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Foreclosures And Investors
Windfalls And Pitfalls Of Tax Sales
Bankruptcy Law Meets Eviction Law
Pennsylvania Amends Transfer Tax Regulations
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In late December, the PA Department of Revenue
issued changes to several regulations affecting
the assessment of transfer taxes on the sale of
real estate, many of which are directed at
transactions by investors.
The Scoop
On Entities
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Normally, each fall I give a seminar on how to
use entities for Pennsylvania real estate
investors, so you can plan and implement an
entity or series of entities in time for next
year. But this year, the schedule does not fit
another seminar, so I’ll cover an update in an
article.
When Is A Contract Not A Contract(2)?
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Sometimes, the cases on which I find myself
going to court deal with issues which would be
of great interest to real estate investors. That
is the situation with a case I argued before the
Pennsylvania Superior Court on March 19, 2008.
Short Notes on Entities
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If you own several properties it may be a
good idea to own these properties under different
entities. This can protect your assets, your privacy,
and can even protect you from liability in the future.
Pennsylvania’s New Wage Attachment Rules
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Rules promulgated in Pennsylvania provide
for landlords to attach tenants’ wages for unpaid rent.
Once you have a final judgment against a tenant, then
you may begin wage attachment procedures if you meet the
requirements.
Fair Housing and You
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Every landlord or person selling
properties needs to be informed and aware of the fair
housing laws to avoid violating these laws and
punishment for violations. This article briefly
summarizes some important areas of the fair housing laws
with which to be familiar.
Déjà vu on Landlord Tenant Appeals
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While the Smith v. Coyne case years
ago decided that it was improper to require only an
affidavit and partial rent payments to act as a
supersedeas to a tenant eviction, a case with the same
issue has been filed against the Court Prothonotary in
Federal Court. A Petition to Intervene has been filed
on behalf of Landlords, which hopefully will be granted.
Changes in Pa Mechanics’ Lien Law
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Owners of property in Pa, who have had
work done to the property should be familiar with the
Mechanics’ Lien Laws. There have been recent changes to
the laws effective January, 2007, and there are ways of
avoiding the Mechanics’ Lien.
Tenant Utilities in Multi-Unit Buildings
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When running a multiple unit dwelling, it
is illegal to overcharge a tenant for utilities or to
include common area utilities in individual bills. The
best way to deal with this situation is to have
individual meters or to charge the tenant rent
sufficient to cover utility charges.
Injunction: An Emergency Legal Remedy to Fight
Demolition and Other Immediate Harm
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Its always a good idea to deal with
problems on a property before it goes too far and the
property is confiscated or condemned. However, if you
are faced with condemnation of your property, there are
emergency remedies such as injunctions, to prevent the
destruction.
Buying Property with Tenants Included (Caveat Emptor)
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Buying a rental property with tenants in
place can be a smooth transaction if you know what you
are doing. Things you should keep in mind include
obtaining correct tenant information, incorporating your
own plain language lease, switching over utilities, etc.
Seller Financed Mortgages
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In Pa if you partially finance a buyer and
a bank partially finances the same buyer, you may not
have a priority lien on your purchase money mortgage,
even if you record the mortgage first at the Recorder of
Deeds Office. The simplest way of avoiding confusion
when giving one of two purchase money mortgages, is to
indicate on the face of one of the purchase money
mortgages that it is subordinate or “second” to the
other purchase money mortgage.
Wage
Attachment 2006
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This article first addresses the proper
procedures for landlords to obtain wage attachments
against tenants. Under the 2005 Pa Rules of Civil
Procedure, in order to later attach tenant wages, a
tenant must be personally served or must personally
appear at the District Justice hearing, which is
something to keep in mind when initiating an action.
Additionally, this article addresses the issue of
certain communities imposing licensing ordinances on
owners of rental properties and what these property
owners can do in response.
Allegheny County Property Tax Update
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Since Judge Wettick has ruled that
Allegheny County Taxes were unfair, a company has been
hired to reassess property values. If this company
finds your property value is lower than the market value
then you should do nothing. If, however, they determine
your property value is higher than the market value, it
is better to provide them with information early to try
to get them to change the value, then to wait up to a
year to appeal the decision.
Pa Laws Protecting Mortgage Borrowers and Buyers on Land
Contracts
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This article summarizes three different
laws in Pa. First, Pa’s Act 6 applies to properties
that contain or will contain two or fewer residential
units, and it list the guidelines for bringing an action
for possession against a defaulting purchaser. The
Homeowners Emergency Mortgage Assistance Act applies to
give mortgage assistance to someone who has fallen
behind on their mortgage for their primary residence,
and during the time that they consult a credit counselor
or apply for assistance an owner cannot commence a legal
action. Finally, in Pa if someone is selling a property
that they did not reside in, and they are providing
seller financing, there is a cap to the interest rate
that may be charged on that loan.
Affidavits in Mortgage Foreclosures
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In February 1999, Judge McFalls published
a commentary on what documents are necessary for summary
judgment in a mortgage foreclosure. It is necessary to
prove both liability and the amount due in a mortgage
foreclosure action, and this is done through the use of
witnesses and affidavits. This article goes through the
necessary information that needs to be contained in
those affidavits.
A Matter of Trust
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There are some national speakers who give
informative lectures on real estate investing, but
investors in Pennsylvania need to be familiar with state
laws to avoid prosecution for using certain techniques
that are against the law in this state but valid in
other states. This article address land trusts, living
trusts, deeds from senior citizens, recording deeds, and
soliciting private funding and how Pa law applies to
each versus the national laws.
Anatomy of an Eviction Action
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When a Tenant has violated the terms of a
lease in Pennsylvania, it is important that the Landlord
quickly begin steps for eviction as the law protects
those who are vigilant and hurts Landlords who sit on
their rights. This article explains the step by step
process that a Landlord must follow to evict a Tenant,
from the initial notice to vacate through the hearing
and even explains what happens if a Tenant appeals the
judgment.
Black Mold and Arsenic The Latest Real Estate Scares
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Arsenic contained in pressure treated wood
and black mold have become the newest concerns in real
estate market. While there are no laws as of now
addressing whether there is a need to disclose these
things to potential tenants or buyers, this could be
heavily litigated in the next few years. For now, if
you own property that has pressure treated wood
containing arsenic on the deck then it would be a good
idea to let the potential tenant/buyer know. The best
way to address mold is to stop it before it starts by
purchasing a dehumidifier to keep the basement dry.
Breaking News on Wage Attachments: PA Supreme Court
Gives a Holiday Present to Landlords
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In December 2005, the Pennsylvania Supreme
Court promulgated new rules that provide for attachment
of wages to satisfy money judgments arising from
Landlord-Tenant actions on residential leases. This
article explains the process of attaching the wages of a
tenant, once a final judgment against that tenant has
been entered.
Can You Have Too Many Rights In Your Mortgage?
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Generally when you provide a mortgage to
someone, the mortgage lists the items that are
collateral for the note. This normally includes the
property and sometimes can include other items such as
furniture, or rents from the property. However, in
Pennsylvania, listing any other security items in a
mortgage on the borrower’s principal residence makes the
mortgage subject to modification by a borrower who files
chapter 13 bankruptcy, which could cost the lender
thousands of dollars.
Changes in Garnishment for Allegheny County
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Judge Wettick made a ruling in November
1998 that has changed the procedures for garnishments.
Prior to the ruling, when an account was being garnished
the bank was supposed to freeze the person’s account and
then send them a letter telling them their account has
been frozen and that they may file a paper claiming a
$300 statutory exemption. Judge Wettick’s ruling makes
the statutory exemption of $300 automatic, and now any
social security payments that are direct deposited into
a bank account also may not be frozen.
Collection of Bad Checks
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What should you do if a tenant writes you
a bad check? Well a bad check is better than no check
because, if a person pays you with a bad check, you can
go to the District Justice and have the Assistant
District Attorney file a criminal complaint against the
tenant for writing a bad check. If the tenant is
convicted of writing a bad check their sentence includes
reimbursing you and paying interest on the money, but
since most people don’t want a criminal record, they
will pay you before the hearing and you will get your
money faster and without expenses.
Commercial Real Estate Broker Lien Act –Act 34 of 1998
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Act 34 of 1998 became effective on May 20,
1998 and entitles a licensed real estate broker to a
lien on commercial real estate for compensation owed in
connection with services that are provided in the sale
or leasing of commercial real estate. This article
describes when a lien may arise and the procedures for
obtaining a lien against commercial property.
Computers And The Law
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The PACER (Public Access to Court
Electronic Records) service allows electronic access to
Federal District Court and Bankruptcy Court documents
from any computer. This can be a valuable tool for a
landlord who needs to keep up with pending cases or who
needs to check out a tenant.
Changes in Available Financing and Their Effect on Real
Estate Investors
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While many lenders have tightened their
requirements before they will loan money to someone who
buys and flips property, they are still willing to lend
money to certain real estate investors. The main thing
these lenders look at are the renovations and money that
have been put into the property before flipping it. If
this does not work for you then another strategy is to
purchase and hold properties for rental, which allows
you to obtain properties that are essentially paying for
themselves.
Changes in Real Estate Law Become Effective November
1999
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This article focuses on the relationships
between real estate agents and brokers under the current
laws, and the effect that the new laws will have on
these relationships. For example under the new laws the
same real estate office can represent both parties by
appointing separate agents to work exclusively for the
buyer and the seller. Additionally, the new law has
added another category of brokers and agents, called
transactional licensees who do not represent either the
buyer or the seller but can help them complete the
transaction and still collect a broker fee.
Challenge of the Recent Amendments to the
Landlord/Tenant Act
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This article summarizes the status of two
pending cases. The first case deals with a challenge of
the constitutionality of a ten day appeal period from an
award of possession against a tenant, and the
requirement of paying the judgment and the ongoing rent
in order to obtain a supersedeas from eviction during
the pendancy of a case. The second update involves the
withdrawal of several plaintiffs from a lead based paint
case against a firm client, but it also cautions that
the liability to child can last for such a long time
that it is really necessary to not hold rental
properties in your own name or you may face personal
liability years later.
Corporations and Other Entities Used By Real Estate
Investors for Asset Protection
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When holding many assets it is a good idea
to hold ones that create liability, such as rental
properties, separate from those that do not, such as
stocks or bonds. A good way to do this is by forming
some type of company to hold the rental property as an
assets, and it doesn’t hurt to have liability insurance
on this company. This article explores the options for
holding property, and how to decide which is best for
you, and the benefits to holding property in this
manner.
Caveat
Emptor
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Installment Land Contracts are legal if
they are used correctly. Certain practices, such as
listing many properties as available that you don’t
currently own, can make you appear to be acting as a
real estate agent which can get you in trouble. To
avoid this problem it may be wise to pay more for
options, to hold and manage some properties, and always
beware of buying and selling properties you have never
seen on the internet.
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