What does a Seller need to know for a real estate closing in Illinois

My clients ask what needs to be done for a real estate closing when they are the seller.  First thing is I take care of getting everything they need.  There are several documents that need to be produced or procured.  They are: 

1. The deed.  What is a Deed?  The deed transfers ownership from the seller to the buyer.  The typical real estate deal uses a Warranty Deed.  This transfers everything from the seller to the buyer.  While I would not accept a Quit Claim Deed, some transactions in a divorce use that deed to transfer property from one spouse to another.  A Quit Claim Deed only transfers what the seller actually owns to the buyer.  For example, if the Lassie and Flipper are getting divorced, and Flipper is getting the house, then Lassie needs to transfer the property to Flipper with a deed.  If before the transfer, Lassie sells her interest to Mr. Ed, then she owns nothing.  When she signs the Quit Claim Deed, she is not transferring anything to Flipper.   Also, she is not committing fraud when Lassie signs the Quit Claim Deed because Lassie is only transferring what Lassie owns, which is nothing.  If Lassie is required to sign a Warranty Deed, then Lassie is promising that Lassie owns the property.    There are other Deeds, such as a Judge’s Deed, that are rarely used.
2. The title commitment.  Title Commitment is used to insure to the buyer that they are buying the property.    Everyone knows the statement; do you want to buy the Brooklyn bridge?  At a real estate closing, the buyer gives the seller money for the property and the seller gives the buyer a piece of paper that states “Deed”.  The buyer has no way to know whether the seller owns the property.  For the buyer to protect themselves, they require from the seller an insurance policy guaranteeing that the seller owns the property or the insurance company (Title company) will pay for the damages.   The seller gives to the buyer a few days before the closing a Title Commitment.  This contains all of the information the buyer needs to know for the closing and insurance policy.  These are legal documents produced by a title company or an attorney.   Because these are complex, it is essential that an experienced attorney review this.
3. Bill of sale.  A Bill of Sale is a document transferring all of the items in the house that are not the actual building.  For example, washer machine, dryers, shelves, and more.  Items that are attached to the property or building that would damage the building or land when removed are typically not part of a Bill of Sale.  This is a simple document, but if not done right, the seller or buyer may be harmed.
4. Settlement statement and RESPA.  Closing statement is a document produced that contains where every penny from the sale is coming from or going .  It is an accounting between the buyer and seller.  The RESPA (this is changing soon pursuant to federal law) contains every penny related to the buyer, seller and any other party that is giving or taking money related to the real estate transaction.
5. State and county transfer tax forms and stamps.  The State and County transfer forms for Illinois differ depending upon what county.  Some counties rely on the paper State of Illinois transfer form.  Other counties rely on the electronic transfer form.  Knowing which form is essential to the closing.
6. City or village transfer tax forms and inspections.  Most Cities or Villages in Illinois have their own requirements.  These need to be determined at the beginning of the real estate contract.  For example, most Cities or Villages require the payment of real estate transfer taxes.  However, it differs from city or village.  Some require the seller to pay and others require the buyers to pay. Some require stamps to be purchased before the closing, others don’t.   In addition, some cities or villages require an inspection of the home and repairs to be done.  Some require that the water bill be paid before the closing.   It is essential to the real estate closing that the requirements be followed and done before the closing.
7. The survey.  The seller and/or lender will want a survey.  The survey determines if the home is actually located on the property.  There is at least one block in Illinois where the homes are partially on the neighbor’s property. 
8. If the property is part of a condominium or townhome, then there are all sorts of requirements.  The first step is to request from the condominium or townhome the requirements.  Also, the seller will need to produce a paid assessment letter and right of first refusal letter.
9. If the sales property is held in trust, the trustee will have requirements to be met.  The trustee will send to the seller a Trustee’s deed and a paid proceeds letter along with other documents that may be required.  This part of a closing is too substantial to cover here.  Contact me if you have questions about this.

         Contact Jeffrey M. Jacobson at JeffJacobsonLaw.com or 331-222-9529

Mortgage foreclosure and tax liability

As of January 13, 2014, a bill was introduced to extend the Mortgage Forgiveness Debt Relief Act of 2007.  It has not even been brought for a vote.

The Mortgage Forgiveness Debt Relief Act of 2007 expires on 12/31/2013.  This Act allows a home owner to not have to pay taxes on the amount of money forgiven by a mortgage company on their residential home.  This Act has several exceptions, one of them being that it does not cover anything but your primary home.

Here is how the Act works. If the mortgage amount was $400,000.00 and you sold the house in a short sale for $300,000.00, you had $100,000.00 income according to the IRS.  You would pay taxes on the $100,000.00 "income".   So, next year when you do your tax returns, you claim $100,000.00 as income.  You could be paying tens of thousands of dollars in taxes.  The Act states you don't have to pay the taxes on your primary residence.  Since the law is expected to end on 12/31/12 try to get the forgiveness done this year in case the Act is not extended.  If the Act is extended, you have more time to sell your house.

If you have any questions, please let us know.  

Jeff Jacobson 

331-222-9529

Consumer Fraud - car repair - save $$$

HOW TO SAVE ALMOST $400 OR ABOUT 1/2 IN CAR REPAIRS.

Recently a major car repair company offered to repair a car for $130 in labor and the cost for the part.  The consumer was told that the part is only available from Mazda (which is true).  The consumer was also told that Mazda charges $790.00 for the part,  and the repair facility had no control over that, as they cannot get the part from an OEM (original equipment manufacture) or another supplier.  The consumer thinking that there is nothing they can do about it, approves the repair.  

Before the part is received, the consumer calls several Mazda dealers and is told that the price for the part is $420.  That is list price without any discounts.  They are also told that is the list price for ALL Mazda dealers to sell to the public.  Obviously, the price sold to a repair shop is around 20% less, and the repair shop makes a 20% profit on the part.  So, the consumer called the repair shop to stop the repair.  The repair shop stated that then there is a 25% restocking fee!  When the consumer agreed to the repair, they were told the part was not going to be in until the next day.  

I had a fit when I heard about this, and quickly informed the repair shop of the problems.  The repair shop agreed to let the consumer purchase the part, and the repair shop would replace it for the same labor charges.  This saved the consumer about $400 on a $550 repair.  

Do not assume that because a part is "being supplied by the Manufacturer" that you are paying the right price.  Always get a second opinion.

Unemployment in Illinois

I just won a Board of Review decision with the Illinois Department of Employment Security (unemploymnet).  My client on his own argued that he was discharged, but not for his fault.  The Appeal division denied him benefits.  He retained me, and I drafted the necessary argument that he was entitled to benefits.  The Board of Review agreed and gave him his full benefits.

The client did not know the basics of the law, and what it takes to be victorious with the Department and the Board.  His facts were complex, and at the hearing, the opposing attorney was confused which caused more issues.

Unemployment benefits are a special area of law.  As a past judge of the Illinois Department of Employment Security, I am well versed on not only the law, but the procedures and organization of the Department.

It is a pleasure to serve this client who tried on his own to get his benefits.

For more information go to my web site at JeffJacobsonLaw.com.

How many days do I have to cancel a contract for the purchase of a car?

I get asked over the years about how many days someone has to cancel a contract.   Just recently at JeffJacobsonLaw.com I received an email concerning this. 

Usually, they bought a car and the next day they realized it is not right for them.  So, when can you cancel a contract in Illinois?

First the bad news.  You cannot, I repeat can not, cancel a contract in Illinois unless there is a law that allows you to cancel it.  There are only three laws that allow the cancellation of a contract.  The purchase of a car is not one of them.

Here is a list of some of the items that you may be able to cancel.  Also, please be advised that over time, some of these laws will change.  You should always seek the advice of an attorney prior to making a purchase.  Also, each of these items has exceptions to them.

1.  When you refinance your house, you have 3 days to cancel the contract.  You must make sure you follow the law on cancelling the contract.  Also, this does not apply to a loan you apply for to purchase the home.  It does not apply to loans for business purposes. 

2.  When you purchase something for more than $25 and the sale is at the buyer's home, workplace or dormitory, or at facilities rented by the seller on a temporary or short-term basis, such as hotel or motel rooms, convention centers, fairgrounds and restaurants.  Under the Federal Trade Commission rules, you have 3 days to cancel this contract.

3.       The purchase of a gym contract allows you to cancel the contract within 3 days, or if you move, die or have a disability.  You have to move more than 25 miles from one of their facilities and they cannot find a comparable facility for you within 25 miles.

When cancelling the contract, you must follow the rules for cancelling the contract.

As you can see, the purchase of  a car does not meet any of the exceptions above. 

For more information, including the current laws and how they impact you, go to my web site at www.JeffJacobsonLaw.com or email me at Info@JeffJacobsonLaw.com.

Contested versus uncontested divorce

So, what is the difference between a contested and uncontested divorce?  In an uncontested divorce, the parties are able to work out the issues in the following areas:

1. Custody
2. Visitation
3. Child support
4. Maintenance
5. Division of assets
6. Division of debts

Typically, all of the issues are worked out between the husband and wife.  If there are disputes, then it is not uncontested.

Contact me at Jeff@JeffJacobsonlaw.com for more information

JeffJacobsonLaw.com

Bankruptcy - chapter 7

There is a lot of information out there on bankruptcy.  What can be discharged under chapter 7 and what can't be.  Most of the questions I receive are highly technical, and I enjoy them.  So, keep asking the questions.  This post is on the process for a chapter 7 bankruptcy when you don't have assets to pay off your debts.

The first thing that we do is go over the financial information with our client.  We then inform them of the requirements under a chapter 7.  We determine, based on the information you provide us is whether you can file a chapter 7.  There is a means test which is a baseline of whether you meet the requirements for a chapter 7.  Then, we retrieve your credit report.  This is incorporated in your bankruptcy schedules, along with all the information you provided us.  Once you review the information to make sure we have it correct, we will file it with the Bankruptcy Court.  At this point, no creditor can contact you concerning your debts.  You must take counseling, and report to us the completion before we file.  Once we file, you have to take debtor education and report to us your completion.

When we file your petition, we are given the trustee's name and the date we meet with the Trustee.  At the trustee meeting, they will ask you questions concerning your financial condition.  Do you plan on inheriting money, is the information you listed correct...?

If the Trustee finds that you don't have assets, he will find that.  Then the Bankruptcy Judge will Order that your debts are discharged.  If there are assets, the assets will be used to pay off as much of your debts as there are assets.

Finally, the Court will order that your debts are discharged. After this, you no longer are responsible for your debts.

for more questions, please feel free to contact us.


Contact me at Jeff@JeffJacobsonlaw.com for more information

JeffJacobsonLaw.com