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Archive for May, 2015

LINC Real Estate Development News, and Lessons from Recent Court Decision

Happy Friday!

News in local real estate development….

Yesterday, the Grand Rapids Planning Commission approved a $15 Million Project. Article here.

The Project, 70 housing units with retail on the first story, is being developed by LINC – a Grand Rapids based non-profit focused on Community Revitalization.

LINC is great example of a local non-profit doing good work in community revitalization. LINC, per its website defines its views on economic development efforts for local communities:

“to develop the entrepreneurial spirit of our community, boost business ideas and expand the business base of our communities, thus creating viable businesses that strengthen the fabric of our neighborhoods”

Business can strengthen local neighborhoods. That’s what local business should do.

I blog a lot about crowdfunding, and how I believe it has potential to be a tool for social entrepreneurship and community revitalization.

On the flip side, I am always reminded that any time an investor is considering taking part in a local project, they should take great care to perform their own due diligence. They need to understand the risks of what they are buying into.

Lessons for Investors in Real Estate Development: The Dinoto Case.

This morning I was reading a court case decided on May 21st,  regarding a dispute between an investor and a developer (and its various entities).

Dinoto v Nu Way Investments, LLC, et al

You can check out the case here

Brief facts;

  • Dinoto was an investor in a real estate development company owned by a relative of his.
  • Dinoto’s investment was apparently intended to fund the purchase and development of commercial real estate.
  • Ultimately, Dinoto lost his entire investment, and the real estate was foreclosed on.
  • Dinoto thereafter sued for an “Accounting” – apparently he suspected his money had been misused.
  • After undergoing discovery, Dinoto wanted to amend his lawsuit to file various claims for breach of fiduciary duty, embezzlement, and to pierce the corporate veils of various affiliate entities.
  • Ultimately his case was dismissed. The Court of Appeals affirmed the decision.

Lesson from Dinoto

I don’t believe there is any real significant legal holding that came out of this case.

I do think it provides a practical warning for investors in real estate.

Perform your due diligence ahead of time – not afterwards.

Dinoto apparently invested in the project and asked questions later. When it was too late. Finding out answers to key questions is not best left for your lawyer via a lawsuit – where it is going to cost you potentially your entire investment, plus additional tens of thousands of dollars in legal fees.

Questions? Comments?

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

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Michigan Real Estate Law Update: Landlords May Send Eviction Notice by E-mail

Happy Friday!

I’ve previously posted on the Michigan Bill introduced in the House that would allow Landlords to send Tenants eviction notices by E-mail – check out that article here

Yesterday, the Governor signed the Bill into Law.

The Story was reported by the Midland Daily News

The Law allows service via e-mail based upon the landlord and tenant’s written agreement.

I commented in March that I would be interested in seeing the Bill in its final form, you can check it out here

The law certainly provides a more detailed procedure as well as definitions than proposed by the original bill.

Take away for Property Owners/Landlords:

Landlords will want to update their standard Lease Agreements to provide for the option to send notice to quit tenancy by e-mail.

Further, Landlords must understand that a Tenant has the right to refuse to consent to e-mail service. A landlord cannot refuse a tenant simply because they don’t consent to e-mail service of an eviction notice.

Questions? Comments?

e-mail: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Work to be Done: Removing Employment Barriers

Today I read several articles that left me impressed with the work that needs to be done to help those crippled with employment barriers.

  • From the ABA Journal Post-conviction consequences make it difficult for ex-offenders to find jobs – here via @ABAJournal

The ABAJournal notes that: “The U.S. economy loses up to $65 billion in output each year because of fewer job opportunities for convicted felons, according to a 2010 study by the Center for Economic and Policy Research.

  • From the Mining Journal – Area leaders, employers to discuss jobs for ex-prisoners – here

The Mining Journal notes these harsh statistics:  “more than 13,000 people are released from Michigan prisons each year and that a third will become reoffenders. Joblessness is identified as their primary barrier to finding success after prison” 

Michigan’s Role..

Laws have recently been enacted to further help remove employment barriers for convicted felons. You can check out my previous articles on the matter here

More Locally…

I also read today on LinkedIn an update posted by Mel Trotter Ministries and their “Street Court” initiative. Check out an older press release here.for details about how MTM helps helps the homeless with criminal backgrounds. Also see the Photo of Street Court in Action

I’m thankful for the work that Mel Trotter is doing to help the homeless in West Michigan clear up outstanding legal issues that are just another obstacle between them and employment..

Also Worth Praising their Efforts….

There are a number of great companies who reach out to support putting Michiganders with certain barriers to work.  Goodwill Industries of Greater Grand Rapids lead by CEO Kathy Crosby does a fantastic job of equipping this demographic and putting them into long term employment.

Some West Michigan companies who do a great job of reaching out to hire/place those with employment barriers are Proos Manufacturing and Fabricating lead by CEO Amy Proos and Cascade Engineering lead by (former) CEO Fred Keller. Others include Lacks EnterprisesKentwood Office Furniture and Express Employment Professionals of Grand Rapids lead by Janis Petrini to name a few.

These community partners deserve praise for their work putting to work the “unemployable” and the vulnerable in our local community..

To conclude, as I stated in the beginning of my post –

there’s work to be done.

Questions? Comments?

e-mail: Jeshua@dwlawpc.com

www.dwlawpc.com

West Michigan Business and Community Partners

The first week of May marked “National Small Business Week

It’s a time to celebrate small business.

Locally…

On that note, on June 6th a West Michigan organization that supports local business, Local First will be hosting its annual street party, you should check it out.

More on Nat’l Small Business week…

As the U.S. Small Business Administration states on its website:

“Every year since 1963, the President of the United States has issued a proclamation announcing National Small Business Week, which recognizes the critical contributions of America’s entrepreneurs and small business owners.”

Powerful Statistics…

Per the SBA’s website, you can’t argue with the impressive statistics on the value small business brings to our local communities:

  • More than half of Americans either own or work for a small business, and
  • they create about two out of every three new jobs in the U.S. each year.

Supporting the West Michigan Business Community

Small Businesses play an important rule in our economy. locally, I’m glad we have organizations committed to supporting the local business community like:

If you aren’t familiar with these organizations you can go to the websites and they make it pretty easy to get connected.

Community Lenders also Support the West Michigan Business Community

Last week the comptroller on currency, Thomas Curry, was speaking at the 2015 State Small Business Credit Initiative Conference, you can check out his remarks here

What impressed me about his remarks is how much of small business is funded by small banks…

As Mr. Curry stated:

“…community banks also play a very significant role in providing small business credit. Even though community banks hold just 8 percent of the assets of the banking industry, according to the Independent Community Bankers Association smaller community banks with less than $1 billion in assets made one-third of outstanding bank loans to small businesses.”

Community lenders and Community Partners –

Keep up the good work supporting our local business community!

Questions? Comments?

e-mail: Jeshua@dwlawpc.com

www.dwlawpc.com

A Call to Serve, a Call to Lead

May 15, 2015 2 comments

I was reviewing the headlines of the latest edition of the Non Profit Quarterly when I came across this headline: NPQ’s Comment Roundup: On Younger Leaders, from the Perspective of Older Leaders .

You can check out the article here

This article addresses an issue that I’ve observed over the last 7 years…

I’ve seen this to some degree on every board that I’ve served on –

a lack of younger leadership on boards.

I think the first non-profit board I served on 6 years ago, I was probably the youngest board member by maybe….20-30 years.

Reasons for the lack of age diversity on boards?

There are many common reasons for this age gap, some more valid than others.

Certainly, particularly with non-profit organizations that are well-established in a community, a very valid reason for this age gap is the value of older board members who possess institutional board knowledge and experience that dates back generations.

This value cannot be overstated.

A Call to “Just Show Up”

However, what I don’t think should  be a valid reason for a lack of presence of younger board members, is a reluctance to just show up.

Let an organization that you are passionate about know who you are, and that you are ready to serve.

One of the reasons I went to law school was to gain a skill set that might translate into an ability to help those in need…to do  some good in this world, particularly in areas where God has laid on my heart – for me, Gospel Rescue Mission work fits that to a T.

What is it for you?

Where are you called to Serve?

Don’t be detracted by fears that are common to us all – such as a lack of experience (gray hair).

Whatever the reasons that many non-profit boards lack diversity in age – don’t let the reason be that you aren’t willing to show up and make your desire to serve known.

Questions? Comments?

email: Jeshua@dwlawpc.com

www.dwlawpc.com

Social Entrepreneurs and Small Businesses – Update on Intrastate Crowdfunding

May 14, 2015 1 comment

A recent Detroit Free Press article highlights the success of Tecumseh Brewing Co, the first business in Michigan to utilize Michigan’s intrastate crowdfunding exemption to securities registration, commonly referred to as the MILE Act.

Crowdfunding: Potential for Start-up Businesses.

As the Free Press article explains, The story of Tecumseh Brewing Co highlights why equity crowdfunding is attractive to small startup businesses who may struggle to secure conventional financing.

“We went through bank after bank. They couldn’t justify giving out a loan to two guys starting a business,” said Kyle DeWitt, general manager and cofounder of Tecumseh Brewing Co.”

Without a doubt – the ability to reach a large pool of investors that were previously unreachable due to Securities Law restrictions is attractive to small businesses.

More States Enact Laws Permitting Intrastate Crowdfunding

Yes, as the Free Press article describes, states are realizing that intrastate crowdfunding can be a viable tool for small businesses. Per the Free Press’s calculation, 23 states have enacted laws permitting crowdfunding, and a dozen more states have proposed bills.

Crowdfund Insider, through  Illinois Crowdfunding Attorney Anthony Zeoli, recently provided a nice “big picture” update on the state of Intrastate Crowdfunding. Check out that article here

Problem Areas

potential abuse

Attorney Zeoli’s article also recognizes the problem areas of crowdfunding exemptions enacted by many states.  The obvious areas of concern often identified by regulators is the potential abuse of such exemptions by scammers and frauds, who may want to take advantage of an “unsophisticated investor.”

limited utility

Another such problem affects the “utility” of the laws; particularly, the limitation on real estate holding companies to utilize many intrastate crowdfunding exemptions.

Attorney Zeoli advises legislators to more narrowly tailor this exemption – I’d be in favor of a Michigan amendment such as is proposed in Illinois HB 3429.

With all of the development and revitalization efforts in Detroit, check out this recent article about the Brush Park Development, Grand Rapids, and other major cities, so long as disclosure safeguards are in place, why not make it as easy as possible for local investors to own a project in their local community?

Questions? Comments?

email: Jeshua@dwlawpc.com

http://www.dwlawpc.co

New Michigan Bill: Investment Property Owners Should Keep Track of this “Bed Bug Bill”

May 8, 2015 1 comment

Last Thursday a class action case against a Real Estate Owner reached a settlement involving payment of over $2 Million to 100 tenants – ABAJournal reports that story here

One of the primary complaints was that “the 26-unit building had a massive cockroach infestation.

Infestations are an issue for every property manager or owner of residential investment real estate.

A few weeks back Michigan House Bill 4520 was introduced – check out the text here – it would amend Michigan statute governing landlord tenant relationships to include addressing the control of certain pests – including bed bugs.

What the Bill seeks to do:

Impose certain duties on landlords regarding bed bugs:

1. Mandates specifically that the Landlord is to keep the rental space free from bed bugs.

2. Prohibits Landlords from renting out space that the landlord knows is infested with bedbugs

3. Provides specific requirements for a landlord to respond to a complaint of bed bugs:

  • within 7 days of receiving a complaint, Landlord shall order an inspection for bed bugs;
  • within 7 days of confirming infestation, Landlord shall remedy it.

4. Limits damages against Landlord for infestations, not Tenant caused, only if “Gross Negligence”

Impose certain duties on tenants regarding bed bugs:

1. Tenant shall inspect for bed bugs when first occupying the space;

2. Tenant shall not move “infested property” into a rental unit

3. Tenant shall notify Landlord within 2 days of notice of infestation.

4. Tenant responsible for damages due to bed bugs caused by Tenant, or guest.

The Bill would also allow the parties to allocate expenses for inspection and treatment in their rental agreement. If passed into law, this provision will likely lead to Landlords/Property Owners updating their standard rental agreements.

My thoughts:

What happens when the Tenant is the one who brought the bed bugs – causing damage to Landlord’s property?

What happens when Landlord is responsible?

Who pays the costs to remedy?

The presence of bed bugs is a problem. It seems like the Bill is attempting to balance the bed bug problems that is all too routine facing landlords and tenants, particularly in urban housing.

Next step:

The bill was referred to the judiciary committee. It will be interesting to see what outside interest groups weigh in on this bill, and what amendments come out of this.

Questions? Comments?

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com