More good news for distressed Cook County homeowners: The Cook County Sheriff’s Department announced this week that they are suspending service of evictions notices on people who are being foreclosed, as well as renters in buildings that are being foreclosed because the landlord has been unable to make mortgage payments. Particularly with respect to renters, the Cook County Sheriff is requesting that banks give tenants notice of the foreclosure and time to leave voluntarily if the landlord has not paid the mortgage; while landlords routinely get such notices from their banks, they usually do not share them with tenants. As a result, tenants often know nothing about having to vacate the property until the sheriff shows up at their door. The Cook County Sheriff’s Department has chosen to take this course of action despite the fact that it violates numerous foreclosure decrees issues by Cook County courts. It is yet… read more →
Finally, some good news for the thousands of people who are being foreclosed and losing their homes: Countrywide (now part of Bank of America) recently entered into an $8.4 billion settlement with 11 states, including Illinois. Illinois’ share of this settlement amounts to $190 million, and these funds will be used to assist approximately 21,000 distressed Illinois homeowners who obtained loans from Countrywide Mortgage prior to December 31, 2007. Specifically, these homeowners can expect to have their interest rates reduced; in some cases, even the principal of the loan may be reduced. The goal is to make their monthly payments more affordable, ideally 32% or less of a family’s income. Additionally late fees, loan modification fees, and prepayment penalties will be waived. Certain families that already lost their homes as a result of foreclosure proceedings shall receive cash payments. Countrywide/Bank of America will also suspend ongoing foreclosure proceedings for those… read more →
I have quite a few clients who own residential investment property, such as condominiums or townhomes or even single family homes that they rent out. On occasion, I get a phone call from a client who has a “bad” tenant — in other words, a tenant who is not paying rent or is breaking the lease in some other way. What should you do if you are a landlord and this happens to you? Well, you should start simple and hope that you can resolve the problem without having to file an eviction. So how do you start simple? I always recommend that you call or visit your tenant and try to talk the issue through — give them a day or two to fix the problem. Sometimes that’s the easiest way to resolve the matter. If that doesn’t work, you need to hone in on your specific problem so… read more →
Landlords know how important security deposits are in residential leases. The threat of losing their security deposit can keep tenants honest. Good landlords don’t want to hold back the security deposit after the tenant leaves; they would much rather have their home or apartment back in good shape. Tenants, too, look forward to the return of their security deposit when they move out. Illinois has two laws governing security deposits, and it is easy to run afoul of them: 1. The Security Deposit Interest Act: This law requires all landlords who have 25 or more units in one building or complex to pay interest on security deposits to their tenants, so long as the landlord hold the security deposit for more than 6 months. The interest rate is calculated based on the savings account interest rate payable by the state’s largest bank at the end of the year preceding the… read more →
As if the real estate market hasn’t had it bad enough this year, Cook County’s real estate tax bills will be coming out soon and will be due on November 3, 2008, and unfortunately, the taxes are going up. While home prices are plummeting, real estate taxes are not. In fact, Cook County’s north and northwest suburban homes were reassessed last year. The second installment tax bill that homeowners will soon receive will include these increased assessments. Unfortunately, the increased assessments are valued as of January 1, 2007, before the housing market crashed. Therefore homeowners will be paying taxes based on home values inflated beyond where they are today. The City of Chicago will not be reassessed until 2009. In the meantime, their property taxes are still based on home values as on January 1, 2006, when the housing market was peaking. Some Chicago homeowners will thus see large increases… read more →
What happens if you own real estate jointly with someone (i.e as joint tenants with right of survivorship or as tenants by the entirety) and the other property owner dies? Who gets his or her half of the property? Did they want you to have it? How do you get it? Don’t worry, if the joint tenant dies, the property is yours. That is the purpose of joint tenancy — if one owner dies the other owner(s) automatically get the ptoperty. But when it comes time to sell the real estate, the title company will be looking for proof that the joint owner has passed on, and a death certificate is not enough. Fortunately, the process of removing a deceased joint tenant from title is simple. A form called a Deceased Joint Tenant Affidavit needs to be prepared by someone with knowledge of the facts (typically the surviving joint tenant),… read more →
Many buyers think that a professional inspection for a newly constructed home is unnecessary. After all, it’s a new house — everything is brand new and absolutely perfect, right? Wrong. I strongly urge all of my clients to obtain a professional inspection of any home they are purchasing, even it’s just been built. In the course of my work, I see inspection reports on homes that have been previously lived in, as well as new construction homes. The lists of defects, however, are pretty much the same in length regardless of the age of construction. In fact, new construction homes sometimes have a longer list of defects because there is no one living there to have found and fixed those defects yet. For example, a switch that is supposed to be wired to an outlet may not be working properly, or a shower diverter may leak. While the builder probably… read more →
If you are selling property and involved in a 1031 exchange, you certainly want to know what your deferred tax liability is. The important thing to remember is that you are taxed on your gain, NOT on your profit and NOT on your equity. In other words, you can sell your property, have no profit and no equity, and still be subject to tax liability under the 1031 rules because there is a gain. How can you calculate what you might owe? Well, see an accountant. But if you’re stubborn and you refuse to go to your accountant, here’s a little formula that will point you in the right direction: First of all, you need to calculate your Adjusted Basis. To do this, take your original purchase price, and then add the cost of your improvements (assuming you have not already claimed them as expenses). Then subtract any depreciation you… read more →
Up until now, if you sold your principal residence, you could pocket up to $250,000 in profit, tax-free (or $500,000 if you are married filing taxes jointly) as long as you were living in it for at least two of the last five years. In other words, if you owned rental or investment property and you moved in and used the property as your principal residence for at least two of the last five years, you could receive substantial profits tax-free upon the sale of the property. You could sell your home and move into your vacation property or rental unit for just two years, and still avoid paying capital gains tax. Well, lawmakers have finally caught on. If you plan to buy, sell or live in an investment or rental property that you own after January 1, 2009, you will still be able to receive some of the profit… read more →
Periodically I come across a client who is interested in a land trust, but doesn’t know all that much about it. Well, here you go, land trusts in a nutshell: Land trusts are a fancy way to hold title to real estate; instead of holding title in your own name or in the name of your company, you can hold title in a land trust. There are basically two types of land trusts: 1) Land trusts that are administered by a bank (typically for an annual fee of a few hundred dollars) and 2) Land trusts that you can administer yourself, with the help of an attorney who can set it up for you. There are a number of advantages to having a land trust: 1) Land trusts can be useful estate planning tools, especially for smaller estates.2) Land trusts allow the transfer of property quickly upon your death. The… read more →