I met yesterday with two of my favorite clients. They recently closed on and moved into a new home. They were fortunate that they were not required to sell their current condo in order to qualify to purchase their new house.
The problem? After many months on the market, their home has not sold. They came to me looking for advice about the possibility of renting out their condo. They were smart to ask.
Thursday, December 30, 2010
Tuesday, December 14, 2010
Lender Deviations from the New Good Faith Estimate
In an effort to reduce consumer confusion when it comes to obtaining a loan, the federal government enacted reforms to the Department of Housing and Urban Development began, on January 1, 2010, to require the use of a standardized form of Good Faith Estimate (GFE). The concept behind the reform makes sense, but in reality, not much has changed.
The charges on a good faith estimate are now broken into three parts. The first part contains fees that CANNOT change. These are your lender fees. The goal is to impair a lender's attempts to pull a bait and switch on a borrower. There is no tolerance for any deviation between this part of the terms of the good faith estimate and the actual costs at closing.
The charges on a good faith estimate are now broken into three parts. The first part contains fees that CANNOT change. These are your lender fees. The goal is to impair a lender's attempts to pull a bait and switch on a borrower. There is no tolerance for any deviation between this part of the terms of the good faith estimate and the actual costs at closing.
Tuesday, November 30, 2010
Dealing with Email of a Decedent
Here is part six in the series of articles on virtual estate planning
Emails and email accounts, like physical letters, are the most obvious and most commonly discussed form of virtual asset. As I mentioned in a previous post, there are two types of email services: POP based and web-based. POP based email is usually downloaded to a local computer and suffers from less confusion about property rights in the email than web-based email (that is not to say that POP based email is without its own set of issues).
Web based email services rely on "off-site" servers administered by e-mail service providers. Web based email accounts and their contents are a form of digital asset. These assets are governed by the contract that establishes the account, commonly known as the "Terms of Service" (this is that page that most people don't read and just click "okay" and then "next" to move on in the process of establishing an account). There is no uniformity among email service providers, so each is feeling its own way in the digital world when dealing with the death of a user.
I will discuss a few of the web based service providers and their current policies for dealing with the death of an account user. These policies are constantly changing, so please, do not rely on the information here. Always check the current terms of service.
Yahoo!: Yahoo's policy on deceased person's accounts has not changed since the resolution of the Ellsworth Estate. Per their terms of service, there is no right of survivorship and a Yahoo account is non-transferrable. Upon receipt of a death certificate, Yahoo! will freeze an account for 90 days and then terminate the account and delete the contents. Basically, without a password, the only way for a personal representative to obtain access to a Yahoo! account is with a court order. Obviously, time is of the essence and a savvy probate practitioner will query a client early in the probate process about email accounts so as not to miss the termination deadline.
Google Gmail: A Google account stays open forever unless a request is made to delete the account. Google will provide access to the account of a deceased person. Access will be granted within 30 days after Google is notified of the death of an account holder if the person notifying Google provides the following: Information to be provided to Google (faxed to 650-644-0358 or mailed to Google Inc., Attention: Gmail User Support, 1600 Amphitheatre Parkway, Mountain View, CA 94043): 1. the full name and contact information of the person seeking access to the account, including a verifiable email address; 2. the Gmail address of the individual who passed away; 3a. a full header from an email message received at the verifiable email address from the Gmail address in question and 3b. the entire contents of the message; 4. proof of death; and 5. one of the following: a) if the decedent was 18 or older, proof of authority under local law that the person making the request is the lawful representative of the deceased or his or her estate or b) if the decedent was under the age of 18 and the person making the request is the parent of the account holder, provide a copy of the decedent’s birth certificate.
In addition, Google will provide information faster than the stated policy of thirty days thirty day processing time pursuant to a valid court order.
Microsoft Hotmail: Hotmail is a part of the Microsoft WindowsLive service. If Microsoft is notified via email that an account holder is deceased, they will "freeze" and preserve an account for six months during which a requester must complete an authorization procedure to obtain account information. If the process is not complete within six months, Microsoft will delete the account. Like Yahoo!, account contents will be turned over but the password will not be provided nor reset. Microsoft will not transfer an account.
Per the MicrosoftLive Solution Center:
Please note: While this process allows for the release of the account contents to you, we will not provide or reset the password for this account. This process does not allow for the transfer of account ownership; however, once your documentation has been verified, we can close the account at your request. This policy is in place to protect the privacy and security of all Hotmail users. Upon authentication, we will also close the account at your request.
Instructions to for the WindowsLive account procedure are here.
Hotmail will mail a CD filled with the contents of the Hotmail account. Information that must be provided to Micorosoft (faxed to 425-708-0096 or mailed to Microsoft Corp., Attn: Online Services Custodian of Records, 1065 La Avenida, Building 4, Mountain View, CA, 94043): 1) a photocopy of the user's death certificate; 2) paperwork from the requestor stating that he/she is the benefactor or executor to the deceased's estate and/or holder of a Power of Attorney and are next-of-kin; 3) a photocopy of the requestor's driver's license or a government issued identification; 4) a document with answers to the following questions about the account, for verification purposes: account name, first and last name on the account, date of birth, city, state and zip code, approximate date of account creation, approximate last date of sign in, a physical mailing address
Editorial comment: obviously Microsoft is unaware of the difference between a power of attorney agent and a personal representative. Technology is sometimes as backwards as the law is to technology in its application of legal concepts
Obviously, there are other email providers out there. They will all have different requirements for access to and turnover or cancellation of an email account. Consult the terms of service for those accounts to see what the playing field looks like.
click here for part five
Emails and email accounts, like physical letters, are the most obvious and most commonly discussed form of virtual asset. As I mentioned in a previous post, there are two types of email services: POP based and web-based. POP based email is usually downloaded to a local computer and suffers from less confusion about property rights in the email than web-based email (that is not to say that POP based email is without its own set of issues).
Web based email services rely on "off-site" servers administered by e-mail service providers. Web based email accounts and their contents are a form of digital asset. These assets are governed by the contract that establishes the account, commonly known as the "Terms of Service" (this is that page that most people don't read and just click "okay" and then "next" to move on in the process of establishing an account). There is no uniformity among email service providers, so each is feeling its own way in the digital world when dealing with the death of a user.
I will discuss a few of the web based service providers and their current policies for dealing with the death of an account user. These policies are constantly changing, so please, do not rely on the information here. Always check the current terms of service.
Yahoo!: Yahoo's policy on deceased person's accounts has not changed since the resolution of the Ellsworth Estate. Per their terms of service, there is no right of survivorship and a Yahoo account is non-transferrable. Upon receipt of a death certificate, Yahoo! will freeze an account for 90 days and then terminate the account and delete the contents. Basically, without a password, the only way for a personal representative to obtain access to a Yahoo! account is with a court order. Obviously, time is of the essence and a savvy probate practitioner will query a client early in the probate process about email accounts so as not to miss the termination deadline.
Google Gmail: A Google account stays open forever unless a request is made to delete the account. Google will provide access to the account of a deceased person. Access will be granted within 30 days after Google is notified of the death of an account holder if the person notifying Google provides the following: Information to be provided to Google (faxed to 650-644-0358 or mailed to Google Inc., Attention: Gmail User Support, 1600 Amphitheatre Parkway, Mountain View, CA 94043): 1. the full name and contact information of the person seeking access to the account, including a verifiable email address; 2. the Gmail address of the individual who passed away; 3a. a full header from an email message received at the verifiable email address from the Gmail address in question and 3b. the entire contents of the message; 4. proof of death; and 5. one of the following: a) if the decedent was 18 or older, proof of authority under local law that the person making the request is the lawful representative of the deceased or his or her estate or b) if the decedent was under the age of 18 and the person making the request is the parent of the account holder, provide a copy of the decedent’s birth certificate.
In addition, Google will provide information faster than the stated policy of thirty days thirty day processing time pursuant to a valid court order.
Microsoft Hotmail: Hotmail is a part of the Microsoft WindowsLive service. If Microsoft is notified via email that an account holder is deceased, they will "freeze" and preserve an account for six months during which a requester must complete an authorization procedure to obtain account information. If the process is not complete within six months, Microsoft will delete the account. Like Yahoo!, account contents will be turned over but the password will not be provided nor reset. Microsoft will not transfer an account.
Per the MicrosoftLive Solution Center:
Please note: While this process allows for the release of the account contents to you, we will not provide or reset the password for this account. This process does not allow for the transfer of account ownership; however, once your documentation has been verified, we can close the account at your request. This policy is in place to protect the privacy and security of all Hotmail users. Upon authentication, we will also close the account at your request.
Instructions to for the WindowsLive account procedure are here.
Hotmail will mail a CD filled with the contents of the Hotmail account. Information that must be provided to Micorosoft (faxed to 425-708-0096 or mailed to Microsoft Corp., Attn: Online Services Custodian of Records, 1065 La Avenida, Building 4, Mountain View, CA, 94043): 1) a photocopy of the user's death certificate; 2) paperwork from the requestor stating that he/she is the benefactor or executor to the deceased's estate and/or holder of a Power of Attorney and are next-of-kin; 3) a photocopy of the requestor's driver's license or a government issued identification; 4) a document with answers to the following questions about the account, for verification purposes: account name, first and last name on the account, date of birth, city, state and zip code, approximate date of account creation, approximate last date of sign in, a physical mailing address
Editorial comment: obviously Microsoft is unaware of the difference between a power of attorney agent and a personal representative. Technology is sometimes as backwards as the law is to technology in its application of legal concepts
Obviously, there are other email providers out there. They will all have different requirements for access to and turnover or cancellation of an email account. Consult the terms of service for those accounts to see what the playing field looks like.
click here for part five
Friday, November 12, 2010
What Attributes to look for in a Real Estate Agent
There are four main attributes for finding a good real estate agent: knowledge, comfort, trustworthiness, and reputation.
Knowledge:
I look for an agent with expertise in a limited geographical area and a limited type of property. In a large metropolitan area like Chicagoland, it is impossible to find an agent who can competently cover a whole city or all of the suburbs and just as difficult to find an agent with the expertise to handle all types (commercial, residential, leasing, etc.) of deals. Location, location, location. Don't use a suburban real estate agent for a south side property. Don't use a commercial broker to find a residential property. Find an agent who knows and works a particular area and with a particular type of property. The right tool for the job! Such an agent will have a basic knowledge of property values, common problems or pitfalls (ie. this property is near the freight train line that comes through in the early morning or is on the landing path for the local airport), and local customs and practices (ie. customary tax proration in the city versus a collar county). Most real estate deals are pretty smooth and just about any agent could handle them. However, when a deal does not go as planned, choosing the right agent becomes critical. The right agent will have a good level of experience so that the agent will know how to handle the "off" situation.
Comfort:
A real estate buyer or seller will spend plenty of time on the phone with an agent and possibly even more time in the agent's personal company. Some buyers spend weeks in the real estate agent's car driving from showing to showing. The client must be comfortable and get along with the agent. This is a matter of personal taste. An agent that some consider to be pushy or short to some may be forceful and to the point for others. An agent who is non-confrontational and collegial to some may be too withdrawn and without enough fight for others.
Trustworthiness:
Most people know that a real estate agents is only paid when a transaction closes. As a result, bad agents sometimes work "for the deal" rather than working "for the client". Avoid agents that do not put the client's best interests first. These agents are easily found out when they begin to play "devil's advocate" a little too much with regard to price, repair requests, or contract terms or when they "babysit" a deal too much to make sure it closes on time (because they need the commission check to eat). Trustworthiness is important when a client needs an agent who knows the law and does not cross over the line. A good agent will find novel and smart ways to solve problems; a bad agent will suggest an illegal or unethical course of dealing and merely suggest that "everyone does it". This behavior is commonly demonstrated by the "bad" agent who has no problem with "off the HUD-1" credits or who smooths over inspection issues by downplaying the importance of those issues to the client.
Reputation:
The best way to find a good real estate agent is to ask someone who has recently been through the real estate buying or selling process or, better yet, to ask someone in a related real estate profession. Attorneys and mortgage brokers know the good agents and the bad agents and can usually help a client find one or more who might be the "right" fit. There is no substitute for experience. It is better to get a referral to a good agent up front than to get stuck with a bad agent only to learn that the agent is bad at the closing table.
A real estate deal is one of the largest transactions that most people will engage in during their lifetimes. The choice of an agent should not be left to random chance, the cheapest quote, the luck of the draw, the first guy who called back, or whoever was "on the desk" when the client called in to the broker's office. A prospective client should always interview multiple agents. Choose the one with the best blend of qualities and the results should pay off.
Knowledge:
I look for an agent with expertise in a limited geographical area and a limited type of property. In a large metropolitan area like Chicagoland, it is impossible to find an agent who can competently cover a whole city or all of the suburbs and just as difficult to find an agent with the expertise to handle all types (commercial, residential, leasing, etc.) of deals. Location, location, location. Don't use a suburban real estate agent for a south side property. Don't use a commercial broker to find a residential property. Find an agent who knows and works a particular area and with a particular type of property. The right tool for the job! Such an agent will have a basic knowledge of property values, common problems or pitfalls (ie. this property is near the freight train line that comes through in the early morning or is on the landing path for the local airport), and local customs and practices (ie. customary tax proration in the city versus a collar county). Most real estate deals are pretty smooth and just about any agent could handle them. However, when a deal does not go as planned, choosing the right agent becomes critical. The right agent will have a good level of experience so that the agent will know how to handle the "off" situation.
Comfort:
A real estate buyer or seller will spend plenty of time on the phone with an agent and possibly even more time in the agent's personal company. Some buyers spend weeks in the real estate agent's car driving from showing to showing. The client must be comfortable and get along with the agent. This is a matter of personal taste. An agent that some consider to be pushy or short to some may be forceful and to the point for others. An agent who is non-confrontational and collegial to some may be too withdrawn and without enough fight for others.
Trustworthiness:
Most people know that a real estate agents is only paid when a transaction closes. As a result, bad agents sometimes work "for the deal" rather than working "for the client". Avoid agents that do not put the client's best interests first. These agents are easily found out when they begin to play "devil's advocate" a little too much with regard to price, repair requests, or contract terms or when they "babysit" a deal too much to make sure it closes on time (because they need the commission check to eat). Trustworthiness is important when a client needs an agent who knows the law and does not cross over the line. A good agent will find novel and smart ways to solve problems; a bad agent will suggest an illegal or unethical course of dealing and merely suggest that "everyone does it". This behavior is commonly demonstrated by the "bad" agent who has no problem with "off the HUD-1" credits or who smooths over inspection issues by downplaying the importance of those issues to the client.
Reputation:
The best way to find a good real estate agent is to ask someone who has recently been through the real estate buying or selling process or, better yet, to ask someone in a related real estate profession. Attorneys and mortgage brokers know the good agents and the bad agents and can usually help a client find one or more who might be the "right" fit. There is no substitute for experience. It is better to get a referral to a good agent up front than to get stuck with a bad agent only to learn that the agent is bad at the closing table.
A real estate deal is one of the largest transactions that most people will engage in during their lifetimes. The choice of an agent should not be left to random chance, the cheapest quote, the luck of the draw, the first guy who called back, or whoever was "on the desk" when the client called in to the broker's office. A prospective client should always interview multiple agents. Choose the one with the best blend of qualities and the results should pay off.
Landlords Subject to New Tax Requirements for 2011
The brand new Small Business Jobs Act of 2010 enacted by President Obama in September, 2010 includes a new provision that affects landlords.
Beginning in 2011, all landlords must provide 1099-MISC forms to all service providers for payments in excess of $600 during the year. Previously, only landlords who rented property as a "trade or business" were required to make a filing. Now, the law extends to any and all landlords, even those who rent out a bedroom or make a short term rental. The law amends the definition of being engaged in the "trade or business" of renting property to include "a person receiving rental income from real estate".
As such, all landlords must issue a 1099-MISC to any service provider who the landlord pays more than $600 in any given year. This means that if you rent your property and pay an attorney to help with an eviction and pay an invoice for $1400, you must issue the attorney a 1099-MISC. Same goes for landlords who, say, pay a cleaning service $75 per month ($900) to clean their rental property.
The law does provide three exceptions. First, it excludes active members of uniformed services or intelligence employees who are renting their primary residence while on assignment. Next, the law excludes any individual who receives rental income of not more than the minimal amount as determined by the IRS regulations. No such regulations yet exist. Finally, it provides a hardship exception for landlords, as determined by the IRS regulations. Again, the IRS has not issued any regulations as to what sort of hardship might be sufficient to excuse performance.
Interestingly, the law also provides for increased penalties for failure to file informational returns.
The 1099-MISC forms must be filed in early 2012, however, landlords must begin the process of maintaining their records beginning as of January 1, 2010. The prudent landlord will collect the name, address, and federal employer identification number (FEIN) from people they pay for goods and services. This means landlords must also become facile with IRS form W-9.
Prudent landlords will be keeping their books current beginning with the new year. Better yet, prudent landlords will want to get a "landlord tune-up" for 2011 from the attorneys at Reda | Ciprian | Magnone, LLC.
Beginning in 2011, all landlords must provide 1099-MISC forms to all service providers for payments in excess of $600 during the year. Previously, only landlords who rented property as a "trade or business" were required to make a filing. Now, the law extends to any and all landlords, even those who rent out a bedroom or make a short term rental. The law amends the definition of being engaged in the "trade or business" of renting property to include "a person receiving rental income from real estate".
As such, all landlords must issue a 1099-MISC to any service provider who the landlord pays more than $600 in any given year. This means that if you rent your property and pay an attorney to help with an eviction and pay an invoice for $1400, you must issue the attorney a 1099-MISC. Same goes for landlords who, say, pay a cleaning service $75 per month ($900) to clean their rental property.
The law does provide three exceptions. First, it excludes active members of uniformed services or intelligence employees who are renting their primary residence while on assignment. Next, the law excludes any individual who receives rental income of not more than the minimal amount as determined by the IRS regulations. No such regulations yet exist. Finally, it provides a hardship exception for landlords, as determined by the IRS regulations. Again, the IRS has not issued any regulations as to what sort of hardship might be sufficient to excuse performance.
Interestingly, the law also provides for increased penalties for failure to file informational returns.
The 1099-MISC forms must be filed in early 2012, however, landlords must begin the process of maintaining their records beginning as of January 1, 2010. The prudent landlord will collect the name, address, and federal employer identification number (FEIN) from people they pay for goods and services. This means landlords must also become facile with IRS form W-9.
Prudent landlords will be keeping their books current beginning with the new year. Better yet, prudent landlords will want to get a "landlord tune-up" for 2011 from the attorneys at Reda | Ciprian | Magnone, LLC.
Thursday, November 11, 2010
All kinds of virtual assets
Here is part five in my series on digital assets. Today, I will touch on the general concept of why digital assets are important to an estate planner or probate attorney. Wikipedia defines "digital assets" as email, social media, and other online accounts, protected by a password and right to use a specific account. Widespread internet technology adoption has created a class of assets, virtual or digital assets, which estate representatives and their legal counsel need to address. These assets can have material value. Today's estate planners need to be able to recognize these assets and the special attention that they call for. Proper planning for virtual assets today can lead to smooth estate administration tomorrow.
There are more classes of virtual assets than one might think. The issues related to these assets are generally issues of content and access. For the most part, content is an easier issue as most content belongs to the creator and the creator's estate. Some terms of service might change that analysis. For example, Facebook was recently in the news for its claims that it had ownership over everything posted there. Access is the harder issue. Access is easy to deal with when a representative has the decedent's username and password. Be aware that even the use of a username and password by an Executor or Administrator may be a violation of certain terms of service. Things get more complex when a username and password are not available. These materials will seek to point out virtual assets that estate planners and probate practitioners need to consider and how to access them.
Beginning in the next installment, beginning with email, I will provide brief general information on how to deal with a particular account upon the death of an account holder.
Wednesday, November 10, 2010
A small side note on law and technology in Illinois
This is the fourth installment in my series on estate planning for virtual assets.
As I have already mentioned, the normally law creeps forward at a snails pace. Technology flies forward at a fast pace. In comparison to each other, technology is going light years faster than law. This disparity in development leads to some confusing, discordant, and unintended results.
One example of the result of these differences comes from an attempt made by the State of Illinois with respect to sexual predators. As of January 1, 2010, the Illinois legislature amended the Illinois Criminal Code to make it a crime for a person convicted of a sex offense to access or use social networking websites.
Here is the statute:
730 ILCS 5/5-6-3(8.9) Conditions of Probation and of Conditional Discharge.
(8.9) if convicted of a sex offense as defined in the Sex Offender Registration Act committed on or after the effective date of this amendatory Act of the 96th General Assembly, refrain from accessing or using a social networking website as defined in Section 16D-2 of the Criminal Code of 1961;
The Illinois legislature defined the term "social networking website" in the law:.
720 ILCS 5/16D-2(h) Sec. 16D-2. Definitions. As used in this Article, unless the context otherwise indicates:
(h) "Social networking website" means an Internet website containing profile web pages of the members of the website that include the names or nicknames of such members, photographs placed on the profile web pages by such members, or any other personal or personally identifying information about such members and links to other profile web pages on social networking websites of friends or associates of such members that can be accessed by other members or visitors to the website. A social networking website provides members of or visitors to such website the ability to leave messages or comments on the profile web page that are visible to all or some visitors to the profile web page and may also include a form of electronic mail for members of the social networking website.
Although you cannot discount the good intentions of the Illinois legislature and the noble goal of keeping sexual offenders off of places like facebook and myspace, the new law, unfortunately, demonstrates the inability of the law to keep up with and define the current state of "Web 2.0". The statutory definition of a "social networking" website is so overly broad that nearly any modern commercial webiste, blog, site with a message board, shopping site, or Linkedin will satisfy the definition.
There's a lot of shakeout left before the law can properly deal with web-related technology issues. Until then, we'll just need to do our best.
Click here for part three
Click here for part five
As I have already mentioned, the normally law creeps forward at a snails pace. Technology flies forward at a fast pace. In comparison to each other, technology is going light years faster than law. This disparity in development leads to some confusing, discordant, and unintended results.
One example of the result of these differences comes from an attempt made by the State of Illinois with respect to sexual predators. As of January 1, 2010, the Illinois legislature amended the Illinois Criminal Code to make it a crime for a person convicted of a sex offense to access or use social networking websites.
Here is the statute:
730 ILCS 5/5-6-3(8.9) Conditions of Probation and of Conditional Discharge.
(8.9) if convicted of a sex offense as defined in the Sex Offender Registration Act committed on or after the effective date of this amendatory Act of the 96th General Assembly, refrain from accessing or using a social networking website as defined in Section 16D-2 of the Criminal Code of 1961;
The Illinois legislature defined the term "social networking website" in the law:.
720 ILCS 5/16D-2(h) Sec. 16D-2. Definitions. As used in this Article, unless the context otherwise indicates:
(h) "Social networking website" means an Internet website containing profile web pages of the members of the website that include the names or nicknames of such members, photographs placed on the profile web pages by such members, or any other personal or personally identifying information about such members and links to other profile web pages on social networking websites of friends or associates of such members that can be accessed by other members or visitors to the website. A social networking website provides members of or visitors to such website the ability to leave messages or comments on the profile web page that are visible to all or some visitors to the profile web page and may also include a form of electronic mail for members of the social networking website.
Although you cannot discount the good intentions of the Illinois legislature and the noble goal of keeping sexual offenders off of places like facebook and myspace, the new law, unfortunately, demonstrates the inability of the law to keep up with and define the current state of "Web 2.0". The statutory definition of a "social networking" website is so overly broad that nearly any modern commercial webiste, blog, site with a message board, shopping site, or Linkedin will satisfy the definition.
There's a lot of shakeout left before the law can properly deal with web-related technology issues. Until then, we'll just need to do our best.
Click here for part three
Click here for part five
Tuesday, November 9, 2010
The Ellsworth Case with Yahoo!
I will continue with part three in my series on digital assets with a discussion of the Estate of Justin M. Ellsworth and his family's troubles with his Yahoo! email account.
The case easily illustrates the complexity of dealing with e-mail accounts. The 2005 Michigan probate was the estate of a marine Justin Ellsworth, who was killed in Iraq. Mr. Ellsworth's parents sought to recover the contents of their son's Yahoo! e-mail account. Yahoo refused Justin's parents' request based upon its Terms of Service (TOS) which indicate that a Yahoo! account is non-transferable and terminates at death.
Yahoo's terms of service:
No Right of Survivorship and Non-Transferability. You agree that your Yahoo! account is non-transferable and any rights to your Yahoo! ID or contents within your account terminate upon your death. Upon receipt of a copy of a death certificate, your account may be terminated and all contents therein permanently deleted.
Yahoo argued that they needed to enforce the privacy rights of their account holders. Elsewhere in the terms of service, Yahoo indicated certain instances upon which it could release private information.
Yahoo's terms of service
You acknowledge, consent and agree that Yahoo! may access, preserve and disclose your account information and Content if required to do so by law or in a good faith belief that such access preservation or disclosure is reasonably necessary to: (i) comply with legal process; (ii) enforce the TOS; (iii) respond to claims that any Content violates the rights of third parties; (iv) respond to your requests for customer service; or (v) protect the rights, property or personal safety of Yahoo!, its users and the public.
Justin's parents were able to obtain an order from the Oakland County Michigan probate court ordering Yahoo to turn over the emails in the account. Yahoo complied with the court order, although the account password itself was never provided to the estate. Instead, Yahoo produced a CD containing the emails and indicated that it would also produce paper copies to the family.
The case brings a number of important questions to light. What exactly is the actual property owned by the estate? Is it the underlying source code? Is it the writings of the account holder? What about writings other people wrote to the account holder? What about the privacy rights and copyright rights of email senders and recipients?
With respect to copyright issues, the estate certainly had copyright in the emails composed by Justin Ellsworth and possibly implied consent for use of those emails received by Justin Ellsworth. It is important to note that Yahoo never made a claim of ownership over the emails in Justin Ellsworth's account. In fact, their TOS explicitly rejects this.
Yahoo's TOS:
Yahoo! does not claim ownership of Content you submit or make available for inclusion on the Yahoo! Services
Even if an estate has a copyright in the material contained in an email, the estate may not necessarily have the right to access the information. It can be argued, and Yahoo did argue, that the contractual rights in Yahoo's TOS trump the estate's copyright. In other words, they limit the family's access to the copy of the copyrighted materials. Their argument can be simplified by saying that they are merely a holder of the email content and the right of access to the content disappears upon the death of the account holder. The Yahoo account was governed by contract law and, by accepting the terms of service, Justin agreed that his account was not transferable.
The case raises many questions and provides few answers. Nonetheless, it is clear that the law will not have ready made answers to the questions raised by technology related or virtual assets.
Click here for part two of this series
Click here for part four of this series
The case easily illustrates the complexity of dealing with e-mail accounts. The 2005 Michigan probate was the estate of a marine Justin Ellsworth, who was killed in Iraq. Mr. Ellsworth's parents sought to recover the contents of their son's Yahoo! e-mail account. Yahoo refused Justin's parents' request based upon its Terms of Service (TOS) which indicate that a Yahoo! account is non-transferable and terminates at death.
Yahoo's terms of service:
No Right of Survivorship and Non-Transferability. You agree that your Yahoo! account is non-transferable and any rights to your Yahoo! ID or contents within your account terminate upon your death. Upon receipt of a copy of a death certificate, your account may be terminated and all contents therein permanently deleted.
Yahoo argued that they needed to enforce the privacy rights of their account holders. Elsewhere in the terms of service, Yahoo indicated certain instances upon which it could release private information.
Yahoo's terms of service
You acknowledge, consent and agree that Yahoo! may access, preserve and disclose your account information and Content if required to do so by law or in a good faith belief that such access preservation or disclosure is reasonably necessary to: (i) comply with legal process; (ii) enforce the TOS; (iii) respond to claims that any Content violates the rights of third parties; (iv) respond to your requests for customer service; or (v) protect the rights, property or personal safety of Yahoo!, its users and the public.
Justin's parents were able to obtain an order from the Oakland County Michigan probate court ordering Yahoo to turn over the emails in the account. Yahoo complied with the court order, although the account password itself was never provided to the estate. Instead, Yahoo produced a CD containing the emails and indicated that it would also produce paper copies to the family.
The case brings a number of important questions to light. What exactly is the actual property owned by the estate? Is it the underlying source code? Is it the writings of the account holder? What about writings other people wrote to the account holder? What about the privacy rights and copyright rights of email senders and recipients?
With respect to copyright issues, the estate certainly had copyright in the emails composed by Justin Ellsworth and possibly implied consent for use of those emails received by Justin Ellsworth. It is important to note that Yahoo never made a claim of ownership over the emails in Justin Ellsworth's account. In fact, their TOS explicitly rejects this.
Yahoo's TOS:
Yahoo! does not claim ownership of Content you submit or make available for inclusion on the Yahoo! Services
Even if an estate has a copyright in the material contained in an email, the estate may not necessarily have the right to access the information. It can be argued, and Yahoo did argue, that the contractual rights in Yahoo's TOS trump the estate's copyright. In other words, they limit the family's access to the copy of the copyrighted materials. Their argument can be simplified by saying that they are merely a holder of the email content and the right of access to the content disappears upon the death of the account holder. The Yahoo account was governed by contract law and, by accepting the terms of service, Justin agreed that his account was not transferable.
The case raises many questions and provides few answers. Nonetheless, it is clear that the law will not have ready made answers to the questions raised by technology related or virtual assets.
Click here for part two of this series
Click here for part four of this series
Monday, November 8, 2010
A new breed of assets for planners
The vast majority of probate estates are straightforward... and tangible. Or maybe it is right to say that the vast majority of probate assets are tangible assets. Until recently, obscure intangible assets were rare. Technology has transformed even the most mundane estates into a walk through the world of contract and intellectual property law. Email or the asset that constitutes email creates a whole new set of questions for attorneys to address. Before the internet, personal correspondence was a simple concept. Someone wrote on a piece of paper. Certainly, the law of intellectual property and copyright might make an appearance in a theoretical review of the laws related to a physical letter, but it is pretty clear that physical letters are tangible assets that form part of a decedent's personal estate.
E-mail is a letter in electronic form. That's simple enough or at least it may seem so. If only it were that easy. The situation is made even more complicated because of the different ways email can be processed. There are at least two types of e-mail: POP-based and Web-based. POP-based email is usually downloaded to and stored on a local computer or other device. Web-based email is remotely accessed in via a password in a remote account and stored in one or more jurisdictions by an e-mail provider. Already, the issue of ownership of e-mail has become murky. What exactly is the e-mail and who should it belong to?
There is still an unsettled debate as to the exact nature of e-mail. Again, POP-based email is seems easy enough to deal with if it is all downloaded to a central computer and that computer is gifted to the same person who is the intended recipient of the e-mail. However, what if the electronic correspondence is of value and the recipient of the computer is different from the recipient of the e-mail? What if the e-mail is stored on multiple devices such as a desktop computer, cell phone, iPad, and netbook computer? Web-based email presents even more problems. What if the web-based account provider does not provide for transfer of the email account? What if the personal representative does not have a password? In a "normal" estate, one of the first things a personal representative is counseled to do it to have the U.S. Mail of a decedent forwarded to the representative's address. What about electronic mail? What if the decedent was receiving bills via email? Will the representative be able to get to the account?
These issues only begin to scratch the surface of a complex area that is still very much developing on a day to day basis. In the next installment, I'll give an example of this complexity in practice - the case of the Estate of Justin M. Ellsworth and Yahoo! email.
click here to go to part one
click here to go to part three
E-mail is a letter in electronic form. That's simple enough or at least it may seem so. If only it were that easy. The situation is made even more complicated because of the different ways email can be processed. There are at least two types of e-mail: POP-based and Web-based. POP-based email is usually downloaded to and stored on a local computer or other device. Web-based email is remotely accessed in via a password in a remote account and stored in one or more jurisdictions by an e-mail provider. Already, the issue of ownership of e-mail has become murky. What exactly is the e-mail and who should it belong to?
There is still an unsettled debate as to the exact nature of e-mail. Again, POP-based email is seems easy enough to deal with if it is all downloaded to a central computer and that computer is gifted to the same person who is the intended recipient of the e-mail. However, what if the electronic correspondence is of value and the recipient of the computer is different from the recipient of the e-mail? What if the e-mail is stored on multiple devices such as a desktop computer, cell phone, iPad, and netbook computer? Web-based email presents even more problems. What if the web-based account provider does not provide for transfer of the email account? What if the personal representative does not have a password? In a "normal" estate, one of the first things a personal representative is counseled to do it to have the U.S. Mail of a decedent forwarded to the representative's address. What about electronic mail? What if the decedent was receiving bills via email? Will the representative be able to get to the account?
These issues only begin to scratch the surface of a complex area that is still very much developing on a day to day basis. In the next installment, I'll give an example of this complexity in practice - the case of the Estate of Justin M. Ellsworth and Yahoo! email.
click here to go to part one
click here to go to part three
Friday, November 5, 2010
Probate and estate planning law and virtual or digital assets
Here is a topic I will spend a few posts on. Technology is moving at a blistering pace. Unfortunately, the law rarely moves fast enough to keep up. According to a Pew Research Center August 2010 report, 66% of all adults in America have a high speed broadband internet account. The world of modern technology and widespread access to the on-line world has created new challenges to estate planners, probate attorneys, and their clients as new forms of assets and doing business are created and evolve. Most of these new challenges created by the online world have not yet been addressed directly by the law. At the dawn of the internet, there were certainly technology issues, but they were relatively minor in comparison to today's issues. The widespread adoption of the internet and other modern technology has brought new issues to the fore. Just as people must plan for their mortal death, they must also plan for their digital death. Careful estate planning and probate practitioners should be proactive to minimize the confusion and complexities caused by the advance of modern technology. Tomorrow's executors, administrators, heirs, and legatees will benefit from a focus on technology today.
click here to go to part two
Tuesday, September 28, 2010
Hardship Letters are Hard
In the wake of the housing bubble, many homeowners have sought various non-foreclosure remedies from their lenders. These range from loan modifications to short sales and deeds in lieu of foreclosure.
In almost all instances, the loss mitigation department of the lender will require, among other things, that the delinquent borrower produce a "hardship letter". Google the term and you will find LOTS of examples. In fact, there is one very common one that seems to be repeated over and over on many sites. Here's an old but excellent article on how "Not to write a Hardship Letter". The article actually picks apart this "common" hardship letter and explains what a bank loss mitigation specialist is looking for when they read a hardship letter.
In almost all instances, the loss mitigation department of the lender will require, among other things, that the delinquent borrower produce a "hardship letter". Google the term and you will find LOTS of examples. In fact, there is one very common one that seems to be repeated over and over on many sites. Here's an old but excellent article on how "Not to write a Hardship Letter". The article actually picks apart this "common" hardship letter and explains what a bank loss mitigation specialist is looking for when they read a hardship letter.
Tuesday, September 7, 2010
Court clarifies rule on eviction notices
The Illinois Appellate Court of Illinois in a new case, Figuero v. Deacon, has clarified the law with respect to the service of a notice of termination of tenancy when a tenant is in actual possession of a premises.
735 ILCS 5/9-211 provides the rules related to service of demand or notice for an eviction as follows: "Any demand may be made or notice served by delivering a written or printed, or partly written and printed, copy thereof to the tenant, or by leaving the same with some person of the age of 13 years or upwards, residing on or in possession of the premises; or by sending a copy of the notice to the tenant by certified or registered mail, with a returned receipt from the addressee; and in case no one is in the actual possession of the premises, then by posting the same on the premises.”
The court determined that the list of methods for service of process are exhaustive and, as the forcible entry and detainer action (eviction) is a special statutory proceeding that is in derogation of the common law, the statute must be strictly enforced. Factually, the landlord did not deliver a copy of the termination notice to the tenant but instead posted the notice on the door and slid another copy under the door. To proceed with the case would violate the tenant's due process rights. As a properly served notice of termination is jurisdictional, the case could not proceed.
Landlords would be well advised to serve notice either through personal service or certified mail (with certified mail having the additional difficulty of requiring proof of delivery) when processing an eviction of their tenants.
735 ILCS 5/9-211 provides the rules related to service of demand or notice for an eviction as follows: "Any demand may be made or notice served by delivering a written or printed, or partly written and printed, copy thereof to the tenant, or by leaving the same with some person of the age of 13 years or upwards, residing on or in possession of the premises; or by sending a copy of the notice to the tenant by certified or registered mail, with a returned receipt from the addressee; and in case no one is in the actual possession of the premises, then by posting the same on the premises.”
The court determined that the list of methods for service of process are exhaustive and, as the forcible entry and detainer action (eviction) is a special statutory proceeding that is in derogation of the common law, the statute must be strictly enforced. Factually, the landlord did not deliver a copy of the termination notice to the tenant but instead posted the notice on the door and slid another copy under the door. To proceed with the case would violate the tenant's due process rights. As a properly served notice of termination is jurisdictional, the case could not proceed.
Landlords would be well advised to serve notice either through personal service or certified mail (with certified mail having the additional difficulty of requiring proof of delivery) when processing an eviction of their tenants.
Tuesday, August 3, 2010
Tips for Renters
Here are some tips for renters looking to find the right place.
1) Always remember that there are lots of rental units on the market. This is a renter's/buyer's market. If something does not smell right, walk away.
2) Consider using a real estate agent. In the downturn, many real estate agents have gotten into the game of showing apartments. It costs nothing from the renter's pocket to use an agent. Agents have access to MLS listings and can pre-arrange appointments to walk a potential renter through a number of units on the same day.
3) Tenants should be familiar with the Chicago Residential Landlord Tenant Ordinance and their rights under it vis a vis security deposits, prohibited lease provisions, and other required disclosures. It is actually better to find a landlord who complies rather than either 1) a landlord ignorant of the law or 2) a landlord who does not comply with the law.
4) Check the cook county clerk of the circuit court website to see if your potential landlord is a party to any lawsuits, especially foreclosures. You can also check the recorder of deeds website to see if there are any lis pendens recorded against the property. Building code violations can also be a good clue that the landlord has a big problem. Landlords involved in foreclosures are usually not going to be good landlords nor will a tenant's tenancy likely extend the full term.
5) If the landlord agrees that anything is to be done before a tenant moves in, the tenant should not move in before the work is done. This should be a provision in the lease excusing the tenant from performance until the landlord completes any necessary work. For instance, if a landlord is supposed to paint a bedroom but does not, a tenant can safely assume that most likely this is 1) probably the landlord's normal practice and 2) the yob will probably never get done. Tenants should negotiate a small hold fee or security deposit until any of those sorts of things are completed. A landlord who waits on those sorts of things is likely waiting for the tenant's deposit to have the money to do whatever work needs to be done or does not really intend to do the work.
6) Tenants should not spend their own money on a rental unit until they are sure that they will be staying/leasing. I was contacted a few months ago by a lady who told me that she had terrible allergies. After doing massive remodeling in the property, she told me she discovered mold in the unit and it was hazardous for her to live there. The landlord had committed numerous CRLTO violations that would give her a right to terminate the lease. The tenant declined to move because she "spent so much money fixing the place up". True story. Don't do this.
7) Plan in advance. A tenant should look in plenty of time before needing to move. Tenants should not get caught in a situation where they must move and then might have to accept a less than optimal situation.
8) Tenants should inspect a rental unit THOROUGHLY. Check under the kitchen sink or in places where water flows for mold. See how drafty the windows are. Listen for traffic/train noise. Make sure everything works (turn on anything that might leak and let it run for a while to be sure). Make sure there are no stains in the carpet being hidden. Look "UP" - at the ceilings for signs of water damage or repairs to water damage. Document the condition of the place. Take pictures. Sign something that indicates any bad conditions that exist at the start of the tenancy so there is not question as to who is on the hook at the end of the tenancy.
9) Prospective tenants should talk to other tenants in the building to get a sense of the landlord's responsiveness and practices. If things are bad, other tenants will usually say so.
10) Tenants should go with their gut and should not act stupid. Trust instincts when they say "run". Do NOT trust a landlord that does not have paperwork or copies available - if you don't get your lease and receipt up front, you might never get it.
I could probably go on and on, but those should give tenant's a good head start on having a successful run as a tenant.
1) Always remember that there are lots of rental units on the market. This is a renter's/buyer's market. If something does not smell right, walk away.
2) Consider using a real estate agent. In the downturn, many real estate agents have gotten into the game of showing apartments. It costs nothing from the renter's pocket to use an agent. Agents have access to MLS listings and can pre-arrange appointments to walk a potential renter through a number of units on the same day.
3) Tenants should be familiar with the Chicago Residential Landlord Tenant Ordinance and their rights under it vis a vis security deposits, prohibited lease provisions, and other required disclosures. It is actually better to find a landlord who complies rather than either 1) a landlord ignorant of the law or 2) a landlord who does not comply with the law.
4) Check the cook county clerk of the circuit court website to see if your potential landlord is a party to any lawsuits, especially foreclosures. You can also check the recorder of deeds website to see if there are any lis pendens recorded against the property. Building code violations can also be a good clue that the landlord has a big problem. Landlords involved in foreclosures are usually not going to be good landlords nor will a tenant's tenancy likely extend the full term.
5) If the landlord agrees that anything is to be done before a tenant moves in, the tenant should not move in before the work is done. This should be a provision in the lease excusing the tenant from performance until the landlord completes any necessary work. For instance, if a landlord is supposed to paint a bedroom but does not, a tenant can safely assume that most likely this is 1) probably the landlord's normal practice and 2) the yob will probably never get done. Tenants should negotiate a small hold fee or security deposit until any of those sorts of things are completed. A landlord who waits on those sorts of things is likely waiting for the tenant's deposit to have the money to do whatever work needs to be done or does not really intend to do the work.
6) Tenants should not spend their own money on a rental unit until they are sure that they will be staying/leasing. I was contacted a few months ago by a lady who told me that she had terrible allergies. After doing massive remodeling in the property, she told me she discovered mold in the unit and it was hazardous for her to live there. The landlord had committed numerous CRLTO violations that would give her a right to terminate the lease. The tenant declined to move because she "spent so much money fixing the place up". True story. Don't do this.
7) Plan in advance. A tenant should look in plenty of time before needing to move. Tenants should not get caught in a situation where they must move and then might have to accept a less than optimal situation.
8) Tenants should inspect a rental unit THOROUGHLY. Check under the kitchen sink or in places where water flows for mold. See how drafty the windows are. Listen for traffic/train noise. Make sure everything works (turn on anything that might leak and let it run for a while to be sure). Make sure there are no stains in the carpet being hidden. Look "UP" - at the ceilings for signs of water damage or repairs to water damage. Document the condition of the place. Take pictures. Sign something that indicates any bad conditions that exist at the start of the tenancy so there is not question as to who is on the hook at the end of the tenancy.
9) Prospective tenants should talk to other tenants in the building to get a sense of the landlord's responsiveness and practices. If things are bad, other tenants will usually say so.
10) Tenants should go with their gut and should not act stupid. Trust instincts when they say "run". Do NOT trust a landlord that does not have paperwork or copies available - if you don't get your lease and receipt up front, you might never get it.
I could probably go on and on, but those should give tenant's a good head start on having a successful run as a tenant.
Thursday, July 22, 2010
"TI" Time for Taxes
Cook County taxes are supposed to come out in September. Everyone, including lenders, knows this.
Cook County taxes usually come out later and sometimes much later. Lenders don't care.
We are now entering "TI Season". That's the time where lenders begin to require home buyers who escrow their tax payments to place funds in a TI for the second installment of Cook County real estate taxes. "TI" stands for "title indemnity". It is simply an escrow held by a title company so that the title company can provide insurance over some issue. TIs are not only used for taxes, but at this time of year, that is their most common purpose.
The process works like this. The lender says "taxes will be out in September and we will not have our buyer set up in our system in time to make that tax payment, so we will need the title company to guarantee that the taxes for 2009 second installment taxes are paid". The title company says "ok, we'll guarantee that the taxes will be paid, but we'll need to hold some money for those taxes and once the tax bill comes out, we'll pay the bill and return any overage in the TI account to the home buyer".
In order to accomplish this, the home buyer will have to put one and one half to two times the first installment tax bill into the TI account with the title company and will have to pay a TI or title indemnity fee, a fee for a tax bill, and a tax payment fee. These fees regularly range from $150 to $200.
Rumors we have heard say that the tax bill this year may come out as late as December 15, 2010. That means that from here on out in 2010, any buyer expecting to escrow for property taxes can also expect to fund a title indemnity for the second installment of 2009 taxes.
Note: this is not a problem in counties other than Cook County. In all other Illinois counties, the tax bill comes out in one bill and both the first and second installments are already know.
Cook County taxes usually come out later and sometimes much later. Lenders don't care.
We are now entering "TI Season". That's the time where lenders begin to require home buyers who escrow their tax payments to place funds in a TI for the second installment of Cook County real estate taxes. "TI" stands for "title indemnity". It is simply an escrow held by a title company so that the title company can provide insurance over some issue. TIs are not only used for taxes, but at this time of year, that is their most common purpose.
The process works like this. The lender says "taxes will be out in September and we will not have our buyer set up in our system in time to make that tax payment, so we will need the title company to guarantee that the taxes for 2009 second installment taxes are paid". The title company says "ok, we'll guarantee that the taxes will be paid, but we'll need to hold some money for those taxes and once the tax bill comes out, we'll pay the bill and return any overage in the TI account to the home buyer".
In order to accomplish this, the home buyer will have to put one and one half to two times the first installment tax bill into the TI account with the title company and will have to pay a TI or title indemnity fee, a fee for a tax bill, and a tax payment fee. These fees regularly range from $150 to $200.
Rumors we have heard say that the tax bill this year may come out as late as December 15, 2010. That means that from here on out in 2010, any buyer expecting to escrow for property taxes can also expect to fund a title indemnity for the second installment of 2009 taxes.
Note: this is not a problem in counties other than Cook County. In all other Illinois counties, the tax bill comes out in one bill and both the first and second installments are already know.
Monday, June 7, 2010
Will County Foreclosure Mediation
Just hours ago, the Illinois Supreme Court announced a program that will use mediation as a means of possibly reducing the burden of foreclosures in Illinois. The program will begin in the Circuit Court of Will County. Court has proposed this new program as a way to prevent vacant and abandoned homes and to keep families in their homes. The program will require any residential foreclosure complaint to be scheduled for mandatory pre-mediation. The mediation will focus on determining, with an outside mediator, whether or not a loan modification or other resolution can be found. If not, the mediation can be used to facilitate a consent foreclosure or the waiver of any deficiency against the borrower. Lenders will be required to participate in the program in food faith or face sanctions, including the possible dismissal of the foreclosure.
The program will be paid for by an increase in plaintiff's filing fees for each foreclosure from $276 to $426.
The program will be paid for by an increase in plaintiff's filing fees for each foreclosure from $276 to $426.
Wednesday, June 2, 2010
Fannie Mae's new rules for post-shortsale buyers
Many people wonder "what is the effect of a short sale on the ability to get a loan in the future"?
Fannie Mae, the company that securitizes mortgage loans, making them more affordable and the entity largely responsible for the guidelines that regulate most conventional mortgages, has provided a bit of an answer. Fannie Mae has released announcement SEL-2010-05 which sets forth the new requirements for home buyers to obtain a new loan if they have participated in a "pre-foreclosure event" (ie. a pre-foreclosure sale, a short sale, or a deed in lieu of foreclosure). Until now, there was no policy on short-sales. The new regulations go into effect on July 1, 2010.
For borrowers with a pre-foreclosure event in their past, there will be a waiting period before a new loan can be obtained. The amount of downpayment provided by the borrower will affect the length of the waiting period. The periods are as follows:
20% downpayment - 2 years
10% downpayment - 4 years
less than 10% downpayment - 7 years
The waiting period begins upon the completion date of the pre-foreclosure event. In addition, after 2 years with 90% LTV and with extenuating circumstances, a lender may be able to obtain an exception to the waiting period.
Guidelines can change on a regular basis, but for know, property owners considering a short sale or a deed in lieu of foreclosure will at least have an idea of some of the consequences of the pre-foreclosure event.
Fannie Mae, the company that securitizes mortgage loans, making them more affordable and the entity largely responsible for the guidelines that regulate most conventional mortgages, has provided a bit of an answer. Fannie Mae has released announcement SEL-2010-05 which sets forth the new requirements for home buyers to obtain a new loan if they have participated in a "pre-foreclosure event" (ie. a pre-foreclosure sale, a short sale, or a deed in lieu of foreclosure). Until now, there was no policy on short-sales. The new regulations go into effect on July 1, 2010.
For borrowers with a pre-foreclosure event in their past, there will be a waiting period before a new loan can be obtained. The amount of downpayment provided by the borrower will affect the length of the waiting period. The periods are as follows:
20% downpayment - 2 years
10% downpayment - 4 years
less than 10% downpayment - 7 years
The waiting period begins upon the completion date of the pre-foreclosure event. In addition, after 2 years with 90% LTV and with extenuating circumstances, a lender may be able to obtain an exception to the waiting period.
Guidelines can change on a regular basis, but for know, property owners considering a short sale or a deed in lieu of foreclosure will at least have an idea of some of the consequences of the pre-foreclosure event.
Tuesday, April 20, 2010
Pre-Closing Possession
For one reason or another, a Buyer may need to take possession of real estate before a closing. For instance, if there is a "dry-closing" (ie. one where the lender fails to fund but all other parts of the closing are done and the lender's funding should take place shortly thereafter), a Seller may be willing to allow a Buyer to take early possession of real estate. Most attorneys disfavor pre-closing possession. Why? Mostly because of liability concerns. What if the deal fails to close? What if the Buyer discovers a condition in the property that causes the Buyer to decline to close? What if the Buyer burns down the property? What if the Buyer's property moved into the real estate is stolen?
A proper and well thought out pre-closing possession agreement can address some of those concerns. While granting possession only at the time of closing is preferable, sometimes pre-closing possession is necessary.
What happens if, having transferred possession, the property is destroyed? In such as case, the Illinois Uniform Vender and Purchaser Risk Act shall apply. Unless specifically disclaimed or modified, all real estate contracts in Illinois are subject to the Act.
The act provides first that when neither legal title nor possession of the real estate have been transferred, in the case that all or a material portion of the real estate are destroyed without purchaser's fault, the Seller can not enforce the contract against the Buyer.
The act makes provision, however, for pre-closing possession. When either legal title or possession of the real estate has been transferred, in the case that all or a material portion of the real estate are destroyed without Seller's fault, then in such a case, the Buyer is not relieved of the duty to purchase the real estate.
Thus, if a buyer takes pre-closing possession of a property and the real estate burns down, the Buyer is still on the hook to buy the property.
A proper and well thought out pre-closing possession agreement can address some of those concerns. While granting possession only at the time of closing is preferable, sometimes pre-closing possession is necessary.
What happens if, having transferred possession, the property is destroyed? In such as case, the Illinois Uniform Vender and Purchaser Risk Act shall apply. Unless specifically disclaimed or modified, all real estate contracts in Illinois are subject to the Act.
The act provides first that when neither legal title nor possession of the real estate have been transferred, in the case that all or a material portion of the real estate are destroyed without purchaser's fault, the Seller can not enforce the contract against the Buyer.
The act makes provision, however, for pre-closing possession. When either legal title or possession of the real estate has been transferred, in the case that all or a material portion of the real estate are destroyed without Seller's fault, then in such a case, the Buyer is not relieved of the duty to purchase the real estate.
Thus, if a buyer takes pre-closing possession of a property and the real estate burns down, the Buyer is still on the hook to buy the property.
Wednesday, March 17, 2010
Sheriff Dart Fined for Slow Evictions
Cook County Sheriff Tom Dart who gained fame a few years ago by refusing to enforce evictions is foreclosure cases has been slammed by a Cook County Judge and ordered to pay a landlord $1400 for taking until February 16, 2010 to enforce an eviction order entered on August 24, 2009. That's about a six month wait. The Sheriff's office argues that manpower shortages, eviction backlogs, and a problem with the eviction order caused the delay.
Landlords are often surprised that it takes so long for the Sheriff to enforce an eviction. In my experience, the winter is always worse for evictions. Because of the holiday eviction moratorium and the delays caused by inclement weather, evictions in the winter used to back up quite a bit. These days, despite changes in the procedures at the Sheriff's office that allow for less time spent by the officers enforcing evictions, evictions take six to eight weeks in the good times and ten or eleven weeks during the winter.
Worse yet, the Sheriff's office has procedures in place to assist the elderly, disabled, and people with children with their move out. This sounds good in theory, but in practice, it adds a great deal of time to the process. There are bad apples out there among the ranks of both Landlords and Tenants, however, a Landlord with a mortgage can't afford to wait as long as it currently takes to get their tenants out.
Landlords are often surprised that it takes so long for the Sheriff to enforce an eviction. In my experience, the winter is always worse for evictions. Because of the holiday eviction moratorium and the delays caused by inclement weather, evictions in the winter used to back up quite a bit. These days, despite changes in the procedures at the Sheriff's office that allow for less time spent by the officers enforcing evictions, evictions take six to eight weeks in the good times and ten or eleven weeks during the winter.
Worse yet, the Sheriff's office has procedures in place to assist the elderly, disabled, and people with children with their move out. This sounds good in theory, but in practice, it adds a great deal of time to the process. There are bad apples out there among the ranks of both Landlords and Tenants, however, a Landlord with a mortgage can't afford to wait as long as it currently takes to get their tenants out.
Saturday, March 6, 2010
Convenience Accounts in Illinois
Beginning on Janaury 1, 2010, a new law, the Illinois Banking Convenience Account for Depositors Act, went into effect. The law provides a new way to add another person to a bank account without making the account a gift or a pay on death with that other person. Illinois banking institutions may now offer "convenience accounts". The person establishing the account can designate another party who will have the right to deposit and withdraw from the account without the right to take over the account as a gift upon the death of the person establishing the account. This can be an effective tool for people who need help doing bills or doing bank transactions but who do not wish to have a co-owner or to remove the account from that person's other estate planning instructions. The law has a sunset provision, so it expires in 2015.
Tuesday, February 23, 2010
Where there's a will...
I received a call from a lady today who told me that her cousin had passed away. The caller was power of attorney agent for her cousin. After the cousin died, the lady tried to go to the bank to get into the cousin's safe deposit box. The bank refused her access to the box. She told me that the bank indicated that she could get a "court order" to enter the box. I suspect that the bank was talking about opening a probate estate to get "Letters of Authority" to represent her deceased cousin's estate. I aksed the lady if there was an estate plan. She told me it was probably in the safe deposit box.
Uncommon? Nope. Most people, quite correctly, keep their important documents, their will or other estate planning documents, in their safe deposit box. But what happens if the executor, power of attorney agent, or other family member is not listed as a person authorized to access the box?
The State of Illinois comes to the rescue. The Safety Deposit Box Opening Act (755 ILCS 15) allows an "interested party" to provide an affidavit to any bank controlling a safe deposit box of a deceased person to file an affidavit with the bank indicating that the person is interested in filing the deceased person's will or making arrangements for the deceased person's funeral and the person believes the box may contain the will or burieal documents of the deceased person and the bank in control of the box may then open the box to search for a will or codecil to a will. If a will or cedecil is found, the bank has a legal obligation to file the will or codecil with the probate court will depository in the County where the bank is located.
As a result, it makes a lot of sense to keep a will in a safe deposit box. The real trick is letting everyone know where the bank is.
Uncommon? Nope. Most people, quite correctly, keep their important documents, their will or other estate planning documents, in their safe deposit box. But what happens if the executor, power of attorney agent, or other family member is not listed as a person authorized to access the box?
The State of Illinois comes to the rescue. The Safety Deposit Box Opening Act (755 ILCS 15) allows an "interested party" to provide an affidavit to any bank controlling a safe deposit box of a deceased person to file an affidavit with the bank indicating that the person is interested in filing the deceased person's will or making arrangements for the deceased person's funeral and the person believes the box may contain the will or burieal documents of the deceased person and the bank in control of the box may then open the box to search for a will or codecil to a will. If a will or cedecil is found, the bank has a legal obligation to file the will or codecil with the probate court will depository in the County where the bank is located.
As a result, it makes a lot of sense to keep a will in a safe deposit box. The real trick is letting everyone know where the bank is.
Thursday, February 18, 2010
Looking for a Speaker?
In the last month or so, I have developed a pretty darn good (if I say so myself) presentation on the plethora of laws (local, state, and federal) affecting Chicago landlords when making a lease. I've presented the seminar to a group of ReMax agents and their clients and will be presenting again next week for Real Living Helios. I would be happy to make that same presentation to any interested landlord groups, real estate brokers or their clients. Anyone who is interested can feel free to contact me at http://illinois-attorney.com/contact.
Wednesday, February 17, 2010
Hey, Buyer, is a short sale for you?
Short sales get you a house at a big value, but they come at a cost! I would say that, for one reason or another, only about 50% of the short sales that our office handles for Buyers actually close. The reasons they fail to close are many and varied. Most commonly, they fail to close because the Seller's bank does not approve the short sale offer, the buyer can't get financing, the real estate's value changes during the long wait between contract and closing, a new buyer is found, or the buyer gets sick of waiting. This is not to say that short sales do not close, but they are a challenge.
During a short sale transaction, the Buyer has to serve two masters - one who says "wait, we need the Seller's bank to approve this deal" and the other who says "as soon as the Seller's bank is ready, you had better be ready to close at a moment's notice". It can be difficult to serve both masters at once. In a short sale transaction, patience is a virtue. The main question for a short sale buyer is “How long can you wait?” The answer is easier if the property the question is not necessary for immediate residential occupancy. For someone who really needs to move into their new short sale purchased home, a short sale is a disaster waiting to happen. Delays are the norm. A short sale Buyer can't count on the contract closing date. Despite all the waiting, once the Seller's lender approves the sale, all of the parties must act fast to close the deal. Oftentimes, the short sale approval may only have a window of a week or so. A Buyer might feel like a yo-yo with all the waiting and edge of the seat preparedness. When the Buyer requires a loan to complete the purchase, because underwriting takes time, loan programs change, and lenders generally do not act quickly, the Buyer's lender may not be able to meet the Seller's lender's time table for closing.
Many Buyers do not want to waste money on their short sale transaction until they know that the deal will “happen”. If a lender does not approve a short sale, the Buyer could be out real money spent on appraisals, inspections, lender fees, rate locks, and attorneys fees. Thus, they try to hold off on obtaining an appraisal or inspection until they know the Seller's lender approves the deal. Oftentimes, the Seller will not agree to delay these items. From the Seller's perspective, the Seller does not want to spend months obtaining a short sale approval only to see the Buyer pull out because of inspection issues. As for the Buyer who wants to wait to get the lending process started, they might find that their lender is unable to close in time.
Even if costly items can be delayed, the delay may make the deal more difficult. If an inspection is performed after the Seller's lender's has approved the short sale, the buyer should not expect any inspection credits (to get those would require going back to square one in the Seller’s short sale approval process) and short sale sellers usually have no money of their own to put into the deal!
The short sale Buyer trades a great price for any right to complain about much of anything, including legal rights. The Seller's lender controls the game. Any short sale seller represented by a competent attorney will work to reduce the Buyer’s right to require a closing absent the approval of all third parties who are owed money. The Buyer generally has to play along. Again, this is part of the trade off for a “great” price, as the lender is normally swallowing a big loss. If the price is not great, the Buyer should not do the deal. After all, there are lots of properties for sale on the market these days.
After overcoming all of tribulations of getting to the closing closing table, the majority of short sale closings that do close usually require more than one day to close! A short sale closing begins like most others. However, the title companies usually need the seller’s lender to sign off on the sale or their payoff letter. This process usually causes delays. I have personally witnessed a seller's lender take a week to approve their already approved short sale payoff letter. Short sale closings can take a full day. They can be re-scheduled several times. They can take multiple days to close. All of these are possible in a short sale.
A short sale Buyer who is flexible, patient, and willing to "play the game" can find a real bargain in the real estate market. They just have to be willing to do what it takes to get that bargain.
During a short sale transaction, the Buyer has to serve two masters - one who says "wait, we need the Seller's bank to approve this deal" and the other who says "as soon as the Seller's bank is ready, you had better be ready to close at a moment's notice". It can be difficult to serve both masters at once. In a short sale transaction, patience is a virtue. The main question for a short sale buyer is “How long can you wait?” The answer is easier if the property the question is not necessary for immediate residential occupancy. For someone who really needs to move into their new short sale purchased home, a short sale is a disaster waiting to happen. Delays are the norm. A short sale Buyer can't count on the contract closing date. Despite all the waiting, once the Seller's lender approves the sale, all of the parties must act fast to close the deal. Oftentimes, the short sale approval may only have a window of a week or so. A Buyer might feel like a yo-yo with all the waiting and edge of the seat preparedness. When the Buyer requires a loan to complete the purchase, because underwriting takes time, loan programs change, and lenders generally do not act quickly, the Buyer's lender may not be able to meet the Seller's lender's time table for closing.
Many Buyers do not want to waste money on their short sale transaction until they know that the deal will “happen”. If a lender does not approve a short sale, the Buyer could be out real money spent on appraisals, inspections, lender fees, rate locks, and attorneys fees. Thus, they try to hold off on obtaining an appraisal or inspection until they know the Seller's lender approves the deal. Oftentimes, the Seller will not agree to delay these items. From the Seller's perspective, the Seller does not want to spend months obtaining a short sale approval only to see the Buyer pull out because of inspection issues. As for the Buyer who wants to wait to get the lending process started, they might find that their lender is unable to close in time.
Even if costly items can be delayed, the delay may make the deal more difficult. If an inspection is performed after the Seller's lender's has approved the short sale, the buyer should not expect any inspection credits (to get those would require going back to square one in the Seller’s short sale approval process) and short sale sellers usually have no money of their own to put into the deal!
The short sale Buyer trades a great price for any right to complain about much of anything, including legal rights. The Seller's lender controls the game. Any short sale seller represented by a competent attorney will work to reduce the Buyer’s right to require a closing absent the approval of all third parties who are owed money. The Buyer generally has to play along. Again, this is part of the trade off for a “great” price, as the lender is normally swallowing a big loss. If the price is not great, the Buyer should not do the deal. After all, there are lots of properties for sale on the market these days.
After overcoming all of tribulations of getting to the closing closing table, the majority of short sale closings that do close usually require more than one day to close! A short sale closing begins like most others. However, the title companies usually need the seller’s lender to sign off on the sale or their payoff letter. This process usually causes delays. I have personally witnessed a seller's lender take a week to approve their already approved short sale payoff letter. Short sale closings can take a full day. They can be re-scheduled several times. They can take multiple days to close. All of these are possible in a short sale.
A short sale Buyer who is flexible, patient, and willing to "play the game" can find a real bargain in the real estate market. They just have to be willing to do what it takes to get that bargain.
Wednesday, February 3, 2010
Taxes and taxes and taxes
Many folks will be seeing the first installment Cook County real property tax bills showing up in their mailbox shortly. This year, the County is looking for 55% of last year's full year bill. Then, when they raise your taxes in the fall, it will not seem like such a shock. Thanks for that Mr. Stroger.
In addition, the Assessor has implemented a bit of a shell game for reassessments. Beginning in 2009, the County has adjusted the formula used to arrive at an assessed value. Generally, the county has reduced the number of property classes and reduced the percent of fair market value for the classes to arrive at an assessed value. This can be confusing because a mere review of the assessor’s raw information comparing assessed values for 2008 to 2009 (or thereafter) will not be effective to adequately assess the change in assessed value.
To really have an “apples to apples” comparison of the two amounts, it is necessary to “back out” the figures to the assessor’s fair market value. A truly detailed review of the situation would compare the client’s increase to the median increase in their township.
Finally, residents in the north and northwest suburbs will be receiving their reassessment notices shortly. Be on the lookout and be aware of the time limits to appeal these taxes.
In addition, the Assessor has implemented a bit of a shell game for reassessments. Beginning in 2009, the County has adjusted the formula used to arrive at an assessed value. Generally, the county has reduced the number of property classes and reduced the percent of fair market value for the classes to arrive at an assessed value. This can be confusing because a mere review of the assessor’s raw information comparing assessed values for 2008 to 2009 (or thereafter) will not be effective to adequately assess the change in assessed value.
To really have an “apples to apples” comparison of the two amounts, it is necessary to “back out” the figures to the assessor’s fair market value. A truly detailed review of the situation would compare the client’s increase to the median increase in their township.
Finally, residents in the north and northwest suburbs will be receiving their reassessment notices shortly. Be on the lookout and be aware of the time limits to appeal these taxes.
Thursday, January 21, 2010
New Procedure for Evictions
Effective January 25, 2010, the Circuit Court of Cook County is now requiring all new municipal law lawsuits must be filed along with a civil cover sheet. The sheet is available on the Clerk of the Circuit Court's website. The form is number CCM 0520.
In addition, beginning on February 1, 2010, the Sheriff's office will charge $10 for each return of service computer printout requested.
In addition, beginning on February 1, 2010, the Sheriff's office will charge $10 for each return of service computer printout requested.
Subscribe to:
Posts (Atom)