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Real Estate Law Update: Bill Moves Forward Allowing Single Member LLCs To Evict Tenants without Legal Representation

September 28, 2017 Leave a comment

 

UPDATE ON PROPOSED House Bill 4463 – Would Allow LLCs to Evict wi

thout Legal Representation.

House Bill 4463 was introduced in March and referred to the  committee on law and justice.

 

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 witho

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ut 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.

Back in May, the Bill came out of the committee on law and justice and

 

a substitute bill was referred for a second reading.

Just 8 days ago the substitute was adopted. Yesterday the Bill was

referred to the Judiciary Committee.
The Major Difference in the Substitute Bill as Adopted.

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.

 

A Divisive Issue: To be, or not to be your own lawyer?

I commented that I would be surprised if this bill passes, although other states have similar laws.  The reason I was surprised is demonstrated a legislative analysis that came out just a few days ago.

 

A recent Legislative Analysis highlights the extreme opposite view points – those expressed by Real Estate Investors and Real Property Owner Associations, and those of Attorneys and Judges.

 

 

To Hire an Attorney or Not?

As I stated in my last post, the Bill makes sense for Landlords who want quick and cost-effective resolutions. I understand that an Investor who is not making money on a tenant also doesn’t want to expend additional legal fees to evict a Tenant. This is particularly true since the most attorney fees that a Landlord can recover against a residential tenant is limited to the statutory amount (currently $75).

All business owners make this same business decision –

at what point can I handle a legal matter myself and at what point do I pick up the phone and call my lawyer?

 

However, I will refer readers back to the lawyer who has a fool for a client…

 

Questions? Comments?

e-mail: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

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Business Law Update: Another Call to Clear Contract Drafting.

September 26, 2017 Leave a comment

It is Artprize again in downtown Grand Rapids! See one of the exhibits on Monroe Avenue in front of the Venue.

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Question:

Did you know: “Shall” has a different meaning then “May”?

One is mandatory.

The other is permissive.

In business, it pays to be clear in the contract language you use.

 

Check out this recent Michigan Court of Appeals decision on why you need to take care in drafting contracts.

 

 

This case was a dispute over a commercial lease contained in a “letter agreement” – and the legal concept of contra proferentem that ambiguities in contracts should be construed against the drafter.

 

 

According to the Court of Appeals: “the primary question presented in this case is
whether the following paragraph of the letter agreement precluded plaintiffs from filing this lawsuit:
“10. The failure of either party to perform the preliminary duties outlined in
this agreement will permit the obligee of the duty to declare a default and
terminate this preliminary agreement to lease or other remedy that may be agreed
to by the parties.”

The trial court found that this language precluded the tenant from suing.

The court of appeals disagreed.

The Court of Appeals evidently found this language to be ambiguous.

“It is an elementary rule of construction of contracts that in case of doubt, a contract is to be strictly construed against the party by whose agent it was drafted.” Shay v Aldrich, 487 Mich 648, 673; 790 NW2d 629 (2010).

This rule of construction is known as “contra proferentem”.

The contra proferentem rule is applicable only as a last resort, when other techniques of interpretation and construction have not resolved the question of which of two or more possible reasonable meanings the court should choose. It is a tie breaker when there is no other sound basis for choosing one contract interpretation over another.”
Klapp v. United Ins. Group Agency, Inc., 468 Mich. 459, 460, 663 N.W.2d 447, 449, 2003 Mich. LEXIS 1224, *1 (Mich. 2003).

However, in this case, the Court seemed to make much of the fact that the drafter, who was a party to the contract, was an attorney.

The Court of Appeals reversed the trial court decision and found that the language did not preclude the tenant from filing suit and the case needed to proceed to trial.

 

Conclusion:

Small business owners often times are wearing many “hats”. They are working with limited cash flow and are forced to make many choices. Many of these choices are in areas outside of their expertise.

Oftentimes startups and small business owners will “cut corners” to be more efficient and cost-effective.

When it comes to signing a legally binding contract – it is simply not worth cutting corners on.

The cost of what you do not know can be significant.

Question? Comments?

e-mail: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

 

 

 

 

 

 

Join me at Mel Trotter Ministries 3rd Annual Season of Hope Event – Keynote by Author Ron Hall “Same Kind of Different as Me”

September 15, 2017 Leave a comment

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Occasionally when I am walking in downtown Grand Rapids I will run into a guy with dirty clothes, smelling bad, looking homeless. When I am asked for money, my gut reaction is to want to help. Honestly though, oftentimes I have no idea what is the right response.

 

I will invariably pray for them, but I’m faced with the hard decision:

  • do I give them money?

 

  • do I buy them food?

 

  • do I simply direct them to Mel Trotter Ministries?

 

Should I be doing more?

 

Join me in hearing from Ron Hall, author of “Same Kind of Different as Me”  – you can check out the trailer to the movie, based upon the book, that is coming out soon.

 

Ron Hall’s friendship with a man that society had all but disregarded and given up teaches us all fundamental lessons – namely:

All people are valuable and loved by God. 

 

Hear from some of Ron’s experiences and valuable lessons.

As he tells us in his book:

To love a man enough to help him, you have to forfeit the warm, self-righteous glow that comes from judging.”
On Tuesday September 26, 2017 Mel Trotter Ministries will host its 3rd Annual Season of Hope Event at the JW Marriott with Ron Hall as our guest speaker.

We are still looking for corporate sponsors. Tickets are available here

 

Thank you to our Honorary Leadership Committee!

Kenneth Graham & Linda Vos-Graham
James & Nancy Engen
Tom & Marcia Haas
Cate & Sid Jansma Jr.
Bill & India Manns
Tom & Jackie McGovern
Mark & Elizabeth Murray
Gordon & Karla Oosting
Janis Petrini
Jerry & Marcia Tubergen
Harold & Lori Voorhees, Jr.
Greg & Meg Willit

 

E-mail: Jeshua@dwlawpc.com
http://www.dwlawpc.com
Twitter: @JeshuaTLauka

Real Estate Investors & Property Managers Should Avoid These Pitfalls: DOJ and Landlord Settle Allegations of Family Discrimination.

September 8, 2017 Leave a comment

I’ve said it before, owning and managing real estate is challenging. Particularly residential real estate.

I hear it from my Property Owner and Property Manager clients. I experience it when I am involved in negotiating in landlord/tenant disputes.

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Some of the pitfalls property owners have to watch out for are illustrated in a Wednesday, September 6  Department of Justice Press Release.

The Department of Justice issued a press release today concerning a lawsuit settlement reached with a Landlord and Tenant over Discrimination Charges brought by the Federal Government. You can review that press release here.

 

 

According to the press release, the Federal government alleged in its complaint filed in March 2017 that “in March 2014 defendant Appleby told a woman seeking an apartment for herself, her husband and their one-year-old child that the apartment buildings were “adult only.

The complaint also alleged that defendants advertised their apartments as being in “adult buildings.

Not good.

The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability.

As stated by Acting Assistant Attorney General John M. Gore, of the Justice Department’s Civil Rights Division. “The Fair Housing Act prohibits apartment owners and managers from denying housing to families because they have children…We will continue to vigorously enforce the Fair Housing Act’s prohibition of discrimination against families with children.

 

I’m speculating, but maybe the landlord didn’t know the law.

I wonder, did the landlord/property owner ever consult with legal counsel on its practices?

On a personal level, this type of practice of discriminating against families is unfortunate, especially considering we are in an affordable housing crisis.

In Kent County Michigan, it is reported that 2,098 school-aged kids are reported homeless.

 

 

There are some lessons to be learned for landlords, property owners, managers, and real estate investors.

Two takeaways from this news headline:

1. It is worth engaging legal counsel. 

Issues arise. When in doubt, e-mail or call your attorney.

 

2. Residential Real Estate Investment is highly regulated.

If you are a landlord leasing out “residential” property as opposed to purely commercial property (business tenant), you are under much more stringent regulations. You must comply with Federal laws, like the Fair Housing Act and state laws, like the Michigan Truth in Renting Act, and Landlord Tenant Relationship Act. Make sure you are operating lawfully.

 

Questions? Comments?

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka