Great Blog Post by Mel Trotter Ministries
How to Talk to Your Kids About Homelessness
Kids say the darndest things.
Do you remember that old comedy series? The one hosted by comedian Bill Cosby in the late 90s? Bill Cosby would ask a few children – usually between the ages of 3 and 8 – several innocent questions throughout the course of the hour-long program. The children would then respond to the questions, usually in the most unexpected and adorable ways. Each response incited great laughter from the audience and – most often – an embarrassed, did-my-child-really-just-say-that? stare from the parents.
A great example here.
Kids say the darndest things.
But they also ask some incredibly apt and appropriate questions too. Kids are curious and smart. They’re observant, and at some point in their young life – inevitably – they’ll probably notice the man or woman on the street corner and ask why?
When that happens, we’re here to help.
Here are several points…
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Real Estate update: Mortgage Performance Continues to Improve
Good news from the Office of the Comptroller of the Currency – Mortgage foreclosures are way down, about 48% from a year ago, and mortgage defaults are declining as well.
You can see the full report here
This is a good sign for our economy. It is also a good sign for private investors who are looking at real estate investment opportunities.
http://www.dwlawpc.com
email: Jeshua@dwlawpc.com
Michigan Business Law Update: Entrepreneur in Residence Program to Assist Small Business
House Bill 4998 has made some movement, which would create an Entrepreneur in Residence Program to assist entrepreneurs and small business owners.
The entrepreneur-in-residence project’s goals would include the following:
a) improving outreach by State government to the private sector,
b) strengthening coordination and interaction between State government and the private sector on issues relevant to
entrepreneurs and small business concerns, and
c) making State government economic development programs and incentives simpler and easier to access, more efficient, and more responsive to the needs of entrepreneurs and small business concerns.
See the full bill analysis by the Senate Fiscal Agency from last Friday here:
This Bill has been idle for a while, having gone through a first reading in the House back in September of 2013. It passed the house and is hanging out in a Senate Committee after the Senate Fiscal Agency produced the above report. You can see the whole history of this Bill here
email: Jeshua@dwlawpc.com
Businesses: Certain Non-Profits Now Have Easier Time Applying for Federal Tax Exemption
Great news for Small Non-profits – the Federal Government is making it easier, more cost-effectively and potentially quicker to gain 501(c)(3) Exemption.
The IRS just came out with its IRS 1023-EZ form, you can see the instructions by going to the follow link
Some of the highlights:
1. Only 501(c)3s are eligible.
If you are looking for tax exemption under any other provision of the IRC you need to still complete out the full application.
2. LLCs are not eligible.
Although LLCs can gain tax exempt status, LLCs cannot use this new application.
3. User Fee is only $400 and application is completely online.
This is less than half of the full application cost ($850), put it must be paid when you file online.
Questions? Comments?
Email: Jeshua@dwlawpc.com
Churches and Real Estate Law: Leaving a Denomination can be Expensive.
About a year ago I wrote a post about Messy Legal Issues Involving Church Property – you can see it here
My article was really a comment on the unique manner in which Michigan law views real estate disputes when churches decide to leave a denomination.
– in a nutshell, Michigan law looks at how the church is organized – if it is organized under a hierarchy, courts will direct the church and the hierarchy to follow their governing documents. If the church is “congregational”, essentially a more loose affiliation with a denomination, then courts generally will apply Michigan real estate law.
I just noticed this recent article about a Mega Church leaving the PC USA Denomination and the church will need to pay Millions of Dollars to the denomination, you can see that article here.
I won’t delve into the specific reasons this church decided to leave the PC USA, (if you are interested on the specifics, I would think Rev. Kevin Deyoung’s Blog would be a good resource).
Regarding the legal issues governing this outcome, the article notes that the Church Real estate had a “reverter clause’ in the deed.
Simply put, the church agreed, contractually, that in the event the church left the denomination, the church property would revert back to the denomination.
This is an example of the majority of state’s rules on how to decide church real estate disputes – by real estate law. Courts know that they should not interfere with church polity – the rules that govern churches and denominations, but when the issue is one of real estate law, real estate law should govern.
All that being said, this article is a good reminder, particularly for those churches in Michigan, or any other state applying the minority jurisdiction to church property:
If you are thinking of leaving your denomination, ask two questions:
1. Is your denomination “hierarchical” v.s. “congregational”?
2a. If your denomination is hierarchical, what do your governing documents say (e.g. – book of church order)
2b. If your denomination is congregational, what does the deed to your real estate say? (e.g. – is there a reverter clause in the deed?)
questions? comments?
email: Jeshua@dwlawpc.com
Businesses: Consequences To Mislabeling Independent Contractors – Court of Appeals Rules Against FedEx – Could Cost Millions.
Businesses: misclassifying your workers as independent contractors v.s employees (“IC” vs “EE”) could cost you serious money.
As reported by the ABAJournal, The 9th Circuit Court of Appeals, provided a victory for FedEx Truck Drivers classified, by their employer FedEx, as “independent contractors” – reversing “a finding in multidistrict litigation in Indiana and held that nearly 2,700 plaintiffs in California and Oregon are in fact employees.” See the ABAJournal article here
Different Tests
States, Federal Government agencies, and Courts all have their own standards of how to distinguish independent contractors from employees.
Look at the Code of Federal Register, as provided by Cornell Law School, for the definition of Employee and you will get one definition; go to the IRS website and you will find another extensive resource on the subject, see that resource here. States have their own rules, statutory and case law, as well.
One of the reasons for the lack of uniformity, is that the distinction between IC/EE matters for different reasons – from the federal government’s perspective, it matters, among other things, from a Federal tax stand point- or whether or not an EEOC , or fair labor standards act claim is at issue. From a state law perspective, the distinction can matter regarding unemployment/workers compensation taxes and claims.
Under Michigan law, 3 conditions must be met in order to find an individual is an employee for purposes of Workers Disability Compensation Act Claims, MCL 418.11(1)(d) – employee means every person performing service in the course of the trade, business, profession, or occupation of an employer at the time of the injury, provided the person in relation to this service does not maintain a separate business, does not hold himself or herself out to and render service to the public, and is not an employer… McCaul v Modern Tile and Carpet, Inc 284, Mich App 610, 616 ( 2001)
The Fed Ex Case
As reported by the ABAJournal:
“Under a “right to control” test that applies in both states (California and Oregon), the FedEx drivers are clearly employees, not independent contractors, a three-judge appellate panel held.”
“The drivers must wear FedEx uniforms, drive FedEx-approved vehicles, and groom themselves according to FedEx’s appearance standards,” wrote Judge William Fletcher in both opinions. “FedEx tells its drivers what packages to deliver, on what days, and at what times. Although drivers may operate multiple delivery routes and hire third parties to help perform their work, they may do so only with FedEx’s consent.”
The fact that FedEx called the drivers independent contractors in an operating agreement did not change their actual status as employees, the court said.”
Take Away:
This last point made by the 9th Circuit Court of Appeals cannot be under stated- how you decide to label your workers is not going to determine their true status as either IC or EE. How are your workers actually operating? E.G. – Do you truly have control over their duties to the extent that they are effectively employees?
Definitely a conversation you may want to have with your legal and tax counsel.
email: Jeshua@dwlawpc.com
Business Owners: News Headline Illustrates the Potential Legal Consequences of Business Break-Ups
The American Bar Association Journal reported a bit of legal news today- a Defunct Law Firm was Ordered to Pay Subleases for a Manhattan Office Building, see the article here
Business owners – you know why you create a business entity – a corporation, or a limited liability company – to limit your personal liability from the reach of creditors of the business.
However, this headline illustrates another issue that business owners should be mindful of when thinking about limiting liability: what happens when you break up a business partnership, or decide to dissolve and then create a new business?
I. When breaking up a business relationship:
What happens when you have a dispute with your business partner and you decide to go your separate ways?
Facts of the article above are helpful. It involves a business with four shareholders. Two of the shareholders decided to leave the business (the “Leaving Partners”) and the other two shareholders dissolved the business, stayed together as a partnership (the “Remaining Partners”) and resided in the former business office space.
The Remaining Partners, through their new business incurred lease expenses for the building.
Upon exit, the Leaving Partners received releases of liability from the Business.
Business Owners and Fiduciary Duties.
As a business owner, you have a fiduciary duty, to act in the best interest, of the company and the other shareholders.
When exiting a business relationship, naturally, removing yourself from this duty is important. In this case, the Leaving Partners were allowed to go their separate ways and they no longer had any responsibilities to the business for any future debts. They were not responsible for liabilities incurred by the remaining partners after their exit. Their share of their former business’s assets could not be used to pay their former business’s rent.
Points To Consider when exiting a business relationship.
When leaving a business relationships make sure to look at the partnership agreement, bylaws or operating agreement, that you entered into with the business partners.
That document will answer some of these questions:
- do you have a right to leave voluntarily?
- If so, how do you value your shares? Is there a different way to measure your shares depending on how you exit the company (good cause, voluntarily, disability, etc..)
- Are you bound by a non-compete or non-solicit of company clients? If so, for how long?
The good news of ending a business relationship, as they two Leaving Partners found out in the article, is that you no longer have any responsibilities to the departed business (assuming you didn’t personally guarantee any obligations of the business)
II. When Dissolving a Company and Creating a New One.
First, a good question to ask is, why do this?
When breaking up a business partnership that went bad, it could be simply to get a “fresh start”. It could also be that you are getting into a completely different business, different market, different product line, different geography, etc…
The wrong reason would be that your prior business held a lot of debt and you want to distance yourself from that debt. That brings us to the topic of:
Successor Liability.
The 1999 Michigan Supreme Court case of Foster v Cone-Blanchard Mach Co, 460 Mich 696, 702; 597 NW2d 506, 509-10 (1999), gives a good definition of “Successor Liability”.
“The traditional rule of successor liability examines the nature of the transaction between predecessor and successor corporations.
If the acquisition is accomplished by merger, with shares of stock serving as consideration (e.g. “stock Purchase“), the successor generally assumes all its predecessor’s liabilities.
However, where the purchase is accomplished by an exchange of cash for assets (i.e. “Asset Purchase“), the successor is not liable for its predecessor’s liabilities unless one of five narrow exceptions applies. The most often invoked exception:
(5) where the transferee corporation was a mere continuation or reincarnation of the old corporation.”
Point to consider when dissolving a business to start-up a new venture: is this new venture merely a continuation of your old company? If so, you won’t be able to avoid any outstanding debts from your old company.
Questions? Comments?
Email: Jeshua@dwlawpc.com
Lessons for Business Owners from Recent DOJ Suit: Grand Rapids Landlords to Pay $550,000 and Terminate Manager’s Responsibilities
The U.S. Department of Justice issued a press release yesterday afternoon regarding a Settlement reached with a Grand Rapids Real Estate Owner concerning actions of its Property Manager. You can see the Press release here
According to the press release, “the owners of the Alger Meadows Apartments in Grand Rapids, Michigan, have agreed to pay $550,000 in damages and civil penalties and to terminate property manager Dale VanderVennen’s role in managing the complex to settle a lawsuit alleging that VanderVennen sexually harassed female tenants in violation of the Fair Housing Act (FHA).”
You can read the press release, and the complaint as well, since it is public record, about the details of the allegations against Mr. VanderVennen concerning the allegations of inappropriate actions against female tenants in the buildings that he managed.
There are a lot of lessons to be learned from this whole mess – I will highlight 3.
1. Hard to Come by Good Property Managers
I have noticed this problem that applies to clients of mine who own investment real estate – it can be a challenge to find good, honest property managers!
This press release highlights, among other things, the fact that there is a need for good, honest property managers in West Michigan. If you are a property manager, or looking to get into that role, you can set yourself apart by ethical and competent behavior.
2. Business Owners – take care in who you employ – it is a reflection on you.
Certainly there is no allegation that I can see in the complaint that any of the direct owners played a role in the actual misconduct against tenants, however, legally that is not an excuse. Business owners would do well to insulate themselves from liability by surrounding themselves with good people. I see this problem most often arise with construction clients of mine, hiring unethical subs (because its hard to find good people)
3. Business Owners – Take Value in Protecting your Privacy through your LLC.
Many of clients form LLCs to hold their real estate, or other business ventures. There is an added benefit to holding property as such – it provides a level of anonymity to the members/owners. The State of Michigan Limited Liability Act requires a resident agent be named, but it doesn’t require that it be an owner. To add a level of privacy, (business owners can value privacy for numerous reasons, case in point) add an agent not connected with the business. I often times serve as agent for business clients of mine.
Questions? Comments?
email: Jeshua@dwlawpc.com
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Don’t file a Lien Against a Judge Part II: “Paper Terrorists”
As a follow up to my last blog post about the sovereign citizens, who believe the laws don’t apply to them, I found this interesting article through the ABAJournal, see it here
One of the stories cited by the article is re: Victor Cheng:
“The Atta family locked up their Temecula, Calif., home and went on vacation in 2012. While they were gone, Victor Cheng moved in.
Cheng had owned the home before the Attas, but he lost it in foreclosure. Nonetheless, he filed a fraudulent deed with the county recorder’s office, transferred the utilities into his name and even tried to evict the Attas after their return.
During his prosecution for burglary, trespassing and filing a false document, he insisted that he was not the person being prosecuted because the indictment spelled his name in all capital letter.”
The article notes that the FBI has identified these people as “Paper Terrorists”
You can read the full article to get some more personal stories about how these “sovereigns” have wrecked havoc on peoples lives.
I had a client go through a similar situation – his spouse was a self-proclaimed “sovereign” and, unfortunately, she was in charge of all the family finances. She kept her activities secret from her husband for years and was filing maritime liens against every creditor they had. My client discovered, only through my due diligence, that his family home had already been foreclosed on and he was literally weeks away from being evicted (despite the fact that his spouse had filed a billion dollar “maritime lien” against the lender on their Home. Why a register of deeds would allow spouse to record such a silly thing is beyond me.)
The point of my post is simply an observation: it’s hard to defend against actions like Mr. Cheng’s when they don’t play by the rules.
Comments? Questions?
jeshua@dwlawpc.com
Lesson:
Purpose Driven General Counsel 