Michigan Business Law Update on Bill that would allow LLCs to evict tenants without Attorneys. Despite Opposition, Bill Moves Forward.

Happy Friday!

It is summer – my favorite time of year. There really is no better place to be during summer than Michigan. I hope you are all enjoying it.

For those keeping track of House Bill 4509  proposed on April 25, 2019 that would allow some LLCs to evict tenants in limited circumstances without attorneys the Bill was dealt recent opposition from the State Bar of Michigan’s Real Property Section.

On May 15, 2019, The Real Property Section voted 16-0 (one abstaining) against the Bill.

The rationale given by the Section:

” HB4509 essentially creates a small claims type of case for landlord-tenant disputes by removing the requirement that LLCs be represented by attorneys in landlord-tenant proceedings for certain 1- or 2-member LLCs; the legislation is problematic for tenants and courts, as it would be difficult to ascertain whether an LLC meets the requirements set forth in the bill; and, further, the proposed legislation opens the door for unscrupulous landlords and property managers, who may have experience with court procedures but are not held to the same ethical rules as attorneys, to represent their LLCs and potentially take advantage of tenants, many of whom are not represented by counsel and are unfamiliar with court procedures

Despite this opposition, the Bill keeps moving forward.

On June 4, the Bill reported out of the Judiciary committee without an amendment. The Bill was passed by the House by a contested margin – 62-47. It is now sitting in the Senate Judiciary and Public Safety Committee.

It will be interesting to me if the comments of the section will prompt a proposed amendment from the Senate committee to attempt to address some of the valid concerns raised by the section.

I’ve been in enough courtrooms watching nonlawyers representing themselves on both sides – landlord and tenant – to know that the section’s concerns are valid. There is a reason lawyers need to be licensed in order to practice law.

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

Questions? Comments?

e-mail: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

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Real Estate Law Update: Bill Would Impose Stricter Requirements on Recording a Construction Lien

Good afternoon, all. I hope you all are enjoying the beginning of summer.

Summer is here.

Residential Builders – check out this House Bill 4695 introduced on June 11, 2019.

This Bill would impose stricter requirements on licensed builders prior to recording a Construction Lien.

According to the Bill, a Contractor:

SHALL DISPLAY THE CONTRACTOR’S LICENSE AND, IF THE CONTRACTOR IS AN INDIVIDUAL, THE CONTRACTOR’S PERSONAL IDENTIFICATION, CONSISTING OF AN OPERATOR’S LICENSE, CHAUFFEUR’S LICENSE, OR PERSONAL IDENTIFICATION CARD ISSUED BY THE DEPARTMENT OF STATE, WHEN RECORDING A CLAIM OF LIEN UNDER SECTION 111. IF THE CLAIM OF LIEN IS NOT PRESENTED IN PERSON, THE CONTRACTOR SHALL ATTACH TO THE CLAIM OF LIEN COPIES OF THE CONTRACTOR’S LICENSE AND PERSONAL IDENTIFICATION.

Violating this law would result in a stiff penalty – criminal sanctions – punishable by a misdemeanor.

The the intent of this Bill would seem to encourage contractors to make sure their licensing is in order and would therefore discourage contractors from filing liens without lawful cause. Simply put, if a Lien doesn’t have a photo ID and proper licensing attached to it, then it wouldn’t be valid.

In reality, this extra hurdle could be an impediment from contractors who otherwise are entitled to payment from having perfected valid liens.

The Bill was sent to the committee on Regulatory Reform.

My sense is that this Bill does not come out of committee without some significant amendments. I’d love to hear your thoughts.

Questions? Comments?

e-mail: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

Michigan Business Law Update: Bill Would Allow Single Member LLCs To Evict Tenants without Legal Representation

Lake Macatawa, Holland, Michigan

Happy Wednesday, all. I took this photo back on Mother’s Day. Looking forward to spending more time enjoying Michigan summers. Summer is approaching!

Last December it looked like Landlords were going to finally be able to represent their LLCs under limited circumstances when evicting tenants. Check out my prior post here

That Bill, after undergoing some changes, died in committee.

Well, it is back!

On April 25, 2019 the law that would allow some LLCs to evict tenants in limited circumstances has revived as House Bill 4509 

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 4509 – Would Allow LLCs to Evict without Legal Representation.

House Bill 4509 was introduced in April 2019 and referred to the judiciary committee.

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 in the past that I would be surprised if this bill passes, although other states have similar laws.

The prior version of 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 and it eventually died.

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 will be interested to see if this Bill stands a chance.

Questions? Comments?

e-mail: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

Standing in the Gap for Those in Need: My Review of HillBilly Elegy

I just finished reading a book called “Hillbilly Elegy” by JD Vance.

What I liked about this book:

So many striking themes from my own family of origin:

poverty, dysfunctional family relationships, addiction, alcoholism, abuse, vulnerability.

It is also personally interesting to me that, like me, JD Vance also ended up graduating from high school, then college, then law school and became a lawyer, beating the odds of those family members that raised him (or failed to raise him).

For those who grew up in middle/upper class families, it is an eye-opening insight into a large segment of our culture lives.

Two key take away points for me from this book:

  1. People Become Homeless Due To Lack of Community.

At Mel Trotter Ministries, we often point to the quote in this photo as one of the primary factors for homelessness.

JD’s book confirmed that fact to me, in his own experiences.

In short, if its because of a lack of community that people tend to enter into homelessness, community needs to be part of what gets them out.

We need to do a better job of being community to the most vulnerable people in our own community, wherever that is.

2. Do Not Underestimate the Impact You can Make in a Child’s Life.

For the last 5 years I have spent every Thursday during the school year mentoring an elementary school-aged boy.

These boys, in large part, suffer from the same tragedies:
poverty, dysfunctional family relationships, addiction, alcoholism, abuse, vulnerability.

I can’t think of a better use of my time – one hour a week than spending it telling a kid that he is valued – he has what it takes – who may not hear that from any other place.

As a kid, I remember being desperate to hear such words from an adult.

“You have What it Takes”

Imagine if all of the struggling students in our local communities had adults who were consistently showing up in their lives telling them:

“You have What it Takes”

My call to you, go be that person in the life of some vulnerable kid today.

Questions? Comments?

E-mail: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

Michigan Businesses: LARA Warns of “Michigan Council for Corporations” Scam.

April 23, 2019 Leave a comment

Good afternoon, all. This is a photo I took from Spring Break a few weeks ago. Peaceful.

Another photo I took of Gatlinburg, Tennessee

Anyway, on to the point of this post:

Businesses should make sure to do everything to protect their “corporate shield” and to stay in “Good Standing” by filing their annual statements. However it appears that some are attempting to take advantage of susceptible business owners.

Today I received an e-mail from The Michigan Department of Licensing and Regulatory Affairs(“LARA”) 

LARA issued a Press Release alerting business owners of a scam that has resurfaced. Indeed, 6 years ago LARA warned the public of essentially the same scam.

According to LARA’s press release:

“[LARA] Director Orlene Hawks today warns Michigan corporations of a non-governmental entity called “Michigan Council for Corporations” seeking to collect a $150 fee to prepare “corporate consent records in lieu of annual meeting minutes.” This deceptive notice is not issued by LARA or any governmental agency. Corporations are only obligated to file their annual report through LARA’s Corporations, Securities and Commercial Licensing Bureau (CSCL) and not an “Annual Records Solicitation Form.”

LARA further warns that:

“Michigan businesses are receiving an official-looking form called the “2019 — Annual Records Solicitation Form, Shareholders, Directors and Officers,” which can be viewed here. The accompanying instructions deceptively state that completing and submitting the form, along with a $150 payment, will “satisfy the annual corporate records for your corporation.”

“This is not to be confused with the State of Michigan legal requirement of corporations submitting an annual report, due on or before May 15 each year after incorporation,” said Corporations, Securities and Commercial Licensing Bureau (CSCL) Director Julia Dale. “The annual report or annual statement can be filed online along with the applicable fee of $25 payable to the State of Michigan.”

LARA gives the following advise:

Any Michigan corporation that receives a notice to have corporate consent records prepared and pay a fee to avoid dissolution of their corporation are advised to do the following:

  1. Keep the notice, mailing envelope, and return envelope.
  2. Contact the United States Postal Inspections Service to report mail fraud at:
    1-877-876-2455 or 
    https://postalinspectors.uspis.gov/
  3. Or contact the Michigan Office of the Attorney General at P.O. Box 30212, Lansing, MI 48909.

Legitimate notices and mailings to Michigan corporations are issued from LARA’s Corporations Division and are mailed to the resident agent at the registered office address on record. When receiving any official-looking document, please review carefully and read the small print. If you are not sure, please contact the LARA Corporations Division at 517-241-6470. Customers with questions about their corporation, limited liability company or limited partnership are encouraged to use the Business Entity Search to check their status. Additional information is available on the Corporations Division website at www.michigan.gov/corporations or by calling the Corporations Division at 517-241-6470

Questions? Comments?

E-mail: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

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My Reflections from a Week off: am I Hiding or Shining?

I just returned from a week in Tennessee with my family. We did a lot of hiking and enjoyed the beautiful mountains.

Gatlinburg, Tennessee

Last week was spring break for much of the country and we found ourselves among a lot of tourists in Tennessee.

A lot of people were like us, from Michigan.

You don’t have to know me well to know that I graduated from Michigan State University and am a Spartan fan.

If you want to see the extent of my Spartan fandom – just check out a prior post of mine.When I am not at work, I am pretty much exclusively wearing my alma mater gear.

I found myself throughout the week in Tennessee routinely getting approached by people, other Spartans, saying “Go Green!” (And if you are a Spartan, you know the only proper response is “GO WHITE!”)

Seriously, this must have happened a dozen times in different places throughout my week. People I have never meet before identified a common connection with me without even knowing me and feeling compelled to acknowledge me simply because of shirt or hat I was wearing. This also happened to me multiple times back in January when my family visited Disneyworld.

This phenomenon really got me thinking. It usually takes me a week away from the daily grind of life in order to prod me to reflect on some of the more fundamental questions in my life.

Most of the time, we are all good at hiding who we really are.

It isn’t hard to do.

On any given workday it is very easy for me to hide behind the suit I wear, the job I perform. I can show the sides of me I want to show, and hide what I want to hide.

The question I need to ask myself: on any given day, am I letting who I truly am shine through?

Much like when I am wearing Spartan green, people know I am an MSU fan, when I am living my life, is it plain as day and easy for people to see:

what I stand for;

what I value most;

what I will stake my integrity on;

what I will never compromise on.

Is the fact that I am a follower of Jesus Christ evident to all who come in contact with me? Am I walking as Jesus walked?

Is the way that I am living my life distinct?

Maybe this is a good question for you to ask yourself:

As you go about your daily life, do people really know who you are?

Are you letting your light shine for all to see?

“And those who are wise shall shine like the brightness of the sky above; and those who turn many to righteousness, like the stars forever and ever. “

-Daniel 12:3

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

Categories: Uncategorized

Community Spotlight: Next Step of West Michigan – walking alongside the most vulnerable

March 27, 2019 1 comment

Yesterday I visited with Jonathan Peerboom – Program and Development Director of Next Step of West Michigan (Next Step) – a faith-based nonprofit employing people coming out of prison or rehab and providing them with a community of support that will help them integrate into the workforce, regain hope and empower themselves to create a better future.

Jonathan Peerboom, Program and Development Director, Next Step of West Michigan

John’s Story.

What really impacted me about my visit was meeting “John” and hearing his story.

John is an employee of Next Step. John was putting together crates and stopped to talk with me and greeted me with a huge smile and an enthusiastic handshake.

Like many of us, John has experienced many struggles and hardships over his life, starting with a traumatic childhood which caused ripple effects throughout his adult life. John ended up spending 10 years in prison.

As many of us know, the barrier to employment and re-entry into society after a felony conviction and extended prison sentence is often times insurmountable.

When society is telling the Johns of this world that they have nothing to offer this world, that they are only valued if they have the right looks, status, job, house, money, family, etc… Next Step is telling those, like John, like me once as a kid, the opposite.

John has inherent value.

He is worthy to be loved because he is a person, made in the image of God.

Next Step gave John a job – the integrity of working for a living – and through words and acts tells John that is loved and inherently valued. Now, John, 7 years removed from prison, is a changed man.

A Sustainable Non-profit.

Next Step states on its website that
it is “a nonprofit that aims to make a real impact in the lives of its employees, while maintaining a financial model anchored in sustainability.”

Approximately 85% of its revenue is through a delivery of services or goods. The remaining 15% are investment gifts that fund administration costs, provide for new initiatives and increase capacity.

Next Step operates like a social enterprise – it has a self-sustaining business model that employees

Relationships Change lives.

Yesterday after meeting with Jonathan at Next Step, we traveled not too far down Division for luncheon held at Mel Trotter Ministries, another community partner along with Next Step serving the most vulnerable in our community.

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 Jonathan and Team at Next Step! Next Step would love to partner with you if you want to learn more about the work they are doing in our community. I encourage you to check out their website or email Jonathan

Questions? Comments?

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka