Thursday, August 17, 2017

Attorney Shannon Wynn: Home builder contracts should reflect your interests

home building contracts, contractors, real estate lawyer


Touring builders' model homes can be intoxicating. They're so flawless with very feature you've imagined into your dream home. Wynn at Law LLC knows the exhilaration because we've been on the same tours of spec properties. Before you rush into the builder's agreement – which undoubtedly will reflect their best interests first – here are some areas you want to make sure are developed to your liking in the contract.

·         The building: Permits are required. Labor has to be furnished. Maybe pieces are subcontracted out. Obviously materials and plans are parts of the construction. Make certain the contract specifies the work that needs to be executed from the lot up to the last closet hinge. Remember lien waivers, too… see our previous article on them.

·         The timeline: Disputes with builders usually heat up over the deadline. Your move-in date means the world to you and your lender. What matters to the builder is accommodating inspections (delays), weather (delays), employee issues (delays) and arrival of materials (delays). A firm contract specifies a start date, move-in date, and provisions for reasonable extensions.

·         The payment terms: Another potential source of disputes (delays) is the payment. Typically there is a down payment and payments at regular intervals. A clear contract specifies the dates, amounts, and the form of payment they'll accept as well as where they'll accept it.

·         The warranties: In a sale of an existing home, defects are identified outright. In a new home construction, builders instead offer a warranty. That warranty usually spells out what is NOT covered (exclusions) rather than what IS covered (inclusions). Wynn at Law LLC reviews the home warranty promise and helps you get the most of it.

If you make the decision to build, rather than buy, your dream home, hiring a real estate attorney will ensure a contract favors your family, not the developer, and protects your investment. Usually, a builder presents a standard contract for your approval. If the contract appears overly simple or unnecessarily complex, there’s an excellent chance that the contract does not serve your best interests. Don’t be afraid to let us negotiate! Your home is on the line.

 


*The content and material in this original post is for informational purposes only and does not constitute legal advice.  

Photo by Andrea De Martin, used with permission.
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Thursday, August 10, 2017

Attorney Shannon Wynn: Transfer on Death Deeds eliminate probate

transfer on death deed, estate planning


When any of Wynn at Law LLC's clients own real property in Wisconsin, we look at a Transfer on Death Deed (commonly called a TOD Deed or a TODD) to see if it is a suitable fit for their estate plan. It can sometimes wipe out the need to go to probate court, which is a time and cost saver.

As our earlier article pointed out, if you have $50,000 or more in probate assets, probate court comes into play when distributing assets. Probate assets are all assets NOT automatically transferred to another person when the owner passes. Life insurance proceeds, for example, skip probate because a beneficiary is identified. So, if assets can avoid probate, why not place a TODD on an asset like a vacation home to transfer it directly to beneficiaries, such as the kids?

The answer in some cases is that if you need to protect assets – for or from your children – you might not want to transfer them on your death. For the minor kids, you might want to transfer the asset to a trustee for their benefit until they're older. In the case of adult children who may have creditor problems or a looming divorce, you might again want a trustee instead of transferring the property to them directly. Otherwise, a TODD making assets 'unprobatable' is an alternative for every Wynn at Law LLC client because the property doesn't need to be owned free-and-clear. You can have a mortgage, a second mortgage, even a line of credit against the property and still use the TODD to pass it on… and skip probate.

Let's say you had a car and some bank assets totaling $49,995 and a $89,000 getaway cabin up north. All in, the assets would require probate, but if a TODD was placed on the cabin, the cabin passes to your heirs (they still get the debt if it was mortgaged, by the way) and the rest of the estate would avoid probate because it's under the $50,000 limit.

Your accountant, or your beneficiary’s, will point out that there may be tax benefits to this strategy as well, because the transfer isn't considered a 'gift' subject to gift tax. The TODD may also reduce or eliminate capital gains taxes if and when the property is sold by the beneficiary.

Even if you have the Transfer on Death Deed, you can still choose to sell a property while you're living: It's yours! The TODD designation does not give the beneficiary 'ownership' of the property while you're alive… if the document is drafted properly. Call an attorney.

 


*The content and material in this original post is for informational purposes only and does not constitute legal advice.  

Photo by Ekaterina Kondratova, used with permission.

Thursday, August 3, 2017

Attorney Shannon Wynn: Flipping real estate advice for buyers, sellers, and speculators


flip, flipping, real estate
 
Wynn at Law LLC has noticed a recent resurgence of real estate 'flipping.' Late-night cable and radio stations are again saturated with ads touting the wild income potential of acquiring and liquidating the same piece of property within the shortest possible time frame. Flipping is legal – as long as it's done on the up and up.
Before the housing collapse a decade ago, some curbs were put in place to deter flipping. The FHA sets the rules by which most lenders follow: Having 3.5 percent as a down payment for example. In 2005, the FHA required additional inspections and safeguards taken on mortgages applied for on properties that have been owned for less than 180 days, and outright forbidding the approval of mortgages on properties owned for less than 90 days. Those rules were relaxed in 2010 following the real estate market bust wiping out $7 trillion in property value.
More importantly, that lost value represented the largest investment loss for many families… and did not involve as many people flipping houses. With that in mind, most lenders still adhere to the 90-day guideline.
If you're buying a flipped home, there are still numerous loopholes and unregulated areas that an unethical or inattentive flipper can exploit when flipping a house. It still remains up to the buyer and his or her attorney to perform all the necessary due diligence before buying. If the property is to be purchased with an FHA-backed loan, a flipped home may require more time to purchase because of the additional documentation required of the seller.
If you're interested in flipping, avoid the late-night infomercials blaring about how you can flip a home without putting in a dime of your own. Banks have extremely tight restrictions to watch for fraud. It's best to have cash on hand for this highly speculative form of investment: Cash you're able to part with (and potentially not recoup) for at least 90 days. A quickly-flipped home requires documentation on renovations, as well as additional appraisals, to justify a much higher resale price if the deal involves an FHA-insured loan. The average flipping time from purchase to resale is just over 106 days, according to market monitor RealtyTrac. Know this as well: Some properties have to become rentals before the flipper is able to get from the market what he or she thinks is the 'value' of the property. Are you prepared, legally, to become a landlord?
In the case of flipping, it's the old adage at play whether you're buying a flipped home or flipping one yourself… If it sounds too good to be true, it probably is. Get an attorney.

 

*The content and material in this original post is for informational purposes only and does not constitute legal advice.  

Photo by Victor Zastolskiy, used with permission.