AVOIDING REHAB INVESTOR PITFALLS

In the course of representing real estate investors, particularly those just entering into the business, some completely avoidable title and zoning problems consistently arise, usually as a result of the investors’ desire to minimize acquisition closing costs. Depending upon the exact nature of the problem, solutions – IF feasible – can take months or thousands of dollars to cure and have the potential for significant financial loss.
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I. COMMON TITLE, ZONING, AND BUILDING CODE PROBLEMS: Among the most frequent problems arising are the following:
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1. Unanticipated encroachments, including discoveries in older neighborhoods with narrow lots that the principal dwelling encroaches onto the adjoining lot.
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2. Non-conforming lots, especially in older neighborhoods subdivided prior to the 1950 that do not meet the current minimum lot size requirements of the current Zoning Ordinance.
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4. Unanticipated rehab/repair costs due to current building code and fire code requirements (e.g., nonconforming stairways, exterior wall fire blocking; fire retardant siding and window placement).
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II. WHAT PREVENTIVE AND/OR CORRECTIVE MEASURES ARE AVAILABLE? The majority of the above described problems can be avoided through proper due diligence. In the worse case, if a problem is not avoided there can often be solutions, albeit it sometimes costly and/or time consuming.
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A. ENCROACHMENTS.
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1. Best Solution: Obtain a physical survey. The easiest way to avoid acquiring a property that either contains improvements that encroach onto an adjoining lot or that have problematic encroachments from adjacent properties is to obtain a physical survey prior to closing which will disclose any encroachment issues which then become a title defect to be resolved by the seller. If the problem is significant and cannot be resolved, then the investor will be in a position to terminate the purchase contract and receive a refund of the earnest money deposit. The cost of a typical residential lot survey is between $250 and $300.
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2. Post Closing Solutions. If a survey is not obtained at the time the investor’s purchase, the problem typically arises when the rehab is complete and purchaser of the rehabbed property obtains a survey prior to closing of the out sale. If the survey shows an encroachment problem, there are several possible solutions:
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(A) Removal of the Encroachment. This may or may not be feasible. If the encroachment involves a house or other significant structure encroaching onto a neighboring lot or parcel, moving the problem structure is most likely not feasible.
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(B) Negotiation of an Encroachment Easement. This will involve negotiations with the adjacent landowner to try to reach an acceptable agreement that will allow the encroaching structure to remain in place with the permission and agreement of adjacent landowner. Typically this cure also involves attorney fees for document preparation and, more importantly, payment of some type of fee to the adjoining landowner if the investor owned improvements encroach on to the adjoining lot. Obviously, the cost of a physical survey would have been far less expensive in most instances.
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(C) A Suit to Quiet Title Based on Adverse Possession. Provided the encroachment has existed for at least fifteen (15) years, the last recourse is to bring a suit to quiet title based adverse possession. This is the worse case scenario and is generally used only if (1) the dwelling or other major improvement on investor’s property encroaches onto an adjacent property, and (2) the investor and previous owners of the investor property can meet the statutorily required 15 year period of exclusive, actual, continued possession, under a colorable claim of title.
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In a relatively recent Virginia Supreme Court decision, Quatannens, et al v. Tyrrell. (Record No. 032562 - September 24, 2004), involving a residence and improvements in Alexandria, Virginia that encroached onto the adjacent lot a distance of 100 feet along the lot line varying in width from 8 to 20 inches, the Court found that the owners of the encroaching property met this standard and had acquired title to the land under the encroaching improvements. The strip of land contained a small portion of a room of the Quatannens' house, part of a brick walkway, part of a paved parking area, and one side of a brick arch over the walkway at the front of the Quatannens' house, all of which have existed since at least 1976. Needless to say the costs and extended period of time involved in litigation made the cost of a physical survey look minute.
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B. ZONING AND BUILDING CODE ISSUES A number of local cities have seen a trend in more and more rehabilitation and flipping of homes in older, often lower priced, neighborhoods that were subdivided shortly after 1900 to 1920. The neighborhoods frequently contain long narrow lots, often only 25 or 30 feet in width. Because of various revisions to the Comprehensive Zoning Ordinances and a trend of requiring larger lot sizes under the various residential zoning classifications in most cities, an increasing number of investors run the risk of discovering that they have purchased a property only to be prohibited from rehabbing and reselling the property as planned. Similarly, homes built in this time period frequently do not meet current day building code requirements and, depending upon the magnitude of the intended rehab project, may have to be brought up to current code standards. Obviously, this has the potential to be a very expensive proposition.

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1. Best Solution. Utilize a Purchase Contract that affords the purchaser numerous rights to conduct a due diligence investigation within a prescribed period and the right to terminate the contract if the due diligence investigation proves unsatisfactory. The goal is not to make an “AS IS” seller do repairs, but rather to give the purchaser a way out of the contract if the property has structural and/or zoning and building code problems. If a seller will not agree to this type of provision, the investor should be forewarned that the seller may know that the property has major problems.

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For zoning and permitted use issues, investors buying property in one of these older, narrow lot neighborhoods, the due diligence investigation should ALWAYS include verifying that the property is a properly grandfathered non-conforming lot AND that the magnitude of the proposed rehab work will not trigger a prohibition against the restoration of the property.

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The best means of doing satisfying the first phase of this test is to obtain a determination letter from the Zoning Department of the applicable city confirming that the property is either (1) a permitted conforming lot/use, or (2) a permitted non-conforming lot/use.

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Even if the property is a permitted nonconforming lot/or use, the investor needs to go on to the second step of inquiry, namely will the magnitude of the proposed rehab work trigger a restriction against such work on a nonconforming property. At a minimum, the investor should calculate the realistic cost of the proposed work and then compare that figure to the current assessed value of the property. If the cost of the work exceeds 50% of the assessed value of the property – 30% in the case of Portsmouth – the investor may not be able to secure a building permit for the proposed changes without, at minimum, being required to bring the structure up to current building code requirements. This requirement, obviously, could greatly increase the cost of rehabbing the property.

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By way of example, the City of Norfolk defines a non-conforming lot and a nonconforming use as follows:

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Lot, nonconforming. A lot which lawfully existed prior to the adoption, revision, or amendment of this ordinance, but which fails by reason of such adoption, revision, or amendment to conform to the lot regulations of the district in which it is located.

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Nonconforming use. A use lawfully established prior to and being conducted on the effective date of these regulations or any amendment hereto which renders the use nonconforming, which does not conform to the requirements of these regulations for the Zoning District in which it is located.

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The City of Norfolk Zoning Ordinance also provides as follows concerning alterations and improvements to nonconforming structures (most other area cities have similar definitions and provisions on nonconforming lots and uses):

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12-3 Structural alterations prohibited; exceptions. A nonconforming structure may not be enlarged or structurally altered in a manner which increases the nonconforming condition, unless such alteration or enlargement conforms to the following provisions:
(a) The total structure as enlarged or altered does not exceed the maximum density or intensity limit for the applicable district; and
(b) The use of the structure is conforming; and
(c) The property owner or developer applies as provided in section 12-5.1 below and obtains a determination of "no adverse impact" based on the following:
(1) The proposed uses are compatible, and
(2) The intensity of development on the site of the proposed expansion will not increase more than ten percent after the proposed expansion; and
(3) The expansion will not result in the reduction below acceptable levels in the lot coverage ratio, off-street parking, landscaping, or the increase in signs above acceptable levels.
(d) Structural alteration for structures located in the Historical and Cultural Conservation Districts shall be as allowed in Article II, Chapter 9, Section 9-0.8.
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12-4 Expansion of nonconforming uses. Nonconforming uses may be expanded only if approved as special exceptions pursuant to the standards and procedures set forth in Article V, Chapter 25. No application for a special exception to expand a nonconforming use shall be approved unless the applicant can demonstrate that there will be no adverse impact within the Zoning District in accordance with the requirements of section 12-5 below.

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12-5 Determination of impact of expansion of nonconforming structures and uses.
12-5.1 Applications for "no adverse impact" status. Applicants seeking to apply for "no adverse impact" status must submit to the division of land use regulation a plan, drawn to scale, detailing the following information:
(a) All existing and proposed uses on and adjacent to the site on which the nonconforming use or structure is located.
(b) All existing and proposed structures, yards, utility easements, rights-of-way, water bodies, floodplains and wooded areas on and adjacent to the site.
(c) The number of square feet of all buildings and structures on the site of the proposed expansion, before and after the proposed expansion.
(d) The density (in terms of dwelling units per acre) and the intensity (in terms of floor area ratio or gross square footage) before and after the proposed expansion.
(e) The building coverage ratio before and after the proposed expansion.
(f) The number of parking spaces, total square feet of signs on the site, and square feet of landscaping or buffers, before and after the proposed expansion.

12-5.2 Finding of "no adverse impact"; approval of expansion. The city council, after review of the recommendation of the city planning commission, may make a finding of "no adverse impact" and approve the expansion of a nonconforming use or structure based on the general standards and considerations for special exceptions found in section 25-7.

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12-6 Change of use. A nonconforming use may be changed as follows:
(a) A nonconforming use may be changed to a permitted use or special exception use for the Zoning District in which the property is located. If the change of use is to a special exception use, a special exception approval shall be required pursuant to Article V, Chapter 25.
(b) A nonconforming use may also be changed to another nonconforming use found only in the same category of Zoning Districts (e.g., residential, office/business, commercial, industrial) and only if approved as a special exception pursuant to the standards and procedures set forth in Article V, Chapter 25.

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12-7 Ordinary repair and maintenance of nonconforming structures permitted. Ordinary repairs and maintenance may be made to a nonconforming structure. The building official shall determine what constitutes "ordinary repairs and maintenance" in accordance with the Uniform Statewide Building Code.

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12-8 Restoration or removal of damaged nonconforming structures.
12-8.1 Restoration. If a nonconforming structure is destroyed or damaged by a fire, flood, hurricane, vandalism, or similar abnormal and identifiable event, and the cost of restoring the structure to its condition immediately prior to the event does not exceed 50 percent of the current assessed value of the entire structure, then the structure may be restored to its original nonconforming condition, provided that a building permit is secured, reconstruction is started within 180 days from the date of the damage, and such reconstruction is diligently prosecuted to completion. The building official shall determine the cost of restoration.

12-8.2 Removal. If a nonconforming structure is destroyed or damaged by a fire, flood, hurricane, vandalism, or similar abnormal and identifiable event, and the cost of restoring the structure to its condition immediately prior to the event exceeds 50 percent of the current assessed value of the entire structure, then the structure shall be removed unless the restored structure, and the use thereof, would conform to all requirements of the Zoning District in which it is located.

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12-8.3 State of emergency declaration. In the event that a state of emergency is declared by the President of the United States or the Governor of the Commonwealth of Virginia, nonconforming structures damaged to an extent that the cost of restoring the structure to its condition immediately prior to the event exceeds 50 percent of the current assessed value of the entire structure may be restored to its original condition without conforming to current regulations on yards, height limitations or parking regulations. In no case shall the degree of nonconformity existing at the time of the state of emergency be increased. All other zoning regulations including but not limited to, use restrictions, density provisions and flood plain regulations shall apply.

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12-9 Discontinuation of nonconforming uses. If a nonconforming use is discontinued for a period of two years, then that use shall not be renewed or reestablished and any subsequent use of the lot or structure shall conform to the use regulations of the Zoning District in which it is located.
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The only exception to the foregoing restrictions is pursuant to a newly enacted amendment to Section 15.2-2307, Code of Virginia of 1950, as amended, which became effective on July 1, 2006. Under this statutory provision, if the damage or destruction of a nonconforming property is due to natural disaster or an act of God, regardless of the cost, the owner my restore the structure to its original nonconforming condition within two (2) years of the date of damage or destruction, PROVIDED, the repair, rebuilding, and replacement work must comply with the then current building code requirements

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2. Post Closing Solutions. If an investor finds after closing that his/her newly acquired property is located on a non-conforming lot and/or may be a nonconforming use, the situation is not necessarily hopeless. One should ALWAYS meet in person with the Zoning and Building Code officials of the applicable city. Before doing so, the investor should verify (1) when the nonconforming lot was subdivided, (2) when did the use first begin and did it predate the adoption of the Zoning Ordinance or the amendment thereto changing the zoning district or lot size requirements for the district in which the lot is located, (3) was there ever common ownership of an adjoining lot on which the original structure has been removed, and (4) was there a cessation of the use for more than two (2) years. The City’s position will be that the burden of proof on these issues is on the property owner, but (A) pleading hardship and (B) documenting that the rehab work will be first class can have an influence on the City’s willingness to work with the investor. City official can be decidedly more helpful when convinced that an investor did not have notice of a nonconformity problem and that the investor is not a “coat of paint and cheap carpet replacement” rehabber.

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The first question is easily met by confirming the date the subdivision plat creating the lot was recorded. In the older, historic neighborhoods, these subdivisions virtually always predate the Zoning Ordinance. The second question can often be answered through city tax assessment records which generally show the date a structure was built. If this does not work, generally the building codes offices will have information on when the structure was built. The third question is one that often is not easily answered without doing some investigative work and/or additional title work, but can be very important. The last question likewise is usually more difficult to establish, but one point to begin is with water and electric billing histories.

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III. CONCLUSION. While many of the above described pitfalls can be cured post closing, the best approach is to avoid them from the outset by proper due diligence, spending some extra money for surveys and owners title insurance, and by working with experienced legal counsel.

BASIC STEPS AND CONSIDERATIONS FOR A SECTION 1031 EXCHANGE

Introduction: A possible tax deferred exchange under §1031 of the Internal Revenue Code of 1986, as amended (“IRC”), is something every seller who has not used the property to be sold as his/her principal residence for two or more of the past five years may wish to consider as a means to avoid capital gains tax. A successful tax deferred exchange under §1031, however, requires some basic pre-planning and coordination as well as the use of a qualified intermediary in order to prevent any deemed or constructive receipt of the sales proceeds from the relinquished property which would destroy the tax deferral of such sale. This summary of the steps involved in a 1031 exchange provides a preliminary overview and does not address all issues involved in a 1031 exchange and is not meant to replace the requirement that a would be exchanger should always review the entire transaction with tax and/or legal advisors. Likewise, it does not address the issues of so-called reverse exchanges and other variations to the typical sale and purchase sequence. This said, the following is an outline of the steps in a 1031 tax deferred exchange of real property.
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1. Basic Requirements: To qualify for a tax deferred exchange, a few basic elements must be satisfied: (a) both the relinquished and replacement properties must be like kind real property - i.e., held for rental/investment; (b) typically, the taxpayer seeking to defer tax is one or more individual taxpayers reporting their real estate transactions on their individual Form 1040 tax returns (although entities such as limited liability companies can utilize 1031 exchange procedures); (c) the relinquished and replacement property are both within the United States of America; and (d) a qualified intermediary and qualified trust accounts are utilized for the proceeds of the relinquished property to ensure that the taxpayer(s) are not in actual or constructive receipt of the sales proceeds of the relinquished property.
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2. Sales Contract for the Relinquished Property: The first step in a tax deferred exchange is to execute an assignable sales contract that describes the seller as the exchanger “or assigns.” In addition, it is also advisable to include a “cooperation clause” in the sales contract. An example of such a clause is as follows:
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Tax Deferred Exchange by Seller. Seller may structure the transfer of the Property as a tax deferred exchange to Seller pursuant to Section 1031 of the Internal Revenue Code, and Purchaser agrees to cooperate with Seller, and to take such action as Seller may reasonably request in order to consummate such transfer. Seller is granted the authority to transfer its rights to this Agreement but not its obligations under an Assignment of Rights Under Contract or similar document to be signed by a qualified intermediary to be selected by the Seller, such assignment to be acknowledged by Purchaser prior to passing title and ownership. At the request of Seller, Purchaser will sign the written Assignment of Rights Under Contract referred to in this paragraph with the clear understanding that all obligations under the Agreement remain with Seller and that Seller shall directly deed the legal title to the Property over to the Purchaser as noted in the agreements between Seller and the qualified intermediary. In connection with the foregoing, Purchaser will have no obligation to (a) acquire or enter into the chain of title to any property other than the Property, or (b) incur any cost, liability or obligations of any nature whatsoever as a result of its limited participation in the exchange for which Purchaser would not be reimbursed by Seller at Closing.

As noted below, in contracting to purchase the replacement property, similar provisions should be utilized.
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3. Exchange documents: Once the sale contract is executed, the Seller must enter into exchange documents for the relinquished property sale pursuant to which among other things (a) the sale contract is assigned by the Seller to the qualified intermediary, (b) the Purchaser acknowledges the assignment of the sales contract to the qualified intermediary, (c) the qualified intermediary agrees to receive the sales proceeds and hold the same pending their application to the purchase price of the replacement property, (d) Seller agrees to deed the relinquished property directly to the Purchaser, and (e) the Seller agrees to indemnify the qualified intermediary from loss, damage or liability except for that arising from the qualified intermediary’s breach of its obligations under the exchange documents.
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4. Relinquished Property Sale Closes: Pursuant to the assignment agreement and exchange documents, the Seller directly deeds the relinquished property to the Purchaser and the sale proceeds for the relinquished property are transferred directly to the qualified intermediary. Note: the settlement statement will be signed by the qualified intermediary, as seller, not the exchanger.
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5. 45-Day Identification Period & 180-Day Exchange Period The timelines for the 45-day identification period and 180-day (or the date the tax return is due, whichever is earlier) period for closing on the purchase of the replacement property begins on the date the sale of the relinquished property closes. The 180-day exchange period establishes a deadline that the purchase of the replacement property MUST be closed not later than 180 days from the closing date of the sale of the relinquished property.
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6. Identification of the Replacement Property (or Properties): The Seller/Exchanger must properly identify replacement property (or properties where replacement properties of lesser values than the relinquished property are to be acquired) by midnight of the 45th day after the closing date of the sale of the relinquished property. This means that the Seller/Exchanger must deliver written identification of the replacement property to the qualified intermediary by midnight of the 45th day after the closing date of the sale of the relinquished property is forwarded to API.
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7. Purchase Contract for the Replacement Property. The Exchanger must execute an assignable purchase sales contract that describes the purchaser as the exchanger “or assigns.” In addition, it is also advisable to include a “cooperation clause” in the purchase contract similar to that described, above, for the sales contract.
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8. Coordinate With Qualified Intermediary: Once the purchase contract for the replacement property (or properties) has been executed, the exchanger must notify the qualified intermediary of the terms of the purchase contract and assign the same to the qualified intermediary. The qualified intermediary will execute the exchange documents for purchase and prepare to apply the funds held from the sale of the relinquished property against the purchase price of the replacement property at settlement on the replacement property.
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9. Conclusion of Exchange: At closing of the purchase of the replacement property, the qualified intermediary will direct the seller of the relinquished property to deed title thereto directly to the exchanger and will apply the funds derived from the sale of the relinquished property against the amount owed from the buyer on the settlement statement. Note: the settlement statement will be signed by the qualified intermediary, as buyer, not the exchanger.
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Conclusion: When properly done, a Section 1031 tax deferred exchange can be a very powerful tool to defer tax consequences. However, to avoid potential pitfalls and to ensure that appropriate exchange documentation is utilized and that a proper qualified intermediary is used, would be exchangers should be sure to consult their with tax and/or legal advisors. Any deemed receipt of sale proceeds, a failure to identify replacement property within the statutory 45-day period, or a failure to consummate the purchase of the replacement property with in the 180-day exchange period can be fatal.

Birth Certificate Amendment - Sex Reassignment Surgery

From time to time transgender clients contact the office for assistance in securing an amendment of their birth certificate to reflect a sex change effected through sex reassignment surgery. In Virginia, the process is actually surprisingly straight forward even though Virginia is not what one would describe as a gay friendly state. The process is contemplated by Section 32.1-269.E., Code of Virginia of 1950, as amended, which reads in relevant part as follows:

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§ 32.1-269. Amending vital records; change of name; acknowledgment of paternity; change of sex.

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E. Upon receipt of a certified copy of an order of a court of competent jurisdiction indicating that the sex of an individual has been changed by medical procedure and upon request of such person, the State Registrar shall amend such person's certificate of birth to show the change of sex and, if a certified copy of a court order changing the person's name is submitted, to show a new name.

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The procedure for entry of a court order is as follows: A petition for an order of legal sex change must be submitted to the Circuit Court of the City or County of the petitioner's residence, supported by (1) documentation of the petitioner's prior name change, and (2) certified evidence of the completion of sex reassignment surgery together with a doctor's recommendation for the amendment of the petitioner's birth certificate. Inasmuch as there is no approved court form for this type of petition, it will be necessary to secure the services of an attorney who can prepare the necessary petition and requested final order. Unfortunately, some attorneys have refused to assist transgender clients in the petition process.

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For individuals born outside of Virginia, the second step of the process will be to file appropriate paperwork with the Department of Vital Records of the state of the petitioner's state of birth. In some instances a further order from a court in that state - e.g., Florida - may be required to domesticate the Virginia court order in order for the out of state birth certificate to be amended. Since states vary, it is essential to review the particular requirements for states other than Virginia.

REQUIREMENTS FOR DOCUMENTS TO BE IN RECORDABLE FORM

A. Every writing authorized by law to be recorded, with all certificates, plats, schedules or other papers thereto annexed or thereon endorsed, upon payment of fees for the same and the tax thereon, if any, shall, when admitted to record, be recorded by or under the direction of the clerk on such media as are prescribed by § 17.1-239. However, the clerk has the authority to reject any writing for filing or recordation unless:
(i) Each individual's surname only, where it first appears in the writing, is underscored or written entirely in capital letters,
(ii) Each page of the instrument or writing is numbered,
(iii) The Code section under which any exemption from recordation taxes is claimed is clearly stated on the face of the writing,
(iv) The names of all grantors and grantees are listed as required by §§ 55-48 and 55-58, and if a cover sheet is used pursuant to § 17.1-227.1, that the names of all grantors and grantees on the face of such writing are the same on the cover sheet, and
(v) The first page of the document bears an entry showing the name of either the person or entity who drafted the instrument, except that papers or documents prepared outside of the Commonwealth shall be recorded without such an entry.

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Such writing, once recorded, shall be returned to the grantee unless otherwise indicated clearly on the face of the writing including an appropriate current address to which such writing shall be returned.

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B. The attorney or party who prepares the writing for recordation shall ensure that the writing satisfies the requirements of subsection A and that (i) the social security number is removed from the writing prior to the instrument being submitted for recordation, (ii) a deed conveying not more than four residential dwelling units states on the first page of the document the name of the title insurance underwriter insuring such instrument or a statement that the existence of title insurance is unknown to the preparer.

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C. A document which appears on its face to have been properly notarized in accordance with the Virginia Notary Act (§ 47.1-1 et seq.) shall be presumed to have been notarized properly and may be recorded by the clerk.

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NOTE: Due to changes in the Virginia Code, a Notary may not notarize a signature on a document without notarial certificate wording on the same page as the signature unless the notarial certificate includes the name of each person whose signature is being notarized.

ESSENTIAL LEGAL DOCUMENTS FOR LGBT COUPLES

There are some things same-sex couples can and should do to provide for some of the legal protection automatically conferred on married couples. Unfortunately, far too many such couples fail to take the relatively simple steps to avoid the adverse and/or unexpected effects of current law.
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NECESSARY DOCUMENTS AND STEPS: There are some basic documents and steps that every unmarried couple and every same-sex couple should have prepared and duly signed. These include:

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Will - A will specifies how you wish your property to be distributed upon your death. In a will, you designate the person you wish to handle your estate -- your partner or another individual. Without one, your partner receives absolutely nothing. Pursuant to § 64.1-46 of the Virginia Code, anyone who is over the age of 18 years and not mentally incompetent may make a will and thereby dispose of any estate to which he shall be entitled, at his death, including any estate, right or interest to which the testator may be entitled at his death, notwithstanding he may become so entitled subsequently to the execution of the will. Inasmuch as neither § 64.1-46 or other provisions of the Virginia Code restrict permitted devisees to spouses or blood relatives, both unmarried heterosexual couples and same-sex couples may make wills leaving assets to their partners.

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Trust - A properly established and funded trust avoids publicly probating assets owned by the trust at the time of one’s death and is more difficult to challenge in court than a will. In addition, a trust can provide beneficiaries with creditor protection in certain circumstances. Properly structured, a trust can provide support for one’s surviving partner for the remainder of his or her life, with the remainder to pass to other relatives and designated beneficiaries, bypassing potential taxes associated with the surviving partner's estate. Chapter 4, Title 26 of the Virginia Code governing the appointment, qualification, resignation, removal of fiduciaries, including trustees, contains no provision restricting permitted trustees or trust beneficiaries to spouses or blood relatives. Therefore, both unmarried heterosexual couples and same-sex couples may create trusts naming their partners as beneficiaries in a manner that does not purport “to bestow the privileges or obligations of marriage.”
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Health Care Power of Attorney - A health care or medical power of attorney allows one’s partner regardless of gender to make medical decisions on your behalf in the event you are not able to do so due to incompetency or other incapacity. Properly drafted, a health care power of attorney can also ensure hospital visitation rights to the designated attorney-in-fact
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Advanced Medical Directive - § 54.1-2983 of the Virginia Code provides that any mentally competent adult may, at any time, make a written advance directive (i) authorizing the providing, withholding or withdrawal of life-prolonging procedures in the event such person should have a terminal condition, and (ii) appointing an agent to make health care decisions for the declarant under the circumstances stated in the advance directive if the declarant should be determined to be incapable of making an informed decision. Advance medical directives must be signed by the declarant in the presence of two subscribing witnesses who cannot be the spouse or blood relatives of the declarant.
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There is no statutory restriction that one’s agent must be a spouse or blood relative. Rather, §54.1-2982 of the Virginia Code provides that under any such advance medical directive, an agent means “an adult appointed by the declarant under an advance directive, executed or made in accordance with the provisions of § 54.1-2983, to make health care decisions for him. . ." Such authority includes visitation rights, provided the advance directive makes express provisions for visitation. Therefore, properly drafted and executed advanced medical directives by a same-sex couple should not be deemed to “bestow a privileges or obligations of marriage.”
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General/Business Power of Attorney - This form of power of attorney allows a member of either an unmarried couple or a same-sex couple to authorize their partner to handle their financial affairs in the event of disability or unavailability.
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Title on Deeds and Accounts - How title to property is held can effect both future ownership and tax liability. Joint tenancy with rights of survivorship, for example, will ensure that the surviving partner will have full ownership upon the death of the deceased partner and avoid ownership disputes with surviving blood relatives. However, it can create certain negative estate tax treatment depending on the size of one’s taxable estate. Historically, deeds creating a tenancy by the entirety have been reserved for husband and wife couples. In light of the Virginia Affirmation of Marriage Act cited above, such a deed conveying title to a same-sex couple even though validly married in another state such as Massachusetts would not be effective in Virginia.

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Child Care Power of Attorney - For couples with children who are not the natural or legally adopted children of both partners, it is critical that the non-parent partner be given a power of attorney that authorizes that parent to act on behalf of the natural/adoptive parent. The power of attorney should empower the non-parent partner to deal with medical treatment, schooling, and general care and custody matters.
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BENEFICIARY DESIGNATIONS: Most securities and retirement accounts provide for the designation of beneficiaries. These should be reviewed periodically to ensure that desired goals are achieved and also should include the designation of contingent beneficiaries to ensure the desired parties are named in the event of the death of the principal beneficiary.
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LIFE INSURANCE: Properly utilized, life insurance can provide funding for payment of estate taxes, outstanding mortgages, charitable trusts, education of minors, and other functions.

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NOTE: This article contains a general discussion of estate planning matters which vary greatly in asset structuring needs and potential tax liability based on the particular facts and circumstances of individuals and the nature of their assets. Therefore, it should not be relied upon as a substitute for individualized legal advice addressing one’s particular situation.

STEPS TO DOING A SHORT SALE

STEPS IN SHORT SALES: A short sale is another twist on a subject to transaction. However, instead of bringing the existing financing current and leaving it in place, the goal is to negotiate a discounted pay off with the lender. A "short sale" involves four basic steps.

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1. Gaining Control of Title; Authorization to Release Information. One of the most important steps in the short sales process is getting the deed. Without the deed, the homeowner can back out of the potential short sale even after you have spent hours working on their property. When the homeowner signs the deed over to you, now you control the property and you can go to work by calling the bank. If you cannot secure a deed, you must have a contract with the seller that specifies the terms of the transaction with a discounted mortgage pay off – e.g., closing is to be as soon as possible, but expressly contingent upon a successful short sale on terms approved by the buyer.

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The other essential document is a signed Authorization to Release Information signed by the sellers. Without one, the lender will NOT talk or otherwise discuss the seller’s loan with you.
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2. Contacting the Lender. When you call the lender, you never want to tell them you are an investor. This is one of the biggest mistakes rookies make and will almost always result in the lender not accepting short sales. Therefore, when you call the lender, to request a "short sales packet" or "workout package," indicate that you are the buyer or that you represent the homeowner. Sometimes they may ask if you are a real estate attorney. Just restate what you told them before. Then you'll want to request the "short sales packet" or "workout packet". When the packet arrives it will explain exactly what you need to make this short sales deal successful. Generally among the things you will need to document are distress concerning:
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(A) The distressed nature of the seller (see paragraph 3 below).
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(B) The property: list out all defects to the property and needed repairs to make it marketable (including price estimates). Photos of any major defects can speak volumes to a lender.
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(C) The neighborhood where the property is located: is there a crime problem? What are the number of days on market for sales that have occurred and are they below assessment and/or past sales? One web site that may help in checking comparables is http://www.zillow.com. The other option is to secure comparables through a realtor who is experienced working with investor properties. Remember that many of your big established real estate companies may NOT be familiar with short sales, so do your homework on any realtor you decide to use.
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(D) Itemize in detail the lender’s cost of not doing the short sale: (1) foreclose costs, (2) bankruptcy costs if the sellers file either a Chapter 7 or 13 under the Federal Bankruptcy Code, and (3) the costs the lender will face if it ends up bidding in the property at foreclosure: (A) repair costs, (B) costs of marketing and selling the property, including realtor commission, and (C) carrying costs, including insurance and real estate taxes.
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Lenders do not like to end up owning property, so the more data provided in 2.(B), (C) and (D), above, the more apprehensive the lender will be of holding out for a full payoff amount.

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3. Hardship Letter. A hardship letter tells the lender why the homeowner is not making their mortgage payments. If a job loss or family illness is the cause, explain it in detail and make the lender feel sympathetic, and seek to secure for the seller a Waiver of Deficiency – i.e., a no-collection agreement where the lender agrees to write off of any discounted balance and not pursue collection against the seller. The letter should suggest that the seller is contemplating filing bankruptcy, but would prefer to avoid doing so, if at all possible. Be prepared to provide documentation: sometimes lenders will request bank statement, pay stubs, income statements, and so on to document the hardship.

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Remember, you must be prepared to send them everything they ask for because if you don't, the short sale will not be accepted. They will almost always ask for a HUD-1 and a real estate purchase and sales agreement. Have your real estate attorney’s office prepare a draft HUD-1 and make sure that you have included all amounts payable by the seller for judgments, delinquent taxes, if any, and any other liens (e.g., homeowner association dues). Send everything the lender asks for back ASAP. It usually takes 3 weeks or more to get an answer back from the lender, so you can't afford to wait. If the foreclosure auction is approaching, you can ask to extend the auction which in most cases they will, if they know it is a legitimate offer.

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4. Broker's Price Opinion. Basically a real estate agent will come out and give their opinion on what the house is worth in the form of a Brokers Price Opinion ("BPO"). The key to short sales is the BPO. A glib letter will not suffice. The BPO needs to be documented and show supporting market time to sale and final sale information as available. You want to try everything you can to influence the BPO to come in as low as you can in order to induce the lender to discount the loan payoff.

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5. Letters of Recommendation. If you have successfully closed short sales previously, obtain a letter from the lenders involved that will help convince the current lender that you can deliver.

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6. How Much to Offer. Part of the answer to this question is a function of what you intend to do with the property. If the intent is to rehab it, then the offer should be calculated to allow for satisfactory rehab costs and a profit margin after sale. If the intent is to wholesale the deal, then the offer should be lower to build in an assignment fee and still leave in factors for rehab costs and a profit margin for the ultimate purchaser under the short sale.

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NOTE: A much more complete article with sample forms is available upon request.

HOW TO PROTECT AGAINST HIDDEN TITLE PROBLEMS

There are many title issues that can arise to cause the loss of real property and associated investment and/or the incurring of significant legal expenses. The sad reality is that there are various title problems that are NOT readily disclosed by the most careful search of the public land records. These defects are often called “hidden hazards” or “latent title defects” and they can be very most dangerous to real estate investors who (1) conduct their own title examinations or (2) try to “save money” and not purchase owner’s title insurance since they plan on flipping the property in short order. These practices are an example of being penny wise and pound foolish. Because of these latent defects, even when proper precautions are taken, title commitments and related title notes may be “perfect,” but title could nonetheless be severely impaired.
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The best and most feasible way to protect against the potentially horrific consequences of these latent defects is to ALWAYS purchase an owner’s title insurance policy. An owners’ title insurance policy protects the investor as well as his/her heirs from financial loss caused by title problems. Even if a title claim proves to be without merit, an owner’s title policy is valuable because the title insurer, without expense to the landowner, will defend against any attack on the title to the insured property as insured. Such defense costs can run into large sums quickly inasmuch as the typical hourly rate for attorneys can be $250.00 and hour and more. Should the worse case scenario prove true and title is significantly impaired, the title insurer will pay to correct title or reimburse the policy holder up to the limits of the policy coverage. Thus, the one-time premium for an owner’s title policy is small in relative monetary terms while the protection is great.
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Here are some of the hidden title problems that can occur. You may not discover them when buying real estate but months or years later, they can result in the loss of investment property or an expensive lawsuit.
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1. False impersonation of the true owner of the land.
2. Forged signatures on deed, releases, etc.
3. Instruments executed under fabricated or expired power of attorney.
4. Deed delivered after death of grantor or grantee or without consent of the grantor.
5. Deeds to or from defunct corporations.
6. Undisclosed or missing heirs.
7. Misinterpretation of wills.
8. Deeds by persons of unsound mind.
9. Deeds by minors.
10. Deeds by aliens (foreign nationals).
11. Deeds by persons supposedly single but secretly married.
12. Birth or adoption of children after the date of a will.
13. Surviving children omitted from a will or affidavit of heirship.
14. Mistakes in recording legal documents.
15. Want of jurisdiction of persons in judicial proceedings.
16. Later discovery of will of apparent intestate decedent.
17. Courthouse errors in indexing resulting in missed deeds and instruments.
18. Intentional falsification of records.
19. Capacity of foreign fiduciaries of trusts or estates.
20. Claims of creditors against property sold by heirs or devisees.
21. Deeds in lieu of foreclosure given under duress.
22. Ultra vires deed given under false corporate resolution
23. Easement by prescription not discovered by survey.
24. Deed of marital property recited to be separate property.
25. Errors in tax records. (e.g., listing payment against wrong property).
26. Federal condemnation of property without filing a notice.
27. Descriptions not actually adequate (e.g., the boundaries do not close).
28. Erroneous reports furnished by tax officials.
29. Administration of estates of persons absent by not actually deceased.
30. Undisclosed divorce of spouse who conveys as consort’s heir.
31. Marital rights of spouse purportedly, but not legally, divorced.
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Having an owner’s title policy provides other practical benefits to real estate investors. If owner’s title insurance is purchased, subsequently identified liens and title defects that arose prior to the policy date but that were not listed as exceptions on Schedule B to the policy will be covered by the policy and the insuring title insurance company will cure the defect or, in the case of total title failure, pay the investor up to the face amount of the policy. In addition, if the ultimate purchaser of a rehabbed property utilizes a different title insurer for their purchase than the one used by the rehabber/investor, frequently the investor who bought an owner’s policy can get still an indemnification from his/her title insurer so that the defect can be insured over by the new title insurance company. Without an owner’s policy, such indemnification is NOT available.

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Best Solution: Use an experienced real estate attorney, obtain a title commitment from an experienced and reputable title insurance company, AND purchase owner’s title insurance. It is ALWAYS crucial that a title exam be conducted to identify (A) all mortgages that attach to the property, (B) any state or federal tax liens that may attach to the property, and (C) any other judgment liens that may attach to the property. This latter category of judgments can relate to unpaid medical bills, defaulted credit card accounts, unpaid utility bills, or even delinquent child support payments. If an investor closes on a purchase without making sure that all previously attaching liens and judgments have been satisfied or confirmed to not apply to the property, they will be a title defect at the time the rehabbed property is sold.

LGBT EMPLOYMENT-NON-DISCRIMINATION IN VIRGINIA

I. SUMMARY CURRENT LAW: Sexual orientation discrimination includes being treated differently or harassed because of your real or perceived sexual orientation -- whether gay, lesbian, bisexual, or straight (heterosexual). This type of discrimination may actually be legal in your workplace, depending on where you reside. The current state of the law in Virginia is leaves most LGBT employees, particularly those employed by private employers, with few legal protections. The following is a summary of current law:
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1. Federal Law: Notwithstanding a number of broad federal laws that bar employment discrimination on the basis of race, national origin, sex, age, and disability, there currently are no federal statutes that bar discrimination based on sexual orientation or gender identity in the private workplace sector. Some federal workers are currently protected from such discrimination based on executive orders and policies. To date, attempts to pass the Employment Non-Discrimination Act, or ENDA, that would prohibit certain private employers – e.g., those with more than 15 employees, subject to certain exemptions - from discriminating based on sexual orientation have been unsuccessful (A version of ENDA has passed the U. S. House of Representatives and is awaiting action in the U. S. Senate; President Bush has threatened to veto ENDA if it passes Congress).
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2. State Laws: Currently, a number of states and the District of Columbia have laws that currently have some form of prohibition against discrimination based on sexual orientation in both public and private jobs. Among these states are: California, Connecticut, Hawaii, Maine, Maryland, Massachusetts, Minnesota, Nevada, New Hampshire, New Jersey, New Mexico, New York, Rhode Island, Vermont, Wisconsin, Illinois and Oregon. (See Appendix 1 for more details). VIRGINIA IS NOT ONE OF THE STATES BARRING THIS TYPE OF EMPLOYMENT DISCRIMINATION.
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II. CURRENT VIRGINIA LAW: In the state of Virginia, subject to certain exceptions to be discussed below, a person--whether gay or straight--can be legally fired or refused a job by a private employer on the basis of that person's real or perceived sexual orientation. A person could lose her or his job simply because he/she is gay, even if he/she is doing a excellent work. It also means that a heterosexual person could be fired from his or her job because someone thinks he or she is gay. Hypothetically, a heterosexual person could be fired because an employer might prefer gay employees. The exceptions to this state of the law are as follows:
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1. Written Contract for a Specific Term: Despite the fact that Virginia is an employment at will state, when an employer enters into a written employment contract with an employee, depending upon the wording of the contract, the employee can only be fired for “cause,” which is usually defined in the contract. Thus, if an employee is fired for something other than cause as defined in the contract, the employee can sue and recover against the employer for breach of contract. It is crucial to make sure that the contract does not contain verbiage that reserves the employer’s right to fire the employee at will.
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2. State Employees: While no Virginia statutes exist which bar employment discrimination against state employees based on sexual orientation or gender identity, by Executive Order 1 (2006), Governor Kaine continued a policy established by his predecessor, Mark Warner, which bars state agencies from discriminating against employees based on sexual orientation. Executive Order 1 (2006) provides in relevant part as follows:
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EQUAL OPPORTUNITY By virtue of the authority vested in me as Governor, I hereby declare that it is the firm unwavering policy of the Commonwealth of Virginia to assure equal opportunity in all facets of state government. This policy specifically prohibits discrimination on the basis of race, sex, color, national origin, religion, sexual orientation, age, political affiliation, or against otherwise qualified persons with disabilities.
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Allegations of violations of this policy shall be brought to the attention of the Office of Equal Employment Services of the Department of Human Resource Management. No state appointing authority, or other management principal or supervisor shall take retaliatory actions against persons making such allegations. Any state employee found in violation of this policy shall be subject to appropriate disciplinary action.
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A copy of the complaint form to be filed with the Office of Equal Employment Services is attached hereto as Appendix 3 and can be found online at the Agency website here: http://www.dhrm.state.va.us/statefrm/discrimfrm.pdf. In Attorney General Opinion No. 05-094, Attorney General, Robert McDonnell issued a non-binding opinion that Governor Kaine did not have the legal authority to add sexual orientation to the protected categories and that only the General Assembly possesses such power. To date No court challenge of Executive Order 1 (2006) has been made and currently Office of Equal Employment Services is investigating at least one complaint made pursuant to Executive Order 1. (2006) against the Virginia Museum of Natural History for firing an employee based on the employee’s sexual orientation.
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Based on that matter, which has been pending for over a year, the principle problem with this legal protection is that the Office of Equal Employment Services seems to lack adequate power to compel the Virginia Museum of Natural History to cooperate with the investigation.
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3. Employer Non-Discrimination Policies: Some large corporations operating in Virginia have their own corporate non-discrimination policies that bar discrimination against employees on the basis of their sexual orientation and, in some case, their gender identity. If one’s employer has such policies, there are typically administrative procedures through corporate human resource offices to secure redress. From a practical perspective, the protections afforded under these corporate policies may prove illusionary depending upon the corporation’s willingness to actively enforce the policies when employee complaints are made. In addition, it may be necessary for the aggrieved employee to take his/her complaint significantly up the chain of command to secure redress. From experience, often, employees are reluctant to fight instances of discrimination under these corporate policies out of fear of retaliation from local supervisors and fellow employees.
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4. Federal Equal Protection Argument: While I am not aware of any Virginia case currently either previously decided or pending that has made this argument, some of the Federal Courts have allowed LGBT employees to prevail in employment discrimination cases against governmental employers utilizing an argument that they have been denied equal protection under the law. In one such U. S. District Court case, the court reasoned as follows analogizing discrimination based on sexual orientation to be in substance like discrimination based on sex:

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In the Court's view, harassment in the public workplace against homosexuals based on their sexual orientation falls within the ambit of Annis and its progeny. Just as Annis recognized that harassment of women in the public workplace that transcends coarse, hostile and boorish behavior can rise to the level of a constitutional tort, so too, in the Court's view, does a hostile work environment directed against homosexuals based on their sexual orientation constitute an Equal Protection violation.
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In so finding, the Court notes that in 1996, the Supreme Court struck down, on Equal Protection Clause grounds, a state constitutional amendment categorically prohibiting gay men and lesbians from obtaining state or local legal protection from discrimination based on their sexual orientation. See Romer v. Evans, 517 U.S. 620, 116 S.Ct. 1620, 134 L.Ed.2d 855 (1996). The Romer Court established that government discrimination against homosexuals, in and of itself, violates the Equal Protection Clause. Romer, 517 U.S. at 633-34, 116 S.Ct. 1620, 134 L.Ed.2d 855.
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Whether the federal courts in the 4th Circuit which encompasses Virginia – one of the most conservative Circuits – would follow such reasoning has yet to be seen. Moreover, this argument does not reach private employers.
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5. Virginia Human Rights Act: Pursuant to the Virginia Human Rights Act, Section 2.2-3900, Code of Virginia of 1950, as amended, the Virginia Human Rights Council, has jurisdiction over allegations of employment discrimination filed against employers of six or more employees occurring within the State of Virginia based on race, color, religion, national origin, sex, age, marital status, and physical or mental disability. Note: Sexual orientation and gender identity are not protected under this statute. Nonetheless, filing a complaint may be worth pursuing in conjunction with an equal protection argument similar to under federal law and equating discrimination based on sexual orientation or gender identity, as applicable, with discrimination on the basis of sex or religious belief. A copy of the form to file a complaint with the Council can be found online here: http://chr.vipnet.org/pdf/complaint.pdf.

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6. General Common Law Theories: If none of the foregoing grounds for non-discrimination are available, the last resort of an aggrieved employee is to try to formulate a basis for redress under general common law theories. The availability of such arguments against an employer or co-workers will be fact specific to the type of discriminatory actions involved. Among the possible theories are: (1) intentional or negligent infliction of emotional distress, (2) harassment, (3) assault and/or battery, (4) invasion of privacy, (5) defamation, (6) interference with an employment contract.

III. CONCLUSIONS: All LGBT employees in Virginia currently lack strong, effective employment non-discrimination protections. Executive Order 1 (2006) currently is the only Virginia law or executive order that specifically includes sexual orientation. On the federal level, until some version of ENDA is enacted, the only argument available to LGBT employees is an equal protection argument along the lines set forth above.

APPENDIX 1

States banning discrimination based on sexual orientation and gender identity/expression (13 states and the District of Columbia) Minnesota (1993); Rhode Island (1995, 2001)1; New Mexico (2003); California (1992, 2003)1; District of Columbia (1997, 2005)1; Illinois (2005); Maine (2005); Hawaii (1991, 2005, 2006)2; New Jersey (1992, 2006)1; Washington (2006); Iowa (2007); Oregon (2007); Vermont (1992, 2007)1; Colorado (2007)

Laws banning discrimination based on sexual orientation (7 states) Wisconsin (1982); Massachusetts (1989); Connecticut (1991); New Hampshire (1997); Nevada (1999); Maryland (2001); New York (2002)

ESSENTIAL LEGAL DOCUMENTS FOR COUPLES

There are some things unmarried couples can and should do to provide for some of the legal protection automatically conferred on married couples. In addition, there are certain “land mines” that can catch re-married couples unaware that can have potentially disastrous results in this day and age of divorce and remarriage and blended families. Three of the most common potential “land mines” are the following:

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1. Widow or Widower’s Share of Estate: § 64.1-1 of the Code of Virginia, which governs course of descent and distribution for those dying without a will, provides in relevant part:

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First. To the surviving spouse of the intestate, unless the intestate is survived by children or their descendants, one or more of whom are not children or their descendants of the surviving spouse, in which case two-thirds of such estate shall pass to all the intestate's children and their descendants and the remaining one-third of such estate shall pass to the intestate's surviving spouse.

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Many widows have found to their dismay that they can lose their homes and/or other assets to the deceased spouse’s children as a result of the decedent to execute a will to protect them.

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2. Non-Adopted Step Children: Another common difficulty is that a step-parent’s step-children are NOT considered children for descent and distribution purposes unless they have been formally adopted. Thus, unless named in a will, these children receive nothing from the deceased step parent’s estate.

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3. Authorization to Make Medical and Financial Decisions: The partner/spouse of an unmarried couple has no legal standing to make medical treatment or financial decisions for their partner/spouse absent a valid medical or financial power of attorney. Virginia’s Marriage Amendment applies to ALL couples, gay AND unmarried heterosexuals.

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Unfortunately, far too many such couples fail to take the relatively simple steps to avoid the adverse and/or unexpected effects of current law.
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NECESSARY DOCUMENTS AND STEPS: There are some basic documents and steps that every unmarried couple and every same-sex couple should have prepared and duly signed. These include:
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Will - A will specifies how you wish your property to be distributed upon your death. In a will, you designate the person you wish to handle your estate -- your partner or another individual. Without one, your partner receives absolutely nothing. Pursuant to § 64.1-46 of the Virginia Code, anyone who is over the age of 18 years and not mentally incompetent may make a will and thereby dispose of any estate to which he shall be entitled, at his death, including any estate, right or interest to which the testator may be entitled at his death, notwithstanding he may become so entitled subsequently to the execution of the will. Inasmuch as neither § 64.1-46 or other provisions of the Virginia Code restrict permitted devisees to spouses or blood relatives, both unmarried heterosexual couples and same-sex couples may make wills leaving assets to their partners.

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Trust - A properly established and funded trust avoids publicly probating assets owned by the trust at the time of one’s death and is more difficult to challenge in court than a will. In addition, a trust can provide beneficiaries with creditor protection in certain circumstances. Properly structured, a trust can provide support for one’s surviving partner for the remainder of his or her life, with the remainder to pass to other relatives and designated beneficiaries, bypassing potential taxes associated with the surviving partner's estate. Chapter 4, Title 26 of the Virginia Code governing the appointment, qualification, resignation, removal of fiduciaries, including trustees, contains no provision restricting permitted trustees or trust beneficiaries to spouses or blood relatives.
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Health Care Power of Attorney - A health care or medical power of attorney allows one’s partner regardless of gender to make medical decisions on your behalf in the event you are not able to do so due to incompetency or other incapacity. Properly drafted, a health care power of attorney can also ensure hospital visitation rights to the designated attorney-in-fact
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Advanced Medical Directive - § 54.1-2983 of the Virginia Code provides that any mentally competent adult may, at any time, make a written advance directive (i) authorizing the providing, withholding or withdrawal of life-prolonging procedures in the event such person should have a terminal condition, and (ii) appointing an agent to make health care decisions for the declarant under the circumstances stated in the advance directive if the declarant should be determined to be incapable of making an informed decision. Advance medical directives must be signed by the declarant in the presence of two subscribing witnesses who cannot be the spouse or blood relatives of the declarant.
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There is no statutory restriction that one’s agent must be a spouse or blood relative. Rather, §54.1-2982 of the Virginia Code provides that under any such advance medical directive, an agent means “an adult appointed by the declarant under an advance directive, executed or made in accordance with the provisions of § 54.1-2983, to make health care decisions for him. . ." Such authority includes visitation rights, provided the advance directive makes express provisions for visitation.

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General/Business Power of Attorney - This form of power of attorney allows a member of either an unmarried couple or a same-sex couple to authorize their partner to handle their financial affairs in the event of disability or unavailability.
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Title on Deeds and Accounts - How title to property is held can effect both future ownership and tax liability. Joint tenancy with rights of survivorship, for example, will ensure that the surviving partner will have full ownership upon the death of the deceased partner and avoid ownership disputes with surviving blood relatives. However, it can create certain negative estate tax treatment depending on the size of one’s taxable estate. Historically, deeds creating a tenancy by the entirety have been reserved for husband and wife couples. In light of the Virginia Marriage Amendment cited above, such a deed conveying title as tenants by the entirety to a same-sex couple even though validly married in another state such as Massachusetts would not be effective in Virginia.
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BENEFICIARY DESIGNATIONS: Most securities and retirement accounts provide for the designation of beneficiaries. These should be reviewed periodically to ensure that desired goals are achieved and also should include the designation of contingent beneficiaries to ensure the desired parties are named in the event of the death of the principal beneficiary.
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NOTE: This article contains a general discussion of estate planning matters which vary greatly in asset structuring needs and potential tax liability based on the particular facts and circumstances of individuals and the nature of their assets. Therefore, it should not be relied upon as a substitute for individualized legal advice addressing one’s particular situation.

BUILDING YOUR POWER TEAM – HIRING A REAL ESTATE ATTORNEY

Hiring a real estate attorney for your “power team” is one of the most important decisions to consider when first becoming involved in real estate investing. The right attorney will keep you on tract, help you avoid possible pitfalls and lessen your liability in your real estate investments. A knowledgeable attorney can also make sure that all of your paperwork is state-specific, meaning it was not some generic paperwork offered in an office supply store or off of the Internet and based on the laws of a state other than your own. Too often, new investors take course pr go to “boot camps” which offer up forms that do not meet your real needs.

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Through the services of a professional and specialized lawyer, you will not only be assured that everything is in good legal order, but it could even smooth along the process at the same time. Of course, this is of great convenience to any real estate investor, and is one of the core reasons behind the popularity that real estate lawyers enjoy. If you are either unsure of the legalities and process involved in real estate contracts and agreements, or if you wish to simply move things along faster, then hiring a lawyer could be the ideal step to take.

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After you select one, two or three real estate attorneys from a list you can get from www.martindale.com or www.law.com, which shows their qualifications. You should feel free to interview the attorneys to see which one is the best fit for your needs.

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1. Questions to Ask a Prospective Attorney?
My first question would be; what experience do you have in creative real estate investing such as subject to investing? If you get an off-in-the-distance stare as he contemplates what to tell you, be assured he does not have the first clue. The Attorney should be open to and understand creative real estate investing. This is very important in making your final decision. The attorney must be very attentive to your needs; he lets you discuss your method of investing then responds in a forthright manner.

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2. How much of your practice is in real estate?
Depending on your market size it should be at least 30% to 50%. In smaller markets there would be less need for an attorney to devote all their practice to real estate. Five years of real estate law experience would be the minimum acceptable to me.

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3. Do you have other real estate investors as clients? If so, ask if you can contact them for references.

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4. What are your fees? The size of the law firm is not an important factor except larger firms usually charge more because of their overhead and are not as available to you as a smaller firm. The price the attorney charges are not as important as how well he works for you, with you and gets the job done. The old adage you get what you pay for applies here.

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5. Do you work with other real estate professionals? The attorney should be able to recommend and refer you to other professionals such as CPAs, mortgage Brokers, (for refinances), etc.

UNDERSTANDING THE FORECLOSURE PROCESS

In the current housing market and sub-prime mortgage shakeout, the number of properties going into foreclosure is going to increase and will provide opportunities to those with available funds and strong credit to purchase real bargains at foreclosure sales. To take advantage of this market opportunity, investors need to understand the mortgage process. Under Virginia law, both in-court and out-of-court foreclosures are possible. Generally, out-of court, also known as non-judicial foreclosures are the most prevalent. Typically, once initiated, a non-judicial foreclosure in Virginia takes less than two months. The majority of this article will focus on the non-judicial foreclosure process. Purchaser at foreclosure sales need to be familiar with the foreclosure process and some of the deadlines and hidden pitfalls that can trip up the unwary.
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1. JUDICIAL FORECLOSURE: In Virginia, a deed of trust (in common parlance, a mortgage) may be foreclosed by filing a lawsuit known as a bill in equity. When and if necessary, a deed of trust could also be foreclosed through court action. In either case, a court order can be issued which specifies the terms and conditions of the sale, which are controlled by the deed of trust provisions. Special Commissioners are appointed by the Court to handle such sales and the ultimate deed to the foreclosure purchaser will be executed by the Special Commissioner. The court must confirm any such sale.
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2. NON-JUDICIAL FORECLOSURE: Except for in unusual situations or where there is ongoing litigation between the mortgagor and mortgagee, non-judicial foreclosures are the typical means by which a deed of trust is foreclosed. Upon direction from the noteholder, the trustee under the deed of trust, or more commonly a substitute trustee specializing in foreclosure proceedings who has replaced the original trustee, will accelerate the note, give the necessary preliminary notices, and arrange the fore closure sale.
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A. Preliminary Notices; Contents and Mailing Requirement: In general, the trustee/substitute trustee must give notice as provided in the deed of trust. In addition, Section 55-59.1, Code of Virginia of 1950, as amended, provides as follows concerning notices to be given by the trustee:
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The trustee or the party secured shall give written notice of the time, date and place of any proposed sale in execution of a deed of trust, which notice shall include either (i) the instrument number or deed book and page numbers of the instrument of appointment filed pursuant to § 55-59, or (ii) said notice shall include a copy of the executed and notarized appointment of substitute trustee by personal delivery or by mail to:
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(i) the present owner of the property to be sold at his last known address as such owner and address appear in the records of the party secured,
(ii) any subordinate lienholder who holds a note against the property secured by a deed of trust recorded at least 30 days prior to the proposed sale and whose address is recorded with the deed of trust,
(iii) any assignee of such a note secured by a deed of trust provided the assignment and address of assignee are likewise recorded at least 30 days prior to the proposed sale,
(iv) any condominium unit owners' association which has filed a lien pursuant to § 55-79.84,
(v) any property owners' association which has filed a lien pursuant to § 55-516, and
(vi) (vi) any proprietary lessees' association which has filed a lien pursuant to § 55-472.
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Written notice shall be given pursuant to clauses (iv), (v) and (vi), only if the lien is recorded at least 30 days prior to the proposed sale.
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Mailing of a copy of the advertisement or a notice containing the same information to the owner by certified or registered mail no less than 14 days prior to such sale and to lienholders, the property owners' association or proprietary lessees' association, their assigns and the condominium unit owners' association, at the address noted in the memorandum of lien, by ordinary mail no less than 14 days prior to such sale shall be a sufficient compliance with the requirement of notice.
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The written notice of proposed sale when given as provided herein shall be deemed an effective exercise of any right of acceleration contained in such deed of trust or otherwise possessed by the party secured relative to the indebtedness secured. (Emphasis added)
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Obviously, in order to give proper notice, the trustee will need to have a title examination performed to confirm what, if any subordinate lienholders must be notified of the sale. The notice must also give the name of the trustee and the address and phone number of a person who will be able to respond to inquiries about the foreclosure sale. A sample notice (as well as a sample Notice to be advertised) is attached hereto as Exhibit A.
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B. Advertisement of Sale: Generally deeds of trust will specify the number of times that notice of the sale must be published prior to the foreclosure sale. To be safe, a trustee should review the advertisement provisions of the deed of trust and consult Section 55-59.2, Code of Virginia of 1950, as amended, which sets out the statutory advertisement requirements:

§ 55-59.2. Advertisement required before sale by trustee. A. Advertisement of sale by a trustee or trustees in execution of a deed of trust shall be in a newspaper having a general circulation in the city or county wherein the property to be sold, or any portion thereof, lies pursuant to the following provisions:
1. If the deed of trust itself provides for the number of publications of such newspaper advertisement, which may be done by using the words "advertisement required" or words of like purport followed by the number agreed upon, then no other or different advertisement shall be necessary, provided that, if such advertisement be inserted on a weekly basis it shall be published not less than once a week for two weeks and if such advertisement be inserted on a daily basis it shall be published not less than once a day for three days, which may be consecutive days, and in either case shall be subject to the provisions of § 55-63 in the same manner as if the method were set forth in the deed of trust. Should the deed of trust provide for advertising on other than a weekly or daily basis either of the foregoing provisions shall be complied with in addition to those provided in such deed of trust. Notwithstanding the provisions of the deed of trust, the sale shall be held on any day following the day of the last advertisement which is no earlier than eight days following the first advertisement nor more than thirty days following the last advertisement.
2. If the deed of trust does not provide for the number of publications of such newspaper advertisement, the trustee shall advertise once a week for four successive weeks; provided, however, that if the property or some portion thereof is located in a city or in a county immediately contiguous to a city, publication of the advertisement five different days, which may be consecutive days, shall be deemed adequate. The sale shall be held on any day following the day of the last advertisement which is no earlier than eight days following the first advertisement nor more than thirty days following the last advertisement.
B. Such advertisement shall be placed in that section of the newspaper where legal notices appear or where the type of property being sold is generally advertised for sale.
C. Sale Procedures:

1. Time of Sale. The sale must be made no earlier than eight days after the first ad and no more than 30 days after the last advertisement.
2. Special Procedures. Written one-price bids may be made and received by the trustee for entry by announcement at the foreclosure sale. Any bidder who attends the foreclosure may inspect the written bids.
3. Manner of Sale. The sale is to be made at auction to the highest bidder. Unless otherwise required by the deed of trust, the trustee may require a bidder to make a 10 percent nonrefundable cash deposit. The trustee must apply the proceeds of the sale first to expenses of the sale, including a 5 percent trustee's commission, second to unpaid taxes, assessments and levies, third to liens in order of their priority and the balance, if any, to the borrower. At the sale, a Memorandum of sale will be executed by the trustee and the successful high bidder confirming the sales price and closing deadline.
4. Deadline for Closing of Sale. Generally, the notice of sale will specify how soon after the public auction the highest bidder must complete the sale. Ten or fifteen days are fairly typical deadlines for closing. The trustee will execute and deliver a deed to the buyer.
5. Deficiency. If the sales proceeds are insufficient to satisfy the amounts incurred for the costs of sale and all unpaid principal and interest due under the note, a lender may pursue a borrower for a deficiency judgment in Virginia. No limits are imposed.
6. Redemption. In a court-ordered foreclosure sale the court may give the borrower a redemption period. Otherwise, contrary to popular misconception, Virginia does not give borrowers any redemption rights.
7. Trustee Accounting. Under Section 26-15, Code of Virginia of 1950, as amended, the trustee under the foreclosed deed of trust must provide the commissioner of accounts for the jurisdiction where the property is located within six (6) months of the date of the public auction. This accounting will set out how the sales proceeds were applied. The accounting for a foreclosure will contain a number of materials: (a) the original note; (b) complete copy of the recorded deed of trust and any substitution of trustee filed by the noteholder; (c) an original affidavit of publication for the advertisement; (d) proof of giving of the notice required under Section 55-59.1 of the Virginia Code; (e) copy of written high bid, if written bids were accepted prior to the sale; (f) receipt from the City Treasurer for real estate taxes paid from the sale proceeds; (g) documentation of any attorneys fees paid; (h) copy of the recorded trustee’s deed; (i) documentation of disbursements made from the sale proceeds; and (j) a statement from the noteholder of the total amount due on the date of the sale.

3. INVESTOR PITFALLS TO AVOID: As initially noted, purchasing a property at foreclosure can be a means of securing a true bargain well below the true market value of the property. However, there are certain inherent dangers that need to be minimized by the prudent investor/purchaser to the extent possible. Some of these risks are as follows:

A. Lack of Inspection. The first risk is that typically, any would be purchaser/investor may not have any opportunity to conduct an inspection of the property prior to the foreclosure sale. The sale and conveyance by the trustee will provide that the property is sold “AS IS.” Thus, if the property has any significant defects, the purchaser will have no recourse back against the trustee under the deed of trust. What you see is what you get.
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B. Superior Liens and Title Issues. The deed delivered to the successful purchaser will be a Special Warranty Deed, which means that the trustee makes NO WARRANTY OF TITLE except that the trustee has not encumbered title to the property. This means that (1) if the deed of trust foreclosed is a second deed of trust, the purchaser takes title subject to the first deed of trust which may be accelerated under the due on sale provisions therein upon the transfer of title out of the borrowers under the foreclosed deed of trust. Therefore, it is critical that the purchaser have a plan in place to deal with paying off the first deed of trust should it subsequently be accelerated. It will do no good to find a bargain only to lose it to foreclosure.
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Another problem that frequently arises is that there can be title defects that predate the deed of trust being foreclosed. While the trustee has generally obtained a current owner title examination to determine what subordinate lienholders, if any, should receive the required notice of foreclosure, this title exam does NOT identify prior title issues – e.g., prior unreleased deeds of trust; tax liens; old judgment liens and other potential title problems. Therefore, it is important that the investor/purchaser who is seriously considering buying property at a foreclosure sale obtain a full title examination of the property. This will identify issues that will need to be addressed and avoid unexpected title issues not cured by the foreclosure of the deed of trust.
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C. Hazard Insurance. The typical foreclosure memorandum of sale provides that all risk of lost passes to the purchaser from the time the memorandum is signed on the court house steps. Therefore, it is critical that the successful bidder have everything in place to have insurance effective immediately. If the property is damaged by fire or casualty between the date of sale and closing, the loss will be on the purchaser.
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D. Closing Deadlines. As indicated, the advertisement of the sale and the memorandum executed by the successful bidder will provide that closing must occur within a short period of time – usually 10 to 15 days from the auction date. If the successful bidder fails to close, the nonrefundable deposit will be lost. While, trustees will sometimes grant and extension of the closing deadline, there is NO guaranty that such will be the case. Therefore, prior to bidding at the sale, unless an investor has significant amounts of cash or available lines of credit, the investor MUST have a plan in place to secure the needed closing funds before bidding at the sale. High bidders who fail to close on schedule can and do lose deposits on a regular basis. This type of loss can be avoided by proper advanced planning.

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EXHIBIT A
Notice of Foreclosure
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VIA CERTIFIED ANDFIRST CLASS MAIL
____________________
____________________

Re: Deed of Trust dated ________, recorded as Instrument No. ___________ in the Clerk’s Office of the Circuit Court of the City of Norfolk, Virginia Securing Note dated _____________

Dear _________________:

Please be advised that __________________________ (the “Lender”), has requested the undersigned Trustee to advertise for sale at public auction the property located at __________________________, Norfolk, Virginia ____________, Tax ID No. _____________ (the (“Property”), which is subject to the Deed of Trust dated ________________, and recorded as Instrument No. ___________________ in the Clerk’s Office of the Circuit Court of the City of Norfolk, Virginia (the “Deed of Trust”), securing that certain Note dated ____________, in the principal sum of $____________________, together with interest thereon at a rate of ______% per annum.

The Note requires consecutive monthly payments of $___________ each, commencing on _____________, and every month thereafter until ___________, at which time the entire unpaid principal amount of the Note, together with all accrued and unpaid interest thereon is due and payable in full. Contrary to the requirements of the Note, you have not paid the required monthly payments and the Note is in default.

As a result of such default, the Lender has requested us to advise you that unless the entire unpaid balance of the Note, including accrued and unpaid interest thereon, is immediately received, then on _______________, at _______ A.M., the Property will be sold at public auction at that time to the highest bidder. A copy of the advertisement that will appear in ________________ commencing ___________, is enclosed.

The Lender advises that the unpaid balance now due and owing under the Note is $________________, exclusive of expense incurred up through the date of sale, including but not limited to additional interest, late charges, newspaper advertisements, attorney’s fees and trustee’s fees, which sums will be itemized to you upon inquiry. Please call me at 622-2008 for complete pay off information in order to prevent foreclosure.
Very truly yours,

Michael B. Hamar

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NOTICE OF TRUSTEE SALE OF
______________________
Norfolk, Virginia _______
Tax ID No. ___________

In execution of a Deed of Trust, dated _________________, and recorded as Instrument No. _________________ in the Clerk’s Office of the Circuit Court of the City of Norfolk, Virginia, in the original principal amount of $_____________, and default having occurred, the undersigned having been duly appointed as Trustee and having been directed by the noteholder to foreclose under said Deed of Trust, will offer the below described property for sale at public auction to the highest bidder, for cash, _________________, at ________A.M., on the front steps of the Circuit Court of the City of Norfolk, Virginia, 23510. The aforesaid property being described as follows:

ALL THAT certain lot, piece or parcel of land, with the buildings and improvements thereon and the appurtenances thereto belonging, situate in the City of Norfolk, Virginia, and known, numbered and described as Lot _____ in Block number _____ as shown on that plat entitled “Subdivision of ________________________,” which Plat is recorded in the Clerk’s Office of the Circuit Court of the City of Norfolk, Virginia, in Map Book ___ at page ___.


MICHAEL B. HAMAR, TRUSTEE
MICHAEL B. HAMAR, P.C.
520 W. 21st Street, Suite J
Norfolk, Virginia 23517
(757) 622-2008

TERMS: CASH: The successful bidder will be required to deposit $_________ at the sale
by cashier’s check and settlement held within ten (10) days.

To be published in _____________ on ___________, __________, and __________, 200___.

DESCRIPTION OF REAL ESTATE INVESTOR FORMS AND EDUCATION ARTICLES

35 TITLE PROBLEMS This article summarizes some of the “latent defects” that can exist in the chain of title to property that often cannot be detected, no matter how thorough the title examination. Hence, why purchasing an owners title insurance policy is always a wise investment.
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AGREEMENT OF SALE – Acreage. This form should be used when purchasing undeveloped acreage for development. The form contains an optional provision where the price can be reduced if the actual useable acreage is less than listed, with actual useable acreage being determined via survey.
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ASSET PROTECTION TOOLS FOR THE REAL ESTATE INVESTOR. This article looks at methods that can be employed to protect real estate investment assets as well as limiting one’s personal liability for claims and lawsuits arising out of real estate investment property.
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ASSIGNMENT OF CONTRACT This form should be utilized for a simple assignment of a contract to another party without any assignment fee. For example, if a contract is executed in one’s individual name, this form may be utilized to assign the contract to a related limited liability company.
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AVOIDING BEGINNER INVESTOR PITFALLS. This article describes common issues and problems encountered by first time investors, particularly where properties are located in older neighborhoods – e.g., zoning issues, non-conforming lots and/or uses, and title issues - and explains (1) how the problems can be avoided or (2) once the problem has been encountered, how it can be corrected.
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BASIC STEPS AND CONSIDERATIONS FOR A SECTION 1031 EXCHANGE. This article summarizes of the steps involved in a 1031 exchange and provides a preliminary overview. It does not address all issues involved in a 1031 exchange and is not meant to replace the requirement that a would be exchanger should always review the entire transaction with tax and/or legal advisors
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CHOOSING AN ENTITY TYPE. This article looks at and compares the three types of legal entities most generally utilized to limit real estate investor liability: a Sub-Chapter S corporation, a limited liability company (“LLC”), or a limited partnership (“LP”). Each has certain advantages and disadvantages.
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CONTRACT ASSIGNMENT – WHOLESALE. This form is used when an investor is wholesaling a purchase contract for an assignment fee and does NOT intend to do a double closing. The form allows the assigning investor to be paid and then the assignee completes the contract transaction with the seller of the property.
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CONTRACT TO PURCHASE REAL ESTATE. This is a short, stripped down purchase agreement that may be used by investors looking to acquire property. NOTE: the form contemplates the property being conveyed in “AS IS” condition, but has inspection and financing contingencies for the benefit of the buyer.
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CONTRACT TO SELL REAL ESTATE. This is a short, stripped down sale agreement that may be used by investors looking to sell property. NOTE: the form contemplates the property being conveyed in “AS IS” condition, but has inspection contingencies for the benefit of the buyer.
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DEED OF TRUST NOTE - Hard Money. This form should be utilized for hard money loan transactions where there are no monthly payments and a single balloon payment of principal and interest on the maturity date. The form includes an optional extension provision where the extension fee is added to the balance owed at maturity.
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DEED OF TRUST – Hard Money. This form should be utilized to secure a hard money loan by way of a deed of trust on the property being acquired and/or rehabbed. In the event interest will be charged over and above the points or loan fee, they should be added to the terms of the accompanying Deed of Trust Note.
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EQUITY SHARING AGREEMENT. This form should be used when title to real estate is to be placed in only one partner’s name for whatever reason and the parties wish to establish the basis for the other partner to share in the equity in the property in the event it is sold or the partnership is discontinued.

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ESCROW AGREEMENT. This form should be utilized when funds are to be placed in escrow pending the completion of repairs or delivery of clear reports, etc. The release instructions must be customized to the specifics of the particular situation.
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FIVE DAY PAY OR QUIT LETTER This form is used to give notice to a tenant that they have five days in which to pay delinquent rent or else eviction proceedings will be instituted. Duplicate originals of the letter should be sent by certified and regular mail (some tenants may refuse the certified mailing). A copy of this letter should be retained for presentation to the Court in an eviction proceeding.
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FIVE DAY NOTICE TO QUIT LETTER This form is used to give notice to a tenant that they have defaulted in rent and that the default is NOT being waived by the Landlord. Therefore, the tenant must vacate the premises or else eviction proceedings will be instituted. Duplicate originals of the letter should be sent by certified and regular mail (some tenants may refuse the certified mailing). A copy of this letter should be retained for presentation to the Court in an eviction proceeding.
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FOR SALE BY OWNER PURCHASE AGREEMENT. This form provides a comprehensive contract for the sale of real property when no realtor is involved. The form approximates the local multiple listing contract form and covers items required when the purchaser is a consumer intending to occupy the property.
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INVESTOR ACQUISITION OF REAL PROPERTY – CHECK LIST. This form is a checklist to be used by investors purchasing property in order to make sure all applicable due diligence issues and items are properly examined. Not every transaction will involve all of the listed items.
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LAND SALE AGREEMENT. This form is utilized when the purchase of real estate is to be accomplished via an installment sale transaction, with record title remaining vested in the seller until such time as the total purchase price has been paid. The form includes a form of deed to be held in escrow pending the transfer of title as well as a contract termination form for use if the sale is not completed.
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LEASE WITH OPTION TO PURCHASE This form is similar to the Residential Lease Agreement except it contains an option to purchase in favor of the tenant within the lease itself. In addition, it has an optional provision where a portion of the monthly rental can be placed into an escrow account in order to allow the tenant to build up a down payment to be utilized when the purchase option is exercised.
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LOAN CALCULATION FORM. This form provides a check list of costs to assist in determining (1) the total rehab costs, required loan amounts, and (3) possible profit margin.
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OPTION TO PURCHASE AGREEMENT This form is used in conjunction with a separate, stand alone Lease Agreement when the Landlord desires to give the Tenant an option to purchase the leased premises.
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OVERVIEW OF CLOSING A PURCHASE TRANSACTION. This article provides a brief summary of the steps involved (and timetables involved) in processing and closing a typical residential purchase transaction by the attorney’s office overseeing and coordinating the closing transaction.
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PREPARING A SHORT SALE PACKAGE – This article provides step by step for preparing and negotiating a “short sale” – i.e., a reduced payoff balance – for borrowers who need to sell their home because they can no longer afford to keep the payments current and are experiencing financial hardship. From the lender’s perspective, a short sale saves many of the costs associated with the foreclosure process - attorney fee's, the eviction process, delays from borrower bankruptcy, damage to the property, costs associated with resale, etc. In a short sale scenario, the lender gets the cash from the property back faster, so it is able to cut its losses. Sample forms and letters are included.
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PROMISSORY NOTE - REVOLVING LINE. This form should be utilized when a private lender is providing a revolving line of credit to an investor engaged in one or more rehab operations where the borrower can borrow, repay and re-borrow against the line of credit
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PROMISSORY NOTE – (Unsecured). This form of note is NOT secured by a deed of trust and provides for a final balloon payment on a specified maturity date or upon the sale of designated property, whichever is the first to occur.
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REAL ESTATE CLOSINGS A-Z – This article provides a step by step overview of closing a residential real estate transaction and includes sample forms.

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REQUIREMENTS FOR DOCUMENTS TO BE IN RECORDABLE FORM. This document sets out the requirements for documents to be in proper recordable form in Virginia as on July, 2007. Documents that do not meet these requirements will be rejected by the Clerk’s Office.
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RESIDENTIAL LEASE AGREEMENT This form is a standard residential lease form that leaves the bulk of maintenance obligations on the Landlord other than yard maintenance and interior cleaning and maintenance of plumbing. It should be used in rental transactions involving single family or condominium rentals.

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RESIDENTIAL SHARED PROPERTY LEASE AGREEMENT (Owner). This form is to be utilized by an owner when leasing a portion of a residential property to tenants. It is NOT intended for use when a tenant is subletting property.
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SUBJECT TO CONTRACT TO PURCHASE. This form is a comprehensive purchase agreement for use where the existing first mortgage lien will remain outstanding. The form also contains an optional repurchase option in favor of the seller. Note: It is the preferred practice to have the seller execute a separate option to repurchase document.
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SUBJECT TO SELLER FORMS. These forms are the minimum that should be required for execution by the seller on a subject to purchase transaction. It is absolutely essential that the seller (1) confirm that they acknowledge that the mortgage loan will continue to be out standing in their name and (2) that the purchaser has no immediate duty to pay off said loan.

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THE POWER OF "SUBJECT TO" REAL ESTATE TRANSACTIONS – An overview of the advantages and pitfalls of a “subject to” transaction where the selling homeowner is still liable for the mortgage, but the investor/purchaser has (A) assisted by curing any delinquencies and reinstating the loan in return for a deed to the property, and (B) agreed to make the mortgage payments for the seller. Depending on the circumstances, the investor may (or may not) renovate the property, and then sell or lease it at a substantial profit.

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UNDERSTANDING THE FORECLOSURE PROCESS. This article explains the foreclosure process in Virginia and states where foreclosures are accomplished without judicial action. The article also discusses certain pit falls that can entangle unwary purchasers at foreclosure sales, including but not limited to title defects and unanticipated property condition.
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WAIVER OF LIENS – VIRGINIA. This form is a lien waiver form that should be required from each subcontractor in order to release potential mechanics’ lien claims for work and labor completed up through the payment date.
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WAIVER OF SERVICEMEMBERS CIVIL RELIEF ACT Landlords should have this form signed by tenants in the military in order to secure the waiver of certain rights under the Service Members Civil Relief Act which can significantly impede attempts to collect delinquent rent and/or possession of the leased premises.
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“WRAP” DEED OF TRUST. This form is utilized where a seller is selling property and leaving the current deed of trust in place and desires to retain control over payments to the first mortgage lienholder. Thus, the form provides for a second deed of trust which “wraps” around the first mortgage and provides for the buyer to make payments to the seller who in turn makes the payments on the first mortgage.
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COMMERCIAL REAL ESTATE FORMS AND ARTICLES

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AGREEMENT OF SALE (Buyer Form) - This form is utilized by a purchaser of commercial property and is focused on providing maximum due diligence investigation, extensive seller representations and warranties, and maximum options for the purchaser to terminate the transaction without liability.
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AGREEMENT OF SALE (Seller Form) - This form is utilized by a seller of commercial property and is focused on providing reduced due diligence investigation, minimum acceptable seller representations and warranties, and reduced options for the purchaser to terminate the transaction without liability.
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APARTMENT FACILITY PURCHASE AGREEMENT This form sets out a straightforward template for preparing a contract to purchase a medium to large multifamily apartment facility and includes provisions for proper due diligence investigations. Additional representations and warranties by the seller can be added on an as needed basis to reflect circumstances particular to property.
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FUNDAMENTALS OF REAL ESTATE DEVELOPMENT – a step by step analysis of how to undertake a commercial real estate transaction/development process. Sample forms are included.
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OPTION AGREEMENT. An option agreement provides (i) a payment by the buyer for the right to elect to purchase the real property on or before the expiration of a specified time period, (ii) sets forth the terms of purchase transaction in the event the buyer exercises the option and elects proceed with the purchase transaction, and (iii) provisions for entry on the property for a range of due diligence inspections, and (iv) a time and place for settlement. Unlike a detailed purchase agreement, an option agreement does not need to set forth the buyer’s due diligence contingencies inasmuch as the buyer can simply elect not to exercise the option if any due diligence inspections prove unsatisfactory.
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NON-CONVENTIONAL FINANCING OPTIONS FOR MULTIFAMILY AND ELDERLY HOUSING PROJECTS – This article reviews tax exempt bond and/or low income housing tax credit financing for multifamily and senior housing facilities which allow developers/investors to (1) secure lower mortgage interest rates and/or (2) obtain a significant equity contribution to the project thereby reducing the amount of equity that must be funded by the developer. These financing options lend themselves to either new construction multifamily or elderly housing projects or acquisition/rehabilitation projects for existing properties that require updating and remodeling.
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SAMPLE LETTER OF INTENT. This form should be used when an offer is being made to lay out the terms of a purchase transaction when the parties will, assuming a meeting of the minds occurs, have a more detailed agreement prepared.
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SMALL CONSTRUCTION PROJECT CONTRACT This contract template provides the basis for an owner oriented construction contract for a small to moderate construction project. For large projects, most lenders will seek to have an AIA form used as the basic template, together with an AIA form Architect Agreement.