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  • How to De-convert an Illinois Condominium Building

    by Evan Sauer | Sep 04, 2018
    By: Evan M. Sauer
    evan@rdlawyers.com
    877-809-4567 x2

    With the rise in apartment rents, we are being approached by developers to assist with the acquisition and de-conversion of condominium buildings to apartment rental properties in Chicago. Although this may seem like a daunting process, it really only involves the following steps: (1) obtaining the vote of unit owners to sell the entire condominium building; and (2) legally de-converting the condominium building.

    Requisite Vote to Sell

    As odd as it sounds, fewer than all unit owners in a condominium building may be able to compel a sale of the entire condominium property. Unless a greater percentage is provided for in the declaration or bylaws, Section 15 of the Illinois Condominium Property Act (“Act”) (765 ILCS 605/15) permits not less than 75% of all unit owners (where the property contains 4 or more units) calculated by unit percentage (not just those that attend the meeting) to elect to sell the property.

    If this happens, all unit owners are bound by the sale. However, any unit owner who did not vote in favor of the sale may file an objection to the board within 20 days after the date of the meeting at which such sale was approved. Such objecting unit owner(s) shall be entitled to receive from the proceeds of such sale an amount equivalent to the greater of: “(i) the value of his or her interest, as determined by a fair appraisal, less the amount of any unpaid assessments or charges due and owing from such unit owner or (ii) the outstanding balance of any bona fide debt secured by the objecting unit owner's interest which was incurred by such unit owner in connection with the acquisition or refinance of the unit owner's interest, less the amount of any unpaid assessments or charges due and owing from such unit owner. The objecting unit owner is also entitled to receive from the proceeds of a sale under this Section reimbursement for reasonable relocation costs, determined in the same manner as under the federal Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended from time to time, and as implemented by regulations promulgated under that Act.”

    If there is a disagreement as to the value of the objecting unit owner’s interest, Section 15 provides for a mandatory arbitration process whereby that unit owner and the purchaser each have the right to designate an appraiser, and both appraisers mutually designate a third appraiser. The three appraisers determine by vote of at least two of the members of the panel, the value of the objecting unit owner's interest in the condominium property.

    De-convert the Condo Building

    Following the sale of the entire condominium property to the purchaser, the next step for the purchaser is to de-convert. De-conversion requires withdrawal of property from the Act. Section 16 of the Act (765 ILCS 605/16) permits all unit owners to withdraw the property from the Act by recording an instrument to that effect. To be effective, however, the withdrawal must be agreed to by all lien holders of the condominium property, by having their liens transferred to the undivided interests attributed to the owners whose units were so burdened.

    After withdrawal of the property from the Act, the property is deemed to be owned in common by all of the owners, with each owner having the same percentage as previously owned by such owner in the common elements. In the case of a single purchaser, the purchaser will be the sole 100% owner of the property. 



    Evan Sauer is a real estate lawyer at Reda & Des Jardins, LLC a forward-thinking, technologically savvy law firm providing top-notch legal services to clients ranging from startups to large companies in a variety of industries. R&D's practice includes business, real estate, litigation and estate planning. 
     
  • Starting Your Amazon Business – Organization & Trademark

    by Evan Sauer | Apr 09, 2018

    By: Evan Sauer
    evan@rdlawyers.com
    877-809-4567 x2

    If you are starting an Amazon business, or any business for that matter, it can be scary, overwhelming, and costly. The biggest mistake I see is not setting up your business properly from the start. In the Amazon private seller and Merch by Amazon industries, there are two important factors to consider from the start: (1) using the correct entity; and (2) protecting your brand.

    Organization

    It is crucial to form an entity for your Amazon business prior to selling. Let me repeat this, form an entity up front. Besides the tax and other advantages of using an entity like a limited liability company or corporation, when selling products or apparel, the liability is extremely high. Take for example an Amazon seller running his/her account in his/her individual name. He/she sells a scooter or alarm clock and the purchaser gets injured on the scooter or electrocuted by the clock or a he/she sells a t-shirt with a logo trademarked by someone else. What happens when the Amazon seller is sued? Ultimately, the purchaser or owner of the trademark could take everything (house, car, money, etc.). If that Amazon seller was an LLC or corporation, for example, and its only assets were the money in the bank account and inventory, the purchaser would likely be only able to come after those assets. 
     
    If your entity is structured correctly, you can avoid personal liability. In a time when everyone believes that everything is DIY, Amazon start-ups are skipping this crucial step in starting a successful business when deciding to take on the legal work themselves.  It amazes me how many businesses do not have a business lawyer.  When asked why, many business owners had the same response: money. Of course, this makes sense if you are a start-up you are strapped for cash and why not save money by doing some of the work yourself. 

    The answer is simple. If you spend a little more up front for the right advice, you will end up saving much more down the line.  If your business is not structured correctly up front, it will cost you much more in the future, during a time when your business should be taking off. Also, keep in mind, although Amazon will only allow you to have one account (maybe two), that does not mean you should only use one entity. If you are selling large amounts of separate products, consider starting an entity for each product line.

    Here are some initial considerations in deciding which entity(ies) is suited best for your Amazon company(ies).

    Top Table
    Bottom Table

    Trademark

    In deciding what entity to set-up, the name and logo will also be a very important factor. This is your brand, and this is how you grow your business. You ultimately want to ensure that you not only have the right to use that name and logo, but that if you decide to trademark it, you will have the ability to do so. A “trademark” is a word, name, symbol, or device used to identify goods and distinguish them from others. 15 U.S.C. Section 1127.

    In deciding what name to use for your company or product line, you want to make sure you’re your mark is capable of being protected. To ensure you have the strongest chance of being protected and registered with the USPTO, consider the hierarchy of trademark classifications below (weakest to strongest):

        1.  Generic. A generic trademark is really not a trademark at all. Using the term “banana” to describe a “banana” is not subject to trademark protection. Thus, when choosing a trademark, it is improper to choose a word that is defined in a dictionary to mean the type of product on which the trademark is being used. 

        2.  Descriptive. Descriptive marks are also poor candidates for strong trademark protection. A mark is descriptive if it describes what the product is. For example, if the product is a drawer that goes in a desk, the trademark “desk drawer” would be considered descriptive since it merely describes what is being sold. 

        3.  Suggestive. Suggestive marks are stronger trademarks, especially if they hint at the type of the product without actually revealing what the product is. For example, the trademark “Chicken of the Sea” which suggests an image of the type of product but does not indicate what the product is that is actually being offered. 

        4.  Arbitrary. Arbitrary trademarks are the best choice from a legal protection viewpoint. These are words that have absolutely no meaning prior to their adoption. These marks instantly become identified with the particular brand, and the exclusive right to use the mark is easily asserted against potential infringers. An example of an arbitrary or fanciful trademark is the trademark “Nike®”. 

    The next step in protecting a mark is to find out whether any other company has registered or is using that same term for similar products or services. Most applicants will search the USPTO website to determine if their mark is being used. However, this should not be the end of your search, you must be thorough and search other websites, Google, etc. Someone may be using your mark that has not been registered. Keep in mind that once you start using your mark in interstate commerce, you are entitled to common law trademark rights assuming no other person has prior rights to that mark. However, one of the advantages of registering your trademark is that you are presumed to have the best rights to that trademark, and anyone opposing it will have to prove otherwise.

    Also, just because your mark may not appear in the USPTO database or in another online search, does not mean it will be approved for registration. The USPTO can refuse to register your mark if it is “confusingly similar” to another mark. I would highly recommend retaining someone experienced in trademark searching to avoid any chance of rejection and unnecessary expenses. 

    The bottom line is that setting up your company and brand correctly up front will set you on the right path to building a successful business. 



    Evan Sauer is a business attorney at Reda & Des Jardins, LLC a forward-thinking, technologically savvy law firm providing top-notch legal services to clients ranging from startups to large companies in a variety of industries. R&D's practice includes business,real estate, litigation, and estate planning.

  • Compliance with Lease Option to Renew and Notice in Illinois

    by Evan Sauer | Mar 27, 2018
    By: Evan Sauer
    evan@rdlawyers.com
    877-809-4567 x2

    Make sure you strictly comply with the lease notice provisions for exercising an option to renew and extend in Illinois.

    On February 28, 2018, the Illinois Appellate Court, in the case of Michigan Wacker Associates, LLC v. Casdan, Inc., 2018 IL App (1st) 171222, held that a tenant’s proposal e-mail did not constitute unequivocal, unconditional notice that the tenant was exercising its extension option and that actual or oral notice was insufficient. The tenant failed to exercise its option to extend the lease term pursuant to the lease.

    It appears from this case that depending upon the terms of the lease, in providing notice to exercise an option to renew, a tenant should consider: (1) timing; (2) method of delivery; and (3) content of notice.

    The contractually mandated time for performance is generally an essential term of a lease. The seminal decision in Dikeman v. Sunday Creek Coal Co., 184 Ill. 546 (1900), remains the leading authority on this matter. Unless that term is waived, an option is lost due to untimeliness. The court in Michigan Wacker went on to explain that “actual or oral notice is insufficient to exercise an option where a party has failed to provide timely written notice.” 

    The lease terms will often provide for type of delivery of an option notice. Whether it needs to be delivered by certified mail, regular mail, e-mail or the like, a tenant needs to ensure it is delivering the notice as required. If the lease does not state the means for delivery, it is always a good idea to send certified mail, return receipt requested as well as e-mail with a delivery receipt. 

    As for the content of the notice itself, an acceptance of an offer contained in an option must be specific, certain, and unconditional. The lease terms may even provide for the exact language needed to exercise the option. In the absence of such terms, words like “[T]enant hereby gives landlord this Extension Notice that Tenant has elected to exercise the First Extension Option granted in the Lease and does so with respect to the entire Demised Premises”, as provided in Michigan Wacker would certainly suffice as specific, certain, and unconditional. Words like tenant “would like to exercise the second option now” do not purport to unconditionally exercise an option.

    If you are a tenant looking to extend your lease, make sure you strictly comply with the lease provisions. Also, a landlord and tenant often overlook the importance of drafting an appropriate notice provision, so when entering into a lease, you may want to consult with a lawyer.



    Evan Sauer is a real estate attorney at Reda & Des Jardins, LLC a forward-thinking, technologically savvy law firm providing top-notch legal services to clients ranging from startups to large companies in a variety of industries. R&D's practice includes businessreal estate, litigation, and estate planning
  • Buying and Selling Amazon Businesses – Legal Issues

    by Evan Sauer | Feb 23, 2018
    By: Evan Sauer
    evan@rdlawyers.com
    877-809-4567 x2

    Buying and selling an Amazon, other e-commerce business, or any business for that matter, comes with many issues and considerations. Although this post will focus on the legal issues involved, I will briefly touch on other considerations as well. 

    Purposes of the Parties.

    In order to advise my clients on the structure of a purchase and sale, I need to understand the purposes for the buyer buying a business and the seller selling the business. 

    As for the buyer of an e-commerce business, a few of the most common motivations, include diversification into new product lines; obtaining needed working capital; obtaining additional or new sources of supply or channels of distribution; obtaining the tax benefits of the selling entity such as loss or investment tax credit carryforwards; or obtaining particular assets of the selling entity, such as patents or trademarks.

    As for the seller, the most common motivations for selling, include the opportunity to enjoy a substantial profit; or business adversities or considerations such as capital shortage, loss of a source of supply, lack or aging of management, strategically exiting a market or disposing of a business unit, or a declining market.

    Investigation of Seller’s Business.

    Before making an offer, buyers should investigate the marketability of the seller’s current and future products, the stability and strength of the seller’s customer base, the quality and depth of management, sources of supplies and channels of distribution, the seller’s position within its product category, seller’s material contracts with suppliers, vendors, employees, and independent contractors, intellectual property ownership and licenses, and the overall future of that industry. 

    Buyers should also review the seller’s financial statements and tax returns for the previous 3-5 years in order to obtain an accurate appraisal of the business’ performance over time. A complete discussion of techniques for analyzing corporate financial statements is beyond the scope of this post. 

    Forms of Acquisitions.

    There are various structures for the acquisition and sale of a business that the parties can explore, such as:

    1.  Mergers.

    Merger means the combination of two or more entities, where one entity absorbs one or more other entities, takes over all property and rights of the other entities, and
    becomes liable for all of their liabilities and obligations. The entities being acquired terminate their legal existence, and their shareholders or members exchange their stock or interests for cash and/or shares, securities, or obligations of the surviving entity. 

    2. Consolidations

    Consolidation occurs when two or more entities combine and form a new entity. The procedure for consolidation normally is similar to that required to effect a merger, and the results produced by the two methods are almost identical. In effect, the consolidating companies merge into the new entity.

    3. Sale of Assets.

    An entity may, under many state statutes, sell all or substantially all of its properties and business to another. The sale may be made for cash or other property, including, in many states, shares or interests. After the sale, the selling company may dissolve, but it need not do so. If shares or other securities of the buying entity are received as consideration and then are distributed to shareholders or interests of the selling company upon its dissolution, the end result is similar to that of a merger or consolidation.

    4. Sale of Shares or Interests.

    The sale of shares of a corporation by its shareholders or interests of a limited liability company by its members does not require specific statutory authority or formal action by the corporation or limited liability company. The parties may agree on cash, shares, or securities of the buyer or other property as consideration. In further contrast to the preceding methods of corporate acquisition, the buyer of shares or interests does not become the immediate owner of the entity properties and business, but the business and financial effect on the selling entity’s owners is practically the same. 

    Choosing the Right Structure – Non-Tax Considerations.

    1. Liability Assumption.

    If you are a buyer, you need to consider whether you are okay with taking on all of the liabilities (known and unknown) of the seller. Below is a brief explanation of what structures would require and not require assumption of the seller’s liabilities.

    A surviving entity in a merger or consolidation inherits all of the obligations and the liabilities of the constituent entities. 

    A buyer purchasing the assets of another company often expressly assumes all of the
    debts and liabilities of the seller. In such cases, the buyer becomes directly liable. However, the parties can agree to limit the buyer’s liabilities. The buyer is not liable for debts and obligations of the seller other than those it has assumed expressly in the purchase contract. 

    There are exceptions. The buyer could be liable for debts of the seller if the buyer pays the consideration for the acquired assets directly to the shareholders or members of the seller instead of to the selling corporation or limited liability company itself. By this process, the selling entity is stripped of all assets that previously were available to pay creditors, and creditors have successfully asserted liability against the transferee entity under those circumstances.

    In addition, a buyer could be liable for the obligations and liabilities of the seller when the buyer entity is merely a continuation of the seller entity (i.e. common officers, directors, and shareholders); or when the transaction is entered into fraudulently to escape liability for such obligations. 

    If the buyer insists on an asset purchase, and seller has known or unknown liabilities, the buyer can protect itself by insisting on payment of creditors before the sale, by withholding part of the purchase price temporarily, and/or by placing part of the purchase price in escrow.

    From the seller’s viewpoint, when an entity sells all of its assets and the proceeds of the sale are distributed to its shareholders or members, unpaid creditors of the selling entity may pursue the shareholder or member proceeds to satisfy the entity’s debts. To avoid such a circumstance, seller most states have statutes for dissolution and discharging liabilities with notice to creditors that sellers should follow.

    When a buyer purchases shares or interests of the selling entity, the buyer merely becomes an owner of the seller and the selling entity is still liable for its preexisting debts and obligations. However, a buyer that acquires the shares or interests of another entity does not become personally liable; the risk of unknown liabilities is borne by the acquired selling entity only. 

    2. Transfer of Contracts.

    Many contracts are not assignable. Restrictions on assignments normally are strictly construed and may be held not to be violated by merger or by the sale of its shares or interests. Some contracts go further and restrict assignment even by operation of law. Intellectual property licenses should be assumed to be non-assignable unless the license specifically allows for assignment. If restricted contracts are important to the transaction and cannot be renegotiated, either a merger or sale of shares will likely be preferable to a sale of assets. 

    3. Convenience & Timing.

    A sale of assets involves a large amount of paperwork, including purchase and sale agreements, bills of sale, and assignments for all its assets and contracts. There is also the danger that some assets will be overlooked and not transferred. A merger or sale of shares or interests avoids these problems. Because less paperwork is involved and typically fewer contractual consents
    are required, a merger or sale of shares or interests often can be completed more quickly than a sale of assets. 

    Choosing the Right Structure – Tax Considerations.

    One of the most important considerations in purchasing and selling a business is the tax ramifications of the parties. If you choose the wrong structure, you could end up paying a lot more in taxes than anticipated. Below is a very brief explanation of the tax implications for each structure. This is not accounting advice, I would recommend speaking with your accountant regarding the tax consequences. 

    In the case of a merger or consolidation, the IRS treats this transaction as a reorganization eligible for tax-free treatment. Treas.Reg. §1.368-2(b). The primary advantage of a statutory merger or consolidation, is the flexibility permitted in determining the consideration to be paid for the acquired entity.

    The sale of assets is relatively straightforward for tax purposes. The overall sale for a single purchase price is treated as separate transfers of each asset purchased and liabilities assumed. The purchase price is allocated among the assets in accordance with their respective fair market values at the time. The selling entity recognizes gain equal to the difference between the adjusted basis of the assets transferred and the amount paid by the buyer. Where there is a complete sale of the business, and the asset sale is followed by a liquidation of the entity, there may be two levels of taxation (depending upon the type of entity) – that is, at the corporate and shareholder levels. From the buyer’s perspective, the buyer acquires the various assets with bases equal to their fair market values, a so-called “step up” in basis. The buyer takes the assets with full basis and new holding periods, and where applicable will get the benefit of depreciation deductions, thereby reducing the buyer’s taxes going forward. Thus, from a tax perspective, this structure would generally be preferable to a buyer.

    In a sale of shares or interests structure, the selling shareholders or members will recognize gain equal to the difference between the purchase price received and their bases in the target entity. The buyer acquires the target’s shares or interest with a stepped-up basis equal to the cash paid and liabilities assumed. For tax purposes, the essential difference to the buyer of acquiring a business through a stock or interest purchase, rather than purchasing the assets directly, is that the individual assets retain their character, bases and holding periods. This has advantages and disadvantages, which is beyond the scope of this post. In general, it would appear that a stock or interest sale would have tax benefits for sellers and result in a corresponding tax detriment for buyers. However, this may not always be the case depending upon certain factors influencing a taxpayer’s taxes.



    Evan Sauer is a Chicago business and real estate attorney at Reda & Des Jardins, LLC a forward-thinking, technologically savvy law firm providing top-notch legal services to clients ranging from startups to large companies in a variety of industries. R&D's practice includes business, real estate, litigation and estate planning. 
  • Part I – Structuring and Operating Successful Business, the Pinwheel

    by Matt Villano | Oct 10, 2017
    Pin Wheel


    Starting and operating a successful business is difficult, confusing, and often fraught with unforeseen liabilities.  Our 8 part series, titled Structuring and Operating Successful Business, the Pinwheel, breaks apart a business into 8 areas providing a simplistic, easy to understand analysis to help you make the right decisions from the beginning.

    Let’s get started.

    It is obvious that to start a business, you need an idea and a name. What is not so obvious is that you also need trusted professionals by your side to guide you in the right direction.

    In a time when everyone believes that everything is DIY, start-ups are skipping a crucial step in starting a successful business when deciding to take on the legal and accounting work themselves.  It amazes me how many businesses do not have a business lawyer and accountant.  When asked why, many business owners had the same response: money. Of course this makes sense, if you are a start-up you are strapped for cash and why not save money by doing some of the work yourself. 

    The answer is simple. If you spend a little more up front for the right advice, you will end up saving much more down the line.  If your business is not structured correctly up front, it will cost you much more in time and money to hire a lawyer and accountant to fix the mistakes, during a time when your business should be taking off.

    As a business lawyer, I believe the most important strategy a business owner can employ from the get go is building a trustworthy and loyal team, including partners, employees, lawyers, and accountants. The first thing I do when getting the initial call from a client who wishes to start a business is suggest setting up a conference call with an accountant. For whatever reason, lawyers and accountants seem to butt heads, but my thinking is the opposite. Each has a very distinct and important role. The business lawyer provides guidance as to liability and legal compliance and the accountant provides financial and tax advice. 

    Your business lawyer and accountant can help you from the beginning.  The first and most crucial decision to be made is the selection of the legal form of the entity.  This will have a variety of consequences during the life of the business. For example, it may affect whether business owners are personally liable for the obligations of the business or it may affect the family succession planning of the owners. In any event, it is paramount to consider the goals of the business and consequences in choosing a structure.

    Here are some initial considerations in deciding which entity is suited best for you.

    Top Table
    Bottom Table

    This is part 1 of Structuring and Operating Successful Business, the Pinwheel. Like it? Stay tuned for part two: with the right employment agreement, you can memorialize and preserve the relationship with your employees, incentivize your employees, and protect against solicitation, competition, and disclosure of confidential information. 



    Evan Sauer 
     is a Chicago business and real estate attorney at Reda & Des Jardins, LLC a forward-thinking, technologically savvy law firm providing top-notch legal services to clients ranging from start-ups to large companies in a variety of industries.  R&D's practice includes business, real estate, litigation and estate planning. Learn more at Reda & Des Jardins.
  • New Illinois Limited Liability Act - July 1, 2017

    by Evan Sauer | Jul 24, 2017
    The Illinois Limited Liability Company Act (“Act”), 805 ILCS 180/1-1, was substantially amended this year. The changes went into effect on July 1, 2017 and can have a significant impact on the formation and operation of Illinois limited liability companies. Although there are many revisions, here are some that may have the most impact.

    Domestication of a Foreign LLC.

    Prior to the new Act, if a foreign LLC (one originally filed in state other than Illinois) wished to do business in Illinois or convert its LLC to Illinois, it had to file in Illinois as a foreign LLC or go through a lengthy and detailed merger process (beyond the scope of this blog). Now, the Act provides the procedures for domestication. Foreign LLCs can domesticate in Illinois by filing the necessary forms with the Secretary of State. 805 ILCS 180/37-31.

    Conversion of an LLC.

    The Act expands the ability of an LLC to convert to a different entity and vice versa. In order to convert, the converting entity must satisfy certain criteria, including that the laws currently applicable to the organization allow such a conversation. 805 ILCS 180/37-10.

    Oral Operating Agreements are Recognized.

    Previously, oral operating agreements were not explicitly recognized by the Act. Although the best practice is still to have a written operating agreement, the Act now sees oral operating agreements as effective and enforceable. 805 ILCS 180/1-46.  Additionally, the amendments expressly except an operating agreement from the writing requirements provided in Illinois’ statute of frauds. Operating Agreements can also be electronically signed. 805 ILCS 180/1-6. This will ultimately speed up the execution process for members and make it more efficient especially if members are in different states or even different countries.

    Enforcement of the Operating Agreement.

    The Act automatically binds an LLC to the operating agreement executed by its members’ regardless of whether the LLC assented to the operating agreement or not. The Act assumes that any individual who becomes a member of an LLC accepts and assumes the current operating agreement. There is no requirement that new members execute the operating agreement or any exhibit thereto 805 ILCS 180/15-5.

    Agency of Members.

    Previously, each member was an agent of the LLC for purposes of the company’s business. Now, third parties cannot rely on a member’s authority just because they are a member of the LLC. LLCs can also dictate the authority of its members with a “Statement of Authority” or “Statement of Denial” which are detailed below. 805 ILCS 180/13-5. This will effectively allow LLCs to manager who has the authority to act on behalf of the LLC and limit any unwanted and unintentional liabilities.

    Statement of Authority.

    The Act creates a new document entitled a “Statement of Authority.” Although not required by the Act, a Statement of Authority can be filed with the Illinois Secretary of State, detailing the authority or limitations on authority of any member or manager of the LLC to enter into transactions on behalf of the LLC. If it relates to real estate, the Statement of Authority can be recorded in the county in which the real estate is located. By recording, the LLC creates constructive notice as to who has authority to act on behalf of the LLC and protects buyers that rely in good faith on the recorded Statement, protecting the LLC should a deed be executed by an unauthorized member or manager not named in the Statement of Authority. It creates a streamlined procedure such that businesses that purchase and sell real estate could file one Statement of Authority without having to execute multiple resolutions for the title company and lender each transaction. 805 ILCS 180/13-15.

    Statement of Denial.

    Similarly, the Act also creates a “Statement of Denial” whereby a member or manager listed in a Statement of Authority can deny the grant of authority or limitation made on the member’s or manager’s authority. The rules for filing and recording are similar to the Statement of Authority. 805 ILCS 180/13-20.

    Unless the Operating Agreement Specifies Otherwise, LLCs are Member-Managed.

    Both member-managed and manager-managed LLCs are still recognized, but unless the operating agreement expressly provides that an LLC is manager-managed, or that the management of the company is vested in its managers, the default is to treat the LLC as member-managed. If LLCs intend to have its managers manager the company and they do not expressly state this in the operating agreement, the LLC can inadvertently provide its members with more authority than intended. 805 ILCS 180/15-1.

    Except for the Duty of Care, Fiduciary Duties can be Eliminated and Altered.

    The operating agreement may now eliminate or reduce a member’s fiduciary duties. Previously, the LLC Act did not allow the operating agreement to eliminate or reduce a member’s fiduciary duties. The operating agreement may not, however, eliminate or reduce the obligation of good faith and fair dealing and it may not restrict or eliminate the duty of care. The elimination of any other fiduciary duties must be clear and unambiguous within the operating agreement. The operating agreement may identify specific types or categories of activities that do not violate any fiduciary duty and may specify the method by which a specific act or transaction that would otherwise violate the duty of loyalty may be authorized or ratified after full disclosure of all material facts. This will allow LLCs to ensure its members and managers devote the time and attention necessary to operate the company effectively.  805 ILCS 180/15-3; 805 ILCS 180/15-5.

    Creditors can Place Liens on Distributional Interests.

    A charging order by a creditor now constitutes a lien on the judgment debtor’s distributional interest and requires the LLC to pay over the debtor’s distributional interest to the creditor. No other rights, however, are granted to the creditor. 805 ILCS 180/30-20.

    Buyout of Member at Dissociation.

    Previously, the Act required the LLC to repurchase a member’s ownership interest upon dissociation, unless the operating agreement unambiguously stated otherwise. The new Act removes this requirement completely. If the LLC decides not to purchase the member’s interest at dissociation, the member will still have economic rights to share in profits and losses of the company. The member will, however, not have any rights to the operation of the company and cannot bind the company in any manner following dissociation. 805 ILCS 180/35-55; 805 ILCS 180/35-60.



    Evan Sauer is a Chicago business and real estate attorney at Reda & Des Jardins, LLC a forward-thinking, technologically savvy law firm providing top-notch legal services to clients ranging from startups to large companies in a variety of industries. R&D's practice includes business, real estate, litigation, and estate planning.
  • Chicago Shared Housing Ordinance – Commissioner's Adjustment

    by Evan Sauer | Jun 26, 2017
    On June 22, 2016, the Chicago City Council voted 43-7 to enact an ordinance amending Titles 2, 3, 4 and 17 of the Municipal Code regarding Shared Housing Units and Vacation rentals (the “Shared Housing Ordinance” or “SHO”).  Chicago Mayor Rahm Emanuel signed this legislation on June 24, 2016, and the Shared Housing Ordinance was published in the City Council Journal of Proceedings on July 20, 2016 at pages 27714 through 27770.

    The Shared Housing Ordinance is divided into several primary sections. This blog will discuss the maximum cap placed on the number of shared housing units in a particular building and obtaining a commissioner’s adjustment.  Are you operating short term rentals in a multi-unit building? If so, you may need to obtain a commissioner’s adjustment in order to continue operating your business.

    Maximum Number of Vacation Rentals

    The most drastic revision to the Shared Housing Ordinance may be the restriction imposed on the number of vacation rentals that can be licensed in a multi-unit building at any given time.

    2-4 Unit Buildings. If the dwelling unit is located in a building containing two to four dwelling units, inclusive, the Shared Housing Ordinance requires that the dwelling unit: (i) is the applicant's or licensee's primary residence; and (ii) is the only dwelling unit in the building that is or will be used as a vacation rental or shared housing unit, in any combination. If the dwelling unit is not the applicant's or licensee's primary residence or is not the only dwelling unit in the building that is or will be used as a vacation rental or shared housing unit, in any combination, the Shared Housing Ordinance requires the following in order to operate a legal vacation rental: (a) a commissioner's adjustment under Section 4- 6-300(1), or (b) the applicant or licensee, as applicable, held a valid vacation rental license, as of June 22, 2016, for the dwelling unit.

    5 or More Unit Buildings.  If the dwelling unit is located in a building containing five or more dwelling units, no more than six dwelling units in the building, or one quarter of the total dwelling units in the building, whichever is less, can be used as vacation rentals or shared housing units, in any combination.  

    Commissioner’s Adjustment

    If your business operates more than one (1) short term vacation rental unit in a building containing 2-4 units, and you did not have a valid vacation rental license as of June 22, 2016, you are in violation of the Shared Housing Ordinance which only allows one (1) short term rental to be operated at any given time. You are also in violation if the unit is not your primary residence. In order to avoid this result, you will need to seek a commission’s adjustment from the City of Chicago. A commissioner’s adjustment maybe requested by the owner, homeowners association or board of directors of the building.

    Per the Shared Housing Ordinance:

    (1) The commissioner is authorized to grant an adjustment to allow:
    (a) issuance of a license to a vacation rental located in:
    (i) a single family home that is not the applicant's primary residence; or
    (ii) a building containing two to four dwelling units, inclusive, where the dwelling unit is not the applicant's primary residence;
    (b) in a building containing two to four dwelling units, inclusive, an increase in the number of dwelling units that may be used as vacation rentals.

    Section 4- 6-300(1).

    In determining whether to approve the commissioner’s adjustment, the City looks at several factors to ensure that such an adjustment would eliminate an “extraordinary burden on the applicant in light of unique or unusual circumstances and would not detrimentally impact the health, safety, or general welfare of surrounding property owners or the general public.”

    Factors which the commissioner may consider with regard to an application for a commissioner's adjustment include: “(i) the relevant geography, (ii) the relevant population density, (iii) the degree to which the sought adjustment varies from the prevailing limitations, (iv) the size of the relevant building and the number of units contemplated for the proposed use, (v) the legal nature and history of the applicant, (vi) the measures the applicant proposes to implement to maintain quiet and security in conjunction with the use, (vii) any extraordinary economic hardship to the applicant, due to special circumstances, that would result from a denial, (viii) any police reports or other records of illegal activity or municipal code violations at the location, and (ix) whether the affected neighbors support or object to the proposed use.”

    When applying for the commissioner’s adjustment, the applicant must provide a copy of the application to all adjoining neighbors. Approval and sign-off from the neighbors may prove to go along way. The commissioner will review the application and request a recommendation from the applicable alderman.

    Obtaining a commissioner’s adjustment from the City of Chicago may be necessary in order for some hosts operating in multi-unit buildings to continue with their business. Although this process is in its initial stages and there is not a precedent for approval, it is important that your commissioner’s adjustment application is complete and thorough. Please contact us if you would like assistance.



    Evan M. Sauer is a Chicago real estate and business attorney at Reda & Des Jardins, LLC a forward-thinking, technologically savvy law firm providing top-notch legal services to clients ranging from startups to large companies in a variety of industries. R&D's practice includes business, real estate, litigation and estate planning
  • Chicago Shared Housing Ordinance - Vacation Rentals

    by Evan Sauer | Apr 29, 2017
    By:    Evan M. Sauer
             evan@rdlawyers.com
             877-809-4567 x3

    On June 22, 2016, the Chicago City Council voted 43-7 to enact an ordinance amending Titles 2, 3, 4 and 17 of the Municipal Code regarding Shared Housing Units and Vacation rentals (the “Shared Housing Ordinance” or “SHO”).  Chicago Mayor Rahm Emanuel signed this legislation on June 24, 2016, and the Shared Housing Ordinance was published in the City Council Journal of Proceedings on July 20, 2016 at pages 27714 through 27770.

    The Shared Housing Ordinance is divided into several primary sections. This blog will discuss the changes that were made to some of the pertinent provisions governing vacation rentals in Chicago.  

    License Application

    The new regulations regarding vacation rentals are similar to, but significantly less burdensome upon hosts, than the regulations for shared housing units. A vacation rental owner must submit an application (for a license, not a registration).  This application requires that the vacation rental owner make significant disclosures, such as the owner’s name, address, the nature of the property, identification of a local contact person, an attestation that the vacation rental is a lawfully established dwelling unit, an attestation that vacation rental use is not prohibited by HOA bylaws or lease restrictions, and attestations regarding the primary residence and “max caps” for certain types of buildings. 

    Maximum Number of Vacation Rentals

    Probably the most drastic revision to the Shared Housing Ordinance is the restriction imposed on the number of vacation rentals that can be licenses in a multi-unit building.

        2-4 Unit Buildings. If the dwelling unit is located in a building containing two to four dwelling units, inclusive, the Shared Housing Ordinance requires that the dwelling unit: (i) is the applicant's or licensee's primary residence; and (ii) is the only dwelling unit in the building that is or will be used as a vacation rental or shared housing unit, in any combination. If the dwelling unit is not the applicant's or licensee's primary residence or is not the only dwelling unit in the building that is or will be used as a vacation rental or shared housing unit, in any combination, the Shared Housing Ordinance requires the following in order to operate a legal vacation rental: (a) a commissioner's adjustment under Section 4- 6-300(1), or (b) the applicant or licensee, as applicable, held a valid vacation rental license, as of June 22, 2016, for the dwelling unit.

         5 or More Unit Buildings.  if the dwelling unit is located in a building containing five or more dwelling units, no more than six dwelling units in the building, or one quarter of the total dwelling units in the building, whichever is less, can be used as vacation rentals or shared housing units, in any combination.

    Operational Requirements

    The Shared Housing Ordinance enumerates specific legal duties of a vacation rental owner, that largely track the legal duties for shared housing hosts.  For example, the requirements to obtain insurance, maintain current guest registration records, print and display the licensee’s license number in all advertisements, provide clean linens and sanitized pots, post the licensee’s license near the rental entrance, post an evacuation diagram inside the entrance door, comply with all food handling codes and ordinances, if the licensee “provides food to guests,” notify the police of any suspected criminal activity, comply with all smoke and carbon monoxide detector laws and ordinances, comply with all tax laws, provide certain disclosures to the guests, ban on the ability of an owner to “serve or otherwise provide alcohol to any guest”, and the prohibition on hourly rentals.  Also, vacation rental owners are required to list their license number in their listing (along with other descriptive information, such as ADA accessibility).  A licensed “vacation rental” is now deemed a “public accommodation.” 

    Penalties

    Operating a “vacation rental” without a license is now subject to a minimum fine of $2,500 per day per violation, and the failure to include a license number in a listing “shall create a rebuttable presumption that the business of vacation rental is being operated without a license.”  



    Evan M. Sauer  is a Chicago real estate and business attorney at Reda & Des Jardins, LLC a forward-thinking, technologically savvy law firm providing top-notch legal services to clients ranging from startups to large companies in a variety of industries. R&D's practice includes business, real estate, litigation and estate planning. 
  • Protect Your Property From Mechanic's Liens

    by Frank Pantuso | Nov 15, 2016
    By: Evan Sauer | e: evan@rdlawyers.com | p: 877-809-4567 x3

    With the current rate of construction, there is no surprise that the number of mechanic’s liens filed has skyrocketed. Since we have experienced an uptick in our real estate clients requesting assistance, I thought it would be a good time for a refresher.

    The first question I always ask is whether the property owner and lien claimant followed the requirements of the Illinois Mechanic’s Lien Act (“Act”). 770 ILCS 60/0.01, et. seq. Unfortunately, the response is often “what are the requirements?”

    Protections Prior to Mechanic’s Lien Recorded.

    Property owners should be proactive from the start. Even before the construction process begins, owners should ensure that their documentation is in order and complies with the Act to protect against future mechanic’s liens. The Act affords great protection for owners when the Act is strictly adhered to. Even minor deviations from the Act by general contractors or subcontractors may declare a lien unenforceable.

    Prior to making any payment to the general contractor, the property owner should have the following: (1) a written construction contract with the general contractor (discussion of terms is beyond the scope of this article); (2) a contractor’s sworn statement; (3) lien waivers; and (4) an owner’s sworn statement.

    1. Contractor’s Sworn Statement.

    Before making any payment to the general contractor, the owner should make sure that it has received and adequately reviewed a properly executed contractor’s sworn statement. A contractor’s sworn statement is a statement in writing, under oath or verified by affidavit, of the names and addresses of all parties furnishing labor, services, and material and of the amounts due or to become due to each. 770 ILCS 60/5.

    The general rule is that a property owner cannot be made to pay an amount greater than it originally agreed to pay the general contractor unless the owner violates a subcontractor's rights and interests by making payment without complying with the Act's requirements. 770 ILCS 60/21(d). The contractor’s sworn statements should be in line with what monies the owner agreed to pay.

    The most significant risk posed to owners is having to pay twice for the work of subcontractors. Take this example: a general contractor submits an invoice to the property owner for work allegedly performed. The owner fails to obtain a contractor’s sworn statement from the general contractor listing all subcontractors and work performed. The general contractor fails to pay a subcontractor for work performed and the subcontractor later records a lien against the property. The owner may be required to pay the subcontractor even though it already paid the general contractor for work it believed was performed by the subcontractor.

    Unfortunately, this scenario comes up way too often. In order to avoid this harsh result, an owner should request from the general contractor a contractor’s sworn statement prior to making payment. Sections 5, 22, and 32 of the Act provide:

    It shall be the duty of the contractor to give the owner, and the duty of the owner to require of the contractor, before the owner or his agent, architect, or superintendent shall pay or cause to be paid to the contractor or to his order any moneys or other consideration due or to become due to the contractor, or make or cause to be made to the contractor any advancement of any moneys or any other consideration, a statement in writing, under oath or verified by affidavit, of the names and addresses of all parties furnishing labor, services, material, fixtures, apparatus or machinery, forms or form work and of the amounts due or to become due to each.770 ILCS 60/5.

    No payments to the contractor or to his order of any money or other considerations due or to become due to the contractor shall be regarded as rightfully made, as against the sub-contractor, laborer, or party furnishing labor, services, material, fixtures, apparatus or machinery, forms or form work if made by the owner without exercising and enforcing the rights and powers conferred upon him in Sections 5, 21 and 22 of this Act. 770 ILCS 60/32.

    When the contractor shall sub-let his contract or a specific portion thereof to a sub-contractor, the party furnishing labor, services, material, fixtures, apparatus or machinery, forms or form work for such sub-contractor shall have a lien therefor; and may enforce his lien in the same manner as is herein provided for the enforcement of liens by sub-contractors. Any sub-contractor shall, as often as requested in writing by the owner, or contractor, or the agent of either, make out and give to such owner, contractor or agent, a statement of the persons furnishing labor, services, material, fixtures, apparatus or machinery, forms or form work, giving their names and how much, if anything, is due or to become due to each of them, and which statement shall be made under oath if required. If any sub-contractor shall fail to furnish such statement within 5 days after such demand, he shall forfeit to such owner or contractor the sum of $50 for every offense, which may be recovered in a civil action and shall have no right of action against either owner or contractor until he shall furnish such statement, and the lien of such sub-contractor shall be subject to the liens of all other creditors. 770 ILCS 60/22.

    Taking these provisions of the Act together, if the owner requires a sworn statement from the general contractor and withholds sufficient funds to pay the amounts shown as remaining due the subcontractors, the owner will be protected from any liens for amounts in excess or the amounts shown on the sworn statements and lien waivers.

    However, there are exceptions: (1) if the owner receives a notice of lien from a subcontractor (within the required time-period, as discussed below) prior to making payment to the general contractor, the owner cannot rely on the contractor’s sworn statement to protect itself; or (2) if the owner has reason to believe that the contractor’s sworn statement is false, the owner may be required to pay any subcontractor liens even if already paid to the general contractor.

    One of the best ways to ensure that the contractor’s sworn statement is accurate is to retain a title company for the construction escrow and to review the documents thoroughly. Below is a checklist that can be used when reviewing the contractor’s sworn statement:

    General Contractors and Subcontractors:
    1. Is the general contractor listed correctly? Are the subcontractors listed correctly? Yes No
    2. Have any parties been added or deleted since the last statement? Yes No
    3. If a party has been deleted, is there a proper final lien waiver? Yes No
    Contract Amount:
    1. Is the contract amount correct? Yes No
    2. Has the contract amount increased or decreased? Yes No
    3. If so, do lien waivers reflect the change? Yes No
    4. If so, do written change orders reflect the change? Yes No
    Increases/Decreases:
    1. Do the amounts total all increases and decreases in the contract amount? Yes No
    2. Are there written and executed change orders for each increase and decrease? Yes No
    Amount Previously Paid:
    1. Do the amounts total prior payments to each contractor/subcontractor? Yes No
    2. Are there lien waivers reflecting the previously paid amounts? Yes No
    3. Does the previously paid column total the amount previously paid to all contractors/subcontractors? Yes No
    Amount of This Payment:
    1. Are there lien waivers reflecting the amounts of these payments? Yes No
    2. Does the amount of this payment column total the amount to be paid to all contractors/subcontractors on this draw? Yes No
    Retainage:
    1. If there is a retainage, does the retainage column equal the total retainage? Yes No
    2. If the contract amount changed, has the retainage been recalculated correctly? Yes No
    Balance:
    1. Does the balance column for each contractor/subcontractor equal the contract amount, plus or minus extras/credits, less amount previously paid, less amount of thus payment? Yes No
    2. Does the balance column total the balance to complete? Yes No
    Completion of Sworn Statement:
    1. Does the sworn statement list the correct general contractor as affiant? Yes No
    2. Does the sworn statement list the correct owner? Yes No
    3. Does the sworn statement list the correct property? Yes No
    4. Does the sworn statement list the correct draw? Yes No
    5. Is the sworn statement signed and dated by an authorized representative of the general contractor? Yes No
    6. Is the sworn statement notarized correctly? Yes No
    2. Lien Waivers.
     

    In addition to the general contractor’s sworn statements, the owner should require partial and final lien waivers from all subcontractors, material suppliers, and the general contractor, if applicable. Lien waivers are not required under the Act, but are normally required as part of the contractual process.  Although lien waivers do not provide absolute protection for the owner, they can be used as evidence if the owner properly relied upon them.  The owner should adequately review each waiver to ensure that it is properly completed. Here is a checklist for review:

    Generally:
    1. Is there a partial or final lien waiver from all contractors, subcontractors, and material suppliers listed in the owner’s sworn statement and general contractor’s sworn statement? Yes No
    Completion:
    1. Is the owner listed properly? Yes No
    2. Is the general contractor listed properly? Yes No
    3. Is the property address correct? Yes No
    4. Is the type of work performed listed properly? If no material supplier listed , is there a statement that “all materials taken from fully paid stock delivered to the job site by our truck”? Yes No
    5. Does the contract amount match the contract amount on the contractor sworn statement? Yes No
    6. Does the previously paid amount match the previously paid amount on the contractor sworn statement? Yes No
    7. Does the amount of this payment match the amount of this payment on the contractor sworn statement? Yes No
    8. Does the balance match the balance on the contractor sworn statement? Yes No
    9. Does the lien state the proper waiver language, for example: “waiving the right to lien on the premises and improvements thereon and on the monies or other consideration due or that may be due from the owner”? Yes No
    10. Is the lien waver dated? Yes No
    11. Is the lien waiver signed by an authorized representative? Yes No
    12. Is the lien waiver properly notarized? Yes No
    13. Is the lien waiver unconditional? Yes No
    3. Owner’s Sworn Statement.

    Although an owner’s sworn statement is not mentioned in the Act and it is not a requirement for the owner, it is highly advisable for the owner to prepare and execute a sworn statement for each draw. If the owner uses a title company for a construction escrow, the title company will also require an owner’s sworn statement for each draw.

    An owner’s sworn statement is a statement by the owner affirming and representing that it made certain payments to the listed general contractors, architects, surveyors, engineers, and other parties. It is evidence that the owner made certain payments to the various parties for certain amounts.

    The owner’s sworn statement should be properly completed by the owner and notarized. The owner should ensure that each general contractor listed on the statement has provided a general contractor sworn statement to the owner. The owner should ensure that the totals of the contract amount, amount previously paid, and amount of this payment columns on the general contractor’s statement match with the owner’s statement.

    Protections After Lien Recorded.

    Even if the owner complied with all of the above and obtained all contractor’s sworn statements and lien waivers, unfortunately general contractors and subcontractors are still able to record liens. A mechanic’s lien recorded against the owner’s property, results in many negative consequences for the owner, including: (1) the lien becomes a cloud on the owner's title; (2) the Act requires the owner to hold back sufficient funds to pay the lien. 770 ILCS 60/27; (3) a construction lender will likely refuse to further fund the loan unless the owner puts up adequate security (150% of the lien amount); and (d) if the owner is an investor looking to sell or flip the property quickly, the lien may delay or prevent the owner from selling.

    What then is an owner to do? What defenses is the owner entitled to?

    1. Defenses to Mechanic’s liens.

    In order for a general contractor or subcontractor (each a “contractor”) to assert a valid mechanic’s lien claim, the contractor must: (1) have a contract with the owner or authorized agent (general contractor); (2) perform lienable work; (3) complete the work or have a valid excuse for non-performance; (4) provide contractor sworn statements, unless waived by the owner (general contractor); (5) timely record a proper claim for lien or timely file suit instead; and (6) timely file a lawsuit to foreclose the lien.

    A. Prerequisites for Valid and Enforceable Lien.

    Sections 1 (general contractor requirements) and 21 (subcontractor requirements) set forth the prerequisites for a valid and enforceable mechanic’s lien:

    1. the lien claimant must be a general contractor or subcontractor;
    2. the lien claimant (general contractor) must have a valid contract with the owner or authorized agent for the project;
    3. the lien claimant must have provided lienable services or materials for the project;
    4. the lien claimant must have completed performance of the work seeking to be paid for or must have a valid excuse for non-performance;
    5. the lien claimant (subcontractor) must have notified (personally or by certified mail) the owner within 60 days from the start of work that it is supplying labor or materials for the project. 770 ILCS 60/5;
    6. if requested by the owner, the lien claimant must have provided contractor sworn statements (as explained more fully-above);
    7. If the project is residential and over $1,000, the contract must have delivered to the owner the required brochure pursuant to the Home Repair and Remodeling Act. 815 ILCS 513/20.
    B. Timing and Contents of Lien Claim.

    Sections 7 (general contractor requirements) and 24 (subcontractor requirements) set forth the requirements for the contents and timing of a mechanic’s lien claim.

    In order to have a valid lien with priority over third parties, such as lenders, a contractor must record a claim for lien with the recorder or file suit to foreclose on the lien within four months following completion of the work. 770 ILCS 60/7. The lien claimant must also serve the owner with the lien claim within ten days of recording if the claimant is a general contractor and ninety days following completion if the claimant is a subcontractor. 770 ILCS 60/7; 770 ILCS 60/24. If the contractor just records the claim for lien, it must file suit to foreclose on the lien within two years after completion of the work. 770 ILCS 60/7.

    The lien claim must be in the form of a recordable verified affidavit, listing the following:

    1. owner’s or owner’s agent name;
    2. contract description;
    3. balance due;
    4. sufficiently correct description of the property;
    5. contract date;
    6. completion date of contractor’s work; and
    7. claim for a lien on the property.
    2. Sections 34 and 35 of the Act.

    If the contractor has not filed suit to enforce its lien claim and the owner believes the lien is frivolous and unwarranted, how does the owner remove the lien?

    First, the owner should serve the contractor with a notice pursuant to 770 ILCS 60/34 demanding that the contractor file suit to enforce its claim within thirty days. I know it sounds odd; why would you want someone to file a lawsuit against you? If the lien is frivolous, often times the contractor will not file a suit to enforce it and failure to file suit within the thirty-day time period will result in a forfeiture of the lien claim. Also, the Act allows for harsh penalties if contractors file unwarranted suits, including payment of the owner’s attorney’s fees and costs. 770 ILCS 60/17.

    Although the lien will be void if a suit is not filed within the thirty-day demand period, it will still show up in a search with the recorder of deeds, unless the contractor voluntarily releases it, which is unlikely to happen. How then do you force the contractor to release the lien? The next step for the owner is to serve the contractor with a release demand. Pursuant to 770 ILCS 60/35, if the contractor fails to record the necessary release of lien with the record of deeds within ten days following the demand date, the contractor will be liable to the owner for attorney’s fees, costs, and $2,500.

    What happens if the contractor fails to release the lien within the ten-day period? If the contractor does not release the lien, the next step for the owner is to file a declaratory action with the appropriate court requesting a declaratory judgment that the mechanic’s lien claim is void and should be released, and damages in the amount of $2,500 together with attorney’s fees and costs.

    Although there are many things on a construction project that an owner cannot control, it can avoid being compelled to pay more for the project than it agreed to pay. The best way to avoid any surprises and issues with the contractor is for the owner to make sure its paperwork is in order before getting started and throughout the construction process, use a title company for the construction escrow, and of course retain a good attorney.

    Evan Sauer is a Chicago real estate attorney at Reda & Des Jardins, LLC, a forward-thinking, technologically savvy law firm providing top-notch legal services to clients ranging from startups to large companies in a variety of industries. R&D's practice includes business, real estate, litigation and estate planning.

  • New OSHA Rule – Electronic Submissions of Injuries and Illnesses

    by Evan Sauer | Jun 01, 2016
    By:  Evan Sauer
           evan@rdlawyers.com
           877-809-4567 x3

    On May 12, 2016, the Occupational Safety & Health Administration (“OSHA”) published a final rule amending 29 CFR 1904.41 establishing three new electronic reporting requirements for certain businesses. The rule becomes effective January 1, 2017.

    Who does the Rule Apply to?

    Under the new rule, certain businesses will be required to electronically submit to OSHA information from their injury and illness logs on an annual basis. The rule applies to: (a) those businesses that are subject to reporting regulations under OSHA and have employed 250 or more employees at any time during the previous calendar year; and (b) those businesses, in certain industries (high rates of occupational injuries and illnesses), that have employed 20-249 employees at any time during the previous calendar year.

    What Information must be Submitted?

    For the year 2017, electronic data submission from OSHA Form 300A – Summary of Work-Related Injuries and Illnesses must be made by July 1, 2017 for businesses with 250 or more employees and businesses with 20-249 employees (in certain industries).  For the year 2018, electronic data submission from OSHA Forms 300 – Log of Work-Related Injuries and Illnesses, 300A – Summary of Work-Related Injuries and Illnesses, and 301 – Injury and Illness Incident Report must be made by July 1, 2018 for businesses with 250 ore more employees. Businesses with 20-249 employees (in certain industries) will need to submit Form 300A only. The electronic submissions will be made public by OSHA.

    Please contact us for more information about this change and OSHA.  

    Evan Sauer is a Chicago business attorney at Reda & Des Jardins, LLC a forward-thinking, technologically savvy law firm providing top-notch legal services to clients ranging from startups to large companies in a variety of industries.

  • Cook County Announces 2014 Tax Sale Date

    by Evan Sauer | Apr 29, 2016
    By: Evan M. Sauer
          evan@rdlawyers.com
          877-809-4567 x3

    Make sure you pay your past due 2014 taxes, Cook County just announced the tax sale date, June 3, 2016.

    Under Illinois law, the Treasurer is required to conduct an annual tax sale at which delinquent property taxes are sold.  The annual sale of 2014 taxes includes properties in Cook County eligible for sale due to delinquent Tax Year 2014 property taxes (including, without limitation, general property taxes, back taxes, etc.) and/or delinquent special assessments.

    If you fail to pay your past due real estate taxes for 2014 and prior, you may suffer grave consequences, including: interest, penalties, expenses, and even loss of your property. If your taxes are sold at the annual tax sale, you will have two years from the date of sale (longer for specific properties) to redeem the taxes sold. The amount of redemption will include:

    1.    all tax principal, special assessments, interest, and penalties paid by the tax purchaser together with costs and fees of sale;

    2.    the accrued penalty computed through the date of redemption as follows:

           a.    if the redemption occurs on or before the expiration of 6 months from the date of sale, the certificate amount multiplied by the penalty bid at sale;
           b.    if the redemption occurs after 6 months from the date of sale, and on or before the expiration of 12 months from the date of sale, the certificate amount multiplied by 2 times the penalty bid at sale;
           c.    if the redemption occurs after 12 months from the date of sale and on or before the expiration of 18 months from the date of sale, the certificate amount multiplied by 3 times the penalty bid at sale;
           d.    if the redemption occurs after 18 months from the date of sale and on or before the expiration of 24 months from the date of sale, the certificate amount multiplied by 4 times the penalty bid at sale;
           e.    if the redemption occurs after 24 months from the date of sale and on or before the expiration of 30 months from the date of sale, the certificate amount multiplied by 5 times the penalty bid at sale;
           f.    if the redemption occurs after 30 months from the date of sale and on or before the expiration of 36 months from the date of sale, the certificate amount multiplied by 6 times the penalty bid at sale.

    The penalty bid is 12% per penalty period as set forth in the above sub-paragraphs. 35 ILCS 200/21-355.

    Evan Sauer  is a Chicago real estate and business attorney at Reda & Des Jardins, LLC a forward-thinking, technologically savvy law firm providing top-notch legal services to clients ranging from startups to large companies in a variety of industries. R&D's practice includes business, real estatelitigation, and estate planning.

  • Limitation of Liability Clauses, Direct & Consequential Lost Profits

    by Robert Reda | Jan 02, 2016
    LIMITATION OF LIABILITY CLAUSES, DIRECT & CONSEQUENTIAL LOST PROFITS

    By:  Robert S. Reda
           robert@rdlawyers.com
           877-809-4567 x1

        On January 6, 2015, the Illinois Appellate Court for the 2nd District decided the Lost Profits matter of Westlake Financial Group v. CDH-Delnor Health System, dockted as 2-14-0580.  Click here for Opinion.

        The relationship between Westlake and Delnor was defined by a General Service Agreement. On April 18, 2011, Delnor notified Westlake by letter that it would not honor the contract because it merged with another company and the surviving entity switched to a new Broker of Record, Towers Watson, replacing Westlake.  

        Westlake argued that the termination letter breached the contract entitling it to direct Lost Profits as damages. Delnor argued that the limitation of liability clause in the contract barred Westlake from recovering all lost profits, whether direct or consequential.

        Direct and Consequential Damages: “Direct damages,” also called “general damages,” are “[d]amages that the law presumes follow the type of wrong complained of.” Black’s Law Dictionary 394 (7th ed. 1999). “Consequential damages” are losses or injuries that do not flow directly and immediately from a party’s wrongful act but rather result indirectly from the act. Hartford Accident & Indemnity Co. v. Case Foundation Co., 10 Ill. App. 3d 115, 124 (1973); Black’s Law Dictionary 394 (4th ed. 1999); see also 24 Richard A. Lord, Williston on Contracts § 64:12 (4th ed. 2014) (general damages are those that naturally flow from the breach while consequential damages were not the invariable result of such a breach but were reasonably foreseeable or contemplated by the parties as a probable result of a breach when the contract was entered).

        Lost Profits: Lost profits can be categorized as either direct or consequential damages, depending on the situation. For example, in Midland Hotel Corp. v. Reuben H. Donnelley Corp., 118 Ill. 2d 306, 319 (1987), the supreme court stated that, as a matter of law, the plaintiff’s lost profits from the defendant’s breach of an oral contract to properly include it in the first issue of a newly published telephone directory were a direct result of the defendant’s breach. On the other hand, lost profits were deemed consequential damages in Burrus v. Itek Corp., 46 Ill. App. 3d 350, 358 (1977) (consequential damages incurred where defective printing press caused decrease in output).

        Limitation of Liability Clause
    : At issue in the Westlake case was the contract’s limitation of liability clause.  It is common for contracts between businesses to contain clauses limiting damages for a breach. Clauses limiting such damages are enforced due to the strong public policy favoring freedom of contract, but such clauses are not favored and will be strictly construed against a benefitting party. Hicks v. Airborne Express, Inc., 367 Ill. App. 3d 1005, 1011 (2006).

        The limitation of liability clause in Westlake’s contract stated:

    . . . under no circumstances shall either party be liable to the other party for any indirect, incidental, consequential, special, punitive or exemplary damages even if either party has been advised of the possibility of such damages, arising from this Agreement, such as, but not limited to, loss of revenue or anticipated profits or lost business.

        In this instance, “loss of revenue or anticipated profits” is the same as lost profits.  Delnor argued that the above clause barred both direct and consequential lost profits.  Westlake argued that the ordinary and customary meaning of the phrase “such as, but not limited to,” is “for example.” The Appellate Court agreed with Westlake, stating that although consequential lost profits were not allowed, Westlake was entitled to its direct lost profits. Cf. People v. Greene, 96 Ill. 2d 334, 339 (1983) (phrase “such as, but not limited to” provided guidance on the kinds of explosive devices prohibited by a statute).

        This Opinion is a clarification of existing limitation of liability clauses regarding lost profits.  You should have your lawyer, hopefully me, check your contracts limitation of liability clause and update in light of this new ruling. 
     ​
        

        Robert S. Reda  is Westlake's lawyer, a Chicago business attorney and trial lawyer at Reda & Des Jardins, LLC, a forward-thinking, technologically savvy law firm providing top-notch legal services to clients ranging from startups to large companies in a variety of industries.

  • Is your Condo Association Charging Too Much?

    by User Not Found | Nov 19, 2015

    By:  Evan Sauer
           evan@rdlawyers.com
           877-809-4567 x3

    Consider this set of facts.  During the development of residential properties, several separate and distinct condominium associations were created by the developer.  There were six condominium associations with 260 homes.  A separate master association controlled and administered the common elements of the six condominium associations.

    A dispute ensued  when the master association charged one of the condo associations (“Plaintiff”) more for the use of certain common elements, namely the maintenance and repair of a roadway, detention/retention bond, and landscaping. The levying of assessments for the common elements was not based upon a percentage of ownership of each unit owner, but rather the master association believed it could assess one particular association differently than it assessed other associations if that particular association predominately used a certain common element.  In believing it could do so, the master association adopted the following provision in its declaration:

    "The amount of Association Expenses assessed against all Owners of Dwelling units shall be calculated on a pro rate basis, with the Owner of each Dwelling Unit being obligated to pay its pro-rata fraction of the association and expenses, which fraction shall have as the numerator one (1) and as the denominator the total number of dwelling units (260). Notwithstanding the foregoing, to the extent any portion of the community areas or limited community area is utilized predominantly for the benefit of any of the Homeowner association, the Association shall have the right to equitably assess such Homeowner Association for the specific costs of maintaining such portion of the community area or limited community areas."

    We represented the Plaintiff who filed suit against the master association alleging that this provision violated the Illinois Condominium Act in that it allowed the master association to impose greater financial burden upon some unit owner without any clear direction or authority.  More specifically, the master association could not charge the Plaintiff higher assessments for maintenance and repair of a roadway, landscaping, and a detention/retention pond based upon the determination that it utilized portions of those common elements more predominately than the other associations.  In its defense, the master association filed a motion to dismiss arguing that it could disproportionately charge Plaintiff for maintenance of those common elements because as a master association it was exempt from the provisions of the Act.

    Although this was a case of first impression in Illinois, the Court looked to the relevant provisions of the Act to make its ruling:

    765 ILCS 605/4(e) provides:

    The percentage of ownership interest in the common elements allocated to each unit. Such percentages shall be computed by taking as a basis the value of each unit in relation to the value of the property as a whole, and having once been determined and set forth as herein provided, such percentages shall remain constant unless otherwise provided in this Act or thereafter changed by agreement of all unit owners.

    Further, 765 ILCS 605/9 provides:

    All common expenses incurred or accrued prior to the first conveyance of a unit shall be paid by the developer, and during this period no common expense assessment shall be payable to the association. It shall be the duty of each unit owner including the developer to pay his proportionate share of the common expenses commencing with the first conveyance. The proportionate share shall be in the same ratio as his percentage of ownership in the common elements set forth in the declaration.

    625 ILCS 605/18.5, Master Associations, provides:

    (a) If the declaration, other condominium instrument, or other duly recorded covenants provide that any of the powers of the unit owners associations are to be exercised by or may be delegated to a nonprofit corporation or unincorporated association that exercises those or other powers on behalf of one or more condominiums, or for the benefit of the unit owners of one or more condominiums, such corporation or association shall be a master association.

    (b) There shall be included in the declaration, other condominium instruments, or other duly recorded covenants establishing the powers and duties of the master association the provisions set forth in subsections (c) through (h).  

    In interpreting subsections (c) through (h), the courts should interpret these provisions so that they are interpreted consistently with the similar parallel provisions found in other parts of this Act.

    While there is no specific provision in Section 18.5 of the Illinois Condominium Act that delineates how assessments shall be calculated, it is clear that all provisions of Section 18.5 shall be read consistently with the rest of the Act.  It is also clear from Section 18.5 that powers of a master association can only be delegated from a unit owner’s association.  Thus, if a unit owner’s association does not have a power to act in a certain manner, a master association cannot be delegated a power that does not exist. One power a unit owner association does not have under the Act is to disproportionately allocate charges for common elements. Section 605/4(e) of the Act requires the “the percentage of ownership interest in the common elements allocated to each unit” to be included in the declaration. 765 ILCS 605/4(e). “Such percentages shall be computed by taking as a basis the value of each unit in relation to the value of the property as a whole”. Id. Thus, a unit owner’s share of the common elements is fixed.

    Common interest ownership goes to the essence of an owner's property interest in a condominium. Huskey v. Board of Managers of Condos., 297 Ill. App. 3d 292, 295-296 (1st Dist. 1998). The percentage of common interest ownership impacts the unit owner's property taxes, the amount of annual and special assessments, as well as the resale price of the unit. Id. This is why unit owner associations, and master associations do not have the power to disproportionately allocate charges for common elements.

    The Court denied the master association’s motion to dismiss, holding that each of the associations in this matter may only assess each unit owner based upon the unit owner’s pro rata share of the entire association. Under that guiding principle, the master association can only levy assessments for common elements based upon the share of ownership of each unit owner or each association.  If the facts of this case were such that the assessments were based upon a common element that was within the exclusive control or exclusive use of Plaintiff, such as a locked swimming pool, tennis court or club house, the outcome may have been different.  

    We were able to settle the matter for the Plaintiff.  The master association agreed to amend the relevant provision of its declaration and reimburse Plaintiff for overcharged assessments.

    If your condo association is being disproportionately charged, we can help.

    Evan Sauer is a Chicago real estate and business attorney at Reda & Des Jardins, LLC, a forward-thinking, technologically savvy law firm providing top-notch legal services to clients ranging from startups to large companies in a variety of industries.  R&D's practice includes businessreal estatelitigation and estate planning

  • Investors Finding U.S. Commercial Real Estate More Attractive in 2014

    by User Not Found | Apr 28, 2014
    Although it took a lot longer than most experts expected, the U.S. housing market has experienced a slow and steady rebound in the wake of The Great Recession. As prices and purchases are finally on the rise nationwide, so are confidence levels, which are gradually returning to pre-recession levels.

    But what about the commercial real estate market? How did it fare during in the worst economic downturn since the Great Depression?

    The good news is that office, retail, industrial, and apartment submarkets did not suffer the complete and total collapse analysts had predicted. That does not mean that the commercial market escaped unscathed. Both rents and occupancy rates declined, but not nearly as dramatically as expected. Unlike in the residential market, there was no selling frenzy, since owners were unwilling to depart with their properties until the market stabilized.

    Where Are We Now?

    According to most polls, economists and insiders have grown increasingly optimistic about the future of the commercial real estate market over the past year. In fact, a recent survey conducted by the Urban Land Institute and Ernst & Young found that the average respondent
    Commercial Real Estate Chicago
    expected transaction volume to increase by a healthy 7% from last year! They were even more optimistic about the recent uptick in the issuance of commercial mortgage-backed securities, which are the main source of financing for commercial real estate investors.

    Is it Time to Buy?

    If the housing crisis taught us anything about investing, it’s that real estate of any kind can be a risky play. Markets can rise or fall on a dime, leaving investors either smiling or shirtless. All we can say for sure is that after a protracted period of uncertainty, buyers are reentering the market in growing numbers. And as with anything else, as demand increases, prices should go up as well. So, if you’re worried about missing your window, it may be a good idea to start searching for deals in the commercial market today.

    Rent or Buy?

    No matter the state of the market, business owners must decide whether they should rent or buy a commercial property.  Like any other investment, there are pros and cons that come with either choice. On one hand, the renter has greater protection against market crashes, since he/she doesn’t actually own the property. But on the other hand, the owner has much greater control over the cost of overhead, since he/she doesn’t have to worry about rising rent costs. But whatever your decision, it’s always a good idea to contact a real estate attorney before you sign anything.

    Office DirectoryDo You Need Legal Guidance?

    A real estate lawyer can help you complete the transaction by negotiating favorable terms with the lender and/or seller.  Even if you have experience buying or renting properties, we strongly discourage anyone from putting their John Hancock on a contract without consulting a lawyer.

    This goes double if you are interested in purchasing commercial real estate, which is a far more sophisticated and confusing process than residential real estate. In this scenario, it is imperative that every possible contingency be spelled out in clear, concise detail in the contract. Only then will you be protected from unscrupulous sellers who create intentionally ambiguous contracts to gain the upper hand.
  • Make Sure Your Will Doesn't Cause Family Fallouts: Planning Your Estate Without Creating Rifts

    by User Not Found | Apr 24, 2014
    When a loved one passes on, the last thing anyone wants to think about is money. Unfortunately, there really is no way around it. Arrangements must be made, bills paid, and assets divided up amongst those left behind. If the departed was prudent, he or she will have a will that spells out who gets what and when.

    But, even if you bequeath every item you own, there’s always a chance that somebody will be offended that they didn’t receive what they thought they were owed. Here’s how to avoid that problematic scenario.

    Be Specific

    When writing your last will and testament, remember that you won’t be around to help your heirs interpret the document after you expire. You won’t be able explain that you wanted your kids to split
    Argument
    your priceless coin collection three ways, but for some reason put your eldest child in charge of its distribution.

    This is a common mistake many people make because they assume their heirs will do the right thing with the assets they inherit. Sadly, this is seldom the case. Money has an odd way of bringing out the worst in us, especially when we’re in mourning. That’s why you should never, ever put another person in charge of another’s inheritance. That simple mistake has been responsible for more legal battles and family conflicts over inheritance than any other.

    Call a Family Conference

    It might be awkward, even upsetting, but talking to your family about your final wishes is the best way to prevent resentment and bad blood. At the very least, getting everything out in the open should forestall the shock heirs often experience when they hear a will read for the first time.

    A conference can also give folks a chance to address areas of contention within the family, issues that may fester and later explode if ignored. The dialogue may even help you decide if you made a mistake with your first draft. For example, if one of your kids tells you he/she has no interest in your coin collection, but would rather have your vintage corvette, and the other children agree, you can make that revision and everyone will be happy.

    Hire an Estate Attorney

    Just like doctors, lawyers have specific fields or areas of practice that they practice. You wouldn’t go to a pediatrician if you had a skin rash, would you? No, you’d go to a dermatologist! So, why in the world would you use your regular attorney to help you draw up your last will and testament? Odds are, he/she has next to no experience with estate planning. In other words, you should go to professional that spends most of their time on estate planning, rather than a general practitioner.

    Trust us; estate planning is an incredibly complex, sophisticated area of legal practice that is constantly changing, since it involves both federal and states laws. Therefore, you need a lawyer that is completely immersed in this type of work, not one that does it on a part-time basis.

    At the end of the day, the best defense against family fights over inheritance is communication. By simply explaining why you’re doing what you’re doing ahead of time, you can give everyone the time they need to come to terms with the decisions you have made.
  • Top 5 Things To Ask in a Consultation: How To Prepare for an Initial Meeting

    by User Not Found | Mar 11, 2014
    When facing legal matters, a lawyer can be a valuable ally. If you’re like most people and don’t have much legal background knowledge yourself, seeking advice and assistance from an experienced lawyer is critical.
    Not all attorneys, however, are equally skilled or qualified to handle your case. And, even among those who are, not all will inspire confidence in an initial consultation. Remember that when you choose an attorney, you’re actually hiring someone to work for you, so think of the consultation like a job interview.

    1. How much experience do you have in this area of law?

    Confused Lawyer


    It helps to know your attorney’s real-life legal experience. Ideally, the lawyer you hire will have dealt with cases similar to yours so that he isn’t figuring it out as he goes. It’s absolutely fair game to ask how they’ve handled those previous similar cases as well. If you’ve chosen an attorney particularly for their specialty in one area of law, he or she should have plenty to draw on.

    2. How many similar cases like mine have you dealt with before?

    Like snowflakes, no two legal cases are the same. Ask if your lawyer has previously handled cases that are similar to yours. He’ll most likely be more capable of foreseeing potential problems. Ask to see a list of past customers whom you can contact. That may not be an option, however, as some attorneys may not reveal a client’s name without the client’s consent.
    If you’d like to get personal referrals for a lawyer, it’s good to ask someone you know who has successfully accomplished legal work with the help of the attorney. You may also contact trusted attorneys in other fields and personally ask them for recommended lawyers who handle your type of case.

    3. How will you manage my case?

    Simply ask for a short overview of the actions the attorney will take to handle the case. If you get vague and general answers, then he probably doesn’t know much about the particular field of law, and he will have to research about it later on. On the other hand, an experienced lawyer will give you a rough outline of what he plans to do and what kind of approach he will use. Depending on your case, you may also want to ask about the possible outcomes, how long it will take to resolve, and any available alternatives to resolve the matter.

    4. What are the legal fees and costs?

    Before concluding an initial consultation, ask about the lawyer’s rates and his fee schedule to avoid unexpected bills later. Most lawyers charge a certain amount per hour, depending on the type of case. For example, if you need an attorney’s services for a real estate sales transaction, you’ll most likely have to pay an hourly fee. However, in cases such as managing property damage caused by a tenant, there may be a contingency fee arrangement wherein the lawyer gets paid only when the case is resolved. Ask for a ballpark figure for the total bill.

    Paralegal5. Is there anyone else who will work on my case? 

    In some law firms, the initial work will be handled by a paralegal or a junior attorney. Make sure to find out who will be involved in handling all parts of your case. It’s important that you’re comfortable working with each and every person who will touch your file, as you will be spending hours communicating with him.
  • Yes, Your Business Needs a Business Attorney: How a Specialized Lawyer Benefits Your Company

    by User Not Found | Jan 27, 2014
    It’s pretty obvious that your business needs a name, a tax identification number, and a business bank account. These are no-brainers – you couldn’t get off the ground without them.

    What might not be so obvious to you is that your business also needs an attorney who specializes in business law. We’ve noticed that many new start-ups seem to overlook this crucial step in starting a company, and we’re here to tell you why that’s a big mistake.
    Gavel

    1. Prevent Legal Issues

    If your business ever has the misfortune of being sued, it’s already too late. Once legal action has been brought against your company, a lot of damage has already been done. Whether you win the case or not, you’ll end up paying legal fees, losing precious time and going through a stressful experience that could hurt your professional dealings.

    A good commercial attorney goes to great lengths to monitor all of your business transactions to ensure that you are never at risk of getting sued. Many business owners find themselves in legal hot water because of an unintentional mistake, which is exactly what your lawyer would catch before it was too late. As the old adage goes, an ounce of prevention is worth a pound of cure.

    2. Guidance

    You are, no doubt, extremely passionate and knowledgeable about your field, but you are probably no expert in business laws. Nor should you be. Your energy and time should be spent on building your client base and doing great work for them. However, regardless of your particular field, you’re going to encounter murky legal issues that leave your head spinning.

    Not only can a business attorney make sense of these issues, but they can guide you in important decisions that will affect your company long-term. Your lawyer is invested in your company’s success, so he or she will help you make choices that will benefit your profitability and survival. The relationship should also be educational for you, so that you begin to consider the legal side of all business decisions.

    3. Financial Protection

    We often find that financial issues can be the toughest to navigate for new business owners. There are monetary considerations that many people don’t even consider. Your attorney makes sure that all of your bases are covered, from taxes, to licensing fees, to employee benefits. Just like you, their priority is your company’s success, so they’ll make sure you are structuring your finances in a way that will keep you in the black.

    4. Contracts

    Meeting

    What business attorneys provide can be summed up in one word: Protection. Their priority is to protect you and your business from anything that could threaten its survival and success. A big part of that protection is contracts – long, extremely specific, binding contracts that guarantee that you won’t be taken advantage of by partners, employees, clients, landlords, suppliers or anyone who you work with.

    Your commercial lawyer is intimately familiar with all of the various types of contracts you’ll need to keep you safe from legal issues. Though a handshake and a verbal agreement with someone you trust is great, it’s fairly worthless when it comes to the law. Your attorney will make sure that you have a John Hancock and a paper trail on every transaction you make, and you’ll be glad for it.

    Hiring a specialized attorney for your new company is the best kind of insurance policy you can buy. Having an invested, experienced advocate on your side is invaluable. They will give you peace of mind and protection against the forces that get the better of so many new companies.

    We can’t say that your business will only survive if you have a designated business lawyer; that would be untrue. You may be able to do fine without one. The key word there, however, is “may,” as in, you “may” be able to blow through a red light without getting hit by another car, but is it worth the risk?
  • Commercial Real Estate Virgins The Newbie’s Guide to Buying Commercial

    by User Not Found | Jan 21, 2014
    Real estate is real estate, right?  You bought a house, and that’s exactly like buying a commercial building, right?

    Wrong.

    Though there are certainly many similarities between the two processes, there are some things you should know if you’re taking your first dive into commercial real estate.

    Commercial PropertyInvestment

    Investing in commercial real estate has the potential to become a great source of income – if all goes well, you could be making beaucoup bucks on a property for years to come.  But, as with many situations that have a big payoff, a bigger risk is involved.

    Properties for commercial use are usually much more expensive than residential properties.  The increased financial commitment means bigger loans and more legwork upfront.  So, it also usually means more waiting and more money lost on deals that fall through.

    An inspection for a large commercial building will run you much more than an inspection on a 3-bedroom home – be prepared to spend that money and kiss it goodbye if you decide not to go through with the purchase.  That being said, you stand to gain a lot more from a commercial real estate.  If you can stomach the initial investment of money, time and red tape, you could very well end up with a very viable business in your back pocket.

    Regulations

    Zoning laws are no joke and could get in the way of your plans.  It may be your dream to open an English pub in that beautiful building down the street, but your city could put the kibosh on your fish & chips fantasies because of the elementary school on the corner.  Do your homework on any building you’re considering, just to make sure that regulations don’t rain on your parade.

    Location!

    In just about any real estate investment you make, location is a big deal.  It’s certainly a big consideration for most homebuyers, but location looms even more largely for commercial buyers. 
    Main Street
    When looking to purchase a home, your locale considerations may involve schools, public transport or access to shopping.  For commercial properties, on the other hand, location can make or break your investment all on its own.  Whether you or a tenant is running a business in the building, if the location isn’t a draw for potential customers, your investment could end up hurting you.

    Before buying any commercial property, stalk the area a bit.  Talk to other business owners on the block and get their take.  Stop a shopper walking down the street and ask a few questions about how often they come to the area or how busy it usually is.  
    You should even look at things like parking options and crime rates.  Make sure that any new business opening there will be easily accessible for potential customers.

    Involvement

    Being the landlord of a commercial building requires some personal involvement.  If you don’t intend to use the space yourself, you will have to find reliable tenants who have a solid business plan.  Not only will you be depending on their monthly rent check, but you’ll be banking on the success of their company.  Make sure you know what you’re getting into and how much of your personal time will be spent looking after your new investment.

    Purchasing any kind of real estate can be challenging, stressful and risky – there are many “what ifs” and risks involved.  That’s why you want a team of experts on your side.  Hire a broker, accountant and attorney who all specialize in commercial real estate.  It’s their job to be your advocate and make sure you’re well-protected.  With a little determination and a lot of patience, you can reap all of the potential benefits of a tried and true investment.
  • The Top 10 Estate Planning Mistakes And How You Can Avoid Them

    by User Not Found | Dec 17, 2013
    I certainly understand why people put off planning their estates. It’s natural to feel an aversion to thinking and talking about what will happen after you’re gone. For many, it can be overwhelming and emotional.

    None of these things, however, should stop you from doing it and making sure it’s done well. Whether you handle the documents on your own or hire an attorney, there are a few pitfalls you should be aware of before you start.
    Will

    1. Waiting to Start

    Estate planning is one of those things we keep putting off, always saying there will be time. Unfortunately, we don’t know just how much time there will be. If you value your property and the livelihood of your loved ones, don’t delay any more. You’ll feel much more at peace knowing that, should anything happen, your affairs are in order and your family will be taken care of.

    2. Setting it in Stone

    Wills should not be carved in stone and set away to gather dust – they should be dynamic documents that reflect changes in your life and your finances. I’ve seen many problems arise from the fact that a client’s will was not updated to include new spouses, new children or changes in property ownership. Anytime your life significantly changes, so should your will.

    3. Failing to Communicate

    Don’t keep your plans a secret – it only causes rancor down the line. Though it may be slightly uncomfortable to have those conversations, it’s better to explain things now than not at all. No one likes to imagine their family squabbling or having fall-outs with one another after they’re gone. Make your intentions clear so that you have the opportunity to communicate your wishes and your motivations.

    4. Not Figuring in Tax

    The larger your estate, the higher the estate taxes. When planning, any people forget to include taxes in their calculations. Depending on your assets, your beneficiaries may end up having to liquefy or go into debt in order to afford the taxes. Take the necessary measures to ensure that your gifts don’t become burdens.
    House

    5. Inheritance Choices

    Consider carefully who will inherit your money and assets and how much each one will get. You should think about each beneficiary’s lifestyle, personality, age and future before making any decisions. One failsafe measure is to hire a trustee to distribute inheritances in a way that would guarantee that the money is used the way you would like it to be.

    6. Executor Choice

    Managing your estate, distributing your assets and paying any remaining debts or costs associated with your death can be a highly demanding job. Not to mention that it can also result in a significant conflict of interest if the executor is also a beneficiary. One thing is certain: your choice of executor should never be a surprise. Make sure that whomever you choose is not only capable of the task, but willing to take it on.

    7. Record Keeping

    Important documents are often squirreled away in strange places. That’s all fine and good when you know where they are, but what happens when you’re not around to tell your executor or your children that tax returns and insurance information is in a shoebox at the back of your closet? Make sure that all relevant documents and information are in one easily-accessible place, and that the right people know where that place is.

    8. DIY Enthusiasm

    There are many parts of estate planning that are entirely personal and must be done on your own. However, if you aren’t an expert, you may find yourself lost in a murky sea of legalese and confusing documents. The last thing you want is to make mistakes that cause your plan to be carried out incorrectly. Be sure that the documents accurately reflect your wishes.

    Will-2

    9. Lack of Secondary Beneficiaries

    Sometimes the primary person you bequeath certain assets to might not be able to take them on. It may be that a beneficiary has died since you last updated your will, or that they are simply not interested in inheriting something you left them. For valuable assets, always list secondary beneficiaries to prevent your executor from having to make any difficult choices that could cause acrimony amongst family members.

    10. Failure to Sign a Healthcare Directive

    If health conditions cause you to be incapable of making or communicating decisions while you’re still alive, you need to name someone whom you trust to do so for you. This includes your medical wishes in case you’re terminally ill or unconscious. It can be extremely trying for family members to try to guess what you would want. Your plans should make it so they don’t have to.

    Estate planning is really about living; it’s about feeling settled and assured about your future and that of your loved ones. You can fully enjoy your life when you know that you’ve made wise and responsible decisions about everything you worked so hard to accomplish.

  • Title Company has No Duty to Provide Chain-of-Title Info

    by User Not Found | Sep 06, 2012
    A cautionary tale for home buyers who are seeking title insurance to protect themselves from potential third-party claims on the property.

    In United Community Bank and McDonough v. Prairie State Bank & Trust, et al. (PDF), 2012 IL App (4th Dist.) 110973, the court determined that a title company’s failure to discover a memorandum of judgment affecting the subject property was not misfeasance or negligence.

    McGargill said this decision is beneficial to title companies because it clarifies what their duties are to customers, and he said real estate attorneys can easily assist their clients in investigating the chain of title and any potential claims against it if they are concerned that such claims might exist.

    “If you want to know the status of a title, you can get a title abstract,” McGargill said. “This decision is absolutely fair to everybody. Everyone is really in the position they thought they were in before, but for what turned out to be a mistake.”

 

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