Once you have successfully purchased a parcel of real estate at a tax sale, you do not yet “own” the property. You have required a “certificate of tax sale,” which is akin to a lien against the property. In order to actually convert that certificate of tax sale into a tax deed, you will need to go through the following procedures:
First, you will need to order title work on the property from an established real estate title company. The title company will examine the local records to determine who might be an interested party in the real estate. This might be a tenant, a mortgagee, a judgment lien creditor– anyone with an “interest” in the property.
You must then notify the owner of the property and all other interested parties of your purchase of the property at tax sale by certified mail.
After notice is given, there is usually a long waiting period until you can file your verified petition for issuance of the tax deed. This is the “redemption period,” which usually runs for one year from the date of the sale. During this period, the owner (or anyone else) can redeem the property by paying the unpaid taxes, penalties, and other assessments. The redeeming party must also pay an amount equal to 10% of the money paid by you. At all times during the redemption period, it will be your responsibility to make certain all real estate taxes are paid.
Because the property can be redeemed, you should file a statement of costs with the county auditor’s office as soon as permitted. This statement will include a certification of your costs expended, including title and attorneys’ fees. Once those costs are certified to the auditor, any redeeming party will be required to make payment of those costs prior to redemption. Those costs will then be reimbursed to you if the property is redeemed.
After the expiration of the redemption period, if no redemption has been made, you will file your verified petition for tax deed in the county court. You will name all interested parties as parties to the petition. Assuming there is no objection by any interested parties, the court will order the issuance of your tax deed.
Keep in mind that there are strict time limitations for each of these steps throughout the process. Missing a deadline can mean forfeiting your right to your tax deed.
Finally, even after you are issued the tax deed, there may still be work to do if you wish to sell or mortgage the property. Most title companies will not insure title to property acquired by tax sale without a “quiet title” suit. A quiet title suit is a lawsuit filed in court whereby the plaintiff asks the court to issue a judgment declaring his title to the property. Potential interested parties are afforded the right to object to the quiet title. If the plaintiff prevails, he usually obtains a judgment declaring the he is the rightful owner of the property. The judgment is final (although subject to appeal) and will usually vest marketable title in the property.
I need to file a law suit in small claims court on behalf of my small corporation. The amount of my claim doesn’t justify me hiring an attorney. The court tells me that because my claim exceeds a certain amount, I must have an attorney. Is this right?
The short answer is “yes, but.”
While non-attorneys regularly file and prosecute their own claims in small claims court, the law prohibits a non-attorney from bringing suit on behalf of a corporation, even when such person is the sole shareholder of the corporate claimant. This prohibition applies to claims over a threshold amount of alleged damages. The purpose behind this rule is to restrict non-lawyers from “representing” another person or entity— in this case, a corporate claimant— in court.
So is the non-attorney stuck with hiring an attorney to bring the claim, even if it is not cost-justified? Maybe not.
If a non-attorney wishes to bring the action but avoid incurring attorneys’ fees, the corporate claimant can assign the claim to the individual to pursue in his individual capacity. Much like cash, land, or other property, the claim is an asset of the corporation, which can be distributed from the corporation to its shareholders. Once the corporation has assigned the claim, the non-attorney litigant is free to pursue the claim in his individual capacity. He will merely need to show the small claims court that he “owns” the claim by virtue of the assignment by the corporation. The costs of pursuing the claim would be his own, and any recovery would be an asset of the individual and not the corporation.
Because the assignment is effectively a dividend from the corporation, any litigant considering a corporate assignment of a claim to its shareholder or shareholders should bear in mind that there may be tax consequences to consider. Prior to taking this action, it may be appropriate to consult his tax advisor.
I recently lost a loved one. I have been told that I may need to open an estate for her, but I have no idea where to start. What should I do?
First, before you begin to tackle the affairs of your loved one, take time to grieve with family and friends. Situations requiring immediate attention by surviving family members or friends are rare. Once you are prepared to take on the issue of the estate of your loved one, you should contact an attorney familiar with estates and the probate process.
During an initial meeting, the attorney should be able to advise you on whether or not it will be necessary to open an estate in the county court’s probate division. Depending on the size and nature of the estate and the degree of pre-planning carried out by the decedent prior to her death, it may or may not be necessary to petition the court for probate proceedings.
If the attorney determines that probate proceedings are necessary, the attorney can help you petition the court to open an estate and, in many cases, appoint a personal representative of the estate. (In some states, the personal representative is called an “executor.”)
The job of the personal representative is to pay all debts, expenses, and taxes owed following the decedents death, and then distribute the remaining estate as directed by the decedent’s will. If there is no will, the remaining estate is distributed according to the “rules of intestate succession,” which are statutorily prescribed rules governing who receives what from the estate where the decedent did not leave a will. The personal representative owes a fiduciary duty to the interested parties in the estate. In order to carry out the personal representative’s duties, he must collect and manage the assets of the decedent. This usually requires an initial investigation by the personal representative into what exactly the decedent owned at the time of her death. Often times, the full value of the estate is not known until the personal representative starts to really dig into the affairs of the decedent.
If you are appointed personal representative of your loved one’s estate, your attorney will guide you through all of the necessary procedures for administration of the estate. You will work closely with the attorney to make certain that the estate is wound up in an expeditious and appropriate manner.
A power of attorney is a document whereby a person — the “principal” — appoints another — referred to as an “attorney in fact” — to act on the principal’s behalf in making certain decisions that are personal to the principal and defined in the power of attorney document. The power of attorney is generally used by the attorney in fact to act on behalf of the principal’s behalf in the event the principal cannot act for herself, such as when the principal is incapacitated or when the principal is otherwise unavailable to take the action herself. Powers of attorney are often used to give an attorney in fact the power to carry out financial or contractual transactions, such as signing checks, paying bills, executing contracts, and so on. The attorney in fact has a fiduciary duty to the principal, which means that the attorney in fact must act in the best interest of the principal. If the attorney in fact uses his authority to act in a self-serving or reckless manner, he may be held liable for his wrongful actions.
A power of attorney is regularly executed as a part of a client’s estate plan. Having a power of attorney in effect can save the client a considerable amount of money and can also help her loved ones avoid the difficult and time-consuming process of court-appointment of a guardian for the client. If the client suffers from incapacity without a power of attorney in place, the client effectively leaves no authorized representative to act on her behalf. This means that there is no one permitted to carry out the very basic and unavoidable day-to-day financial transactions that the client once carried out on her own— paying the monthly utility bill, withdrawing from a savings account to purchase groceries, endorsing checks, etc.
Because the client is now incapacitated, she lacks the ability to execute a power of attorney. In other words, it is too late for a power of attorney. In order for a loved one to act on behalf of the client, the law usually requires the appointment of a guardian by a court. The process for appointment of a guardian generally requires an attorney, paperwork, a hearing and fees and costs that significantly exceed what the client could have paid for a relatively simple power of attorney document. If there is any dispute among loved ones about the guardianship, the burden becomes even greater. Furthermore, the person to serve as guardian is chosen by a court and not by the client herself.
There are generally two ways to go about selling a home: using a licensed realtor or “for sale, by owner.” Many home-sellers choose to use the expertise of a realtor to list their property for sale, prepare the property for the market, negotiate a deal, and bring the deal to closing. An experienced and knowledgeable realtor can offer valuable insight and professional support and advice throughout the sales process. Of course the representation of a realtor comes at a cost, which is generally a commission on the sales price of the property.
In order to avoid a realtor’s commission, some sellers decide to sell their property “for sale, by owner.” By choosing this route, the seller foregoes the support and advice of a realtor and elects to carry out the necessary steps to sell the property on his own behalf.
Once a home-seller has negotiated the general terms of the sale with a prospective buyer, there are two steps to bring a sale to completion: Execution of a real estate purchase agreement and bringing the deal to closing.
In order to sell and purchase the home, the seller and purchaser usually begin by executing a purchase and sale agreement. The agreement sets out the terms of the deal. What is the purchase price? Who pays the real estate taxes due on the property? What happens if one of the parties breaches the contract? These and other issues should be addressed in the agreement so that the intentions of the parties are clearly expressed and understood. The agreement may also contain certain contingencies that must be fulfilled before the parties are obligated to proceed with closing, which might include the buyer’s examination of title, the buyer’s inspection of the property, and the buyer’s procurement of financing for the purchase. Finally, the law may require certain disclosures at the time of the execution of the purchase agreement, such as a residential disclosure form or a lead paint disclosure.
Once the agreement is signed, the parties begin to work toward closing. In between signing the agreement and closing, the parties will take whatever actions necessary to fulfill any contingencies under the agreement, such as title work, inspection, security of financing, and so on. Assuming that all of the contingencies can be fulfilled to the satisfaction of the parties, the deal will go to closing. Closing is usually administered by a closing agent, who may be a bank representative, a lawyer, or a title professional. At closing, the purchase price is paid to the seller, and the seller delivers a deed to the buyer. Any expenses arising from the transaction are also paid, such as attorneys’ fees, real estate taxes, title insurance premiums and costs, and recording costs. Other documents are also reviewed and executed by the parties, including a note and mortgage if the buyer is financing the purchase, a closing statement showing the purchase price and the allocation of expenses paid, and tax-related documents. At the conclusion of closing, the buyer owns the property and seller accepts payment of the purchase price.
It is important for someone considering the sale of his home “for sale, by owner” to realize that while a realtor’s commission on a sale can be avoided, the seller should consider seeking professional advice and representation in negotiating and drafting the purchase and sale agreement and preparing and reviewing closing documents.
I am starting a new business. I am told I need an LLC (limited liability company) or a corporation. What’s the difference?
I am starting a new business. I am told I need an LLC (limited liability company) or a corporation. What’s the difference?
A limited liability company is a business entity formed by the filing of articles of organization with the Indiana Secretary of State. It is owned by its member or members. The ownership interests of the members in the LLC are often called units. The operation of the LLC is governed by an operating agreement, which sets forth rules concerning management of the LLC, allocation of profits and losses, contingencies in the event of the death of a member, and so on. The operation of the LLC is carried out either by a manager or co-managers, or the LLC can be member-managed, meaning the members make collective decisions concerning the operation of the company. An LLC must file biennial business entity reports with the Secretary of State in order to remain in existence.
A corporation is formed by the filing of articles of incorporation with the Indiana Secretary of State. It is owned by its shareholders, who are issued shares of corporate stock in the corporation. A corporation can have any number of shareholders or a sole shareholder. The corporation is governed by its bylaws, which generally regulate issues like voting, meetings, and duties officers. The corporation is required to have a board of directors which oversees the corporation’s officers. The board of directors appoints the officers of the corporation, such as the president, vice-president, treasurer, and secretary. The corporation’s shareholders and directors are required to conduct an annual meeting. The secretary of the corporation maintains the corporate records including the minute book and stock ledger. Like an LLC, a corporation must file a biennial report with the Secretary of State to remain active. Most small corporations are taxed as Subchapter S corporations, which means that the taxes “pass through” the corporation to its shareholders. If the corporation fails to elect for S taxation, it is called a C corporation. In a C corporation, the corporation is taxed on its income earned and upon distribution to its shareholders, its shareholders are likewise taxed on their income. (This is often referred to as “double taxation.” Failure to elect taxation as an S corporation can be a costly mistake.)
In many respects, LLCs and corporations offer the same benefits. Both offer limitation of liability, meaning that their members or shareholders are shielded from the liabilities incurred by the company, which protects their personal assets from the company’s creditors.
The chief advantage to an LLC over a corporation is its flexibility in terms of taxation and management. An LLC can elect to be taxed as a sole proprietor, a partnership, an S corporation, or C corporation. An LLC also has less rigid rules and formalities for its operation than a corporation.
The most significant advantage to a corporation versus an LLC is the potential avoidance of self-employment tax. In an LLC, the member is treated as being “self-employed” and is taxed accordingly. However, the shareholder of a corporation can often avoid this taxation, as the shareholder is treated as being an employee of the corporation. There is a catch, though: because the shareholder is treated as an employee, the corporation will be responsible for making payroll to the shareholder and withholding taxes. This can create more work and expense for the corporation than the tax savings actually justify.
LLCs are more often used as investment companies where income is rarely or only occasionally realized, such as in a real estate investment operation. Corporations are more often used in businesses that require regular payroll and where there is a more steady flow of income.
Before forming either an LLC or a corporation, the new business owner should consult his or her tax advisor and attorney. These professionals can help the owner make the right choice for his or her new business.
Dying without a will is referred to as dying “intestate.” In the event that you die without have a valid will that instructs how your probate assets are distributed, the law requires that your estate be distributed according to the rules of “intestate succession.” In Indiana, these rules generally require that your probate estate be distributed as follows, depending upon your marital and family status:
Unmarried, no children.
• Everything to your parents and siblings.
• If you do not have living parents or living siblings, then everything to your nieces and nephews.
• If there are no living nieces and nephews, then everything to your grandparents.
• If there are no living grandparents, then everything to your aunts and uncles.
• If there are no living aunts or uncles, then everything to the State of Indiana.
Married, no children or grandchildren.
• Three-fourths (3/4) to your surviving spouse and one-fourth (1/4) to your surviving parent or parents.
• If there is no surviving parent, then everything to your surviving spouse.
Married, with children (or grandchildren).
• One-half (1/2) to your surviving spouse and one-half (1/2) to your children (and grandchildren, in some cases).
Married to second or subsequent spouse, with children from prior spouse, but no children from subsequent spouse.
• Your surviving spouse receives the equivalent of 25% of the fair market value of your real estate, minus the value of any liens or mortgages against the real estate.
Bear in mind, these are general rules and far from a complete schedule of rules of intestacy. Furthermore, there are other rules that may affect the ultimate distribution of your probate assets, such as rules concerning personal property and family allowances.
The rules of intestacy are designed by the Indiana General Assembly as a “best guess” of how you would have wanted your probate assets distributed. Because there is no will that sets out how you would have actually wished the assets distributed, the legislature has decided for you.
Making a will gives you the opportunity to dictate how your estate is administered and distributed upon your death.
At the outset of a dispute, both sides are often emotionally charged and determined to see their fight to the bitter end. However, as the dispute continues, both sides usually see the merit in settlement or compromise of their differences.
If the parties are unable to settle the case prior to the filing of a lawsuit, there is an opportunity to settle during the progress of the court case. In fact, many judges will require the parties to make a good faith effort to settle the case prior to hearing the case. Many require the use of a mediator to try to help facilitate the settlement.
Even if you are confident in your case, settlement may be in your best interest. There are usually three reasons why a litigant should consider settlement: The risk of loss, the cost of prosecuting or defending the case, and the personal burden of litigation. Plaintiffs also need to take into consideration the chance of collection on any monetary judgment.
No lawyer can guarantee you a best-day result. There is always risk that you will not prevail in court. You should always consider your risk of loss during a settlement negotiation process. If you feel that your best day in court would yield at $10,000 judgment against your adversary, but your chance of success is only 50%, it would make good business sense to consider an offer to settle for $7,000. After all, when factoring in the risk of loss, you claim is only valued at $5,000.
The above scenario does not factor in the cost of litigation. Prosecuting or defending a claim usually involves significant costs, including attorneys’ fees and court costs, and fees arising from court reporting services, private investigation, expert testimony, court-ordered mediation- the list can go on. Except under exceptional circumstances, those costs will be incurred by you, whether you ultimately prevail or lose. Let us presume that in your $10,000 case described above, you anticipate costs of litigating the case to conclusion of $3,000. Suddenly, your claim valued at $5,000 is only worth $2,000 after the anticipated expenses are paid. The offer to settle for $7,000 looks even better.
Law suits are not fun. They often take an emotional toll on the parties that tends to grow as the case progresses. And law suits take a long time— sometimes years— to resolve. Sitting through mediation, depositions, hearings, and attorney-client meetings can take a toll on anyone— all of this which is endured before the day of trial. When you add to this personal burden the expense and uncertainty inherent with a law suit, you may ultimately decide that settlement is the best route in order to put the dispute and aggravation to bed.
Plaintiffs should also consider the chance of collection on a monetary judgment. If you ultimately obtain a judgment against a defendant who is insolvent, the judgment, insofar as you are concerned, may be worth the paper it is written on. Furthermore, even if the defendant has the assets to satisfy the judgment, he may make life difficult for you in your efforts to reach those assets. While the law affords you certain tools to aid you in your recovery, using those tools may require yet additional attorneys’ fees and costs. As a plaintiff, you should take into consideration the chance and cost of recovery when valuing your claim.
Not all law suits can settle, and not all law suits should settle. However, in analyzing your case, it is recommended that you consider settlement opportunities that make financial or personal sense.