditors, stop speaking to the creditors as long as you can make one monthly payment to us," said Clark.
Customers are asked to sign a three-year contract - and if they do, all of their debt will be paid off. Sounds like a great deal until you see all the hidden fees and charges.
"Some of the victims that we've spoken to admitted I didn't even ask what the fees were because they were so happy to stop paying all the credit cards and pay one monthly fee that was affordable," said Clark.
Relief quickly turned to anger when consumers realized the money they were paying had not been sent to creditors.
(Robert Clark, US Postal Inspector)
"A lot of the victims called once they realized there was no money in their escrow accounts," said Clark. "The company would then point to the stipulation in the contract that says they're allowed to collect these fees."
Postal Inspectors say in one case there were more than 1,300 victims and $3 million in dispute. Lincoln Police encourage anyone interested in the service to run the idea by someone else first.
"Someone that you trust that would have good financial sense," said LPD Officer Erin Spilker. "You don't want places that are going to end up charging you extra fees and really it's not helping you get your debt taken care of."
Moral of the story: Read a contract very thoroughly. If you don't, you could end up being a victim of a scam.
KOLN-TV - Chad Silber, June 10, 2013
Proven Resource Managing Attorney, David Soble, Clarifies "Zombie Debt": Four Reasons Certain Debt Just Doesn't Go Away and Die
Real estate and finance attorney discusses four scenarios as to when old and lingering debt can be revived.
Proven Resource: Growth through knowledge.
Detroit, Michigan (PRWEB) May 28, 2013
1. Divorce. Generally, in a divorce, a divorce decree or separation agreement will shift monthly credit obligations from one ex-spouse to another. Contrary to common belief, these court orders do not release either spouse of the underlying joint credit obligation. Only ones' creditor can do that. So when one ex- spouse fails to make a payment to a joint creditor, a creditor can still sue both parties to the loan obligation for a loan default. Suggestion: In the event of an ex-spouse's default, go back to court and try to enforce the divorce decree. Also, make sure to monitor the monthly payments carefully, and review a credit report frequently. Unless a creditor provides a written release, which seldom happens, be vigilant.
2. Loan Guaranty. Many lenders and banks will require an individual to personally guarantee a loan. A loan guarantor cannot unilaterally revoke a loan guaranty. Tearing up or providing a written revocation of one's personal guarantee has little effect, except to agitate the creditor. A guaranty only expires when the subject loan is paid off, or when both parties to a loan agreement mutually rescind or revoke the guaranty in writing. Careful: Make sure one's loan guaranty specifically references the date and amount of the loan so that there is no confusion that when the loan is paid off, the corresponding guaranty is extinguished. Lenders have been known to attach otherwise old extinguished guarantees to newer or outstanding unrelated multiple loan obligations.
4. Zombie debt. Each year, billions in unpaid bad consumer debt is written off by lenders. Often the right to collect on this bad debt is sold to collection companies. Some debt is so old that it is considered worthless. It is out of "statute'. This means that the legal right and time to collect such old debt has expired by law, and the debtor can no longer be pursued on the debt. Collection companies that purchase old debt do so in hopes to receive even a small payment from an unsuspecting debtor. This small payment resets the time limitation for collection back to the beginning and the obligation, or "zombie debt", rises again.
About the Author: Since 1990, David Soble has been a real estate and finance attorney in Ohio and Michigan. He advises national banks, lenders, loan servicers, consumers and business owners on residential and commercial real estate, finance and compliance issues. He has been involved in thousands of real estate transactions, being responsible for billions in real estate loan portfolios throughout his career. And while he may seem harsh, he has 23 years of real estate battle scars to support his tempered cynicism.
Proven Resource Attorney Cautions Against Making Your Buyer Your Tenant: Four Reasons for Home Sellers to 'Cut and Run.
Detroit, Michigan (PRWEB) April 22, 2013
With home sales activity increasing throughout the country, sellers are feeling excited about better prospects. Some national mortgage programs are less restrictive than in recent years and buyers needing home financing feel relieved. Despite the optimism, sellers and buyers must still keep their wits about them to avoid making silly real estate mistakes that can have financial or legal consequences. Making your buyer your tenant, ("buyer/tenant") is but one avoidable mistake that sellers often make.
Understand that selling a home can be a lengthy and often frustrating process. Perhaps a seller is seeking a short sale with their bank, or a buyer's financing arrangements hit a snag. When things don't go as planned, eager sellers and anxious buyers may consider allowing the buyer to move in the home prior to a closing. Regardless of pressure from the buyer, their real estate agent, or your own good intentions, here are four reasons a seller should never let their buyer become their tenant:
1. The buyer's new legal status as "tenant". When a seller allows a buyer to move into the subject home before a closing has occurred, they now have created a landlord -tenant relationship. And like some tenants, they may not pay rent, or they don't leave when they should. So when a buyer, in anticipation of securing a mortgage is later denied, the buyer should leave the home voluntarily, right? If they refuse to leave, then the seller must legally evict them since their buyer now has the same rights as a tenant under the law. Unless there is a mutually beneficial relationship that remains after the buyer's financing falls through, there is no further reason to allow the buyer to stay in the home.
2. Buyer's remorse is quickly amplified. The excitement of buying the seller's home is short lived. The buyer / tenant now living in the home may begin to notice the little things that they may have overlooked when they first fell in love with the home , or they realize a deficit in their earlier buying decision. Perhaps the location isn't as good as they thought, they found a cheaper home, or worse, they met your neighbors. As "tenants", they are free to look elsewhere for a more "suitable" home.
3. The "test drive". Once the buyer moves into the home, unless specifically stated otherwise, the seller is obligated to make any repairs to the home while both parties are awaiting the closing. Suddenly items that would normally be a new buyer's "wants", become their "needs" and at the seller's cost. From having simple blinds replaced, to having a furnace or air conditioner replaced, a sharp buyer won't close on the home until their "needs" are met. Don't be a sucker and let a buyer "test drive" your home.
4. The "garage" scenario. Often there may be a small window of time between the buyers move from their former residence and the time for closing on the new home. When the buyer's real estate agent asks if the buyer can set their items in the garage before the closing for a few days, be careful. Resist the temptation. If the sale does not close, will the buyer remove their belongings from the garage? If so, when? Next week? Next month? Next year? If and when the buyer does remove their items, is the seller prepared to answer for the disappearance of a priceless heirloom that was allegedly in the buyer's belongings, now termed "antiques"? Should the seller have to underwrite the risk posed by storing the buyers items, now "treasures", in their garage? Avoid the needless headaches and pass on this request.
Considerations. Seek the advice of an objective legal professional. Yes, there are good real estate agents out there. They are essentially the sales person that ushers a buyer and seller through the home sale process, and good agents make the job look easy. It isn't. But despite these accolades, agents are still commissioned sales and marketing people. And what may be good for them and their client, may not be good for you. What happens when your deal doesn't close? If the buyer / tenant fails to leave voluntarily, the agent will not be paying for, nor performing the eviction. If the buyer / tenant destroys the inside of your home, you will be paying for repairs in order to get the home back on the market. If a buyer fails to remove their items from the garage, you will be hauling these items away, or walking through a mess every day. Not the agent.
No one says that the buyer/tenant relationship is completely untenable, Certainly the examples above are provided for the seller to stay alert and take precautionary measures. Sellers need to obtain maximum protection by consulting with outside real estate counsel so that they may protect their biggest investment, and themselves from becoming an unwitting landlord.
About the Author: Since 1990, David Soble has been a real estate and finance attorney in Ohio and Michigan. He advises national banks, lenders, loan servicers, consumers and business owners on residential and commercial real estate, finance and compliance issues. He has been involved in thousands of real estate transactions, being responsible for billions in real estate loan portfolios throughout his career. And while he may seem overly cynical, he has 23 years of real estate battle scars to support his comments.
The "Law of Holes" states that "when you find that you've dug yourself into a hole, stop digging". It's a simple rule, yet so difficult for many people to follow. Here are three reasons why people who "go it alone" should seek professional guidance for a problem before it becomes worse or before it's too late to fix.
Hiring a professional representative, such as a real estate agent, attorney or accountant, has as much to do with these agents serving as an emotional buffer as it does their education or experience. Take for instance real estate agents . There's a long list of instructional materials available for selling a home "by owner." Hidden obstacles (too many to name here) and the emotional roller coaster that comes with it, make hiring an experienced agent sensible. Perhaps the home fails an inspection or the buyer's mortgage financing falls through. Emotions can, and do run high. A good agent can tackle the issue, smooth out the wrinkles, and keep emotional parties focused. An experience agent is not only a professional problem solver , but acts as an emotional buffer between parties to get an purchase offer to the closing table.
Likewise, people who insist on handling important legal or financial matters on their own proceed without the benefit of good counsel. Often these people they lack clear focus and objectivity, They generate excessive and needless costs to themselves, leading to more of their own frustration and time wasted. A professional adviser helps take emotion out of a particularly difficult process so that reasonableness prevails.
There is an old adage, "if you think that a professional is expensive, wait until you hire an amateur." Being thrifty has its place and time, but when it comes to personal safety, health, or legal responsibilities, hiring a professional at a reasonable price is a far better choice than paying for future consequences. For instance, performing electrical, structural, or plumbing work without a permit comes with hidden costs. Insurance carriers will deny property damage claims when the source of damage was a repair or remodeling project performed without a permit .
Recently, in a debt settlement matter , a business woman proudly proclaimed that she had personally negotiated down a substantial portion of her debt on a large promissory note. That she was now paying smaller monthly payments to her creditor. But later, she learned that this settlement was really a consent judgment and it allowed the creditor to attach all other assets owned to reduce the balance. Unknowingly the settlement allowed the creditor to garnish her bank accounts. In terms of price, forgoing the use of a professional in order to save money is silly and is costly in the end. If the work was done poorly or without full knowledge of a subject matter, there will be a higher price to pay down the road. Seek out professional advisers who are competent and reasonably priced.
With technology, people have access to all types of information on almost any topic. Besides a professional education, practical experience developed over years in a profession is just as valuable to a client. Consider for a moment that most C.P.A.s are skilled in the U.S. Tax Code. But the C.P.A. who spends years negotiating with a particular IRS department has the contacts and understands the procedure better than a colleague who may only deal with state sales tax issues. If this CPA has a good reputation among IRS agents for being prompt, thorough, knowledgeable, and respectful, then chances are that his services will be most valuable to his client, and a particular problem may be resolved more smoothly, efficiently and less costly.
Another example of hiring for experience is when one hires an attorney who understands how to clear a complicated title issue that prevents the sale of a building. The attorney's relationship with a title underwriter is based upon years of past and positive experiences and can save his client thousands of dollars by not having to litigate the matter. Professionals are rarely asked by their clients about their alma mater, but they are frequently asked about their professional experience in handling a particular matter. Experience is worth paying for if one wishes to advance their cause efficiently.
Emotion, price and experience are all good reasons for people to seek out competent professionals in their respective fields of concern. Lay people who wish to do work that is commonly within the scope of trained professionals, either have too much time on their hands, or are masochists...or both. But one thing is for certain, it costs more time and money reinventing the wheel than it does hiring the right adviser. So to them I say, "keep digging".
Banks are repossessing fewer homes, in fact the fewest since March of 2007, but in some states that may be about to change, according to a new report from RealtyTrac, an online foreclosure data and sale firm.
Bank repossessions, the final stage of the foreclosure process are down 29 percent from a year ago, but foreclosure starts, which are the first stage of the process, jumped 10 percent in February from the previous month. This after falling for three consecutive months.
"At a high level the U.S. foreclosure inferno has been effectively contained and should be reduced to a slow burn in the next two years," said Daren Blomquist, vice president at RealtyTrac. "But dangerous foreclosure flare-ups are still popping up in states where foreclosures have been delayed by a lengthy court process or by new legislation making it more difficult to foreclose outside of the court system. Foreclosure starts have been steadily building in those states over the last several months and likely will end up as bank repossessions or short sales later this year."
( Read More : Home Buyers Are Back, but Where Are the Houses? )
In hard hit Nevada, where a new state law criminalizing faulty foreclosures went into effect last year, foreclosures basically ground to a halt. In February, however, they hit a 17-month high, up 334 percent from a year ago, according to RealtyTrac, which means banks will inevitably repossess thousands more properties in the near future.
This as home builders in Las Vegas are ramping up construction, due to historically low supplies of homes for sale. That supply is about to change.
The jump in new foreclosures is not just in the formerly hardest hit states either. Foreclosure starts jumped 319 percent in Maryland from a year ago, 172 percent in Washington, 139 percent in New York, and 70 percent in New Jersey. All of these states have large backlogs of delinquent mortgages due to new state laws governing foreclosures and/or the fact that they require a judge in the process.
"The strongest correlation we see is that states with the biggest jumps in foreclosure starts are states with some of the most pro-active foreclosure prevention legislation over the past few years. We believe that resulted in a short-term drop in foreclosure activity but is now resulting in a backlash of delayed foreclosures," says Blomquist.
Misleading "Professional" Titles, Such As "Foreclosure" or "Short Sale" Expert Harm an Unwary Public Warns Veteran Real Estate Attorney.
Proven Resource Managing Attorney, David Soble, Says Keys to Successfully Resolving a Financial or Legal Crisis Begin with Selecting the Right Licensed Advocate
Detroit, Michigan (PRWEB) February 25, 2013
When experiencing financial or legal trouble for the first time, be assured that while the poor economy has affected virtually everyone, one's financial or legal fact pattern is unique to each person. And after years of experience working with troubled clients, the following recommendations for a successful outcome remain constant no matter how serious the issue:
1. Hire a specialist. Imagine for a moment, having severe chest pains. Should a cardiologist, a general medical practitioner, or a naturopath be consulted? The choice is obvious, a cardiologist of course. The cardiologist specializes in the heart after years of medical training and experience. Now imagine a financial “heart attack”. A bank or creditor has secured a judgment and is raiding a bank account or garnishing wages. For some, the nightmare begins with an eviction or foreclosure notice. What type of specialist should be summoned in this matter? A real estate agent, a paralegal, a lawyer who maintains a general practice, or a lawyer who specializes in banking or real estate law. When faced with a serious financial or legal problem, treat your situation like the financial “heart attack” that it is and obtain a legal specialist.
2. Don't go it alone. Using the same analogy above, performing your own “bathroom surgery” instead of seeking a qualified special to perform heart surgery will be messy and ugly. Managing one's own financial or legal crisis instead of retaining an experienced licensed professional is no different. Clients who were initially representing themselves usually come for professional help after spending countless hours compiling vast libraries of documents and having extremely long and complicated stories that are made worse by their own inaction or actions. They relay exhausting stories of disappointment only after their creditor has divested them of all of their valuable assets. In short, “going it alone” is messy and when a professional has to clean up the mess it gets extremely costly and ugly.
3. Investigate your advocate. Work only with licensed professionals. Each state has their own occupational code and requires a professional to have achieved a core education as well as a demonstrated minimum competency to obtain a license. If your “adviser” does not have a current state or federal license, they shouldn't be your adviser. Avoid someone who calls themselves a “foreclosure specialist” a “short sale” specialist, a bankruptcy consultant or a loan consultant. There are no such licenses for such titles. A licensed real estate agent sells real estate and can obtain numerous professional designations from within their professional organization. They should state they are a licensed agent that has experience in a specific area, and that they have a designation earned by having taken classes through their professional organization. Likewise, most people know that an attorney is a legal advocate, but may not be aware that attorneys have their own specialties that can range from health care law to equestrian law. Ask the lawyer what area of practice they specialize in. A bankruptcy attorney practices bankruptcy law, a real estate attorney deals with real estate and foreclosure defense. Understand these specialties and investigate your options.
When seeking out the best advocate for a legal or financial crisis, remember that it is your home, your credit, your mental health that is in jeopardy. Take some time to investigate and choose the professional that will specifically address and resolve your need.
For the original version on PRWeb visit: http://www.prweb.com/releases/prweb2013/2/prweb10462901.htm
Real Estate and Finance Attorney of 23 years gives tips on what can be done now to improve household finances for the coming year.
Get off the financial roller coaster
Detroit, MI (PRWEB) December 21, 2012
“It’s never too early to outline a household financial strategy for the approaching new year” according to David Soble, a real estate and finance attorney at Michigan-based, Proven Resource, LLC , a professional firm that represents businesses and consumers experiencing financial or legal crises.
Here are but six suggestions that can make handling finances easier– now. Accomplish just one item within the next few weeks and get a head start for next year.
1. Know the “score”. Everyone has the right to a free credit report annually. Obtain a credit report on line. Some banks have been providing clients with a free credit report. Review each trade line on the report for accuracy. Look for any items that report negatively. Investigate any collections, late pays, or unfamiliar items. Dispute or explain any erroneous reporting by writing to the credit bureau. Retain copies.
2. Review all important bank and monthly statements. Check statements for errors, including unnecessary bank fees. Do it regularly and do it soon. As time passes, the harder it is to rectify an error. Research may have a cost, or information may no longer be available. Certain providers will not waive fees for errors found after 60 or 90 days.
3. Enroll in a bank’s automatic online payment service or use a third party service. Making timely payments is important to maintaining a good credit score. Technology makes paying bills on line efficient. Most banks and third party providers make payments at no cost, and most bill payment platforms integrate into financial software such as Quicken or Mint.com. Securely enroll utility, car and mortgage payments online, now.
4. Switch retail cards for one debit card. Carrying a credit card balance with high interest is waste of money. For many, it is easier said than done. It can be difficult to go “cold turkey” by cutting up every credit card. Keep the main credit card, but replace the gas and retail cards with one debit card. Most retail credit cards carry very high rates of interest and can only be used at the corresponding store. Retail cards are not useful in a financial emergency . It takes some discipline, but edging out these minor gas and retail cards is a great place to start.
5. Account for your past years monthly mortgage payments and compare the interest paid for the previous year to the amount the lender reports on tax form 1098. As a loan amortizes, the interest paid per year should be reduced in comparison to the amount going towards principal. Use an online amortization calculator to double check what the bank reports and what you have actually paid. Also, every year, your 1098 should state the amount of principal left on your mortgage. If not, contact the lender immediately. If there is no response, contact the state regulatory agency that regulates mortgage lenders.
6. Reduce unnecessary expenses. Review a list of monthly expenses and determine where changes can be made. Cable and cell phone plans are a good place to start. View favorite shows without costs by going to a network website. Don’t buy books or movies that can otherwise be borrowed from the local library. Many libraries now have free on-line lending. Also, cancel magazine subscriptions. Use the library’s periodicals. Look at gym dues, sell unused home gym equipment. With on line technology, visit You Tube for a variety of free exercise videos. Communities often offer exercise programs for free. Get physically fit while getting fiscally fit.
Deep in Debt? Crucial Steps to Winning Over Your Creditors & Successful Debt Negotiation
Real Estate and Finance Attorney of 23 Years Gives 5 Critical Points on Successfully Dealing with Creditors.
Detroit, Michigan (PRWEB) November 09, 2012
DEEP IN DEBT?
Critical Steps to Win Over Creditors
Whether a debt obligation is $1,000 or in the millions, the overall advice for handling debt negotiation remains the same, according to David Soble: communicate, consult with the appropriate experts and proceed with caution.
An attorney for 23 years, Soble has worked both sides of the debtor-creditor negotiation table,
representing various multi-billion dollar banks and national finance companies as well as helping small business owners and homeowners. Here are five critical pointers he says have helped his clients succeed in negotiating their debt.
1. Stay in touch with creditors.
Times are tough for everyone. While it may not feel good, keeping the lines of communication open benefits both parties. Banks and creditors want to work out a payment arrangement. Ignoring and avoiding creditors gives them no alternative but to escalate collection action.
2. Contact a credit professional early in the process.
For those who are uncomfortable with negotiating, contacting a professional about a debt issue may be the answer. Reach out to a non-profit credit or debt counselor early in the process. Procrastinating can make the situation worse.
3. Consult with the right kind of attorney.
“Short sales”on properties are more common these days, yet going through a “short sale” does not automatically relieve the obligation to the bank. Mortgage obligations are written contracts, and real estate agents cannot interpret or provide advice on the law. Not all attorneys specialize in real estate or debt resolution either. Talking with the proper professional can prevent costly mistakes.
4. Never sign a blank document and watch those page numbers.
How many business owners have lost thousands of dollars by signing blank forms? Plenty. Don’t become one of them. If a document has a blank page, draw a large “X” across it and initial it to prevent later insertions. Another safeguard is to make sure the document is properly numbered; if it has 7 pages, they should read “1 of 7,” “2 of 7″ and so on. It’s a protection against fraudulent or doctored paperwork.
5. Be on the lookout for scam artists.
Avoid individuals who aren’t properly credentialed. That should be a top priority. Anyone involved with a real estate transaction needs to be licensed — from federally regulated loan officers, to state regulated real estate agents and attorneys. And even then, ensure that the professional has the experience and reputation necessary to help out in a financial or legal crisis.
As if purchasing or refinancing a home wasn’t stressful enough, the key professional players in a real estate transaction don’t necessarily have their client’s best interest in mind, according to real estate and finance attorney David Soble of Proven Resource: contractual limitations, professional conflicts of interest, and lack of proper professional guidance are prevalent throughout the real estate transaction.
An attorney and real estate broker for 23years, Soble has been involved with thousands of residential and commercial real estate sales and refinances. He has represented multi-billion dollar banks and national finance companies as well as helping small business owners and consumers.
Here are 7 things purchasers need to know about the real estate process that are not frequently discussed:
1. Home Inspectors. First. never waive the right to a home inspection. Never. Second, purchasers should select their own home inspector. Real estate agents sell real estate every day, and may have a stable of these home pros, and therein lies the potential conflict of interest that compromises the integrity of the inspection in favor of “getting a deal done”. Third, avoid blurring the distinction between an appraisal and an inspection. An appraisal is a professional opinion as to the value of the subject property. That’s it. While the appraiser may note deficiencies in the property’s condition, it cannot ever be mistaken for a home inspection. An inspection should consist of a thorough examination of a home’s mechanical and structural condition. Finally,a home inspector’s liability is often limited to the cost of the inspection itself, and no more. So an inspector who fails to note a leaky roof may only be liable for $300, the average cost of an inspection. Therefore, if a specific item is questionable, call on a licensed contractor to delve further and give you peace of mind.
2. Real Estate Agents. It is not surprising that many legal issues involved with real estate transactions involve the real estate agent as they are the center of the transaction. But understand an agent’s limitations. Work with a buyer’s agent or seller’s real estate agent, but not both. Known as a “dual agent”, the real estate agent is responsible for representing both parties. There is absolutely no way that a professional can represent the competing interest of a buyer and seller. Purchasers can remove the potential for conflict of interest by hiring their own buyer’s agent. Finally, understand that a seller’s agent has their professional duty to the seller. Not the buyer. So tread carefully. Purchasers should not disclose information to a seller’s agent that they don’t want the seller to know.
3. Lending Officers. Residential lenders are required to disclose all of the third party vendors, that they intend to use in a transaction. Appraisers and title companies are third party vendors and loan applicants are not legally required to use them. Find a licensed appraiser or title company before you apply for your mortgage. Also, get “pre-approved” by a lender before going house hunting. Purchasers should avoid using the real estate agent’s lender referral unless they are having difficulty securing a mortgage on their own. Loan officers often rely on referrals from agents and they can, and will discuss your finances and credit with the agent.
4. Insurance Agents. Buying a home requires home insurance. After closing on the property, keep the insurance agent informed of significant changes planned for the home. When making any material structural changes that involves wiring or plumbing, or any other change that requires pulling a building permit, don’t skimp, pull the permit. No matter how handy a homeowner may be, if there is a fire, flood or other home disaster, the insurance company could deny your claim because your improvements were done without a permit. This is true even when homeowner repairs were not the direct cause of a structural problem.
5. Title Agents. It is standard in the real estate industry to secure title insurance with a home sale or refinance. In a sale, the seller customarily pays for an owner’s policy for the buyer equal to the purchase price. If the buyer financed the purchase, then a lender’s policy in the amount of the mortgage is paid for by the buyer. Review the title policy. Title insurance has exceptions and exclusions which is based upon what is revealed in the public real estate records. A buyer needs to know these exceptions as it could impede their ability to sell their property in the future. Moreover, when a buyer purchases a home below market value, they should purchase title insurance equal to the home value, not the purchase price. For example, a buyer who purchases a home for $75,000 and valued at $100,000, would be exposed to $25000 in the event of a title claim. No one is ever precluded from purchasing more title coverage. Finally, If there is a title issue, consult with a real estate attorney as no other real estate professional is qualified to comment on the legal consequences of clouded title.
6. Real estate attorneys. While is sounds self -serving, for most people, purchasing real estate is one of the life’s most significant legal and financial transactions. Hiring a real estate agent costs about 3 to 6 percent of a home’s purchase price. Secure home financing cost anywhere from 1 to 3 percent of the loan amount. Why people sign a purchase agreement, a mortgage loan agreement, or sign off on warranties, title schedules, insurance declarations, or other various third party legal agreements, without the expertise of a real estate attorney, is puzzling. Real estate transactions are all about legal contracts in the end. A loan officer is not an attorney. A real estate agent is not attorney. A neighbor or cousin, may or may not be an attorney. Don’t skimp. And when any real estate professionals pushes or “encourages” a home buyer to forgo legal advice, then that in itself is a pretty good sign that a real estate attorney is needed.
The Importance of a Memorandum of Land Contract
I recently prepared a land contract for the Seller of an investment home to her current tenant. As part of the process, I drafted a Memorandum of Land Contract (“Memorandum”) for the parties' endorsement. In the past, my seller had sold several properties on land contract, but had never seen a Memorandum before. She questioned it's need and importance. I explained to her the following:
The Memorandum of Land Contract
A Memorandum of Land Contract (“Memorandum”) is a legal document that evidences the relationship between a property owner and the purchaser under land contract. To be effective, it needs to be filed or recorded in the county property records where the property is located. The Memorandum of Land Contract will specify the name of both the seller and the buyer of the property, the common and legal address of the property and the date on which the agreement was entered. Inserting additional terms into the Memorandum is at the discretion of either party, but one of the reasons to use a Memorandum is to keep details to a transaction private.
What a Memorandum isn't.
A Memorandum can elaborate on the terms of the purchase such as the term of the agreement, or the monthly payment, but that really isn't necessary. The real purpose of the Memorandum serves as notice to the "world" that a subject property is under a seller -financed purchase agreement. There is no law that requires a Memorandum for a land contract to be valid, however, it is highly recommended for both Seller and the Buyer that one is properly drafted and recorded.
Why a Memorandum is important to the Purchaser.
Without a Memorandum filed in the county property records, third parties wouldn't be aware that the buyer's intended property is already under a purchase agreement. Otherwise, an unscrupulous seller could impair the marketability (the ability to sell free of any encumbrances) of the property by, for instance, taking a mortgage out on the property. Or even worse, the seller could turn and and sell the property to another buyer. Generally, in most states, this 'second buyer's" interest is protected against the initial purchaser who failed to file their land contract interest. The only time a lender or prospective purchaser could even know that a property has already been purchased or pledged, would be when a title search revealed the recorded Memorandum.
There are other precautions and provisions that one can use when drafting a land contract that would prevent a seller from encumbering a property without notifying the buyer, but none is more effective than the recording of the Memorandum. I have counseled many a purchaser buying on land contract who has come to me only after they had learned that their seller sold the property out from under them. A filed Memorandum would have stop this type of seller misconduct.
Why a Memorandum is important to the Seller.
The seller should also record the Memorandum if they ever want their buyer to pay them off by obtaining financing elsewhere. True, land contracts serve as a good investment vehicle that generates income, especially in this low interest environment. But sellers finance their buyer's purchase for various reasons such as when the condition of a home would not pass a bank inspection, or when a purchaser does not qualify for a bank loan. When the economy was soft several years ago, banks were not willing to lend and the need for seller financing using land contracts exploded.
Most lending institutions require that the land contract as evidenced by the Memorandum, be recorded before the bank will lend. The bank is usually looking for at least 12 months of 'seasoning.' A loan is considered "seasoned" when their is a verifiable payment history for a specified length of time. A lender is not likely to lend otherwise. Recorded Memorandums serve to legitimize the existence of a transaction with the essential terms of the underlying contract: start date, parties, property address and amount of the sale.
Comprehensive documents for a property sale under land contract include a Memorandum of Land Contract. Both sellers and buyers should insist that their real estate attorney draft and then record one for everyone's legal and financial protection.
About David: As a real estate attorney and “former bank insider, ” author David Soble not only 'talks the talk, but "walks the walk, " with over 25 years of practical real estate and legal experience gained from his ownership interests in hundreds of mortgages, notes, and income producing properties. David has successfully represented numerous banks, lenders, investors and consumers on both sides of the negotiation table in thousands of transactions.
Now you can reference Soble's straight forward approach to real estate concerns and put those nagging real estate issues to rest! Claim David Soble’s Free Ebook, ' WHAT'S KEEPING YOU UP AT NIGHT? AN ATTORNEY'S PRACTICAL APPROACH TO RESOLVING REAL ESTATE NIGHTMARES.
According to the American Bar Association relatively few lawsuits ever go all the way to trial. Most parties to civil (non- criminal) cases are settled long before trial. Once a suit is filed, the legal process itself can actually help opposing parties understand the strengths of their respective positions, often facilitating a settlement.
Here are 5 things parties to a lawsuit should consider about negotiating a settlement:
1. Define Liability. Contrary to popular belief, settling a legal matter usually does not require either party to admit right or wrong. A settlement can define a new relationship between the parties by specifying their new responsibilities or just reaffirm old ones.
2. Define Issues. In a legal complaint, lawyers list all legal theories of why a defendant is liable to the plaintiff. It not only can create confusion, but this practice tends to raise emotions. A settlement can resolve some of the less important issues while leaving other issues to be heard by the judge or a jury.
3. Reduce Expenses. Many legal professionals will agree that settling a legal dispute can be far less expensive than litigation. A law suit involves pleadings, motions, discovery, pre-trial hearings, status conferences, case evaluations, jury selection, trial preparation, a trial, post trial motions, appeals, etc. Time and financial commitments as well as risk of financial exposure act as great motivators for negotiating a settlement.
4. Manage Risk. When parties to a lawsuit reach a settlement, they themselves are controlling the outcome of a dispute. This reduces their risk of having a third- party, such as a judge or jury, decide the final outcome and terms of a dispute.
5. Strategy. Known as a “strategic default” among some legal circles, parties can often negotiate settlement terms more favorable to them than those terms and provisions found in an original agreement.
It's often said that a good settlement is reached when both parties leave the negotiation table a little unhappy. Negotiating a reasonable settlement takes time and patience and is influenced by at least one of the above- listed factors.
With the change in seasons, snow melt and the onset of spring rain, some home buyers, who had recently purchased their property during the winter months, have come to discover to their surprise that their basement leaks or worse, floods. Nothing is more disappointing, frustrating and disruptive as having a basement leak or flood, especially when the buyer relied upon a seller’s statements concerning a home’s condition and a home inspection. They relied upon their seller’s representations that the seller had no knowledge of basement water problems. In almost all cases, had the buyers known of existing water problems, they would not have written an offer on their home.
With very few exceptions, Michigan real estate law requires that a home seller must in good faith, provide a complete disclosure of their home’s condition to prospective purchasers prior to selling the property. Sellers are not liable for errors in the disclosure statement which are not within their personal knowledge. But when they know of a current water problem or had a former water issue, they had better disclose this fact to their buyer. Yet, there still are sellers who think they can get away with misleading their buyer and it's this misguided attitude that continues to contribute to my job security.
In Michigan, a seller may be legally and financially culpable to a buyer for making statements contained in the disclosure form that they knew or should have known are inaccurate. Sellers are committing “misrepresentation,” when the seller had personal knowledge of the problem, but failed to exercise "good faith", by not disclosing that knowledge. In cases of water damage that allege a seller’s misrepresentation, Michigan courts look at whether or not a “reasonable fact finder” could determine if the seller knew about a leak, yet allowed the transaction to move forward without disclosing the water problem to the buyer.
Seller Fraud on the Buyer
When a seller fails to disclose known water leaks and then tries to conceal the damage, they are committing fraud. It is deceitful and if the seller is found culpable, they will be responsible for triple the damages. An example of knowingly concealing water damage is when a seller installs new paneling or drywall over a water damaged area so as to prevent the buyer or their inspector from discovering the water problem.
Buyer’s Remedies Against the Seller
In both instances where a seller has been found to misrepresent or intentionally mislead the seller by hiding or concealing water damage, Michigan courts allow a buyer to rescind or cancel the entire purchase transaction. This can come months after the buyer has moved into their home. The purchaser of the home is permitted to transfer the property to the seller, and the seller must return the purchase price, plus interest.
Buyers don’t have to actually rescind the transaction. They can sue for their money damages if they elect to remain in their home. Damages can include the cost to remove the material that concealed an offending leak, as well as the costs for repairs and restoration needed to stop the leak in the future. In cases of fraud, sellers are responsible for triple the damages. For example, a $10,000 problem can cost a deceitful home seller $30,000.
Real estate transactions are serious business and the related home disclosure requirements should not be taken lightly. If a seller is uncertain as to whether they should disclose a known defect in the home that cannot be observed in plain sight, always remember that it’s best to disclose. A competent real estate professional can address the defect in the sales price. The alternative choice to hide a known defect from a home buyer will be far more costly later. When in doubt, or if you are having problems with the condition of your home after the home sale, consult with a real estate attorney. Effective April 15, 2017, claim your free book: What's Keeping You Up At Night? An Attorney's Practical Approach to Resolve Real Estate Nightmares at www.provenresource.com/book4U .
DEEP IN DEBT? Financial Relief Feels Great!
Critical Steps to Win Over Creditors
Whether a debt obligation is $1,000 or in the millions, the overall advice for handling debt negotiation remains the same, according to David Soble: communicate, consult with the appropriate experts and proceed with caution. Financial Relief is possible.
representing various multi-billion dollar banks and national finance companies as well as helping small business owners and homeowners. Here are five critical pointers he says have helped his clients succeed in negotiating their debt.
1. Stay in touch with creditors.
2. Contact a credit professional early in the process.
3. Consult with the right kind of attorney.
4. Never sign a blank document and watch those page numbers.
How many business owners have lost thousands of dollars by signing blank forms? Plenty. Don’t become one of them. If a document has a blank page, draw a large “X” across it and initial it to prevent later insertions. Another safeguard is to make sure the document is properly numbered; if it has 7 pages, they should read “1 of 7,” “2 of 7” and so on. It’s a protection against fraudulent or doctored paperwork.
5. Be on the lookout for scam artists.
Avoid individuals who aren’t properly credentialed. That should be a top priority. Anyone involved with a real estate transaction needs to be licensed —- from federally regulated loan officers, to state regulated real estate agents and attorneys. And even then, ensure that the professional has the experience and reputation necessary to help out in a financial or legal crisis.
Imagine for a moment, a small business owner, "Sally", is considering a new location for her business when she happens upon a small retail building that would serve as a perfect location for her future success. One problem. The building is not for sale. But Sally is eager to buy the property, and wants to show the property owner that she is serious about purchasing the building. The building's owner wasn't anticipating selling the property when Sally approaches her, but would consider selling it for the right terms. Together, both parties can write up a letter of intent, which is a document that details their wishes to enter into serious negotiations at a later date.
Essentially, letters of intent are agreements to create an agreement in the future and are commonly used in the purchase of real estate, a business, or contracting for goods or services. Letters of intent outline important elements of what parties intend to have placed in a future agreement. They help to gauge how serious a party like Sally is about something. They include provisions addressing things like purchase price, time lines, confidentiality, exclusivity, financial considerations, property or product condition.
Rushing to draft a letter of intent can have legal consequences. Letters of intent can create real legal problems and expensive litigation when one party, such as Sally above, wants only to enumerate the beginnings of a future contract, but the other party, the building owner, now considers the language to be more than just an intent to negotiate, but rather, to Sally's surprise, a binding agreement itself. In certain situations, courts have found that letters of intent that memorialize terms for an agreement at a later date can be enforced as a binding contract.
Here are 4 things to do to avoid having a letter of intent litigated and enforced as a contract:
The above items are the best way for a letter of intent to remain non-binding and enforceable. Before creating "self-inflicted legal wounds" and endorsing a letter of intent, it is always best to consult with an attorney.
About the Author: David Soble has been a real estate and finance attorney for over 25 years. He has advised both business owners and consumers in thousands of real estate and business / finance transactions.
DISCLAIMER: This article is not intended to serve as legal advice. When it comes to legal concerns always seek the advice of an attorney.
Each month, I receive more than a handful of calls concerning quit claim deed forms. Usually the callers are not looking to me to obtain the legal forms - they can be easily downloaded online. No, instead, they are usually calling me for legal advice on how to "reverse" or "undo" the real estate transaction that they've created - and what has been created is usually a real legal mess.
Quit claim deeds "gone bad" are like an unsightly or embarrassing tattoo. Reversing the transaction can be painful and expensive and involves a healthy dose of regret.
Quit Claim Deed
Deeds are the documents that legally transfer property interests. There are a few types of deeds that convey title, depending upon your jurisdiction. Among them are: (1)Warranty,(2) Covenant , (3) Trustees, (4) Ladybird, (5) Sheriff, and (6) Quit Claim. This list is not exhaustive, but suffice to say, each type of deed has its own purpose, conveying different 'guarantees' of ownership to a grantee. But only the 'lowly" quit claim deed comes without grantor representations or warranties. In essence, a grantor of a quit claim deed basically says to the grantee, "I may own this property, but I can't guarantee you that someone else doesn't have a better claim to it. Oh, and by the way, if someone else does have a more superior interest or claim to the property that I am deeding to you here, don't expect me to do anything to help in defending your rights to the property." As a legal document it sounds pretty useless doesn't it? Yet, with the proper legal guidance and due diligence, a quit claim deed can be an effective transfer instrument.
What Went Wrong?
With access to online legal forms readily accessible to the general public, it is easy to forget that with these legal documents comes "great responsibility." "Practicing" law without the requisite knowledge has consequences, usually financial. Nowhere is this more evident then when "John Public" creates a quit claim deed. Here are two of the most common problematic scenarios:
Could the above scenarios happen with other types of deeds, such as a warranty deed or covenant deed? Certainly, they could. But I can assure you that these scenarios don't occur quite as often when using these type of transfer instruments. Unlike the quit claim deed, the other deeds come with inherent warranties and remedies available to the grantee.
From my vantage point, if you are using a quit claim deed as a "quick" from of action, beware! Quit claim deed forms, which the public frequently calls "quick" claim deeds, should come with a 'cooling off' period...come to think of it, that wouldn't be good for business.
About the Author:
Since 1990, attorney David Soble
has represented investors, lenders, loan servicers, business owners and consumers in real estate, finance and contract matters. He has been involved in thousands of real estate transactions for his clients and has successfully saved his clients millions in lending agreements and contract negotiations. He can be reached at 888-789-1715
As originally published in Miami Herald and Boston Globe (September 2013) by David Soble
With the spike in home sales, buyers and sellers alike are feeling the pressure to quickly close on their purchase transaction before mortgage rates go up and demand for new homes slip. But before rushing to "ink the deal," understand that real estate professionals are required to provide written disclosures to their clients on a variety of important items necessary to the transaction, as they directly affect the buying or selling decision. Here are 8 areas where written disclosure should be or are required:
1. Affiliate Disclosures. These days, it's common for a mortgage company to have a business interest in a title company or a real estate brokerage to also own a mortgage company. These are called "affiliate" relationships, and the relationship must be disclosed to the potential end users of these services. For instance, a mortgage company must disclosure in writing to its loan applicants that is also owns a title company that will close on the mortgage and purchase transaction. A loan applicant is not required to use the "affiliate" title company and can use another suitable title provider instead. Most importantly, a home seller or buyer cannot be pressured to use an affiliate service or be prevented from seeking a loan or making an offer on a home, just because one chooses to do business with an "unaffiliated" business.
2. Third- party services. Similar to the above paragraph, a home seller and real estate agent cannot require someone to use a third party service in order to purchase a home. A third- party could mean a lender, a title co, an appraiser or inspector. However, one can give better pricing to a buyer who uses their services. For example, a lender
can waive fees if the buyer uses one of their "affiliates," however, they cannot prevent you from making a loan application or denying a loan for refusing to use their business affiliates.
3. Real estate agent disclosure. If a real estate agent is selling a home that they own, they must disclose that they are a licensed real estate agent. Some states limit this disclosure to only an agent's primary residence. Other states require the disclosure for any properties that the agent owns.
4. Dual agency. In a real estate transaction , a seller's agent or "listing agent" represents the seller. The seller's agent does not have any professional duty to a buyer who is not represented by their own agent. The buyer should hire their own agent. A dual agent is an agent or real estate broker that represents both parties in the transaction. Agents must provide written disclosures to both a parties when they act as dual agents. In theory this disclosure is supposed to make a dual agent in a transaction neutral. However, a real estate deal is never without some controversy and give and take, and therefore this writer suggests that a prospective purchaser hire their own "buyer's" agent.
5. Title agency. A title company's function is to insure that the ownership to a specific property is valid according to public property records so that a lending institution can provide a mortgage on the property or a purchaser can take proper title from the rightful owner. Title agents represent the insurance companies that provides this coverage. They do not dispense legal advice to buyers or sellers. They do not represent lenders or real estate brokers. Title companies must disclose when they have an affiliate relationship with a real estate service provider, meaning that they are owned by the lender or real estate brokerage, or even an appraiser.
6. Provide all offers. A real estate agent is required to provide its sellers with all offers. Unless a seller specifically instructs an agent not to bring certain offers, say one below a certain price or time frame, the agent must present the offer. Therefore, if a buyer feels that an offer was not presented, they should contact the agent's broker. In some states, it's customary for a buyer or their agent to present the offer directly to the seller. But nothing prevents an enthusiastic buyer from directly speaking with a seller, it's just not commonplace.
7. Terminating a real estate agent. It is a common misconception among sellers that they cannot fire or terminate their listing agent. They can. However, the best way to still market one's property without bad feelings is to approach the agent's broker and have the broker assign a new agent to the listing. Understand that the agent and broker still have a "protection period" that protects them against the seller closing a transaction with a buyer that the agent, through their business efforts, had previously procured. The period is usually for 180 days, but at time of listing a property this period can be negotiated down to 90 or even 60 days. Regardless of the time limits, it is wrong for a seller to take advantage of the agent's efforts and is grounds for legal action.
8. Attorneys. Like a real estate professional, an attorney cannot represent a buyer and a seller in a transaction unless the attorney discloses the conflict in writing and both parties sign the disclosure. If two parties to a transaction have completely different versions of a transaction, then it's time that one party hires their own attorney.
In a residential real estate transaction written disclosures comprise most of the real estate package. For those new to real estate, hire the right adviser to guide one through a successful transaction. But make sure to read and understand the disclosures and how they apply to one's deal, as they are there for the buyer or seller's benefit.
Emotion. Just because a tenant pays for a purchase option, once the 'tenant' is in the home, they may grow 'out of love' with the home. At times, tenants try to renegotiate the purchase price in the agreement or they decide not to move forward at all and just continue to rent. (This consideration should already be built into your option price and your monthly rent.)
Legal. Lease options may prolong the time in which a landlord can exercise available legal remedies in the event of the tenant's default. Generally, when a tenant purchases the option they have an equitable interest in the home. An equitable interest means that the tenant has financial interest or claims to legal title in a property. Courts tend to treat tenants with an equitable interest more favorably and a tenant's defenses under federal laws such as the Dodd-Frank act afford legal protections for purchasers on lease option.
Financial. Consider the financing 'end game" for the tenant who wants to purchase the property after the term for their purchase option expires. Usually mortgage lenders do not credit the full amount of the rental payment towards the purchase price without first calculating the fair market rental value. Additionally, under Dodd -Frank, if challenged, lenders will not be able to credit any monies collected for rent or the option price, towards a down payment. Remember, when a tenant purchases an option, there is not a guaranty that they will close on the agreed sales price in the future. Tenants who don't close on their option often attempt to offset their spent option money by withholding rental payments. (See legal considerations above.)
The considerations as stated above are but a few factors landlords need to consider when offering a tenant an option to purchase a home. If you are not clear on how to properly proceed with a lease with option, consult with an experienced real estate attorney.
About the Author: Since 1990, attorney David Soble has represented lenders, loan servicers, consumers and business owners in real estate, finance and compliance matters. He reduces legal and financial exposure of real estate investors so that they can focus on growing their investment portfolio and has been involved in thousands of real estate transactions and has successfully negotiated and saved millions for his clients.
Before you list your property for sale, perform your due diligence, which includes, but is not limited to, ordering title work, beforehand. If you are not "clear" about any issues that affect your ability to transfer your property, its best to consult with a real estate attorney.
About the Author
Since 1990, attorney David Soble has represented real estate investors, lenders, loan servicers, consumers and business owners in real estate, finance and contract matters. He has been involved in thousands of real estate transactions and has successfully negotiated and saved millions for his business and consumer clients alike.
Disclaimer: You should not rely or act upon the contents of this article without seeking advice from your own, qualified attorney. Remember, only attorneys can provide legal advise.
Here are several things that smart real estate investors need to be skeptical of:
1.Property managers and contractors. In Michigan, property managers need to have a real estate broker’s license. The have a fiduciary duty to their clients to manage and maintain properties. Before sending a property manager any money to perform construction or manage remodeling projects, screen property managers carefully. Too often, unvetted property managers abscond with significant client monies without performing the work. (I was recently hired to sue a property manager who stole over $25000 from an out of state investor.) Using unlicensed contractors can be just as disappointing.
Solution: Work with reputable property management companies and licensed contractors who have a history in business and referrals from happy clients. Trust but verify licenses and insurance.
2. Documentation. I am busier than ever cleaning up after ‘self-inflicted” legal problems caused by non-lawyers. They create various real estate and finance agreements that include, but are not limited to mortgages, loan assignments, leases, purchase agreements, contractor agreements, and lease options. Trust me, I am not complaining, but the last time I checked, the real estate business is hard enough without having to deal with the frustration, delays and setbacks caused by poorly drafted documents and weak due diligence. Recently a purchase agreement earned my client a high 5 figure settlement, all because the draftor, a non-lawyer, failed to include one sentence in their agreement. Yes, one sentence.
Solution: Do yourself a favor, have an experienced real estate attorney create or review your documents and assist you with legal due diligence.
3. Inspections and Certificates of Occupancy. Relying on third party inspections without personally checking on a property can generate a host of problems. Many investors use their own money or money procured from small investor groups. Purchasing a property without knowing the estimated repairs needed to obtain an Occupancy Certificate (“C of O”) is like flushing money down a drain. Last year, in order to get her C of O, a client lost substantial equity when the city required her to replace an entire pea gravel circle driveway with a concrete one.
Many clients and other smart Detroit investors come far and wide to inspect properties before they purchase. Recently, an investor believed they had purchased a vacant property. When they went to secure the property they soon learned the home was ‘tenanted.” The cost of a contested eviction delayed their ‘flipping” plans for over 5 months. Those who invest in properties sight unseen have only themselves to blame.
Solution: Personally inspect your investment property or hire a reputable agent. Would you invest in a stock without reading the prospectus?
4. Title and property taxes. Understand the property tax forfeiture and foreclosure process and verify a property’s lien and tax status before you close. Nothing is worse than restoring a property only to find that it was sold to another party at tax sale or that title is such as mess that the investment does not have marketable title.
Solution: Hire a real estate attorney and pull a title abstract before you buy. Why buy into a lawsuit?
Conclusion. Every real estate investor has their ‘‘war story” and these challenging experiences contribute to their continued success or become a source of financial stress and even ruin. Detroit real estate is Michigan’s modern day 'gold rush' and news of the fantastic opportunities has been broadcasted throughout the country and the world. But it’s okay to approach this market with some healthy skepticism, because investors who fail to exercise caution will get burned. And you can “take that to the bank.”
About the Author: Since 1990, David Soble has been a real estate and finance attorney in Ohio and Michigan. He advises national banks, lenders, loan servicers, consumers and business owners on residential and commercial real estate, finance and compliance issues. He has been involved in thousands of real estate transactions, being responsible for billions in real estate loan portfolios throughout his career. And while he may seem harsh, he has over 25 years of real estate battle scars to support his tempered cynicism.
Hiring an attorney can be a daunting task. Once that hiring decision is made it can be equally frustrating to encounter the following things.
Take your time to find the right attorney for your needs. Interview the top 3 attorneys you are considering. Many attorneys will offer an initial consultation without charge. Be ready to describe your concerns and needs. Take notes and come prepared with questions. It is important to establish a relationship with your attorney. Life has many twists and turns and your attorney should be with you for a long time.
In the Fall of ‘87 I was a first year law student. I have a distinct recollection of my first day surrounded by equally nervous first year students listening to a lecture by our contract law professor. He told us that the practice of law was akin to having someone come in and vomit all over your desk. “Your job as an attorney” he said with a smirk “was to clean it up.” 25 years later, there is not a week that goes by that I don’t take a moment to reflect upon that day. But my professor wasn’t completely right. You see, while most people come to see me with a high sense of urgency concerning real estate, loan or contract issues, a significant segment of clients entrust us with their asset planning. And as much as I love negotiating real estate deals and resolving loan and debt problems, I am passionate about proper asset planning.
There is a reason why I am so passionate about asset planning...my father, Ken. He was a terrific father, friend and mentor. He was also a pharmacist for almost 50 years and a smart businessman. Several years ago my Dad passed away after a very long illness. He hadn’t been well since I was a teenager. Despite his poor health, he loved to tell funny stories and joke around. He had an infectious and deep laugh. Even after his illness prevented him from working, he insisted on maintaining his pharmacy license and renewed it faithfully every year. In fact each year when Gallup published their annual list of America’s “most trusted” professions, my father would call me up to tell me that once again, “pharmacists were listed as the number one trusted profession.” Then, without fail, you could sense through the telephone, his finger slowly sliding down a long list of professionals, and with a slight pause, he would announce what double digit spot “lawyers” and / or “bankers” occupied. Not wanting to rub it in, he’d end the call assuring me not to worry, that ‘used car salesmen” still remained towards the very bottom of the list.
Because of his illness, my father was always a planner. He had to be. He had a wife, six kids and a business. Never knowing how or when his health would turn, he was diligent about his estate planning and that his business affairs were in order. Many times as a teenager, I felt uncomfortable talking with him about his poor prognosis and his last wishes. But in his later years as his eldest son and as an attorney, I admired him for being so responsible. Never more so than when, after 6 months after his death, my mother came to my office to drop off some important papers.
As I walked up to the reception area, sitting on the couch opposite my mother, was my 11 a.m. appointment, a woman in her late 50’s. Her husband had passed about a year after my Dad. He had owned a plumbing business and several months after his death their bank had demanded full payment on their business loan secured by a small store front. As I took the papers from my mother, I looked over my shoulder and smiled at my client. Just then, it struck me. Both of these women had lost their husbands, each on opposite sides of the asset planning spectrum. After all those years of listening to my father’s worries and concerns over what would become of my mother, his business and property, it finally came home to roost when looking at both women and seeing what could have been. It was a bittersweet observation and one which I felt compelled to share with you now.
There are many ways to begin an estate plan. Just so you know, everyone has an “estate.” Estate plans are more than just wills. When appropriate, they also include a durable power of attorney, a healthcare power of attorney, letters of intent, guardianship designations and trusts. You can go online and learn more about estate planning by visiting www.ProvenResource.com. Should you have any questions, you are welcome to call me at 888-789-1715 to discuss your concerns. It is always a good time to begin the discussion.
P.S. In Gallup’s most recent survey ranking America’s Most Trusted Professions, pharmacists and nurses ranked as among the “most trusted” professionals. It’s no surprise that used car salesmen outranked members of Congress this year. See the entire list at Blog.ProvenResoure.com.
There is an old adage that when two opposing parties in a legal matter proceed to litigation, then they have both lost their case. Having negotiated thousands of real estate and finance deals in my career as an attorney, I have listed below what I call the 5 “B’s” of successful negotiation:
There are times when parties to a settlement leave the negotiation table not getting everything they wanted. That’s fine. In most good deals, the parties need to concede some, but not all, of their position in order to reach a resolution. Those people who insist on going to the negotiation table with an “all or nothing” attitude, do not make good negotiation partners initially, but by using the preceding 5 points, they will in time.
How can a person recognize that they are approaching the proverbial “last minute” when facing a pressing legal or financial matter? The “last minute” is the time in a crisis where the balance teeters against one’s favor, placing them beyond any significant help; help that can have a real impact on a desired outcome. It’s true that there are people who can “pull one off at the last minute” but this is only noteworthy because it is the exception rather than the rule. So why go through all of the anxiety? When experiencing a financial or legal crisis, here are 5 significant indicators that one is approaching “the last minute” and it is a good time to seek professional intervention:1. When key decision- makers stop responding to your inquiries. So you’ve taken your concerns to the highest level
Although the economy appears to be on the mend, many small business owners still struggle. Especially those with commercial loans taken between 2007 and 2009. They either received, or will receive bank demands that their loans are now due in full. Commercial loans typically have 5 year maturities and most banks will not provide more than a one year loan extension of the maturity date to pay back a loan. For example a business owner who took a loan out in 2008 with a 2013 maturity, and received a one year extension is most certainly feeling intense pressure from their bank to pay back the money –this year!
There are few choices a business owner can make when their bank issues a demand for repayment: refinance, fight, negotiate or file business bankruptcy. Doing nothing however, is unacceptable. It’s an all -around recipe for financial disaster, and while a borrower may experience temporary paralysis upon receipt of a bank demand, weigh the options, seek experienced representation and take action.