Florida hotels are changing hands much less frequently lately, thanks to COVID-19’s negative impact on the local economy. Orlando’s 500+ lodging properties are dealing with severely reduced revenue due to sparse tourism, and this is only contributing to the ongoing mass layoffs within the hospitality industry. Continue reading “Florida Hotel Sales are Down, is a Spike in the Horizon?”
Mortgage rates were on a steady path of decline in 2020, allowing many people the opportunity to become Homeowners or adjust their current property loan values. These historically record low rates are being projected to stay low for at least the first few months of the New Year but are expected to slowly rise again towards the end of 2021.
What does this mean for current property owners? The ability to take advantage of record-low rates on their mortgages and to save funds that can be put towards other investments.
So, when does it make sense to go through with a refinance?
When it lowers your monthly interest rate and/or payment
If you can reduce loan term/remaining payments with minimal increase in monthly payment
If you can use debt consolidation from the refinance to lower overall monthly obligations
Using a cash-out refinance for home improvements or some other major purchase.
The most important thing to note is that a refinance may sometimes have costs associated with them. Homeowners should calculate their break-even point to see how long it would take to recoup the costs. The decision to start this process is solely in the hands of the property owner, and if the savings outweigh the initial costs then it may be a smart financial move.
Take advantage of great rates & have Premier Florida Title help with your title needs. As a property owner, you are allowed to select your own title company for the title work. Call us today so we can help guide you through this process!
As of December 1, 2020, a new refinance fee is now in effect. This comes at a time when we are having record-low mortgage rates, a great time to refinance. “The Federal Housing Finance Agency (FHFA) will begin charging a mortgage refinance fee that could impact the cost of your mortgage.”
What is the fee and how will it affect me?
The “adverse market refinance fee,” of 0.5%, will be added to any new refinanced mortgages beginning December 1, 2020. This new fee is designed to help Fannie Mae and Freddie Mac offset some of the COVID-19 related losses.
“In light of market and economic uncertainty resulting in higher risk and costs incurred by Fannie Mae, we are implementing a new loan-level price adjustment,” Fannie Mae explained in a letter announcing the fee.
The new fee could potentially increase the interest rate homeowners are quoted if they do not negotiate with the lender to waive the fee.
“On the whole, borrowers don’t seem too concerned about this fee because it’s baked into the rate they’re being offered by their lenders.” However, our team at Gulati Law, like our borrowers to be well informed of the potential increased costs on your mortgage.
Below are a few things borrowers should know:
Some Borrowers are exempt if they fall under the following:
If your principal is less than $125,000;
Borrowers refinancing VA or FHA loans; and
If you are buying a home and taking a new loan.
Lenders might find different ways to charge the fee.
The FHFA charges the fee directly to lenders. Some may role it into the interest rate, while others may role it into the closing costs.
This fee should not deter you from refinancing, as the rates are the lowest on record. This new fee may still be negotiated with your lender. It is advisable to discuss with your Real Estate Attorney, to make sure all fees charged by the lender are reasonable and if it is even worthwhile to refinance based on how much the borrower can potentially save.
The fee may not last, however, it is still here for now! Stay informed and discuss it further with an Attorney at Gulati Law.
If you are a foreign national or you are assisting a foreign national client in selling real estate, you are most likely familiar with Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”). When you are handling a real estate transaction involving a foreign seller, depending on the value of the property and how it will be used, the transaction is generally subject to a 15% withholding on the purchase price due to FIRPTA. The Act places the responsibility of the Buyer for this withholding.
For the purposes of FIRPTA, a foreign seller is defined as either a non-resident alien individual, a foreign corporation not treated as a domestic corporation, or a foreign partnership, trust or estate. A person is considered to be a resident alien under FIRPTA if they have legal permanent resident status in the U.S. (they have a Green Card), and they meet the substantial presence test which sets a minimum number of days they must be physically present in the United States.
The formula for the substantial presence test is as follows:
31 days during the current year; PLUS
183 days during 3-year period
All the days present in the current year, &
1/3 of the days present in the first year prior, &
1/6 days present in the second year prior.
If you are buying or selling a property, and the Seller is a foreign national, it is highly recommended that you obtain legal counsel to guide you through the complex particulars and ensure that the financial obligation you are about to embark on is drafted specific to your needs and in your interest. For any questions or assistance, please contact us as we would be happy to guide you.
At the begining of the year, the Florida legislature passed a bill amending Florida Statutes § 689.01 which eliminated the requirement of having two witnesses for the execution of a lease on real property.
On June 27, 2020, Governor De Santis signed this bill into law. Until such time, Florida law has clearly stated that a lease for a term of more than one year could be created only by an instrument in writing signed in the presence of two subscribing witnesses.
Under the new amended law, which is now in effect, no subscribing witnesses will be required for leases of real property in Florida.
As a firm who has assisted both Landlords and Tenants in drafting and reviewing commercial and residential leases, we pride ourselves on keeping current with changing requirements and ensuring that no Landlord or Tenant is left executing a lease which is unclear or subject to contesting.
Should you find yourself entering into a lease, whether commercial or residential, it is highly recommended that you obtain legal counsel to guide you through the complex particulars and ensure that the financial obligation you are about to embark on is drafted specific to your needs and in your interest. For any questions or assistance, please contact us as we would be happy to guide you.
The Coronavirus pandemic has caused many businesses to experience severe income loss, many already unable to cover their bottom-line business expenses. As a result, our firm has begun actively working with clients applying for economic disaster loans. Please reach out to us immediately for help in preparing your application as deadlines are quickly approaching. Due to the urgency and time sensitivity of these applications, we are making these are highest priority.
Below is a list of the business loans that may be available to you (on a case by case basis):
FLORIDA SMALL BUSINESS EMERGENCY BRIDGE LOAN
Purpose: Designed to “bridge the gap” between the disaster occurrence and when the business secures long term recovery resources
Amount: Up to $50,000.00 per small business (up to $100,000.00 in some occasions)
Term: Requires repayment within 12 months
Interest: 0% for the first 12 months after which interest is charged at 12%
Florida must be the designated disaster area
Must maintain a place of business in Florida and established prior to March 9, 2020
Demonstration of economic injury as a result of Coronavirus
Individual or individual who owns at least 51% equity of entity
At least 2-100 employees**
Use: Proceeds MUST be used for maintaining or restating business (use of proceeds to pay off debts already incurred on case by case basis)
Supporting Documentation Required:
Federal Business tax returns for the last 2 completed years
Employer tax documentation.
Personal tax returns for the last 2 completed years with attached Schedule C
Additional information that the applicant believes would assist the Loan Review Committee in making its decision (such as a loan summary).
FLORIDA DEPARTMENT OF ECONOMIC OPPORTUNITY-THE REBUILD FLORIDA BUSINESS LOAN FUND
Amount: Up to $500,000.00 in state and federal funds ($40,000,000.00 available)
Term: Case by case basis
Interest: Market interest rates
Existing and new businesses that were impacted directly or indirectly by a disaster to rebuild and expand
Industries identified by the state as key strategic markets for future growth and will focus on creating and enhancing the diversification and resiliency of Florida’s economy
Use: Inventory purchases, construction or renovation, working capital needs, capital start-up loans, machinery and equipment purchases, equipment financing
SBA FEDERAL ECONOMIC INJURY DISASTER LOAN (EIDL)
Amount: Up to $2,000,000.00 in assistance available (determined on a case by case basis but may not exceed what the applicant could have paid had the disaster not occurred)
Term: long term prepayment up to 30 years
Interest: 3.75% for small businesses; 2.75% for non-profits
Must have less than 500 employees
Physical presence in the disaster area
Substantial economic injury
Applicant’s credit history
Financial position of the business (must be able to repay loan)
Business’s potential to accumulate funds necessary to operate
Estimated loss incurred or that will be incurred
Businesses with credit available elsewhere are not eligible (This may be removed by approved CARE Act)
Must have collateral for loans over $25,000
Ineligible: Agricultural, religious, charitable, gambling, unclear about cannabis industry
Use: Proceeds MUST be used to pay fixed debts, payroll, accounts payable, and other bills that are unable to be paid as a result of Coronavirus impact
Cannot be Used To: Refinance debt incurred prior to disaster; Service current SBA loans, Pay directly or indirectly any obligation of tax or non-tax penalty due to a violation; Pay dividends or disbursements to owners except for reasonable remuneration directly related to performance of services for the applicant business
Step: (1) Apply via SBA website; (2) Review, verification and processing; (3) Loan closing and disbursement
Supporting Documents Required:
Online SBA Application – Form 5 – To be completed online (Registration required)
IRS Form 4506T- Tax Transcript authorization for tax verification
Copy of most recently filed tax return
Personal financial statements for all owners of 20% or greater ownership interest – SBA Form 413
Schedule of liabilities – SBA Form 220
Current year to date profit and loss statement
Disbursement: Initial disbursement within 5 days after approval (approval usually takes 3-4 weeks but could be more given the extent of the pandemic)
Application: Within 9 months of state of disaster declaration
SMALL BUSINESS ASSOCIATION 7(A) (Loans given not specifically as a result of Coronavirus)
Amount: Maximum of $5,000,000.00
Term: Maximum of 25 years
Maximum Guarantee: 85% for loans up to $150,00.000 and 75% for loans greater than $150,000.00
Eligibility: Case by case basis.
CARES ACT (initial proposal-not yet approved)
Extension of EIDL Loan availability to $10 Billion.
Waiver: Creates waiver of personal guarantee for loans of less than $200,000.00
Emergency Grant: Creates emergency grants of $10,000.00 to be distributed by SBA within 3 days while an application is pending. No repayment even if denied EIDL loan.
Nonprofits with fewer than 500 employees
Business must be in operation on March 1, 2020 and had employees for which it paid salaries and payroll taxes
Basis is only on credit score
Use: Proceeds MUST be used for working capital, payroll support, salaries, mortgage payments, rent, utilities, and certain other existing debt obligations
SMALL BUSINESS INTERRUPTION LOAN PROGRAM
Purpose: to cover the period of time from March 1, 2020 to December 31, 2020. Designed to ensure employees are paid even as their employer’s business is currently closed
Amount: Government to make available $350,000,000,000.00 in guarantees to obtain loans to cover expenses during Coronavirus Pandemic. Maximum to business is an amount equal to 4 times the borrower’s total monthly expenses (monthly average over last 12 months) capped at 10 million
Expenses include payroll, mortgage, rent, payments on other debt obligations
Interest: No more than 4%
Waiver of Fees: SBA to waive all applicable fees.
Deferment: Lenders required to defer payments for not less than 6 months
Loan Forgiveness: Equal to the costs incurred or payments made by borrower during an 8-week period after the origination date of the loan including:
Interest payments on any mortgage (existing prior to Feb 15, 2020)
Rent payments (after Feb 15, 2020)
Utility service payments (service began before Feb 15, 2020)
Forgiveness reduced by reduction in employees or reduction in employee pay greater than 25%
Borrower will not be penalized for reduced payroll if borrower rehires workers previously laid off (unclear as to time limits)
No more than 500 employees (applies per physical location unless gross receipts exceeds $500,000,000.00) Standard cannot be more than 500 employees in the aggregate of all affiliates.
Cannot be receiving other assistance related to the Coronavirus Pandemic, any pending application will eliminate availability of SBIL
Not limited by geography or to states that have been declared as disaster areas
Use: Paid sick leave, group health care benefits, employee salaries, mortgage payments, rents, utilities, payment of other debt obligations.
Application: Accepted through SBA qualified lenders
EXPANSION OF SBA EXPRESS LOAN PROGRAM
Approval or denial within 36 hours
Can be a term loan or line of credit
Amount: Maximum of $350,000.00 to be increased to $1,000,000.00 then reduced to $500,000.00 after December 31, 2020
EXPANSION OF MICROLOAN PROGRAM
Loans up to $50,000.00 made through nonprofit lending organizations directed to underserved market applicants
Average loan size of $14,000.00
SBA LOAN DEFERMENT FOR EXISTING LOANS
Secondary Market Loans: Up to 6 months
Loans Not Sold on Secondary Market: Lender can use the Colsons Customer Service Online Request for deferral of less than or equal to 12 months, including lender notification of unilateral 3-month deferral
SBA 504 Loans: The amount deferred should not exceed 6 cumulative monthly payments or 20% of original loan amount whichever is less
Borrower financial info will be reviewed prior to deferral to ensure cash flow problems are not long term
If loan is more than 60 calendar days past due and problems appear long term deferral will not be granted
Interest will continue to accrue during deferment period with payments optional
FEDERAL RESERVE-MAIN STREET BUSINESS LOANS
Details not yet available but will be a direct lending program from the federal reserve to businesses
FL DEPT OF ECONOMIC OPPORTUNITY-SHORT TIME COMPENSATION PROGRAM
Term: 12 calendar months
The employer must describe a plan for giving notice, if feasible, to an employee whose workweek is to be reduced, together with an estimate of the number of layoffs that would have occurred absent the ability to participate in STC.
Participating employees must be full-time (at least 32 hours per week prior to Short Time Compensation reduction), permanent employees (not seasonal) and the employees must have a set number of hours (excluding overtime) that they work each week in order to participate. Employees paid piece rate, on commission, or who are hired to do certain jobs regardless of the time required are not eligible for participation.
Short Time Compensation benefits are payable when normal hours of work are reduced from 10-40 percent. If normal work hours exceed 40, the percentage will be based on 40 hours.
Each week that Short Time Compensation benefits are claimed, at least 10 percent of the employees from the total staff or within a particular unit must be working reduced hours. (Two employees is the minimum for a staff or unit of less than 20 employees.)
Use: to retain employees during a temporary slowdown, avoid the expense of recruiting, hiring, and retraining new works when business resumes, a transition to layoff
Application: Requires log in.
FACEBOOK SMALL BUSINESS GRANTS PROGRAM
Amount: $100,000,000.00 in cash grants and AD credits determined on a case by base basis
Eligibility: Details to come
Use: Proceeds may be used to assist with rent, keep workforce, connect with more customers, and cover operational costs.
Emergency Credit for existing Borrowers affected by the Coronavirus outbreak
Amount: up to ₹ 200 crore or 10% of existing fund based on working capital limits
Term: 12 months
Current standard account
Account not classified as SMA 1 or 2 as of March 16, 2020
Deadline: June 30, 2020
Please note many of the loan options above are provided on a case by case basis and are not set in stone, as they are changing depending on what is available, and the laws being enacted. It is important you understand your options and the loan terms being offered during this period.
We are immediately available to assist you through the application process, contact Gulati Law at 407-900-5054 to get started immediately. We recommend getting your applications in as soon as possible as processing can take weeks.
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