lead paint

Methamphetamine, also known as crystal meth, was initially produced by gangs on the West Coast. But since that time, meth production has moved to small, residential home labs, especially in rural areas.

Meth residue poses significant health risks for the buyers of those homes, especially for the younger members of the family, but there is no obligation for a seller to disclose whether a home was used for meth production.

Michigan requires that sellers of residential property complete a Seller's Disclosure Statement for potential buyers. The Disclosure asks about environmental problems, such as asbestos, radon gas and lead-based paint, that could be a risk for future owners. However, the form was created before meth labs were a problem, so there is no question regarding the production of meth in the home. Currently, a seller does not have any legal duty to mention that information.

Until the Legislature acts to update the Seller's Disclosure Statement, the burden will be on the buyer of a home to protect himself. There are both home tests available for detecting meth residue and companies that can test for and remediate the contamination if any meth residue is detected.

If you are new to estate planning and not sure where to start, contact us today for a free consultation.

house insurance

If your home is owned by your Trust, or if you are the Trustee or Personal Representative for someone who owned a home, you need to make absolutely certain that your homeowner's insurance knows that!

Earlier this year, the Michigan Court of Appeals was faced with a case where a homeowner transferred his house to his Trust as part of his estate plan. He never notified his insurance company of the transfer.

After the homeowner died, the Trustee renewed the insurance policy, but never told the insurance company that the house was owned by the Trust. While the family was at the home to divide the deceased's personal items, a family member fell through the stairs and was injured.

The insurance company denied the claim, and the Michigan Court of Appeals agreed with that decision. The Court found that although the Trust owned the home, the Trust was not the insured party on the policy, the homeowner was. Even with the Trustee paying the insurance premiums after the homeowner's death, that did not create a contract between the insurance company and the Trustee.

If you are new to estate planning and not sure where to start, contact us today for a free consultation.

The Legal Hotline for Michigan Seniors recently published an excellent article explaining the use of “Lady Bird” deeds.

A Lady Bird deed allows an owner “the best of both worlds”. He can maintain control of all legal rights regarding his home until his death. Upon death, the home transfers to the beneficiary without the need to go through probate court.

The problem with simply adding a loved one to a deed as a joint owner is that then the added co-owner cannot be removed without his consent. Also, the house can be vulnerable if the added co-owner goes through a divorce, a bankruptcy proceeding, or has judgments outstanding against him.

Maintain Control with a Lady Bird Deed

The Lady Bird deed lets the original homeowner change his mind and remove the beneficiary he has added onto the deed. The homeowner maintains complete control to subsequently sell the house or borrow against it without the consent of the beneficiary.

The name "Lady Bird Deed" comes from Lady Bird Johnson, President Lyndon Johnson’s wife.

For more information on this and other sensitive legal matters, please contact us for a free consultation!

secret property deeds

Many clients like to plan their estate by making sure there are always a least two owners on a piece of real estate. That way, when one owner dies, there is no need to go through the probate court to have the property transferred; it simply passes to the survivor.

This is simple enough to accomplish when both a husband and wife are still alive. But it becomes more involved after the first spouse dies. Commonly, the surviving spouse adds one or more of his children to the deed to his home. Often, these deeds are then hidden away with instructions for a child to record the deed after the parent dies.

This method has several possible pitfalls. First, if the original deed is lost or destroyed, there will be no other record of the parent’s intent and the real estate will need to go to probate court. Second, if the parent names only one child on the deed, with instructions for that child to “share” with his siblings, there is no way for the other siblings to enforce those instructions.

Finally, depending upon how the deed is drafted, the parent may have created expensive tax consequences. If not drafted properly, the deed may cause the property to be “uncapped” by the local tax assessor and it may lose the homestead exemption. Often, the biggest expense is the capital gains tax that the children will have to pay on the amount the real estate has appreciated since Mom and Dad originally purchased it.

It is usually much simpler, and cheaper, to have a will or trust prepared by a professional, which leaves clear instructions for all of the children to see. Copies of the documents can be kept in multiple locations or given to the children in advance of death so there are no surprises and no unnecessary taxes.

As an alternative, a person may use a “Ladybird” deed to keep control of the property during his or her lifetime and pass it on at death (without probate). This deed should be recorded with the local County so there are no problems if the original is lost or destroyed.

dangerous real estate contracts

There is an old expression in the law that “An oral contract isn’t worth the paper that it’s written on.” This is especially true for contracts that involve real estate. A contract to buy or sell real estate MUST be in writing in order to be enforced by a court. A lease lasting more than one year must also be in writing to be enforced.

As with any legal scenario, in matters of real estate law, it is critical to verify all associated parties, and really know who you are dealing with. Consider these true cases: A man once signed a purchase agreement to buy land and gave the “seller” a large deposit. He later learned that the seller had deeded away the property a year before to keep it from being seized by creditors. Another person added his fiancee’s name to the deed to his house only to find out, after the marriage was called off, that she hadn’t paid her income taxes and the I.R.S. had placed a lien on “her” (his!) home.

If you decide to draft your own agreement to buy or sell real estate, you need to think of everything that could possibly go wrong and create an action plan to resolve the pitfalls in any given situation. Each possibility needs to have a deadline and method of resolving that particular problem. If a difficult situation arises, you don’t want to find out in the middle of it that the contract you have drafted is completely silent about what to do in that particular situation. If you are the seller of real estate, be sure to outline clear deadlines so that if a buyer cannot live up to them, you can find another buyer.

Matters concerning real estate can be complex and involve important details you may not have considered. The best solution is to have a professional assist you in the drafting of any legal documents or contracts. Contact us for a free consultation.

Michigan’s depressed real estate market has caused many home sellers to consider becoming a landlord and renting their homes to tenants instead of trying to sell them. Before jumping into the role of a landlord, one needs to be aware that Michigan law is designed to protect tenants (who in the eyes of the law have less bargaining power than a landlord).

A lease of residential property must meet strict legal requirements to be enforceable. The lease must include specific warnings to the tenant and the law even requires how large the print must be for these warnings. A landlord is legally limited on the amount of security deposit he can require and how to determine if he gets to keep the security deposit. (The law presumes the deposit belongs to the tenant until the landlord proves otherwise.) A violation of any one of these requirements could make the entire lease unenforceable – a fact that is usually discovered when the landlord tries to evict a tenant who is late paying his rent.

There are also specific steps that must be followed regarding how to evict a tenant who has not paid his rent. By law, these steps must be followed. It is illegal for a landlord to resort to “self help” and put a tenant or his possessions at the curb without a court order.

If you are considering becoming a landlord, don’t go about it alone. Meet with a legal expert and have a professional assist you in drafting your lease and other legal documentation. It will be time well spent now, and can potentially save you time, frustration and money in the future.

michigan land contracts

The depressed real estate market has caused many people to consider buying or selling a home on a land contract. Before deciding on this type of transaction, it is important to first understand what a land contract is.

What is a Land Contract?

A land contract is simply a sale of real estate in which the seller acts as the bank. Instead of the buyer getting a mortgage from a bank and paying off the seller at the closing, the seller agrees to be the mortgage company and to take payments from the buyer.

Benefits for the Buyer

A land contract usually allows the buyer to immediately take possession and move into the property. While he is not considered an owner, the buyer does have a stronger interest than if he were a tenant. In fact, the buyer will be allowed to claim the property as his homestead and thereby lower the property tax bills.

In addition, even though the buyer is not an owner until he has paid in full for the property, a seller cannot simply evict a buyer who falls behind on his payments. The seller must start either a forfeiture or a foreclosure proceeding.

Options for the Seller

A forfeiture requires the seller to give a notice of default and then wait at least 14 days before filing a complaint with the court. Once the seller gets an order from the court, the buyer still has 3 months or 6 months (depending on how much of the principal he has paid) to “redeem” the property. In other words, the buyer can simply pay his missed payments and he gets to stay in the property. The cycle can then start all over again.

The alternative is for a seller to foreclose on the property – just like a mortgage company might do. The seller has to follow all the same rules as a bank would follow, including allowing the buyer 6 months to “redeem” the property by paying the entire balance due on the property.

In both cases, if the buyer does not redeem the property, he loses any money that he has already paid. However, the seller also loses money (and time) recovering the property. So, it is critical that the land contract document contain provisions for attorney fees, court expenses and a higher rate of interest after a default.

Don’t Proceed Alone!

Land contracts are complicated transactions. Whether you are the buyer or the seller, be sure to enlist the help of a professional to ensure you understand all of your rights and obligations.

Contact Legal Strategies for assistance with land contracts and other matters of real estate.

Are you using construction liens to your benefit?

If you are a contractor, or a supplier of materials to a contractor, you have one of the most powerful collection tools at your disposal – the construction lien.

If you are not paid by your customer, the law allows you to place a lien on real estate to secure your debt.

As you might expect, nothing this powerful comes without some strings attached. If you are a contractor dealing directly with a residential homeowner, you must have certain notices, and your license number, in your written contract with the homeowner. If you are a subcontractor, you must send the homeowner written notice so he doesn’t pay the contractor without making arrangements for you to get paid, too.

In addition, you must FILE a lien at the register of deeds office within 90 days of the last day of WORK on the project. This deadline is read very strictly and is not extended if you went back to the project simply to perform warranty work or to pick up your tools. In addition, the lien must be RECEIVED by the register of deeds office (not just "in the mail") by the 90th day from the last day of work on the project, or it is invalid.

Questions? Contact us for a free consultation!

Legal Strategies, P.C. 

Beth Stubbs is the Macomb County, Michigan attorney who heads up the Legal Strategies practice. Legal Strategies assists clients in the areas of estate planning, probate and real estate. 
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