Michigan Business Law Update: Bill Stuck in Committee that would Allowing Single Member LLCs To Evict Tenants without Legal Representation

December 11, 2018 Leave a comment

Once again, we are reaching the end of the year. One of the signs that the year is ending:

december

Rosa Parks Circle becomes an ice rink.

See the photo I took from a few days ago.

Another sign that the year is ending, interest groups are pushing to get legislation pushed through the legislature before they die in committees.

One such Bill would give Certain Landlords who own their real estate in a Limited Liability Company the ability to evict tenants without retaining an attorney

 

 

Today

Kent County Rental Property Owners Association  published a post pushing constituents to contact their State Senators to push this bill out of committee.

This Bill was passed by the Michigan House and since September of 2017 has been sitting in the Senate Judiciary Committee

As the RPOA indicates:

 

“For the first time in two decades, the “LLC bill” has a chance of passing.  The bill, HB 4463, would enable single-member LLC’s and LLC’s owned by married couples to handle their own evictions in court without an attorney.  The cases would be limited to the amount of small claims cases—which is the majority of all landlord-tenant eviction cases”

 

History Behind the Bill…

As background, a common scenario in my legal practice:

Investor purchases property in an LLC. Investor locates a tenant. Tenant falls behind in rent. Investor hires attorney to evict Tenant.

 

Why hold real estate in an LLC?

Most of my investor clients own investment real estate in a Limited Liability Company.

This is for liability protection.

Once a limited liability company comes into existence, limited liability applies, and a member or manager is not liable for the acts, debts, or obligations of the company. “Duray Dev., LLC v. Perrin, 288 Mich. App. 143, 151 (2010).

 

Why not hold real estate in an LLC?

Some investment property owners decide not to do so. The primary driving reason from my experience is cost.

Cost associated with setting up the LLC; and

Cost associated with hiring an attorney and evicting non-paying tenants.

Some landlords don’t want to hire an attorney to evict a tenant.

Under current Michigan law, since an LLC is a separate legal person independent of the actual owners of the LLC, unless such owner is a licensed attorney, an owner of an LLC cannot file a lawsuit on behalf of the LLC.

To do so would be the unauthorized practice of law.

You can practice law on your own behalf – just not on behalf of someone else.

Although, the saying goes – he who is his own lawyer has a fool for a client.

 

House Bill 4463 – Would Allow LLCs to Evict without Legal Representation.

House Bill 4463 was introduced in March 2017 and referred to the  committee on law and justice. It has been passed by the House and sent to the State Senate.

The Bill would allow owners of a single-member LLC (or a married couple under certain conditions) to file their own eviction actions on behalf of the LLC without the need for legal representation.

If the Landlord is seeking money damages, the amount, not including taxable costs, must be under the small claims Court maximum.

I commented that I would be surprised if this bill passes, although other states have similar laws. The Kent County RPOA mentions in its post that it is the closest in over decade that such a bill has come to passing – so the RPOA is pushing hard to get this Bill out of committee.

 

As mentioned, the Bill  came out of the committee on law and justice and a substitute bill was referred for a second reading.  The Bill was passed by the House and sent to the Senate Judiciary Committee over a year ago.

 

The Major Difference in the Substitute Bill

The major revision that came out of the committee affects property managers.

The Bill as introduced would have allowed property managers or agents to represent the LLC under certain circumstances – e.g. – having personal knowledge of the relevant facts related to the Property and tenancy.

That language was removed from the first version of the bill.

Under the substitute bill, Property Managers or other Agents would not be allowed to represent the LLC.

Further, this is a “burden shifting” mechanism in the substitute bill – the law would place the burden on the LLC owner to prove he or she is in compliance with the statute. That makes sense – since the legislature would be creating an exception to the rule – only lawyers practice law.

 

It looks like this Bill will die in committee unless constituents can convince their local state Senators to do something about it.

 

 

 

Questions? Comments?

e-mail: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

Advertisements

Grand Rapids Social Enterprise, L3Cs and a Call to Community Partnership.

November 21, 2018 Leave a comment

Yesterday I visited with Dr. Justin Beene – Founder of Grand Rapids Center for Community Transformation  (GRCCT) – a collective of non-profit/for-profits working to see flourishing in Grand Rapids for all.  GCCT is essentially a hub for social enterprise, for the common good of the Greater Grand Rapids Area.

Justin Beene

Dr. Justin Beene, the future expansion of GRCCT

GRCCT states on its website that Grand Rapids was ranked the number one city in the United States to raise kids by Forbes Magazine (Van Riper, 2012).

Even more, the city has been ranked as one of the most philanthropic areas in the United States (Raghaven, 2013).

GRCCT mentions the powerful presence of the institution of the Church in Grand Rapids, and over 2,800 nonprofits.

This all sounds good, but there is much work to be done. There is still great need in the Grand Rapids Community.

 

 

despite the affluence, giving, and nonprofit services in West Michigan, the outlook in education, employment, and long-term quality of life for many urban citizens looks bleak. 

Forbes Magazine just recently released a study of 52 metropolitan cities in the United States and found Grand Rapids to be the second worst city in the country for African-Americans to live based on business ownership/entrepreneurship, median income, and home ownership (Kotkin, 2014)…

Youth living in the urban center of Grand Rapids are among the most impoverished young people in the country.”

 

In response to the great need in our city, particularly for youths struggling with poverty,  GRCCT supports several social enterprises (Rising Grinds Cafe and Building Bridges) that not only provide skills/job training but also provides revenue for the long-term sustainability of these programs.

 

Low-Profit Limited Liability Companies.

Both Rising Grinds Cafe and Building Bridges are Michigan Low-profit Limited Liability Companies (L3Cs)

Back in 2009 the Michigan legislature authorized the formation of these “hybrid” business entities.

L3Cs are formed fundamentally for a charitable/socially beneficial purpose, but unlike non-profit corporations, members can own equity in these L3Cs.
L3Cs – Viable Tools for Social Entrepreneurs…

I’ve said this before- L3Cs are a viable tool for social entrepreneurs – they tell the whole world that your company exists, fundamentally to do good.

Certainly, that is the purpose of both Rising Grinds Cafe and Building Bridges –  they exist for the common good.

 

Doing our Part – Being a Good Community Partner.

Grand Rapids is taking deliberate steps to help those most in need, particularly in the area of affordable housing

Recent national headlines demonstrate that there is a lot of mixed feelings about the proper solutions to the affordable housing crisis facing many cities across the U.S.

 

One key take point that GRCCT inherently understands:

 

Creating real change requires an entire community’s involvement.

 

GRCCT is looking for individuals, businesses, organizations

MTM

who will partner for the common good of the Greater Grand Rapids Area.

I love this quote that is often spoken of at Mel Trotter Ministries – “People don’t become homeless when they run out of money. They become homeless when they run out of relationships.”

That is our job. Being those relationships for the most vulnerable.

Not just “one-way relationships” but truly reaching out in community in a sustainable way.

Keep up the good work Justin and all at GRCCT.

 

 

 

 

 

 

 

 

 

 

 

 

A Cautionary Tale for Leaders on National Philanthropy Day. A Call to Humble, Authentic Leadership.

November 15, 2018 Leave a comment

Good afternoon, all.

It has been a month since my last post – a lot has happened in a month. I wanted to sent a quick post.

11.15

 

Today is the first day of some serious snow – check it out. I am looking forward to ice skating beginning at Rosa Parks Circle.

 

Yesterday, I read a press release from the Department of Justice: Former Charity CEO Pleads Guilty to Multi-Million Dollar Political Corruption Scheme

Wow.

 

 

The Press Release goes on to summarize the allegations:

Marilyn Luann Nolan, 68, of Springfield, pleaded guilty before U.S. Magistrate Judge David P. Rush on Friday, Nov. 9, to one count of conspiracy to embezzle and misapply the funds of a charitable organization that received federal funds.

By pleading guilty, Nolan admitted that she conspired with others from 2008 to June 30, 2017, to misapply millions of dollars of the charity’s funds for substantial, undisclosed payments to lobbying firms and political advocates, monetary and in-kind contributions to the campaigns of candidates for public office, and to bribe public officials.  Nolan also admitted that she knew her co-conspirators defrauded the charity in order to enrich themselves, and her.

 

 

In a prior post I wrote about the need to be authentic as leaders.  It is true, that, we all get to choose what parts of our story we reveal to other people.

It is a tremendous temptation to only reveal to others what looks favorable about ourselves – to shine the light on our achievements, awards, skills, and the things that we can so easily take pride in.

You know what I am talking about.

The things that fall into the  “look at me, I am important.”  category.

This is especially true for those in key leadership positions.

Last month, in my 40 Second Story  I hoped to convey authenticity. Being real.

That is not a comfortable thing to do, particularly if you are like me and don’t have it all together. (none of us do).

In fact, when my story was displayed in front of 500+ people last month, I was extremely anxious. It was not a comfortable feeling. But, I know that it is OK not to have it all together.

Applying this concept of Authenticity to Ms. Nolan’s story – I am sure she that she did not set out running a multi-million dollar non-profit organization with the goal of breaking the law and the public trust.

But at some point, I imagine that the lie she was living became too big in her mind to disclose to others until it was too late.

In light of National Philanthropy Day I wanted to highlight this point:

There is a desperate need for leaders who are willing, in humility, to be authentic.

Humble authentic Leadership.

 

I’ve heard it said by Craig Groeschel

Be yourself.

“People would rather follow a leader who is always REAL than one who is always RIGHT.”

 

As for me, I’m striving to be a leader who is real.

In order that God might be made powerful in my weakness. – 2 Corinthians 12:9

 

Questions? Comments?

Jeshua@dwlawpc.com

http://www.dwlawpc.com

Connect with me on Twitter: @JeshuaTLauka

Legal Update on Michigan Bcorps and Purpose Driven Business.

October 9, 2018 Leave a comment

Happy Tuesday, all.

I recently took this photo of the Grand River that flows through downtown Grand Rapids.

Today I read an article in the Grand Rapids Business Journal by Local First President

2018-09-30 13.46.51Elissa Sangalli Hillary on how to build a “Purpose Driven Business“.

Elissa starts off the article by advising entrepreneurs to “start with your values”

“As an entrepreneur, you have an opportunity to start a business that’s founded on your values, morals and principles. Before you dive into your business plan, reflect on your core values and prioritize those you want as the foundation of your business.”

 

According to Elissa’s article, you can join her and other entrepreneurs at  Start Garden on Oct. 10 for a “Measure What Matters Workshop on The Social Justice Entrepreneur. This workshop is an opportunity to hear from entrepreneurs and their best practices for developing a meaningful business plan and leading a business with purpose.

 

Benefit Corporations – purpose driven business.

The option of forming a business entity using a “benefit corporation” legal structure is one way to formally memorialize at a fundamental level your company’s values morals and principals.

 

Why BCorps?

BenefitCorp.net describes the benefit of BCorps as:

“Benefit corporations expand the obligations of boards, requiring them to consider environmental and social factors, as well as the financial interests of shareholders. This gives directors and officers the legal protection to pursue a mission and consider the impact their business has on society and the environment. The enacting state’s benefit corporation statutes are placed within existing state corporation codes so that it applies to benefit corporations in every respect except those explicit provisions unique in the benefit corporation form.”

 

BCorps have gained Popularity since 2006.

Currently 34 States have enacted BCorp Laws.

Michigan is not one of those States.

Almost six months ago the State of Michigan House tantalized social entrepreneurs, once again, with the possibility of Bcorps becoming a viable legal option to do business in the State of Michigan.

House Bills 5867, 5868 & 5869 were introduced on April 24, 2018, that would allow BCorps to be formed under Michigan Law.

As of today, there is still no movement on these bills.

 

Back almost two years ago the legislature proposed similar legislation which died in committee. For a review of the Former BCorp Bills, the House Fiscal Agency issued a Fiscal Analysis, check it out here. 

The Analysis provides good background on what the legislation would do. This is helpful for those who are not overly familiar with BCorps in general.

 

I continue to wonder why year after year Michigan fails to catch up with the rest of the country concerning these social enterprise businesses for good.

As of March 2018 there have been 14 West Michigan businesses certified B Corporations – a third party sustainable good certification process, but not having the corporate BCorp Structure. That number is growing.

People want to do business with companies that exist for something besides making a profit. Certainly you don’t need the Bcorp legal structure in order to accomplish that.

However, there seems to be a demand for such a social enterprise entity in Michigan.

What is the legislature waiting for?

Questions? Comments?

Jeshua@dwlawpc.com

http://www.dwlawpc.com

Connect with me on Twitter: @JeshuaTLauka

 

 

 

Grand Rapids Combats the Affordable Housing Crisis through the Rental Assistance Center

September 20, 2018 1 comment

Today was my first day back mentoring my student at a local elementary school in the City of Grand Rapids.

MTM

I was excited to catch up with my student, what had changed over the summer?

One thing that changed, he had moved once again. Having to be concerned about where you will be sleeping at night, is a concern that no kid should have.

In fact, Mel Trotter Ministries reports that in Kent and Ottawa

County there are over 3,300 homeless school-aged children.

 

 

Yesterday evening was Mel Trotter Ministries’ Annual Season of Hope Event. There, once again, was presented the information on the above photo. People become homeless due to a lack of relationships.

Our community needs to come around those who are vulnerable. One way that our community is doing that, is through the public/private collaborations to address the affordable housing crisis in Grand Rapids.

 

There is an Affordable Housing Crisis.

As many of you know, Kent County, like much of the U.S. is experiencing a serious lack of Affordable Housing.

The City of Grand Rapids has made concerted efforts to address problem through an advisory board, which has come up with strategies for addressing the Affordable Housing Crisis

Last year I posted on one of those tools that I deal with fir

st hand in representing landlords, real estate investors and property management companies – the Kent County Eviction Prevention Program. You can check out a blog post I wrote about that here

I have seen firsthand that this program can be a useful tool to keep families facing temporary emergencies in housing.

The EPP was developed as a collaborative effort between the City of Grand Rapids, Salvation Army of West Michigan, The Kent County Court System, the Michigan Department of Human Services and with funding provided by Steelcase.

Why I like this program.

This program provides an opportunity to keep people in housing who are on the verge of being homeless. The fact is, families are experiencing homelessness in Grand Rapids every day.

 

 

City, Grand Rapids Housing Commission create Rental Assistance Center

 

Today I read that the City of Grand Rapids and the Grand Rapids Housing Commission have established a two-year pilot for a Rental Assistance C

enter for low-income households. Check out the complete press release here.

According to the press release:

“The Rental Assistance Center – approved by the City Commission on Tuesday – will connect households that earn 80 percent or less of the Area Median Income (AMI) with vacant rental properties and refer “rent-ready” applicants to landlords, increasing the efficiency of the rental search for households and landlords.”

Further – households who are “not rent-ready” “who – do n

ot meet established landlord criteria – will be referred to a resident service coordinator who can help them overcome barriers to secure rental housing.”

 

 

Housing is a community problem. It is encouraging to see the great collaboration between government, private sector, non-profit sector.

We all have a role to play. I hope you can find yours.

 

e-mail: Jeshua@dwlawpc.com

Twitter: @JeshuaTLauka

www.dwlawpc.com

Removing Barriers for the Vulnerable in our Society.

September 19, 2018 Leave a comment

 

Today is the first day of Artprize!  I took this photo today. For the next few weeks Grand Rapids will be swarming with visitors to see Art like the “Phoenix” – see below a photo I took.

 

9.19

Mel Trotter Ministries  – showing compassion for the vulnerable

Today just so happens to be Mel Trotter Ministries annual Season of Hope Event.

MTM is the safety net for the West Michigan community. It serves the vulnerable in our community and serves people no matter where they are found – homeless, hurting, addicted, including those who have just been released from prison.

Those with a felony conviction on their records face an uphill battle in finding housing and employment.

phoenix

Phoenix Artprize Exhibit

According to the  Small Business Association of Michigan

Convicts leaving incarceration often have a difficult time re-entering the working world because, according to one survey, 65 percent of employers would never consider hiring someone with a felony record.

 

When people think about the marginalized in our society – those with a felony record should be at the top of the list.

 

Removing Barriers for Felons

A few weeks back Michigan Governor Rick Snyder signed a law that bans “felony box” from State Job applications. See the Detroit Free Press article Here

According to Governor Snyder he wanted to “ set an example for the private sector in giving ex-felons improved chances to successfully return to society.”

 

The legislator has attempted to pass a law to help ex-felons find jobs in the private sector, but the law appears to have stalled.

Last year I posted about the Michigan Work Opportunity Act

Senate Bill 14 was passed by the Senate, but stalled in House committee Check out the Legislative Analysis by the House Fiscal Agency, here

The Bill would create the “Work Opportunity Act” which would require the Department of Talent and Economic Development (TED) to provide grants for employers’ hiring of qualified individuals on probation or parole.

The House Fiscal Agency’s Analysis recognizes the “apparent problem”

“In seeking re-entry into the workforce, an ex-felon is confronted with myriad challenges, including appealing to employers who are not eager to accept the risk of hiring an ex-felon. This program would seek to mitigate that risk, by offering grants of a portion of the exfelon’s salary to employers who hire qualified ex-felons.”

 

Homelessness, joblessness, is a community-wide problem. It takes an entire community.  I am thankful for the local businesses who employ ex-felons.

The fact is, all people have inherent value.

 

We are all just a life-circumstance away from being homeless, addicted, or in jail.

 

But for God’s Grace, there go I.

Questions? comments?

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

 

A Call to Authenticity and Servant Leadership.

August 30, 2018 Leave a comment

Good afternoon, all.

I am looking forward to a relaxing Labor Day Weekend, I hope you are too. Before I am headed out of the office to venture past the Mackinaw Bridge, I wanted to sent a quick post.

I took this photo today – Rosa Parks Circle in downtown Grand Rapids has music and food trucks. Thursdays in Rosa Parks Circle is a great time.

IMG_0132

 

A few weeks back I was notified that I had been named as a “40 under 40” Business leader for 2018 by the Grand Rapids Business Journal.

As part of the “40 under 40” event, yesterday I had 40 seconds to tell “my story“. This story will be aired at the event on October 17, in front of over 700 people.

At first glance, that seems a tall task. How can anyone tell their story in 40 seconds?

We all have a story to tell.

Moreover, we all get to choose what parts of our story we reveal to other people.

I recognize it is a tremendous temptation to only reveal to others what looks favorable about ourselves – to shine the light on our achievements, awards, skills, and the things that we can so easily take pride in.

You know what I am talking about.

The things that fall into the  “look at me, I am important.”  category.

 

What I hoped to convey in my 40 seconds was something that I believe God has been impressing on me as of late –  authenticity.

Being real.

That is not a comfortable thing to do, particularly if you are like me and don’t have it all together. (none of us do).

In theory, I didn’t think it would be a big deal to share my story. But yesterday, when I sat on a stool under glaring lights with several cameras on me (thanks Justin Razmus and Team at 616 Media) I became anxious. The fears began to creep in.

 

Interestingly, when I did my first take, someone in the room could identify with aspects of my story.

 

It is OK not to have it all together.

 

I’ve heard it said by Craig Groeschel

Be yourself.

“People would rather follow a leader who is always REAL than one who is always RIGHT.”

 

As for me, I’m striving to be a leader who is real.

In order that God might be made powerful in my weakness. – 2 Corinthians 12:9

 

Questions? Comments?

Jeshua@dwlawpc.com

http://www.dwlawpc.com

Connect with me on Twitter: @JeshuaTLauka