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What (at a minimum) should you expect from your attorney?

What follows is my opinion on what you should expect from your attorney. They are the minimum standards of conduct necessary in order to build trust between an attorney and his client. My view is that you have a right, not just to ask for, but to demand the following:

Attorney John Menszer

Attorney John Menszer

 

His or her attention.

An attorney must listen to you in order to evaluate the facts of your case. He (or she) should pay attention to the details of your story. He should ask you questions in order to get you to focus on the critical facts of your case. He should be able to summarize what you said and feed you back what he heard. On the other hand, in many cases a story contains both legally relevant and legally irrelevant information. You may not be aware of the difference. Don’t be put off if at some point in order to save time your attorney wants to skip over the legally irrelevant parts of your story.

A prompt response to communications.

My thought here is that attorneys should return phone calls the same day, preferably within 3 hours, and emails by the next day at the latest. The premise is what is reasonable. If the attorney is in trial, he may not be able to meet this goal. But, you should feel that your attorney is accessible to your need to communicate with him.

Realism.

Your attorney, like your doctor, should tell you the truth. He should not over-promise, but be realistic about your chances. If you give your case to an attorney who promises the moon, he will likely break that promise. You are hiring an attorney for his knowledge and his judgment. He should tell you what he knows and it is often appropriate that he share with you what he doesn’t know. (But it is OK if he says he has to do legal research in order to find the answer.)

An explanation.

An attorney should be able explain his view of your case up to your ability to absorb the information. Not everyone wants to know the how and why, but for those who do he should be available to explain the issues in your case.

Timeliness.

Your case should progress in a timely manner. Frequently, unforseen complications arise that require an adjustment of the expected time frame. Nevertheless, you should be assured that your case is getting a fair share of your attorney’s attention.
Your best interest in mind.

They say that to a hammer every problem looks like a nail. I’m not sure what that means, exactly. But as a client I want my attorney to have my best interest in mind. It is possible in the legal arena to throw up a lot of sparks that give very little heat. Not e very case benefits by taking extreme measures. Compromise is sometimes better than a win, especially if it comes at a lower cost and in time. The services an attorney delivers should be appropriate to the case and the needs of the client, not just to the size of the client’s pocketbook.

Should I be afraid of Zombie Real Estate?

JohnMenszer-0690It happens so often. I ask clients if they own a home and they say, “No, but I am buying one from the bank.” There is a popular misconception that when you are paying a mortgage, you don’t own the property until it is fully paid for. In fact, when you buy a piece of real estate on credit you are owner from the time the ink dries on the paper.

The three essential documents involved in a credit purchase of real estate are: the Act of Transfer, the Note and the Mortgage. The Transfer, also known as the Deed, transfers ownership from the seller to the purchaser. The Note is a statement of the amount the purchaser owes and the terms of repayment. The Mortgage is a security agreement that ties the note to the real estate, giving the lender certain rights over the property. Among those rights is the option to foreclose if the Note becomes delinquent.

Notice, I said “option to foreclose” because here is where the Zombie Real Estate comes in. There are unknown numbers of these foreclosure horrors where it is the bank’s refusal to foreclose which sets the owner down the path to perdition. Zombie Real Estate is property that nobody wants which keeps racking up costs for the owner.

I read of a property owner in Ohio who fell behind to JP Morgan Chase due to ill health. He received a foreclosure suit and proactively moved out before the date of the sheriff sale to live with his daughter. Then the bank quietly dropped the suit. Two years later he started getting bills for taxes, waste removal, weed control, and was threatened with demolition costs.

In depressed markets banks are walking away from properties. If they foreclose they have the legal costs and the expense of keeping up the real estate owned (known in the trade as “REO’s). In not foreclosing the bank can reap accounting and tax benefits from the government and sell the debt at a deep discount to debt collectors, who then hound the owners.

In my practice I once had a case of Zombie Real Estate in a bankruptcy. A client had a piece of investment real estate that he wanted to give back to the lender, as well as a lot of hospital bills and other debts that justified filing a Chapter 7. We filed his case and listed his intention to surrender this property to the bank. Unfortunately, before the lender could foreclose the property was damaged and the lender decided not to foreclose after all. The wrecked property sat for years with the City racking up liens and charges. The Note on the property was discharged in the bankruptcy, but since the City’s liens and charges dated from after the bankruptcy they were fresh obligations to the debtor.

You can’t force a bank to foreclose if it doesn’t want to and you can’t make them accept a donation, a dation or a quitclaim, unless they sign the document. What you own may not be so easy to get rid of.

 

What you don’t know about homeowners insurance can hurt you.

If you are like me you pay your insurance and forget about it. This article is about how to avoid that sinking feeling when your insurance agent says your loss is not covered under JohnMenszer-1090932your homeowners policy. What you may not realize is that insurance companies exclude, or partially exclude, entire classes of losses. These fall into two main categories : correlated risk and moral hazard.

What insurance companies are afraid of paying for is really big catastrophes. If my house burns down that is catastrophic for me, but it is unlikely to affect the whole city. Since it hard to actuarially adjust the premiums for really big losses that happen infrequently, the companies tend to exclude them.

War is one example. Hurricanes are another. My homeowners policy states that flood damage is an exclusion “regardless of how caused” and goes on to state that flood includes “but is not limited to storm surge, waves, tidal water, overflow of a body of water, whether driven by wind or not.” Whew! If you want protection from flood loss get a flood insurance policy which is a government program.

Another factor to consider is that most policies in costal areas of the country now include enhanced deductibles for “Named Storm Damage” (Hats off to the storm-naming National Weather Service). Unlike a standard deductible which is a fixed dollar amount, the hurricane deductible is based on a percentage of the total insured dwelling value

So far we have been discussing correlated risk – multiple losses that can happen together. Another type of loss that insurance companies try to steer away from is moral hazard. Moral hazard is when the insured’s behavior changes in such ways as to raise the costs for the insurer.

But you might say, “all insurance affects behavior.” That is almost the point of insurance. If my camera is insured, you bet I’ll be more likely to take it on a canoe trip over the rapids. What the companies are concerned about are the hidden moral hazards, where having the insurance will be encouraging indifference. “Yes,” the company says we insure against loss, “but we don’t want to be ridiculous about it.”

Infestations of vermin are not covered. You really should wash the dishes in the sink and keep your house tidy. Mold is not covered. Fix that roof leak. If a bowling ball falls off your shelf and breaks your TV, shame on you.

To learn more about these questions check this National Public Radio Planet Money report.

 

How do I dispute my real estate property tax assessment? There are 4 levels of appeal.

_1140656Many of us think that our taxes are too high, but when it comes to property taxes you can actually do something about it.  You have to pay attention to timing, as the assessor’s rolls are only open for a short period.  In Orleans Parish the books are open from July 15 through August 15. In the other parishes the rolls are open from August 1 through September 15.

You can go to your assessor’s office when the books are open and make your case why your taxes are too high.  Unless there is an obvious error, a gut feeling is not going to get you very far with the bureaucrats.  It is essential that you bring documents to make your point.

Your property is assessed at a percentage of its fair market value.  Fair Market Value is defined as the price a property would bring on the open market between a willing and informed buyer and seller, if exposed for sale for a reasonable amount of time.  Helpful documents would be a recent appraisal, a builder’s contract for necessary repairs, copies of recent sales of comparable properties and always, bring photographs of your property.  If you and the assessor come to an agreement, then you have won and the process is over.

If you cannot come to an agreement at the meeting with the assessor’s customer service representative then you can submit you can submit an appeal to the Board of Review of the assessor’s office.  This is usually done by mail or online, so you wil  make your case entirely by the written word.  The watchword is to be concise and marshal your facts, as you want to make it easy for them to agree with you.  Get to the point and avoid extraneous justifications.  The Board of Review will send you their written decision by certified mail.  Either you or the assessor can appeal the Board of Review’s decision to the Louisiana Tax Commission in Baton Rouge.  In some Parishes the assessor appeals as many of 50% of the Board of Review’s decisions to the Louisiana Tax Commission.

If you cannot come to an agreement at the meeting with the assessor’s customer service representative then you can submit you can submit an appeal to the Board of Review of the assessor’s office.  This is usually done by mail or online, so you wil  make your case entirely by the written word.  The watchword is to be concise and marshal your facts, as you want to make it easy for them to agree with you.  Get to the point and avoid extraneous justifications.  The Board of Review will send you their written decision by certified mail.  Either you or the assessor can appeal the Board of Review’s decision to the Louisiana Tax Commission in Baton Rouge.  In some Parishes the assessor appeals as many of 50% of the Board of Review’s decisions to the Louisiana Tax Commission.

Your signature on the certified mail initiates the 10 day period you have file your appeal with the Louisiana Tax Commission, but this 10 day period may be waived for cause.  A taxpayer’s appeal to the Louisiana Tax Commission should be filed on their Form 3103 A.  The Louisiana Tax Commission holds public hearings.  You can call them for the schedule.  If you receive an unfavorable decision from the Louisiana Tax Commission you have 30 days to file a judicial appeal in the District Court.

The following are some useful websites:

Orleans Parish Assessor’s Property Owners Guide

http://www.qpublic.net/la/orleans/docs/10steps.pdf

Orleans Parish Assessor’s Website

http://nolaassessor.com

Jefferson Parish Assessor’s Website

http://www.jpassessor.com

Louisiana Tax Commission’s Website

http://www.latax.state.la.us

What You Should Know About Code Enforcement.

Code Enforcement is serious business in New Orleans. An Administrative Judgment can cause you to have:
Your property seized and sold at public auction. JohnMenszer-0296
Daily fines of hundreds of dollars per day.
A lien filed against your property.
The fine and penalties added to your tax bill.

In New Orleans, the Municipal Code was amended as of April 10, 2014, making occupied and vacant property subject to the “Minimum Property Maintenance Code”. See this link to the Municode website, specifically Sections 6 and 26:
https://library.municode.com/index.aspx?clientId=10040

It is a violation of the Code to have:
Weeds in excess of 18 inches.
Substantially peeling, flaking or chipped exterior paint.
A gutter that discharges water onto a neighbor’s property.
A window that doesn’t operate or has a substantially cracked glass.
A screen with holes or breaks.
Peeling, chipped or flaking interior paint.
An inoperative or unlicensed motor vehicle.
A hot tub or pool without a 6 foot high fence with self-latching gate.

The Code Enforcement process can be initiated by an inspector or by a neighbor’s call to 311. At the hearing, the owner can present evidence and photographs to show work in progress. The Code Enforcement Bureau has discretion to continue the hearing, if substantial progress is shown, or render a Judgment. If found in violation the Bureau will issue a Notice of Judgment and levy a fine which is subject to stiff penalties beginning in 30 days if the fine is not paid. After 30 days the Judgment is recorded in the Land Records Division of the Clerk of Court (formally Notarial Archives and the Mortgage Office.) The Bureau has discretion whether to have the Sheriff of Orleans seize and sell the property at public auction.

The Owner is best served by bringing the property into full compliance. The administrative process allows appeals of a Judgment to Civil District Court, but only a suspensive appeal, which requires the posting of a bond, will protect the property from seizure and sale. Paying the fine (and penalty) will terminate the current case, but the property is subject to being re-cited for violations. Repeat offenders may have increased penalties.

As I said before, “Code Enforcement is serious business in New Orleans.”

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.

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.