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For the benefit of all stakeholders – Pushing the Needle Forward on Business as a Force for Good.

August 22, 2019 Leave a comment

Good afternoon, all. I hope you all have been enjoying the summer. I took this photo this morning as the sun was rising over downtown Grand Rapids.

Just a few days ago Business Roundtable announced the release of a new Statement on the Purpose of a Corporation signed by 181 CEOs who commit to lead their companies for the benefit of all stakeholders – customers, employees, suppliers, communities and shareholders.”

Thanks to Jeff Van Winkle for bringing this to my attention. You can check out the link to the Business Roundtable webiste and the announcement: https://lnkd.in/eYSTrxg

It is exciting to see the general acknowledgment and support for the idea that business exists for a purpose more than simply profit.

This is not a new thing, particularly in West Michigan.

West Michigan is truly a unique place where business and philanthropy intersect unlike any other place.  Giving of time, talents and treasure to worthy causes is embedded in the culture of this community.

We know of many businesses that have established core mission statements of social good as something beyond profit for quite some time. I look to Cascade Engineering, as one example. Check out the Blog of Fred Keller, Founder of Cascade – titled “Purpose & Profit”

Some groups are skeptical that this statement will lead to any real change – case in point Corporate America Says “Sorry” via @npquarterly

However, I am hopeful that this statement pushes the ball forward on business for good in the State of Michigan.

BCorps?

Last year the State House tantalized social entrepreneurs, once again, with the possibility of benefit corporations (“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.

There was never any movement on those bills and they died in committee.

Back almost two years ago the legislature proposed similar legislation which also died in committee (are you recognizing a pattern?). 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.

Education on the “why” for BCorps.

Interested groups and local politicians have been educating the public on why BCorp laws would be a good thing for our state.

State Rep Hank Vaupe gave a discussion to a local chamber group on B-Corps two Septembers ago:

As Rep. Vaupe indicated “benefit corporations provide an opportunity for businesses to use the markets, rather than traditional charity giving, to advance their philanthropic missions.”

Michigan is behind the ball.

Over the last several years Michigan legislators have repeatedly introduced BCorp legislation – to no avail.

Check out this handout from Rep Barnett almost 10 years ago in support of the BCorp legislation he proposed in September 2010.

I found particularly interesting the very last section – it provides some comment on why some Michigan businesses may have been averse to the introduction of BCorp legislation. Feel free to read it and reach your own conclusions.

Michigan now ranks as one of the vast minority of states that has not enacted benefit corporation legislation.

Check out the Benefit Corporation website for a state by state legislative analysis.

I hope Michigan can continue to make progress and recognize business as a force for good.

Questions? Comments?

Jeshua@dwlawpc.com

http://www.dwlawpc.com

Connect with me on Twitter: @JeshuaTLauka

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Real Estate Investors Bidding at Foreclosure Sale: What Happens to a “Surplus?”

January 28, 2019 1 comment

It is a snowy day today in Grand Rapids. If you are on the roads, drive safe!

snow day

 

Last week I read a  Court of Appeals decision that prompted me to write on the topic concerning real estate investors.

 

The market to purchase distressed real estate has become extremely competitive since 2008-09. Having multiple real estate investors bidding on properties can cause some serious problems. 

Some lenders/investors have tried some creative methods of recovery and made some interesting legal arguments in order to  maximize their profit at or after foreclosure sales. Complex legal issues can arise in a competitive market when there is money to be made.

For clients of mine that purchase investment real estate at foreclosure – an interesting situation can come up:

  1. Purchaser at foreclosure knows the bidding is competitive – is the highest bidder – overbids due to competitive bids.
  2. Purchaser, in order to “pocket” the overbid (and to extinguish the mortgagor’s right of redemption) – purchases the homeowner (mortgagor’s) interest via quitclaim deed prior to foreclosure and thereafter.
  3. The Sheriff conducting the sale receives and deposits the surplus with the County Treasurer.
  4. Purchaser seeks from the County Treasurer the overbid amount after the foreclosed debt is satisfied.

 

 

Facts of January 22 Decision in Trustlink Equities LLC v Dietech

That’s presumably what the Plaintiff, purchaser expected to happen in this case.

With real estate, however, things don’t always go how you expect.

Check out the January 22, 2019 unpublished case of Trustlink Equities, LLC

This case is helpful, because it provides some guidance to an area of the law that isn’t used very often and there simply isn’t a lot of case law about: what happens to surplus funds after foreclosure and who is entitled to those funds?

In the Trustlink case,  after foreclosure, there was a second mortgage with $162,497.12 remaining owed. Id.

After the proceeds from the sale of the Property to Purchaser satisfied the first mortgage the Sheriff received and deposited the $77,490.54 in surplus funds with the St. Clair County Treasurer.

Purchaser filed a document with the Treasurer, “document titled “Verified Claim for Turn-Over of Proceeds of Sale.” seeking payment of the $77,490.54 surplus funds.

Defendant, the junior mortgage servicer, filed a competing document titled “Verified Claim for Surplus Proceeds of Sale

The result was that the funds were turned over to the Circuit Court for the proper disposition. The Court found Defendant, as junior mortgage holder, the proper party. Plaintiff appealed. A few interesting points to discuss came out of this case.

 

Law:

There are a couple of particular laws that come into play here:

I. Full Credit Bid

One general one to be aware of – the Full Credit Bid Rule – it basically stands for the proposition that: “An overbid at a Sheriff’s sale extinguishes the entire debt.” Pulleyblank v. Cape, 179 Mich.App. 690, 446 N.W.2d 345 (1989) (per curiam).

Practically speaking, if the bank bid the entire amount that was owed, regardless of whether or not the fair market value of the property is worth less than what is owed, the bank cannot come after the borrower for a deficiency.

 

II. MCL 600.3252 – Surplus Funds After Foreclosure. 

That statute states in relevant part:

If after any sale of real estate…there shall remain in the hands of the officer…making the sale, any surplus money after satisfying the mortgage on which the real estate was sold, and payment of the costs and expenses of the foreclosure and sale, the surplus shall be paid over by the officer…to the mortgagor…or assigns, unless at the time of the sale, or before the surplus shall be so paid over, some claimant or claimants, shall file with the person so making the sale, a claim…in which case the person so making the sale, shall forthwith upon receiving the claim, pay the surplus to, and file the written claim with the clerk of the circuit court of the county in which the sale is so made…

 

So, the mortgagor is entitled to receive the funds from the Sheriff – or if sent to the Court, an interested party making a “claim” to the funds may make a claim to the Court.

“The statute allows both (1) parties who filed a “claim” with the person making the sale, and (2) any person or persons interested in the surplus, to apply to the circuit court for distribution of the surplus funds after a foreclosure sale.” Id. page 10.

 

a. Mortgagor – “demand” v.s “claim” – all the same?

One of the primary issues on appeal concerns whether the Purchaser’s filing qualified as a “demand” or as a “claim” under MCL 600.3252. Plaintiff filed with the Treasurer a  document and did not use the word “demand.”

The Court held that, “because plaintiff conveyed to the Treasurer its assertion of its right to disbursement of the surplus funds, we conclude that plaintiff made a “demand” for purposes of MCL 600.3252.” Id. page 7

 

b.  Mortgagor’s demand needs to be “immediately” paid?

Purchaser argued that the Sheriff should have paid “immediately upon demand” and disregarded the junior mortgage holder. Basically a “you snooze you lose” argument.

The Court was not convinced, holding:

“Although plaintiff makes a valid point that an obligation to make payment “on demand”
generally requires immediacy, the specific facts of this case support the trial court’s ruling that the Treasurer was justified in delaying payment for seven days while it conducted its due diligence in evaluating plaintiff’s filing.” Id. Page 10.

 

In summary – if you are a Purchaser at foreclosure and have obtained the “mortgagor’s” rights – be careful to search the title for competing claims to that money.

You can’t rely on the fact that you immediately demand the funds to ultimately entitle you to them.

 

Questions? Comments?

E-mail: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

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

 

 

 

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. (Updated): You can check out my 40 second story here

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