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“6th Circuit loses patience with IRS”

Author By Christopher P. FinneyPosted on

The above headline — a great headline — greeted us from today’s Washington Post, for an article describing a decision issued today from the 6th Circuit Court of Appeals on the case in which we are local counsel — NorCal Tea Party v. United States of America.

That case addresses the abuses at the IRS over the segregation and targeting of conservative groups for slowed consideration of their tax exemption applications, and harassment in the form of illegal and over-burdening questioning and extra reviews of their applications.  It is the only case addressing the abuses at the IRS that is still proceeding and the only case to achieve class certification status.

In that case, the Plaintiffs are seeking the spreadsheets showing the list of the targeted groups, and certain details of the extra scrutiny they endured.  Federal District Court Judge Susan J. Dlott had ordered that the IRS produce that list.  The IRS first asked her to reconsider that decision and then appealed the decision to the 6th Circuit Court of Appeals.

Today’s opinion upheld that decision of Judge Dlott.  The decision is here.

Nominally, the decision was a detailed analysis of the taxpayer confidentiality statute, 26 USC Section §6103.  But the unanimous 6th Circuit panel decision authored by Judge Kethledge, did so much more than that.

  • First, it provided a detailed recitation of the alleged abuses of the IRS in targeting and discriminating against tea party groups;
  • It also laid out a scorching criticism of the IRS and its counsel for fighting every issue in the litigation, including discovery, beyond reason.

The opinion has garnered widespread media coverage as well:

Our firm is proud to participate in this historic and important litigation.

 

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Advanced commercial real estate law: Letters of intent, memoranda of understanding, and scribbles on the back of an envelope in Ohio

Author By Casey A. JonesPosted on

 

As a real estate attorney, I many times take for granted that experienced real estate professionals — Realtors, lenders, and investors — understand the fundamentals of real estate law.  And many times I am proven wrong in that assumption.

Just a few weeks ago, I again learned this lesson from real-life experience.

In that scenario, the parties signed a document entitled “letter of intent” for a million-dollar-plus property.  The document identified the property in question, the purchase price and the timing for the closing.

Later, the seller obtained another offer on the property and took the position that our “Letter of Intent” was not binding.  We took the opposite position and vigorously acted to enforce the newly-formed contact.

How is that so?

Statute of Frauds

First, we have extensively explored on this site the requirements of every state in the union that contracts for the purchase and sale of real estate (i) must be in writing and (ii) must be signed by the “party to be charged” therewith (i.e., the party who is to be sued on the contract). Grafton v. Cummings, 99 U.S. 100, 106 (1878); Smith v. Williams, 396 S.W.3d 296, 298 (Ky. 2012); Sanders v. McNutt, 72 N.E.2d 72, 75 (Ohio 1947). You may read more about that here.

What writing constitutes a contract?

Virtually any document that evidences a meeting of the minds between parties on the material terms of a transaction and that complies with the statute of frauds will be a binding contract for the purchase and sale of real estate. McGeorge v. White, 174 S.W.2d 532, 533 (Ky. Ct. App. 1943); Beasley v. ANG, Inc., 10th Dist. Franklin No. 12AP-1050, 2013-Ohio-4882, ¶ 8 (Ohio Ct. App., Nov. 5, 2013).

The title of the document does not matter.  The paper on which the contract is memorialized does not matter.  Whether it is written in pen, pencil, or crayon does not matter.

It simply matters that the material terms are in the document, the document is in writing and the document bears the signature of the “party to be charged therewith.”

Memoranda of understanding and letters of intent

Certainly, though, a document entitled so innocuously as a “letter of intent” or a “memorandum of understating” would not in and of itself be a binding agreement, right?  Wrong.

Sometimes the terms of a document — such as a letter of intent or memorandum of understanding — may say in the text that it is not binding upon the parties unless and until they sign a contract drafted by their attorneys and signed by the parties.  In such instance, by its own terms, the document is not a binding contract. See, e.g., John Wood Group USA, Inc. v. ICO, Inc., 26 S.W.3d 12, 17 (Ct. App. Tx. 2000) (“the parties expressly stated that the letter agreement ‘is not binding,’ with the exception of certain enumerated paragraphs”); Christ v. Brontman, 175 Misc. 2d 474, 477 (S.Ct. N.Y. 1997) (“Generally, if the language in the contract so provides, a real estate sales agreement which is subject to the approval of attorneys is not binding and enforceable until approved by the attorneys.”).

But in the absence of such “saving” language, a writing is a binding agreement on the terms set forth in such writing.

Again, the title of a document, or its brevity, could lead a buyer or seller to believe it is intended to be non-binding, and simply preliminary.  Buyers and sellers are lulled into erroneous understanding that the informal nature of the document, the shortened text, and/or the title mean that the document is not binding unless and until further documentation follows, carefully reviewed or drafted by counsel.  This is simply false as a matter of law.

Lot Reservation Agreements

This same logic extends to “Lot Reservation Agreements” in the context of a buyer-builder relationship.  A one-paragraph agreement that seems to be just a quick way to tie up a piece of property for a few weeks or months could in fact give rise to binding obligations assuming the agreements comply with other contract principles.

Principle extends to other agreements

Although the focus of this article is the purchase and sale of real estate, its contents could just as well apply to other legal transactions such as real estate leases, options, easements and license agreements, and to non-real estate transactions such as equipment leases, and the sale of a company or its assets.

The back of an envelope

We learn in law school that a buyer and seller can memorialize a contractual agreement on any type of paper, including the back of a used envelope.

About 20 years ago, to my surprise, I ended up being involved in a “back of the envelope” case.  There, the buyer sat on one side of a table and the seller’s Realtor was on the other side of a table.  The Realtor wrote out some basic bullet-point contract provisions, being the address of the subject property, the price and the closing date, on the back of a used legal-sized envelope.  The buyer, on the other side of the table, signed the document upside down! — he didn’t even bother turning around the writing and reading it.  A judge found that that crazy-looking instrument constituted a contract binding upon that buyer.

The lesson: It simply does not matter what kind of paper the contract is memorialized upon or even where and how the terms are written on that piece of paper.

Conclusion

As we frequently caution our clients, “it’s a dangerous world out there.”  You must carefully consider the consequences of your actions and those acting on your behalf.

 

Our title underwriter: First American

Author By Christopher P. FinneyPosted on

I recently was asked by a commercial real estate salesman desiring to refer to Ivy Pointe Title: “Who is your underwriter and what is the quality of their paper?”

Who is our underwriter?

We are proud to have been accepted as an agent for First American Title Insurance Co.  We write exclusively with First American as our title underwriter.

Who is First American?  

From their web site:

  • First American is the title insurance industry’s largest single brand name;
  • First American has been issuing title insurance for more than 120 years.

What are First American’s financial strength ratings?

  • Moody’s Investors Services: A3
  • AM Best: A Excellent
  • Fitch Ratings: A

Our firm obtains great support from the underwriting staff of First American and have a high degree of confidence in the coverage they provide to our clients and customers.

 

 

Growing Our Practice To Serve You Better

Author By Finney Law FirmPosted on

FLF_MtAdams_2

For the past two years Finney Law Firm and Ivy Pointe Title have expanded their service to clients with the addition of attorneys paralegals staff and technology.

We are pleased to enhance our service delivery with the addition of a second office in Mt. Adams. The new office has a gorgeous panoramic view of downtown, Over-the-Rhine and Northern Kentucky.

Our second location is:
1077 Celestial, Suite 10 Cincinnati
Ohio 45202

It is “Open for Business” for real estate closings depositions and confidential client conferences. Our team of transactional litigation and public interest attorneys is here to serve your legal needs … from both of our offices: Eastgate and Mt. Adams!

How a Will and Trust Factor Into Your Estate Planning

Author By Paul S. SianPosted on

Why You Need A WillA Will/Trust Can Offer Peace of Mind

Definitions:

Guardianship:  “A legal guardian is a person who has the legal authority (and the corresponding duty) to care for the personal and property interests of another person…”  Wikipedia “Legal Guardian”

Heir:  A person (can be a relative or non-relative) who inherits some physical, real or monetary property under a Will.

Probate Attorney: An attorney who specializes in estate planning, Wills, Trusts, and Probate.

Trust:  A relationship whereby some type of property (usually money but can be financial assets like stocks, bonds and personal/real property like a home with real estate, a car, jewelry etc.) is held by one party (Trustee) for the benefit of another (beneficiary).

Will:  A Legal document which expresses a person’s desires for distribution of their assets, guardianship designations for their underage children, designation of the Executor, burial preference and more upon their death.

The Will and Estate Planning

Under a will you can dictate how your assets will be distributed upon death.  The biggest benefit with this is your family members will have less reason to fight over your belongings after death since you have stated who will get what in the Will.  You can either give everything you own as a whole to whomever you choose (there are limitations for this if you are married) or you can separate out your assets and indicate how particular assets are to go to particular people.  For instance if you have a classic car that you and a sibling worked on and you would like for that car to be given to your sibling that can specified in the Will.

In the case where you are married, state laws usually prevent you from completely disinheriting your spouse.  That means you cannot say in your will that your spouse gets nothing and instead all your money should be given to someone else.  If you are at the point in your life where divorce is being considered, after the divorce has been finalized you should have a new Will made.   Children under the age of 18 are also usually protected from being Last Will and Testamentdisinherited under the Will through state laws.

Wills should generally be stored in a fire proof safe within the house.  Putting a will in a safe deposit box adds extra steps to the process since  a court order must be obtained in order to get access to the safe deposit box after death.  There also should be only one executed original of the Will.  Multiple executed copies of the Will can cause confusion and slow down the process in the event new Wills were prepared at a later date with new instructions.

Why a Will?

One of the constant things in our lives that experts are always talking about is death and taxes.  Until they can figure out a way to extend our lives to make us immortal or figure out a way to give everything to everyone at no cost, both death and taxes are matters that we should take time to think about.  One should not dwell on those topics with a negative sense of impending doom, but understand that if we are not around our loved ones still need to be taken care of.  With proper planning one can make sure our loved ones are provided for of in the event something does happen to us.  Yes there are life insurance and retirement accounts which offer protection to our family members in the event of our passing.  But did you ever stop to consider how is that money from the insurance and retirement accounts distributed?  Normally money from life insurance or retirement accounts  are given out based on the instructions in the beneficiary forms we all should have filled out when we set up those accounts.  Simple enough?  Maybe not.  What if your children are the only living people who will be inheriting from your accounts and they are under the age of 18?  What if you forget to fill out the beneficiary forms?  While most state laws would prohibit under age 18 children from receiving those monies outright, the state will give that money to some adult (usually a relative if there is one) to hold and manage that money for your children.

By not having a Will you have given up that choice of who should hold and manage the money for your children.  It is possible the court may give the money to someone who may not be ideal with managing their own money and may run into problems when faced when managing money held for your children.  While courts will try and give the money to the best choice available it is not always guaranteed since they don’t know your family and friends like you do.  Yes we all have our trustworthy relatives who most certainly can manage and hold the inheritance money until the kids are above age 18, and by naming them in the Will as Guardian or Trustee you know you made the decision and did not leave it to someone else.

Of course there is also the idea of your child getting full and unrestricted access to a large amount of money at age 18.  Just like that, your children can have access to a large amount of money at age 18 to spend as they like.  Yes the wiser among our children will use that money to put themselves through college and work on improving their life.  But without our guidance and input some children may be tempted to instead get a fancy new sports car to take them to and from their college classes.  Too many bad financial decisions are made when one is younger and as a result any inheritance a person may have can quickly run out.

The above scenarios are exactly where a Will can come in handy and prevent money from falling into the wrong hands or from being spent unwisely.  By setting up a Trust you can designate how the money will be distributed to your children, who will hold and manage that money, and you can even distribute the money over time to your children.  Through the use of a Trust you can set age limitations and education requirements (i.e. certain amounts are paid out to children only after getting a college degree) so as to limit when your child can get full access to the money.  While an 18 year old may not be able to handle a large sum of money at one time, a 23 year old who has went to college and worked some should better be able to handle their finances.  All of this and more can be done with the use of a Trust.

Guardianship

In the case where we may pass before our children are above age 18 a Will can also be used to set up Guardianship for our children.  Under the Guardianship provisions of a Will a person can name anyone over the age of 18 to be the legal guardian for their minor children in case of death.  In the absence of a Will stating a preference for Guardianship Probate Court will try and find close relatives to assume Guardianship of children under the age of 18 regardless of what your preference might have been.  With no legally signed Will the court can only guess what a person would have desired and instead will usually look at who best is capable to care for children while they are under the age of 18.

Additionally if there was no Trust set up to provide for children under the age of 18 the guardian of the children will most likely also get supervisory duties for any money the children have inherited.  Under this scenario the guardian is “supposed” to use the money for the children they are caring for, whether they do or not is another story.  A Will which names one person as guardian and a Trust names a separate person as Trustee allows an extra layer of protection for any inherited money.  Of course the extra layer of protection also requires extra steps to follow which may slow down the process of getting money to children when they need it.

The decisions to name particular people as guardians for your children should be discussed with the potential guardians ahead of time so there are no surprises.  Guardians can be grandparents, aunts and uncles, close friends, siblings who are over the age of 18 and more.  Naming non-relatives as guardians when you still have blood relatives who would want to care for the children could result in court battles.  Discussing before hand your desires with both the guardians and your blood relatives of your wishes can help prevent unnecessary fighting down the line.

The Trust and Estate Planning

The commonly recommended form of Trust to set up is called an “inter vivos trust” which basically means a trust set up during the lifetime of a person.  This type of trust can be funded at the time of creation or left unfunded.  To fund the trust upon creation you can use most any assets you currently have and transfer them into the trust.  If you have an unfunded trust the proceeds from life insurance, retirement accounts, and any remaining assets named in the Will can be directed into the trust upon death.  The person setting up the trust can act as the initial trustee if so desired.

Upon death or incapacity the Trustee for a trust can either be an individual or can be specific trust companies who are setup to manage trusts.  You can name any person as Trustee under your Will and should pick someone you find to be trustworthy with managing money.  Trust companies are usually registered businesses with fiduciary and legal obligations requiring proper maintenance and management of trust Trust as part of a will.accounts under their control.  Management costs associated with trust companies will generally be higher so it may only make sense to use them when there are large sums of inheritance money to be managed.

Additional Documents

A Probate Attorney who specializes in Estate and Gift Law would be best able to help you in preparing your Will, Trust and Guardianship Papers.  The Probate Attorney would sit down with you to discuss your individual and family situations in order to best draft a Will for you.  If you are married your spouse should attend along with you as your  spouse may have a mirror image Will that often names the same people as guardians, trustees and relatives who will inherit under the Will.  You should also look into getting a Power of Attorney (POA), Health Care Power of Attorney, and/or Living Will documents.

With a Power of Attorney document there are different types to consider but the main one recommended is a POA document that only comes into effect if you are somehow incapacitated and unable to make decisions.  This type of POA will help your spouse or children make decisions for you when you cannot.  Those decisions may include dealing with the mortgage company, filing taxes, selling certain property and more.   The amount of power given in that POA document can be tailored to your desires and needs.

With regards to health, there is the Health Care Power of Attorney document which allows someone to make medical decisions for you in the event you are unable to.  This is also a helpful document to have in that it can be presented to a doctor or hospital by your spouse, adult child or someone else you trust who can then be able to make medical decisions on your behalf.  Without a Health Care Power of Attorney someone you trust to make decisions for you may get little say in medical treatments a doctor may propose.

Adding on to the Health Care Power of Attorney is a document called a Living Will which allows you to state whether you wish to be maintained on life support indefinitely.  Some people wish to express a desire to not be maintained on life support whereas others prefer to be maintained on life support.  This is not a  document you must have, but it is something that you should be aware of in case you do want to make that preference be known.

Final Thoughts

A Will and Trust are valuable estate planning tools for taking care of your family when you are gone.  A Will ensures your assets are distributed according to your wishes and can be used to appoint guardians for underage children.  A Trust can protect your assets from estate taxes upon death and can provide for more control over how your assets are distributed.  Only by sitting down with an attorney and discussing your plans, desires and needs can you fully accomplish what you want with a Will, Power Of Attorney, Health Care Power of Attorney, or Living Will.

Do you need a Will, Power of Attorney, Health Care Power of Attorney, Medical Directive or do you have more questions about those documents?

Paul Sian is a licensed attorney in the States of Ohio and Michigan.  If you would like to have a will, power of attorney, health care power of attorney, medical directive prepared for you or someone in your family or have questions about your existing documents feel free to contact me at paul@finneylawfirm.isoc.net or via phone at 513-943-5668.  Connect with me on Twitter and Facebook.

Class open to the public: Chris Finney to teach “Property Tax Valuation Reduction” to Empower U

Author By Christopher P. FinneyPosted on

The Cincinnati-area adult continuing eduction series “Empower U” is presenting this Thursday night “Property Tax Valuation Reduction” by Chris Finney.

The Finney Law Firm has handled hundreds of property tax valuation complaints in Ohio and Kentucky in the past two years.  This course instructs home and business owners how they can — on their own — lower their property taxes.

The course is this Thursday night, March 3, at 7 PM at the Empower U Studio at 225 Northland Blvd.  You may RSVP here.  Also, the course will be a “virtual seminar” that you can watch on line.   Just click here after 6:50 PM on the night of the class.

The Empower U link for the announcement is here.

6th Circuit upholds Finney Law Firm victory in striking Ohio “False Statements” statute

Author By Christopher P. FinneyPosted on

On Wednesday, the 6th Circuit Court of Appeals upheld the decision of Federal District Court Judge Timothy Black to strike down Ohio’s “False Statements” statute as a violation of the First and Fourteenth Amendments to the United States Constitution.  The decision in  Susan B. Anthony List v. Ohio Elections Commission is here.  The Finney Law Firm represented in this litigation the Coalition Opposed to Additional Spending and Taxes (COAST), which had joined the litigation as an intervening Plaintiff.

The litigation commenced in 2010 when the Susan B. Anthony List put out press releases and attempted to erect billboards that explained that Congressman’s Steve Driehaus’ vote for the ObamaCare legislation was a vote for taxpayer funding of abortions.  Driehaus filed a “False Statements” complaint on the pronouncements before the Ohio Elections Commission.  Susan B. Anthony List sued, claiming the statute violated its free speech rights under the U.S. Constitution.  COAST intervened in the litigation claiming that it, too, desired to make these same statements but was “chilled” by the threat of administrative and criminal prosecution.

Under Ohio’s statutory scheme, anyone can bring before the Ohio Elections Commission a claim that someone uttered a “false statement” in the course of an election campaign, intending to impact the outcome of the election.  Then, the panel had to first decide if there was “probable cause” that the utterance violated the statute.  Discovery would ensue, and then a trial would be held to ascertain if the statement was knowingly false of reckless — in the judgment of three Republicans, three Democrats and an independent.  If so, they would make a public finding of falsehood, and could refer the matter for further criminal prosecution.

The problems, of course, with this process, include that (i) it places the judgment of campaign falsehood in the hands of highly political, non-attorney, non-judicial political appointees who fail to understand the breath of First Amendment protections, (ii) it becomes a cudgel in the hands of political opponents, and (iii) therefore has the effect of suppressing entirely truthful speech for fear of a protracted and expense

Over the decades that Ohio’s False Statements statute was in effect, there have been many attempts to challenge the constitutionality of the law, but the 6th Circuit previously had ruled that a very similar statute was constitutional.  Further, each new attempt to challenge the statute was rebuffed by trial courts and the appeals court as lacking “standing” to challenge the law.

In April of 2014, the Finney Law Firm went to the United States Supreme Court on that “standing” issue and prevailed 9-0 in a Clarence Thomas-authored opinion.  That decision is here.  That case was unique for many reasons, not the least of which was the varied amicus briefs the litigation attracted, including one from Ohio Attorney General Mike DeWine attacking the law, although he is the attorney charged under Ohio’s Constitution with defending it.  That June 2014 “victory” merely placed the decision back before the trial court.  In September of that year, Judge Timothy Black ruled in favor of Plaintiffs and permanently enjoined the statute.

Wednesday’s 6th Circuit ruling upheld that decision of Judge Black.

The Ohio Elections Commission can now either accept the 6th Circuit’s ruling, or can elect to ask all 15 judges on the 6th Circuit to review the ruling en banc or appeal that ruling to the United States Supreme Court.  In oral argument and a prior ruling in United States v. Alvarez and at oral argument in the Susan B. Anthony List case, both liberal and conservative members of the Court indicated that they thought statutes like Ohio’s are unconstitutional.  Further, the High Court accepts fewer than 1% of all cases presented to it.  Thus, this should be the “end of the line” for prosecution under Ohio’s False Statements statutes.

Finally, Finney Law Firm is currently prosecuting three cases in this vein: (i) the Susan B. Anthony List case, (ii) COAST v. Ohio Elections Commission (known as the “tweets” case that is pending before the 6th Circuit), and (iii) Magda v. Ohio Election Commission that is pending before the 10th District Ohio Court of Appeals in Columbus.  Wednesday’s victory should seal the fate in the other two cases as well.

In all, Wednesday was a good day for free speech in Ohio.

Media coverage of this decision is linked below:

Professor Volokh/Washington Post: Court strikes down Ohio ban on knowing or reckless falsehoods …

Cleveland Plain Dealer: Ohio politicians can legally lie in campaign ads, appeals court says

Columbus Dispatch: Appeals court strikes down ban on campaign lying

AP: Court axes law banning campaign lies

ABA Journal: Appeals court strikes down Ohio laws banning political lies

 

 

Real Estate Contracts During a Home Sale or Purchase

Author By Paul S. SianPosted on

Real Estate Contracts You Will Encounter During a Home Sale or Purchase

Real Estate Contracts You Will Encounter During a Home Sale or Purchase

Definitions used in this article:

Implied Contract: A contract created by actions of the parties involved and is not always in writing.  Courts usually look for a meeting of the minds to determine if an implied contract exists.

Explicit Contract: A contract created by a written document which is signed by all parties involved with the contract.

When buying or selling a home you will come across a number of different contracts that you will sign as part of the process. You may be wondering what all these contracts are and how do they impact you. This post provides a general explanation for the various contracts used in a real estate transaction and the functions they read the fine print in real estate contractsserve in the transaction process.

Buyer Representation Agreement

A Buyer Representation Agreement is an agreement between the home buyer and a real estate agent. The agreement generally states that the real estate agent will get a commission by helping the buyer find a home and assisting in the process of buying the home. The assistance aspects include taking the buyers to homes they want to see or suggesting homes for them to see; preparing the offer in accordance with the buyer instructions; negotiating on the buyers behalf with regards to any matter related to the home purchase; guiding the buyer along the home purchase process and more.

This type of contract should be in writing (explicit contract) to have maximum effect. Sometimes these agreements will also state that the real estate agent is due a commission regardless of whether or not the buyer uses the agent’s services or showed them a particular home. Some agreements may only require the payment of a commission if the real estate agent is the procuring cause of the sale (i.e. the agent showed a particular home to the buyers).

Sometimes a real estate agent may forgo having their buyer sign this type of document in order to not make the buyers feel pressured. Those agents may be proceeding under the assumption that they are under an implied contract with their buyers.  If the buyer who has not signed any agreement happens to purchase a home without the help of their real estate agent or another agent happens to put in an offer for the buyer, the agent may not be entitled to a commission. Whether the agent will get a commission will depend if it can be shown that they are the procuring cause and whether or not their broker will pursue a lawsuit to get the commission.

Seller Representation Agreement

A Seller Representation Agreement is an agreement between a real estate agent and a home seller for the purpose of listing the seller’s home on the market for sale. Generally most real estate brokers want these agreements to be explicit contracts signed by both the seller and the agent representing the broker so as to avoid any confusion as to duties and rights. Many states have laws governing the marketing of real estate by licensed real estate agents and usually do have other forms for the sellers to review and sign in order to indicate their understanding of how the real estate agent they have hired will work when it comes to representing them and other buyers and sellers.

The seller representation agreement usually has a start date, end date, terms regarding what will go and what will stay with the property, language regarding use of advertising signs, forms of advertising (internet), home warranty information and more. It should be noted that while the seller representation agreement may state what items will stay with the home after closing that agreement is not binding upon the seller and buyer since it is only an agreement between the seller and the real estate broker. If a buyer wants certain things to stay with the home those items should be specifically mentioned in the Offer to Purchase contract document talked about below.

Buyer Offer To Purchase

The buyer’s offer to purchase represents merely an offer until it is accepted in writing by the seller. Any counter offer by the seller represents a new offer. If the buyer rejects the seller counter offer the seller cannot go back and decide to accept the offer that was first presented unless the buyer agrees to it. While an offer to purchase or counter offer can be made verbally (implied contract) in order for the offer to be legally enforceable in court it must be in writing (explicit contract) in accordance with the Statute of Frauds. Anything not captured in writing will not be enforced in a court of law. Therefore if there is something from the house (movable kitchen island, curtains or other non-fixed window treatments etc.) that you would like to stay with the home it is best to make sure that item is specifically written in to your offer to purchase.

Generally earnest money is not a requirement of an offer to purchase residential real estate. Earnest money is used to show a good faith desire to enter into a purchase agreement but is not required by law. Earnest money is usually credited towards the buyer upon closing. The earnest money will be returned if the seller and the buyer are unable to come to agreement on an offer. If the seller or the buyer call off the offer to purchase due to some disagreement then usually any claim to the earnest money must be released by the seller in writing before the money can be returned to the buyer. If a seller refuses to release their claim to the money then the parties must go to court to have a judge decide who is entitled to the earnest money.

Just because either the buyer or the seller state they want to back out of the deal does not mean they can back out of the deal without both parties agreeing to cancel the Offer to Purchase. If one of the requirements (contingencies) of the offer of the offer is not met then the offer can be cancelled without consequence to either party. Contingencies such as financing, home inspection, selling another home first are some common contingencies found offers to purchase. If the buyer or seller wants to back out of the purchase offer for the simple fact they changed their mind they could be sued by the other side for breach of contract.

Mortgage Document

When money is borrowed to purchase a home the mortgage document represents an explicit contract between the borrower and the lender. The mortgage document will set out the terms of the payments, due dates, late payment penalties, assignment provisions (the ability to sell the loan to another company) and more. While there are many consumer protection laws designed to keep borrowers from signing documents with illegal or unethical use a professional when dealing with real estate contractsprovisions one should still review the document and understand what is being signed since the commitment is a long term one.

Other Explicit Contracts in Real Estate

Home Warranty:

With a home warranty the buyer or the seller can purchase warranty coverage on the major systems of the house like water heater, HVAC, appliances, etc. Usually the warranty coverage is provided for a one year period and can be renewed yearly. The home warranty company will require the warranty agreement be signed by the person paying for the warranty. Always make sure to read the warranty document to know what is and what is not covered under the policy.

Title Insurance Policy:

The title insurance policy covers the lender and the buyer (if the buyer purchases a policy for themselves) in case there are hidden title defects on the property. In order to set out the terms of coverage for the insurance policy everything is put into writing and is signed by those seeking the coverage. For more information on Title Insurance check out the title insurance section at Ivy Pointe Title.

Other Implied Contracts

Implied contracts during the real estate process can include services provided by a company or individual with the promise of payment upon completion of the work. For instance a cleaning company, home inspector, home stager may agree to do work in your home in exchange for payment after completion. Due to the smaller amounts of money involved both parties agree to do the work without any written contract.

A common example of an implied contract is when you contact a cleaning company and ask them to clean your home prior to your putting it on the market for sale. A cleaning company may agree to perform the work with an unwritten implied promise to pay them for the work after they are done. If the home seller refuses to pay the cleaning company after the work has been done the cleaning company can sue the homeowner in small claims court and attempt to recover the money owed.  The court will look at if there is a written contract (whether language via email or text message) or will look towards what the parties actually said and/or did and make a decision on whether a contract does exist.

Final Thoughts

Many real estate contracts can be confusing with all the legalese in them. If you have any questions or are unsure about terms of a particular requirement in a contract you should ask the person presenting you the contract to explain the language to you. If the answer does not resolve your questions or concerns then you need to find outside expert help from a real estate attorney. It is better to walk away from a contract than to sign something that will bind you to terms or requirements you never intended to.

Do you have a real estate contract you have questions about?

Paul Sian is a licensed attorney in the States of Ohio and Michigan.  If you have any questions about a real estate contract you are being asked to sign feel free to contact me at paul@finneylawfirm.isoc.net or via phone at 513-943-5668.  Feel free to connect with me on Twitter and Facebook.

 

Real estate phishing scam is a serious threat

Author By Finney Law FirmPosted on

Real EstateAccording to the National Association of Realtors, all parties engaged in real estate transactions should be cautious of emails requesting wired funds.  Recent trends show that real estate transactions have increasingly become the target of a sophisticated phishing scam, commonly known as “spear phishing.”

The hackers break into email accounts seeking information about current or upcoming real estate transactions – looking for names and identifiable information of sellers, agents, buyers, title companies, or attorneys.  The hackers then use this information, while posing as a party to the transaction, to request a wired funds deposit into their account.  Sometimes the hackers will use an email address that is different from the sellers email address by one letter, which goes unnoticed by the buyer.  The victim, believing the wired funds deposit is for closing, unsuspectingly transfers the funds and the hacker makes off with money.

Many people are lured into a false sense of security that hackers only go after large companies, like Sony, Target, Home Depot, and eBay.  However, small businesses and home buyers are much more susceptible to “spear phishing” because they lack the sophistication, technology, and legal assets to prevent such attacks.

“Spear phishing” involving wired funds in real transactions has occurred in numerous states and defrauded large sums of money from its victims.  According to an article by Sam Silverstein in Realtor®Mag, multiple incidents of fraud were reported in North Carolina, including an incident involving a $200,000 loss.  A separate article by Rose Meily in the San Jose Mercury News mentions a first time buyer losing $13,000.00 to a spear phishing scam.

However, there are ways to prevent or guard against spear phishing.  Here are some recommendations:

  • remain vigilant to suspicious activity during a real estate transaction
  • always call to verify all the information before a wired transfer
  • develop a face-to-face relationship and/or voice contact with parties involved
  • exchange and verify contact information of parties involved
  • maintain communication with parties involved
  • maintain strong email passwords
  • change email passwords
  • use two-step verification for emails
  • encrypt emails and documents
  • clean out email accounts
  • use data security programs and anti-virus software

Let our real estate team “make a difference” for you in your real estate transactions.  Contact Dylan Sizemore (513-943-6659) or Isaac Heintz (513-943-6654) to assist in your real estate needs.

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