My Thoughts on Social Enterprise: Am I Living Each Day with Conviction and Purpose?

Last week I mowed the lawn for the first time this year.

I didn’t have any gas to fill up the mower, so I just relied on the unknown amount of gas that had been in the mower over the winter.

As I was mowing the back yard, the largest portion of my lawn, I kept wondering – is this gas going to last the entire lawn? I really had no idea.

5.24

I like mowing the lawn because it gets me thinking outside of myself.

My thoughts shifted to a friend who had unexpectedly passed away in February. My friend was the same age as me, 37, he was in excellent health, married with young children. He died suddenly of a heart attack while vacationing with his family.

 

 

 

 

I am sure my friend had no idea that morning he woke up on vacation, that it would be his last on earth.

 

Mowing the lawn without knowing how much gas was in the tank reminded me of how none of us are promised tomorrow.

I had no idea when my mower was out of gas.

None of us knows when we will breathe our last breath.

It gave me pause to ask myself:

am I living each day with conviction and purpose?

am I living each day for what really matters?

 

I think we all could benefit from this “eternal” or “purposeful” mindset.

 

This “purposeful mindset”  is one reason why I love social entrepreneurs:

Those in business who are purposeful in using their business as a force for good.

 

And it is why I am excited about the proposed Benefit Corporation laws that have once again been introduced in the State Legislature.

 

My call to you:
Be purposeful.

Be eternally minded.

 

Questions? Comments?

Jeshua@dwlawpc.com

http://www.dwlawpc.com

Connect with me on Twitter: @JeshuaTLauka

 

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Small Businesses and Startups: What you Don’t Know Can Hurt You.

It is truly starting to feel like summer in downtown Grand Rapids! This was the scene today from my office.

5.17.18

 

Summer is coming fast and so is Detroit Startup Week. Scheduled from June 18-22.

 

According to its website, Startup week is:

“A week long celebration of Detroit’s entrepreneurs. Volunteer-led and completely free for attendees, we are aiming to create a community driven event that builds a stronger startup ecosystem. Startup Week is held in dozens of cities around the world.”

 

Crain’s Detroit reported this week that the venue will be moved to outdoors where a crowd of 8,000 – 10,000 is expected, up from last year’s 6,500.

Crain’s reports that Startup week will consist of similiar “weeklong collection of panel discussions, speeches, activities, networking and competitions is bringing back its women-tailored entrepreneur events.”

Last year the week kicked off with Detroit’s Small Business Legal Academy.

I think it is no secret – that startup businesses would do well to get some basic legal  during their business startup

 

I had a client just yesterday send me this e-mail, below (unprompted) which I was given permission to share – it is extremely on point:

 

“I don’t think you understand how valuable your assistance is. A small guy like me, without you, would sign whatever they put in front of me and get into big trouble because of that someday.  The problem is that most small businesses don’t understand how critical legal review is either.” – client

 

The reality is that there are a host of legal areas that can turn into pitfalls for startup businesses – over the years I have written on quite a few of those areas, including:

Terms and Conditions in Contracts

Non-Competition Agreements

Entity Formation and Personal Liability

Personal Guarantees

 

Cash flow is a barrier for startups. This doesn’t mean you should avoid educating yourself on the legal issues affecting your business.

Take advantage of the resources available.

Consult with an attorney – Particularly law firms friendly to startup businesses.

 

e-mail: Jeshua@dwlawpc.com

www.dwlawpc.com

twitter: @JeshuaTLauka

 

Real Estate Law Update: The Most Vulnerable Are Affected in an Affordable Housing Crisis.

Today, is a gray rainy cold day in Grand Rapids, Michigan.

Yesterday, like most every Thursday during the school year, I spend the noon hour with an elementary school-aged kid in one of the most economically depressed school districts in Grand Rapids, Michigan.

5.11

 

Over the last 4 or 5 years I have had 4 different students that I mentored.

Inevitably, they all move. Their families end up getting evicted, become homeless, or just leave to find new housing that they can afford.

 

Poverty in your Backyard

If you live in West Michigan, I urge you to pause and consider the poverty and vulnerability that exists in your own backyard. It is astounding to me that just a 15 minute drive from the suburbs kids are experiencing hunger and homelessness.

Right now.

It is no secret that Grand Rapids is experiencing an Affordable Housing Crisis.

 

The American Bar Association Journal reported recently that nearly 1 million U.S. households were ordered evicted in 2016. 

 

At the school where I mentor, the stories that I hear about infestations are sad.

Kids talk about roaches, bed bugs, mice.

Particularly, I hear a sense of dread about bed bugs.

I have previously blogged about some proposed Michigan legislation that would establish rights and duties concerning bed bug infestation in residential Landlord Tenant relationships.

 

Beg Bug Legislation.

One June 9th  2017 Michigan House Bill 4719 was introduced – by Representative Brandt Iden -himself a Developer and Property Manager in South West Michigan. check out the text here – the Bill would amend the Michigan statute governing landlord tenant relationships to include addressing the control of certain pests – including bed bugs.

 

Update

There has been no noticeable progress and this Bill appears to be dead. The House Fiscal Agency prepared its legislative analysis back in October 2017 – you can check it out here for details

 

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 and provide educational literature about bed bug infestations to new tenants.

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 begin control and schedule inspections of adjoining rental units.

4. Limits damages against Landlord for infestations unless caused by Landlord’s 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 was referred to the Committee on Law and Justice.

Something that the legislative analysis highlights –

“Notwithstanding any other provision of the Landlord-Tenant Act, the landlord and tenant could agree in writing (by hard copy) or electronic mail how responsibility would be assigned for costs resulting from an infestation, including, but not limited to, costs of
control or treatment.

This would provide some discretion among the parties to craft a resolution.

 

 

Michigan Poverty  Law Program’s Opposition

The House Law and Justice Committee met in October 2017.  The Apartment Association and Property Management Association affirmed its support of the Bill. The Michigan Poverty Law Program testified in opposition to the Bill.

You can review the Michigan Poverty Law’s written statement in opposition here

The Poverty Law Program acknowledged in its remarks that bed bugs are a serious problem in many communities, but opines that this Bill is not the answer.

Bedbug infestation is a problem. It can cause tenants problems, particularly in lower income housing. As reference, I would highly recommend reading Matthew Desmond’s book “Evicted” It is no secret that Michigan, particularly Kent County, is experiencing an Affordable Housing Crisis.  Further, unhappy tenants who withhold rent can cause landlord problems that end up in court.

 

In my opinion, this type of bill could provide clarity to landlords and tenants on their reciprocal duties and rights in such circumstances. It could also provide them flexibility to come up with a resolution to get rid of any infestations.

I am grateful for those like the Michigan Poverty Law Program who are advocating for the vulnerable in our communities – people like the kids I mentor every week.

I would also call on opponents of this Bill to propose a solution.  If the Bill proposed back in June 2017 is not good policy, then please propose one that you believe is good policy.

 

 

 

Questions? Comments?

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

Business Law update: Michigan Senate to Take up “Pyramid Promotional Scheme Act”

 

It is a rainy day in Grand Rapids, today. I took this photo of Lyons Street – showing the Amway Grand Plaza and the Windquest Building.

Speaking of Amway and Windquest, the Michigan House passed a Bill that would benefit Amway’s direct sales business.

5.3.18

 

The Michigan legislature has been busy proposing some interesting laws that affect business.  I posted a few days ago on the recent BCorp legislation. 

The Legislature also apparently wants to clarify that direct selling companies like Amway are not within the definition of pyramid schemes.

The Michigan House recently passed four bills that would create a new Act known as the Pyramid Promotional Scheme Act. 

Those Bills appear to address the question: what is a pyramid scheme v.s. what is a perfectly legal direct selling business.

Not surprising, the following companies were in support of the Bills:

Direct Selling Association
Amway
American Communications Network
Mary Kay, Inc.
Southwestern Advantage

 

According to an Article published by U.S. World News 

“The new classification more obviously sets distinctions between pyramid schemes and traditional direct selling companies such as Amway, which testified in support of the bill. The legislation exempts operations that repurchase unsold inventory from participants at no less than 90 percent of the original cost.”

the Bills would create a new Act known as the Pyramid Promotional Scheme Act, amend the criminal code, as well as the Michigan Consumer Protection Act.

For more detailed information you can check out the House Fiscal Agency’s Analysis of these 4 bills.

According to the HFA this legislation is intended:

“to more clearly define a pyramid promotion scheme and provide for the attorney general to investigate and prosecute when violations are found”

 

Stiff Penalties

According to the new Act:

“Any person that promoted a pyramid promotional scheme would be guilty of a felony
punishable by imprisonment for not more than 7 years or a fine of not more than $10,000 (per violation), or both.”

 

With penalties this severe, it is understandable why certain companies would want to insure they are clearly on the right side of the law.

 

What’s Next.

Next week the State Senate Commerce Committee will be taking on these four bills.

The Meeting will be held on Wednesday, May 9 at 9:00 am in Lansing.

This could result in a fast track course for this new Act.

Questions? Comments?

Jeshua@dwlawpc.com

http://www.dwlawpc.com

Connect with me on Twitter: @JeshuaTLauka

 

 

 

Michigan is Back Trending Towards Social Entrepreneurship: April 24, 2018 Benefit Corporation Legislation Proposed.

April 30, 2018 3 comments

Good morning! Downtown Grand Rapids is starting to look and feel like spring. The trees are just starting to get their leaves – I can’t wait for West Michigan to become green once again.

4.30

Speaking of new life – the legislature has breathed new life in 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 last week, on April 24, 2018, that would allow BCorps to be formed under Michigan Law.

 

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.

 

 

The latest proposed Bcorp Legislation

The current Bcorp legislation has some different language than the 2016 proposed language. One difference is the definition of “general public benefit” to “specific public benefit” which would be defined under the new Bcorp law as:

 

“SPECIFIC PUBLIC BENEFIT” INCLUDES, BUT IS NOT LIMITED TO,
ANY OF THE FOLLOWING:
(i) PROVIDING LOW-INCOME OR UNDERSERVED INDIVIDUALS OR
COMMUNITIES WITH BENEFICIAL PRODUCTS OR SERVICES.
(ii) PROMOTING ECONOMIC OPPORTUNITY FOR INDIVIDUALS OR
COMMUNITIES BEYOND THE CREATION OF JOBS IN THE NORMAL COURSE OF
BUSINESS.

(iii) PRESERVING THE ENVIRONMENT.
(iv) IMPROVING HUMAN HEALTH.
(v) PROMOTING THE ARTS, SCIENCES, OR ADVANCEMENT OF KNOWLEDGE.
(vi) INCREASING THE FLOW OF CAPITAL TO ENTITIES THAT HAVE A
PUBLIC BENEFIT PURPOSE

 

I still need to perform a more detailed review of the legislation to see how it differs from the prior iteration; and also how it compares to what other states are doing.

 

 

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.”

 

BCorp Certification is Trending in Michigan…

Over the last several years more and more local businesses have becoming Certified B Corps through BLabs. West Michigan has the most concentration of BCorp businesses in the State.

Check out a March article from Rapid Growth Media on the strong presence of Bcorps in West Michigan.

Headlines in Grand Rapids have brought attention to the need for businesses to ask the question: Am I working to build a better community?

 

B-Corp certification is one way (certainly not the only way) for businesses to hold themselves accountable to being a good community partner.

 

Why has it taken so long to get here?

 

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

Check out this handout from Rep Barnett several 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.

Trending Towards Social Entrepreneurship.

The trends all show that millennials and our up and coming workforce want to to be part of business as a force for good in our local community.

Questions? Comments?

Jeshua@dwlawpc.com

http://www.dwlawpc.com

Connect with me on Twitter: @JeshuaTLauka

Real Estate Law Update for Investors and Lenders: Court of Appeals Holds “Admittedly Curious Practice” “Expungement Affidavit” is Not Permitted under Statute.

April 20, 2018 Leave a comment

Happy Friday, all! I took this photo today – the sun is shining and it is starting to feel like spring.

4.20

 

 

In what was already a shocking day for a major lender, Wells Fargo, the Michigan Court of Appeals, in a case of binding precedent, invalidated an efficient tool lenders and investors routinely utilized to undo a foreclosure and revive a mortgage.

I just reviewed a published Court of Appeals decision that came out yesterday that will change the way investors, lenders, and mortgage holders set aside foreclosures.

 

 

The Case: Wilmington Savings Fund Society, et al. v Clare

The Facts are a bit complex, however they can be summarized as follows:

Defendant owned property in Hemlock, Michigan. The original lender held a mortgage on the Property; this mortgage was assigned numerous times. Id. page 2.

In 2010 lender’s assignee (“new lender”) foreclosed on the mortgage. After the redemption period expired, the new lender filed an action to evict the mortgagors/homeowners (“homeowners”).

After trial, the Court found in favor of the homeowners.

the court basically held that the new lender could not provide sufficient evidence that there was a proper chain of title passing on to new lender. Id.

In 2014 new lender’s servicer, Ocwen filed an “Affidavit of Expungement” – which stated that, among other things, the new lender:

agrees to set aside the above Sheriff’s Deed, making it void and of no force or effect, thus reinstating and reviving the above mortgage and Note”  Id.

 

Expungement Affidavit

The Expungement Affidavit has been a common tool used by lenders/mortgage holders  who have foreclosed on mortgages to record an affidavit that would, in theory, and relying on MCL 565.41a, set aside the foreclosure sale, sheriff’s deed, and reinstate the underlying mortgage. See Id, page 6.

The Sixth Circuit Court of Appeals indicated that this is a “admittedly curious practice” other states with similar statutes have not interpreted the statute to allow the affidavit to be used in this way. Id. Citing Wuori v Wilmington Savings Fund Society, 666 Fed Appx 506, 510 (CA 2016).

 

The Court of Appeals agreed and held, as an issue of first impression:

“a Party cannot set aside a foreclosure sale simply through the unilateral filing of an expungement affidavit.” Wilmington, Page 5.

The Court analyzed the statute and held “the plain language of the statute does not include any indication that an affidavit may be used to create a condition. It necessarily follows that a party cannot unilaterally revoke a foreclosure sale by recording an affidavit that is itself the claimed condition.” Id. pg 6. (emphasis in the original).

 

 

Lesson

So, investors and lenders have one less tool at their disposal for what was an efficient method to clear up title if there was a problem with foreclosure.  Since this case is binding precedent, lenders showed take note of this.

 

 

 

 

 

e-mail: Jeshua@dwlawpc.com

Twitter: @JeshuaTLauka

www.dwlawpc.com

 

 

 

 

 

Real Estate Law Update: Evictions, Affordable Housing, Harassment provide an Opportunity for Investors to Shine Brightly.

April 18, 2018 Leave a comment

I wrote my last post right before leaving for a week on the beautiful, warm beaches of Destin, Florida. We came back to snow. In Spring.

Michigan has experienced some awful weather in the last week. I hope today is the turning point. Most of the snow is melting, as you can see from today’s photo.

The headline of my post says it all:

4.18Owning and Managing Real Estate is uniquely challenging.

 

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

 

I see the affects of a lack of affordable housing on the most vulnerable in our population.

I see it when mentoring at a local school, or serving at Mel Trotter Ministries.

 

 

 

If you own or manage investment real estate, you are involved in messy business.

 

And there are many investors who are simply part of the problem.

 

DOJ Sues Landlord for Sexual Harassment Allegations

Just one week ago in a recent press release  the Department of Justice, announced that it filed suit against Owners and Managers related to allegations of sexual harassment in New York..

According to the press release, the owner and manager:

 since at least 1990, Douglas Waterbury has sexually harassed numerous women who have lived in or inquired about the defendants’ residential rental properties.  The suit alleges that Waterbury’s conduct has included demanding or pressuring female tenants and potential tenants to engage in sex acts with him in order to obtain or keep rental housing; subjecting female tenants and potential tenants to unwelcome sexual contact and groping; offering to grant tangible housing benefits, such as reduced rent or deposit payments, in exchange for sex acts; refusing needed maintenance services or otherwise taking adverse housing actions against female tenants who refused his harassment; and making unwelcome sexual comments and advances.  The conduct alleged in this complaint is egregious, ranging from demands to exchange sex for rent, to unwanted sexual encounters.

 

I believe that is why, at least in West Michigan, there is an opportunity for real estate investors to stand out.  To shine.

 

“Evicted” – Lack of Affordable Housing

I have written many times about West Michigan’s Affordable Housing Crisis.

Last week the ABAJournal posted an article on extensive research performed by Matthew Desmond, author of “Evicted”

According to the research, evictions are much more prevalent than first believed. This is not surprising to me, given the lack of housing for the most vulnerable population in West Michigan.

As the ABAJournal article notes, the consequences of evictions are many:

“…Schools reroute buses to homeless shelters, job applicants have no answer when a form requires an address, and families who don’t have an address to receive renewal notices lose public lose food stamps and Medicaid benefits. Some people take years to recover, and the eviction remains on their records, causing problems when they look for future housing.”

 

Shining Brightly as part of the Solution.

West Michigan is attempting to address the Affordable Housing Crisis. This is a community wide problem that will require an entire community to come around it.

At the beginning of this year, Kent County implemented an “Eviction Prevention Program” – to keep vulnerable people in housing. You can learn more about that here.

Local non-profits and churches in partnership with Luis Palau Association are implementing One West Michigan intended to mobilize the community, churches and non-profits to come together to address those issues most pressing – this includes Affordable Housing.

 

Finally, as I’ve written before – I believe the Affordable Housing Crisis that we find ourselves in provides a unique opportunity for Real Estate Investors to be different.

To shine brightly.

 

 

 

e-mail: Jeshua@dwlawpc.com

Twitter: @JeshuaTLauka

www.dwlawpc.com