How to take control of Real Estate in a Succession

When real estate is inherited by more than one heir it can get tied up– a stalemate can occur.  Typically, a parent will leave the family home to all their children, but they may not be situated equally.  Consequently, one heir wants to sell and the other does not.  Should the heir who doesn’t want to sell have “veto” power over the property?  Putting the property under  administration and selling it out of the succession is one solution.


Woman Handing Over the House Keys To A New Home Inside Empty Tan Colored Room.

Consider  the following example: One sibling has been living in the family house for years, rent free, while the other sibling
has been financially responsible and lives out of state. If the attorney put both the heirs into possession, each would each get their percentage of ownership, but both would have to agree in order to sell the house and distribute the proceeds.  The sibling who is living in the house rent free has an incentive not to sell, because as part owner he would have the right to continue to live there. The out of state sibling would get no tangible benefit from being a co-owner.  This produces the stalemate I was talking about.  One wants to sell, one does not – as a consequence the house cannot be sold.*

As attorney for the estate I have advised putting the succession under administration and selling the house out of the open succession.  With this scenario, each heir benefits equally.  The heir who opens the succession applies to the court to be named as administrator of the estate. Any interested party can object on the basis that they are unfit for the office.  But if there are no objections, and it is rare to have an objection, the administrator is empowered to make decisions for the succession, including selling assets to pay off the heirs.

There are two ways that estates can be put under administration in Louisiana.  The standard mode requires court approval for each administrator’s decision. The other way is called an independent administration, and gives wide latitude to the administrator.  Either way, with or without court approval, the administrator can list the house for sale with a real estate agent and at the closing sign for the succession. The sales proceeds are deposited in the succession’s bank account and ultimately divided among the heirs.

 

* The asterisk refers to the type of lawsuit called a partition by licitation. A co-owner can sue to have a property legally sold at auction, whether or not the co-owners agree. This is an expensive option and a sale at a public auction does not fetch the highest price.

 

What is a Purchase Agreement and why is it important?

JohnMenszer2-Crop_-0761For a buyer or seller of real estate the Purchase Agreement is a critically important document. It is the rule book or ”road map” for the transaction. Most people sign their Purchase Agreements without reading or fully understanding what they are agreeing to. Then, if there is a bad outcome, they call an attorney and want to get out of the contract.  It may be too late.

There is a Standard Agreement that is in common use among the real estate brokers and agents in New Orleans. It protects the commission of the realtors and splits the penalties between the buyer and seller roughly down the middle. It sets out the conditions for property inspections and financing. In a private sale it is not necessary to use this Standard Agreement. A seller or a buyer may decide they want to use a contract that is more favorable to them or meets their special needs. This is permitted. Or, the Standard Agreement can be modified with additional terms and conditions.

A real estate deal is a complicated venture involving property inspections, financing, appraisals, warranties, title issues, timing of events and a significant deposit. Many things can go wrong. As a result penalties can kick in and property can be tied up in litigation.

Consulting with a real estate attorney prior to signing a Purchase Agreement or hiring a lawyer to draft a modified or custom contract is time and money well spent.

 

How Good is Your Tax Sale Title?

When it comes to Tax Sales the investor should be guided by the ancient motto “Caveat Emptor,” which in Latin translates to “Buyer Beware.”

There are two main reasons for this:

JohnMenszer2-Crop_-80661) When a property goes to tax sale no one has checked for prior clouds on the title; and 2) The tax sales are often conducted in such a manner that legal notice is not received by the former owners.

When I take a tax sale case the first thing I recommend is a title search. This should reveal the title issues that could be problems later. Next, I make a governmental request for documents that show the steps taken to notify the former owners of the sale. These notices state that the owners are about to lose their property if they do not pay the taxes before the auction. On lucky occasions the record shows that the owners actually got notice, but often it cannot confirm that the notices reached them.

Now a word about titles. The gold standard is a “merchantable title,” which means, not a perfect title, but a title unlikely to lead to litigation. A merchantable title is readily transferrable and a reputable insurance company will write a policy of title insurance on it. The latter is important because most mortgage companies require that a title insurance policy be issued to safeguard their loans. They will not make a loan without the title insurance. It has been the case in South Louisiana that reputable title insurance companies will not issue policies on tax sale properties.

I look at a the purchase of a tax sale as an investment. The tax sale purchaser will have to determine if the risks justify the rewards. Whether, the defects in the title, if any, and the lapses in the notice process, if any, justify the financial risk.

High Tech Zoning Tool You Should Know About

 

 

Screen Shot 2014-03-12 at 9.59.09 AM

The City of New Orleans website has a cool new mapping tool that allows you to zoom in on any lot in Orleans Parish and obtain up to date zoning information.

You can:

• View the city in satellite imagery or as street map.

• Search by street address or drag and click on a location.

• Create custom layers that show lot, square, zoning and future land use.

For each lot it will tell you the zoning designation, description and when the map was last updated. Click on each item for more detailed information and a link to the zoning ordinance itself. Check your neighbors. Check yourself. Check the commercial development on the corner.

The Comprehensive Zoning Ordinance is the “blue print” to new developments in New Orleans real estate. Last updated in the 1970’s a new ordinance is in the process of being adopted. It will afford predictability and uniformity to what has been an ad hoc process of appeals for each non-conforming use and waiver. The goal has been to balance comprehensiveness and simplicity, so that the average citizen can understand it. High tech mapping tools have allowed the City to analyze neighborhood patterns of use as never before which should lead to fairer and more just decisions.

You will find a link to the Planning and Zoning Lookup Tool on the City’s website at:

www.nola.gov/city-planning/planning-and-zoning-lookup-tool/

 

 

 

Real Estate Liens and Judgments — How to Cancel Them?

Liens and Judgments that are recorded in the Land Records Division of the Clerk of Court of Orleans Parish are indexed under the names of the parties. They act as clouds on the titles of real estate owned by the parties cast in judgment. Fortunately, there are several ways to cancel them.

Note: Formally, the Land Records Division of Orleans Parish was divided between the Notarial Archives, the Mortgage and the Conveyance offices. Now, all documents in Orleans Parish are filed once, in one place, making Orleans conform to the practices of other Louisianan parishes.

Here are the major ways to cancel a Judgment:

1. Consent of the parties – usually upon payment or settlement of the Judgment balance.

2. Prescription – the effect of recordation ceases 10 years from the date of the Judgment,
unless it is re-inscribed..

3. Order of a Bankruptcy Court – upon motion and hearing the Bankruptcy Court may order the cancellation for a debtor’s lack of equity in the property.

4. Erasure by State Court – usually by a Mandamus proceeding for the failure of the
Clerk to take action.

Here are the major ways to cancel a Mechanics’ Lien:

1. Release by the Lien Filer.

2. Order of the Court in Suit to Compel Release.

3. Prescription if more than a year has passed and no lis pendes (notice of suit) has been filed in Land Records.

Here are the major ways to cancel City Code Enforcement Liens:

1. Consent of the parties – upon payment of the fine, penalty and costs or settlement..

2. Order of the Court – after filing a timely appeal in a lawsuit.

Here is the way to cancel a Federal IRS Lien:

1. Consent of the IRS after notification of prescription or payment.

JohnMenszer-7484

Does a Succession Containing Real Estate Have to be Judicially Opened?

If the estate is valued at $75,000.00, or less, you don’t have to open a judicial succession. Even if it contains immovable property. Seventy-five thousand dollars doesn’t buy much of a house, but consider this. If the person was married and in community, the value of the decedent’s interest in the jointly owned property is half the market value. Surely, there are many properties in New Orleans, Metairie and Covington worth $150,000.00, or less.

JohnMenszer2-Crop_-2510Instead of opening a succession judicially the heirs merely execute an affidavit. The affidavit must contain the date of death, the marital status of the decedent, the names and addresses of the heirs, a description of the property of the estate with its value at the date of death and a statement that the person died without a will.

To transfer the real estate the affidavit is filed in the public conveyance records. There is no filing of a succession lawsuit, no filing fees to pay, no drafting of all the required documents and no judgment of possession to be signed by a judge. There is just a simple affidavit of nine points that can be executed in the lawyers office.

The main requirements are these. The deceased must have died without a will. The aggregate estate of all the property must be $75,000.00, or less. At least two heirs must sign the affidavit and if there is a surviving spouse one of the two heirs must include the spouse. Nothing could be simpler.

Tax Sales – How do they work?

JohnMenszer-1060877In New Orleans Tax Sales are conducted by online auctions. The price is set at the amount of taxes owed, plus costs. The bidder who offers the least percentage of ownership wins. The city issues the winning bidder a tax sale certificate who becomes the tax sale purchaser and holds a tax sale title.

Tip: Never bid less than 100% ownership, just to get the property. I know you want the winning bid. However, if you decide to quiet the title later, owning less than 100% can be a nightmare. It won’t be worth it. Don’t do it.

Keep in mind that what you bid is just your initial investment. You will have to pay subsequent years property taxes to maintain your interest in the property. And you may have additional costs to keep the grass cut and avoid environmental liens.

The owners have up to three years from the day the tax sale is filed in the public records to redeem the property. In order to redeem the owners must pay tax sale purchaser the amount of taxes paid, plus a 5% penalty and 1% interest per month (12% per year).

After the redemption period is over (if the owners have not redeemed) the tax sale purchaser becomes the owner and can file suit to quiet the title. The goal of a suit to quiet title is to have the courts recognize the rights of the tax sale purchaser.