Recently an editorial published in USA Today on June 13, 2019 (read here: tinyurl.com/y36lvwjp) basically viewed reverse mortgages as simply predatory lending designed to steal seniors’ and the heirs’ homes without any benefit or knowledge. As a board-certified real estate attorney and Florida HUD Commissioner who has seen and dealt with many reverse mortgage foreclosures, I do not agree with this perspective for a number of reasons explained below.
First, the editorial fails to clearly discuss several important facts:
Without the loans, many seniors would have been forced to sell the homes anyway, due to the inability to pay maintenance costs (such as major structural repairs, and roofs), existing loans (which may be burdensome), or taxes and insurance;
No one forced these seniors to take the loans and spend the money they received, even if spent frivolously;
A majority of foreclosures occur not due to defaults relating to non-payment of taxes or insurance, but due to either abandonment of the home (residing in the home is a condition of getting and keeping the loan) or death;
Claiming that the heirs lost out on getting the home due to the reverse mortgage is a false premise, because it presupposes that the heirs deserve the home even though their parents needed and got to enjoy the benefits of the reverse mortgage money; and
Many foreclosures occur simply because reverse mortgages were granted before the crash, and the monies given were based on a higher pre-crash value. Combined with the accrued interest over 10 to 15 years (a key to how these work, seniors pay nothing during the term of the loan), and all the costs of sale (as high as 8% for real estate commissions, taxes, transfer taxes and title insurance), there is little to no equity left to interest the heirs or the estate to consider selling the properties.
Every buyer and seller understands what a purchase price and closing date are, but oftentimes, they are not sure which party pays the closing costs associated with the closing.
Who Pays for What?
In the most recent iteration of the commonly used residential form contract in Florida, also known as the “FR/Bar,” paragraph 9 lists out which default costs are the responsibility of the parties (unless negotiated otherwise).
For example, the party who pays for title insurance is often negotiable, and custom is often what dictates who pays for what. In Broward and Miami-Dade counties, the custom is that the buyer pays for the title insurance, while in most other counties throughout Florida, the seller does. Continue reading →
The most significant change to the U.S. tax code in 30 years was approved by Congress and signed by the President just in time for Christmas 2017. Many of the provisions became effective January 1, 2018, only a few days after being enacted.
SO, WHAT DOES IT CHANGE?
Corporate and Pass Through Entity Income Tax: Permanent
Corporate Tax Rates are reduced from 35% to 21%.
Business Income from Pass Through Entities: provides for a 20% deduction for individuals and trust and estates on domestic qualified business income from pass-through entities.
Effectively reduces the top tax rate for those eligible to 29.6% (from 37%)
Wages paid to owners and certain income from specified services business (i.e. attorney and accounting firms) are excluded from the deduction.
On October 16, 2017, the Supreme Judicial Court of Massachusetts ruled favorably on a Personal Representative’s access to a deceased user’s online accounts and digital property (Ajeman v. Yahoo). This is the first reported case with respect to access to digital assets by a fiduciary.
The conundrum: Email are part of a deceased user’s estate. But a personal representative (aka executor) can’t read them without violating Federal privacy or anti-hacking law. The Ajeman case is the first to permit access and will empower fiduciaries throughout the U.S.
After more than 30 years of concentrating my legal practice in real estate matters, below is a brief listing of common mistakes I repeatedly see. Read below and find out how a few quick fixes can save you time, money and headaches.
Deeds Without Estate Status:
You want to add dad, mom or a sibling to your Florida property, so you get a Quit Claim Deed from an out-of-state lawyer, an office supply store or online, fill it out and mail it in to be recorded. Three years later they die, and when you go to sell the property you discover that in order to clear their interest, you need to file an ancillary administration in Florida. An easy fix could have saved you $3,000 and a few months of time. You eventually close and share the proceeds with their heirs, however this can be avoided by using the proper language on the deed. If you want the property to go to everyone’s heirs, do nothing, but if you want to be sure that the property goes to the surviving grantees, simply add, “joint tenants with full rights of survivorship, and not as tenants in common” after the grantee’s name. Upon their death, the title goes to the remaining grantee without probate.
If you own a second home/condominium in Florida and are a resident of another state, you can avoid two probates by simply deeding your second Florida property to yourself for life with a remainder to your chosen heirs. Then, when you die, no probate is necessary. You can even keep full control of your property by adding Ladybird Powers to your Life Estate Deed, which means you can sell or mortgage your property without your remainderman’s (person who inherts property) consent. Continue reading →