Post-Hurricane Scams Targeting Real Estate Owners!

ATTENTION all Real Estate Owners!

BEWARE OF SCAMMERS
There have been talks of some individuals attempting to take advantage of real estate owners post-hurricane recovery situations. Insurance, debris removal, and tree removal scammers are actively working in storm affected areas.

Do not sign anything regarding an “assignment of benefits” from a potential contractor.

If you have any questions regarding reviewing paperwork to be signed, please reach out to your Real Estate or Business Law Attorney.

 

#GulatiLaw

Big Moves in the Hotel Industry

Marriott plans to remove plastic straws Worldwide by July 2019!

Marriott International today announced that it has adopted a plan to remove disposable plastic straws and plastic stirrers from its managed and franchised properties by July 2019. The move will impact 6,500 properties across 30 brands around the world, and could eliminate the use of more than 1 billion plastic straws per year and about a quarter billion stirrers. The company says that its timeline gives hotel owners and franchisees time to deplete their existing supply of plastic straws, identify sources of alternate straws (which hotels will offer upon request), and educate staff to modify customer service.

Here are Gulati Law we strive to protect our enviroment, and are also following the same plan.

Not so Fun Fact: According to Google, over 100 million marine animals are killed each year due to plastic debris in the ocean. Currently, it is estimated that there are 100 million tons of plastic in oceans around the world.

#GoGreen #SavethePlanet

Source

Non-Tax Reasons to do a Section 1031 Tax Deferred Exchange

The majority of our clients and referral sources are aware that doing a Section 1031 tax deferred exchange allows Taxpayers the privilege of deferring the payment of their federal capital gains taxes, depreciation recapture taxes and state income taxes (if any) on the property they held for investment or on the property that they used in their trade or business.  

So, deferral of payment of taxes is a major reason astute Taxpayers use Section 1031 of the Internal Revenue Code.  But there are numerous Non-Tax reasons to do a 1031 exchange.  I will try to cover some of these reasons in this 1031 information missive.  Let’s begin:  Non-Tax reasons to do a Section 1031 Exchange:

1. Taxpayers may want to sell a property that they have fully depreciated and exchange into a more expensive property that can have additional depreciation.

2. Taxpayers may want to exchange a property that is not producing income into a piece of property that does produce an income stream.  A typical example would be the exchanging of a piece of raw acreage into a replacement property, such as an office building, that would produce a positive cash flow.   A lot of retirees do this type of exchange, because they are looking for an additional income stream in their retirement years.

3. Taxpayers’ “Property of Their Dreams,” becomes available and so they exchange an investment property they are not particularly fond of for the “Property of Their Dreams.”

4. Taxpayers exchange a property that is not producing a satisfactory cash flow for another that will produce a larger cash flow.

5. Taxpayers want to diversify their investments.  They might own one large property.  They could sell the large property (relinquish it) and purchase (replace) with numerous investment properties.   They may want to diversify because they would like to have properties in various different states, so that if one state has an economic problem, the rest of their assets are not affected.  Or they might want to own different types of property.  For example, they could exchange a large office building and replace it with a small strip shopping center, an office condominium, and other property–all being different types of real estate.  Remember–the property sold (relinquished) must be “like kind” to the property purchased (replaced).   In the case of real estate, all investment real estate is “like kind” to any other type of investment real estate.

6. The Taxpayers may want to exchange a property that is not appreciating at the rate they would like for another property that has a better possibility for increased appreciation.

7. The Taxpayers may decide to do a 1031 exchange because the present property they own may be harder to sell in the future and the replacement property may be easier to dispose of in the future.

8. The Taxpayer decided to relocate to another state and would like to have all of their investments within a reasonable distance from where they live.   This becomes especially important to the Taxpayer who must manage and oversee their investments personally.

9. Consolidation is an important concern to many of our clients.   They own a number of investment properties and managed them for a number of years.  They have decided that it would be better to own fewer, but more expensive investments.   This could decrease the Management responsibilities, as a larger/more expensive property is more conducive for hiring a management company to take care of the investment.

10. Multiplication and Leverage–no I’m not talking about 3 x 3 = 9.  Many Taxpayers are hoping that through their investments, their net worth will appreciate.  For example:  A Taxpayer who owns a piece of property valued at $500 that will appreciate 10% in a year, will have an investment worth $550 at the end of the first year (appreciation of $50 that year).  A Taxpayer who exchanges that $500 (I am presuming there is no debt on the property to make this example easy to understand) for a $2,000 investment (that would be 25% down–$500–with the remaining $1,500 in borrowed money) would have at a 10% appreciation factor, a $200 appreciation that year.  We know which is more–$200 is more than $50.  So, through multiplication and Leverage–the Taxpayer’s net worth can appreciate at a much quicker pace.

11. Reduced Management Responsibilities–I know I have intimated this reason above, but it is a very important reason that many Taxpayers transact a 1031 exchange.  They exchange the property they presently own and replace it with one with less management headaches, or replace it with a property that they don’t have to manage at all, such as a Tenant-in-Common/Delaware Statutory Trust type of property–that is professionally managed by others.

12. Exchange out of a property they own a partial interest in–and exchange into a property they will own just by themselves.  That way they no longer have to get an approval to do anything to or with the property from their “co-owner.”

13. Estate Planning is a major reason Taxpayers should do a Section 1031 exchange.  Although this 1031 Information Missive is titled Non-Tax Reasons–I just had to sneak this one in because, if done correctly, most Taxpayers will pay NO tax when doing a Section 1031 exchange and at the Taxpayers’ demise, their heirs will receive these assets at a stepped-up basis—-and it’s very likely that there will be no estate taxes.

Courtesy of: Liberty 1031

Actions to Take When a Hurricane Threatens for Individuals & Business Owners

When a hurricane threatens your community, be prepared to evacuate if you live in a storm surge risk area. Allow enough time to pack and inform friends and family if you need to leave your home.
Secure your home:
  • Cover all of your home’s windows. Permanent storm shutters offer the best protection for windows.
  • A second option is to board up windows with 5/8 inch exterior grade or marine plywood, built to fit and ready to install.
  • Buy supplies before the hurricane season rather than waiting for the pre-storm rush.
 Stayed tuned in:
  • Check the websites of your local National Weather Service office and local government/emergency management office.
  • Find out what type of emergencies could occur and how you should respond.
  • Listen to NOAA Weather Radio or other radio or TV stations for the latest storm news.
  • Follow instructions issued by local officials.
  • Leave immediately if ordered!
If NOT ordered to evacuate:
  • Take refuge in a small interior room, closet or hallway on the lowest level during the storm.
  • Put as many walls between you and the outside as you can.
  • Stay away from windows, skylights and glass doors.
  • If the eye of the storm passes over your area, there will be a short period of calm, but at the other side of the eye, the wind speed rapidly increases to hurricane force winds coming from the opposite direction.
Stay informed. Visit www.floridadisaster.org to find Florida’s Division of Emergency Management. Text FLPREPARES to 888777 to receive updates via text or use the Florida Emergency Information Line 1-800-342-3557. For live updates on Hurricane Irma, follow the State Emergency Response Team @FLSERT on Twitter and Facebook. VISIT FLORIDA is also providing weather updates and official source links for visitors to keep up with the latest changes here.Register your business with FLVBEOC. Register to report your open/closed business status, complete a business damage assessment survey and request or offer resources. Businesses may also report their status to esf18@em.myflorida.com and via the Private Sector Hotline 850-410-1403.

Know before you go. For up-to-date traffic information, visit FL511.com or call 511. Use GasBuddy to find gas stations with fuel.

Learn re-entry requirements. Governor Scott has issued an Executive Order that rescinds all weight and driver restrictions for highways so water, food, fuel and emergency supplies can be quickly brought to Florida. After the storm, individuals and businesses seeking to provide essential commodities and services to impacted areas will be allowed re-entry by possessing and presenting specific documentation to local officials. Learn what you need.

Provide emergency accommodations and have compassion for cancellations. Those seeking available lodging may find and reserve a room here. Reserve by brand here. During this emergency, lodging operators are strongly encouraged to waive cancellation fees and to not require minimum stays for evacuees. In preparation for FEMA’s potential activation of the Emergency Lodging Assistance program, lodging operators are encouraged to sign-up here.

Extend hospitality to pet evacuees. FRLA strongly urges its members, and the industry at large, to consider waiving normal pet restrictions and fees for evacuees seeking shelter and safety during this catastrophic storm. Search for pet-friendly lodging on BringFido.com or PetFriendlyTravel.com.

Follow power outages. Find a map of statewide power outages here. FPL customers can use the FPL Power Tracker map, and report or track outage information at www.FPL.com/outage or call 1-800-4-OUTAGE (1-800-468-8243).

Food safety tips. In the wake of Hurricane Irma, there may likely be power outages and flooding.  Both pose a risk to the integrity of food and water. For a guide to food safety during severe storms, visit the USDA or Florida’s Division of Hotels and Restaurants to learn guidelines for emergency recovery.

Free WiFi access. Comcast has opened more than 137,000 free Xfinity WiFi hotspots throughout the state for individuals in need, including non-Xfinity customers, to help residents and emergency personnel stay connected. Find a map of Xfinity WiFi hotspots here.

Report price gouging. As the entire state of Florida is under a declared state of emergency, Florida’s price gouging law applies statewide. Learn how to comply and/or report violations online or via the Attorney General’s Price Gouging Hotline at 1-866-966-7226.

Filing insurance claims. Florida’s Division of Consumer Services offers assistance to insurance consumers in the aftermath of Hurricane Irma by offering the insurance Consumer Helpline 1-877-693-5236Learn more.

For additional information and continued updates, visit FRLA’s Hurricane Resource Center for a comprehensive guide of tips on how to stay safe during the storm and how to recover and rebuild.

Most of all stay safe our Florida family, friends, colleagues and clients!
unnamed
Sources: AAHOA, Visit Florida, FRLA

Title to Real Estate Property!

 

A deed is a legal instrument used to convey real property. There are three main deeds in Florida, or three methods of transferring property. They vary depending on the guarantee that is offered by the seller, the type of property, or reason for transfer.

1) General Warranty Deed

  • Most complete form of ownership, or highest level of protection to buyer
  • Guarantee that grantor (seller) has legal title

2) Special Warranty Deed

  • Provides limited warranty of title
  • Seller guarantees he/she has not adversely affected the title to the property during their ownership period
  • Common for transactions with trustees, or personal representatives, & foreclosures

3) Quitclaim Deed

  • No warranties or guarantees from seller
  • Most risky form of ownership
  • Conveys the interests of the grantor (seller) but grantor does not represent he/she has any rights to convey
  • Common to transfer property among family members or when dealing with a divorce
  • Common to clear defects in title

lisa-jones-sale-pending-orlando-001

In most real estate transactions, we recommend obtaining a general warranty deed in congruence with a title insurance policy to ensure you have complete equity, or ownership in your new property & proper protection for any unexpected encumbrances. However, every case is different and you should discuss your options with a Florida Real Estate Attorney.

Stay tuned for our next blog on – which Deed is right for you!

Maintaining Accurate Records

files

Regardless of the size of a company, whether a small business or a large one, it should comply with its state law record-keeping requirements.

Here is a list of some of the important corporate documents to maintain:

– A copy of the corporation’s articles of incorporation or organization;

– Corporate bylaws or operating agreement;

– Organizational minutes;

– Annual reports;

-Minutes from any shareholder meetings;

-Maintain an updated list of all executives, employees, etc;

-Accurate accounting records; and

-Important Financial statements.

 

For a year-end business check-up, contact your Business Law Attorney today!

Interested in Florida Real Estate Investment? Here are Some Tips!

Real estate investing can be an extremely rewarding process, but it can also carry some worth-noting risks.  Troubleshooting for these issues begins before the purchase takes place and continues throughout ownership.  Here are some tips to help get you started.

The thing to address first and foremost is the financial aspect.  Buying profitable real estate means investing in properties that are cash flow positive. Rentals should provide a fair rate of return on the invested equity.  Also make sure to secure long-term fixed rate financing. Financing or refinancing a property can end up costing you more in the long run or effect transfer issues.

real estate

When it comes to “fixer-uppers,” you may want to look elsewhere.  Projects that involve extra remodeling or renovations are very much likely to loose money in the end.  Estimating the cost of repairs can be difficult to the average buyer, except for construction contractors that have experience in such. Obtain experienced contractor opinions before you consider a “fixer-upper”.

Take an in-depth look through all title documents.  This includes the title insurance policy, title abstract, schedule of exclusions, and a survey of the property.  Schedule some time with an Florida Real Estate Attorney to assist you in going through all items in detail and addressing any issues before you go forward with the purchase.

Proper insurance should always be put into place for each specific property and circumstance.  Speaking with an experienced Title Insurance Agent will make it easier to cover all liabilities and reduce the chances of anything severely impacting your finances.

All areas touched on above are great places to start when considering a new real estate investment.  If you are relatively new to property investment, speaking with seasoned long-term investors and Florida Real Estate Attorneys may offer some insight into how to go about taking on a new project. At Gulati Law, we are able to work with you in all these areas. Contact us for more information today!

Source: Zillow Blog

5% Down Payment on a Home Purchase will Not Last for Long!

In the past, it has been difficult for buyers to to get a mortgage without having a large down payment requirement.   Some available options this year and going into next are the Federal Housing Administration’s low down-payment program.  Now, banks like Wells Fargo, Bank of America, and TD Bank are offering as low as 5 percent in some mortgages to create an opportunity in the market and compete with FHA’s down payment loans.
TD Bank offers the “Right Step” loan with 5 percent down on mortgages and allows for 2 percent to be paid as a gift from a relative or third party.  Most of the banks now offering 5 percent mortgages are requiring borrowers to pay for Private Mortgage Insurance (PMI), and maintain mortgage and home insurance until there is 20 percent equity built up in the home.  FHA requires PMI for the lifespan of the loan.  To know what works best for you, research your options.
save-money
Source: Money News

Sale Pending: Can I Still Make An Offer?

In the world of online real estate searches, it can be easy to fall in love with a house before realizing that the property reads “pending sale”. Many homebuyers see a listing and assume that the property is unavailable, when in actuality that may not be the case. “Sale pending” can mean a few different things depending on how the market works for your area.

Understanding the basic real estate transaction process helps to understand what exactly a pending sale means. When someone chooses to buy a home, they make an offer “contingent upon” certain factors. This can be the completion of a property inspection, a bank appraisal, or loan approval. If there is an issue with the inspection or the buyer cannot get financial backing, the buyer has a right to exit the contract. After an offer has been made, the buyer typically has about 3 weeks to get the inspection, appraisal, and the loan approval.

lisa-jones-sale-pending-orlando-001

Although the sale is not a “done deal,” the seller is not able to enter any agreements with another buyer while these processes are being completed. Another buyer, however, is able to submit a “backup offer.” A backup offer functions as a backup plan in case the first offer falls though and the transaction never takes place. Some listings classified as “sale pending” may include transactions where all contingencies have been removed. This means the buyer’s loan has been approved and both the inspection and appraisal have taken place. In this case, the only thing left would be to move toward closing. This may take up to a few weeks, and technically the sale is still pending.

Even though all contingencies have been removed, there is still a slight chance that  the buyer may exit the deal. The buyer will not become the owner until the property is closed and the deed is recorded. Until this happens, a buyer may still need to back out in a case of emergency or if they risk losing the earnest money deposit. Falling in love with a pending property may not mean a dead-end for you. Find out about the status of the property and whether or not it is possible to make an offer at this point. You may also want to find out more information such as if they buyer has had any previous inspections and if there have been any real issues thus far.

The best thing to do when a home you are interested in is pending is to put that property on the back burner and keep up your search. If you truly would like to pursue the home, make your interest known and find out the information you need. The only next step is to wait and see what happens with the current sale.

Source: Zillow Blog

Contact Us Today!

    Gulati Law