A NEW BOOK FROM A ZOLVE MEMBER
24 September 08 12:19 PM | Dean Hanewinckel | 1 comment(s)


The Official Snowbird's Guide                                              
To Becoming A Florida Resident 
 
BE DIFFERENT  Still giving your clients a bottle of wine or potted plant at the Closing?  Give them something they can really use.
 
THE OFFICIAL SNOWBIRD'S GUIDE TO BECOMING A FLORIDA RESIDENT is the most complete source written for Florida residency. This book is a must for persons moving to Florida or even just thinking about moving to Florida. Starting with a step-by-step guide of how to become a Florida resident, the book covers such valuable topics as:
 
- Understanding Florida homestead law so you can take advantage of its tax savings and asset protection features.
 
- How to save thousands of dollars by qualifying for in-state college tuition.
 
- How to make sure your loved ones don't suffer the same fate as Terri Schiavo's family.
 
- How to save thousands of dollars when buying a home in Florida.
 
- Money saving tips Florida contractors don't want you to know that will reduce your costs and put you in control of your Florida home construction.
 
- Simple things you can do to save thousands of dollars in property insurance premiums.
 
- How to free yourself from the tax bondage of your previous state.
 
This book will explain in clear language easy tasks to follow to make sure you will be able to enjoy the benefits of living in Florida.
 
Click the link below to purchase.
 
The Official Snowbird's Guide to Becoming a Florida Resident
 
NOW AVAILABLE AT AMAZON.COM
AND BARNES AND NOBLE.COM.
 
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Outside the Box Negotiations - What do the Parties Really Want?
20 August 08 04:57 PM | Dean Hanewinckel | 1 comment(s)
One of the breakthrough concepts of negotiation that leads to more successful deals than any other is learning that getting what you want doesn't mean others can't get what they want.  If you've ever been through the frustrating process of a court mediation, you realize that by the time the parties get to this point they just pound against each other's wills until they arrive at a number in the middle.  No real solution has been reached and both parties leave the mediation unhappy.
 
While many attorneys will tell you that this is the best result that can be expected, the truth is that working with other people, rather than working against them, produces better results for everyone involved.

Issues vs. Positions

No negotiation can be successful until the parties define the issues.  If you ask the Seller of a property, he may tell you that the issue is receiving no less than $300,000 for the property.  The Buyer believes the issue is paying a lower price and closing before mortgage rates increase.  What the parties have actually communicated are their positions. To them, what they want is the issue. 
However, positions are not issues.
 
Recognizing each party's position is only the beginning step in determining the issues.  Both parties need to talk to each other about what they want and why they want it.  Everyone involved, including the real estate agents, must understand the negotiations from the other people's point of view.
 
So the real issue isn't whether or not the Seller gets his price.  The issue is how we can align the legitimate concerns felt by both sides most effectively.
 
Determine What the Parties Really Want
 
The best way to address this challenge and reach a solution that makes both sides happy is to determine what it is they really want.  The key to this stage is to gather information.  What are the parties' underlying goals?  What solution can we reach that will make all the parties better off? 
 
For example, you have a listing with a Seller, a retiree who is liquidating real estate he acquired over his lifetime.  The Seller and a potential Buyer are deadlocked on the purchase price.  However, the Seller has indicated to you that he and his wife want to take some of the proceeds from the sale to go on an around the world cruise they had dreamed of all of their lives.
 
The Seller believes that the issue is to sell for a high enough price to finance his cruise.  You now know that this is only his position, not the true issue.  You also know what he really wants.  You realize that the cruise, not the purchase price, is his immediate goal.  The issue of the negotiation becomes, "How can we address the concerns of both parties so that the Seller and his wife can afford the cruise while the Buyer can get a break on the price?"
 
Now that you know the real issue, you can find a creative solution.  In this case, you go to a travel agency to make a deal.  You know that travel agencies pay commissions to people who sell cruise packages for them.  You get a list of around the world cruises that pay top commissions and make a deal with the  travel agency to pay you the commission.  You arrange to book the cruise for the Seller and apply the commission toward the purchase price of the property.  The Seller gets the full value he was seeking and at the same time the Buyer's outlay is reduced.
 
As you can see, effective questioning skills are vital for defining the issues and determining what the parties really want.  You have to ask the right questions to get people to talk about more than their positions.  However, if you develop that skill, you can be in a position to design creative options that will meet everyone's needs.

VISIT OUR WEBSITE AT www.dean-law.com.

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BLOOD IN THE STREETS
11 August 08 10:59 AM | Dean Hanewinckel | with no comments
I just got back last week from a family vacation to Washington, D.C. My four kids, aged 12 to 15 (that’s right – we have twins) had never seen our nation’s Capitol and we had a great time exploring the symbols of our country’s greatness.

Standing on the mall near the Washington Monument and looking at the Capitol building, White House and the monuments reminded me of the scene in the movie, War of the Roses, where Danny DeVito’s character looks out of the window in his Washington D.C. office and remarks, "best home field advantage in the world."

Those of us who are entrepreneurs truly do have the best home field advantage in the world. We have the freedom to choose our professions and strive to fulfill our dreams. We have a relatively free hand to operate our businesses as we wish, knowing that we alone are responsible for our own success.

Sometimes outside circumstances make it seem as if we have lost control of our destiny. Our local real estate market, as well as the national market, has suffered a painful decline. We are constantly told by political candidates and pundits that we are entering a recession.  Many, for some strange reason, hoping to create a self-fulfilling prophecy. The media is a blaring boombox playing its Top 40 of gloom and doom.
 
The playing field has definitely changed.

However, as we all should know – where there is change, there is opportunity. Believe it or not, there are real estate professionals who continue to sell real estate in this market and make huge sums of money. They have repositioned themselves to take advantage of the opportunities afforded by this change. They don’t listen to the nay-sayers. They are optimistic.

I truly believe that success begins with a positive attitude. Investors who seek to thrive in today’s market want to associate with like-minded indviduals.  They are not likely to rely on or work with advisors who reek of pessimism. They want someone who shares their positive view of the future.

The first rule of investing is: Buy Low and Sell High. I think we can all agree that today we are in a "Low." Common sense as well as basic economics tells us it is time to buy. John D. Rockefeller, the wealthiest man in history, had a maxim by which he lived. "Buy when there’s blood in the street." There are countless examples of persons who purchased during the Great Depression and the recession of the late 1970's and, when the economy rebounded, made incredible fortunes.

You can always find people out there with vision who stubbornly insist on buying when everyone else is bailing out – buying when there is blood in the streets. You need to find these investors. But more importantly, you need to share their optimism.

It doesn’t take a genius to know that the real estate market will come back. It always does. It just takes the courage to break through the wall of pessimism that is being built around us.

Embrace the opportunity.
 
Dean Hanewinckel is a real estate attorney in Englewood, Florida.  You can subscribe to his monthly - "Outside the Box Solutions" Real Estate Newsletter by clicking http://www.dean-law.com/special-offer/ or call him at (941) 473-2828.
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Secrets to a Smooth Closing - Identifying the Seller on the Purchase Contract
28 July 08 12:33 PM | Dean Hanewinckel | 1 comment(s)
 
 
Contracts are only enforceable against the persons who agree to be parties to them.  I've had a number of occassions when our office has received a contract for us to conduct the closing, only to discover that not all of the owners had signed or even been mentioned as a party to the transaction.
 
Sometimes one of the sellers gives incorrect information as to the owners of the property.  Other times a spouse is required to join in on the contract.  Whatever the reason, if an owner is not included on the contract, there is a real chance that the deal may fall through.
 
In this article, I'll show you some situations where owners are not always who you may think and I'll give you some tips to help you avoid delaying or even losing a closing.
 
Sellers' Names and the Contract
 
The sellers' names should appear exactly as they are on the deed in which they acquired title.  If the property is jointly owned, all owners are required to be a party to the contract. 
 
All persons named as sellers must sign the contract for it to be valid.  If a property is owned by a husband and wife and only the husband signs the offer, it is not a valid offer and your response should be to require the wife to sign before presenting the offer to the buyer. 
 
If the property is owned individually by a married person and the house is his homestead, the Florida homestead law requires both husband and wife to sign the contract.  You must add the name of the spouse and both must sign.
 
I See Dead People - On My Contract
 
If the record owner of the property is deceased, the situation becomes a little more complicated.  If the deceased owner's estate is in probate, the personal representative of the estate is usually the proper party.  The seller's line should read, "John Smith, as the Personal Representative of the Estate of William Jones, deceased."
 
In this case you would have to determine whether the personal representative has authority to sell the property.  First, he should produce "Letters of Administration" from the court which shows he has been appointed as personal representative. 
 
In most cases a personal representative's authority is set forth in the will.  If not, approval of the sale by the probate court is necessary.  If there is no will or, if there is a will but it does not give the personal representative authority, the sale should be made contingent on the authorization of the probate court.  The contract should contain the provision, "this contract is conditioned on seller obtaining an order authorizing sale from the probate court."
 
If the property was the deceased person's homestead, you may need to acquire the signatures of all the heirs or beneficiaries under the will.
 
Other Entities
 
If the property is owned by a corporation, the seller's information should contain the exact name of the corporation and the contract should be signed by the president, vice president or other authorized agent or officer of the corporation.  The website of the Florida Department of State (www.sunbiz.org ) contains information on Florida corporations and limited liability companies.
 
If the property is owned by a trustee, the deed where the trustee acquires title should specify that the trustee has authority to sell the property.  If not, a review of the trust document is advisable.  Also, in preparing the contract, the proper seller is the trustee, not the trust entity.
 
If the seller is a non-resident alien, you may be responsible for withholding proceeds of the sale for payment of taxes under the provisions of the Foreign Investment in Real Property Tax Act (FIRPTA).  A special FIRPTA provision should be included in the contract.
 
Powers of attorney must be examined before you rely on them.  Someone may tell you they have a power of attorney for Uncle Joe up North, but until you see the document, make sure it complies with Florida law and find out a little more about Uncle Joe, you should not rely on it.
 
Where Do I Get the Information?
 
Do not rely solely on information obtained from the property appraiser or the MLS listing.  Many times this information is incorrect or incomplete.  To determine the proper sellers, you should look to the previous deed or other documents of record.
 
If the tax rolls show someone different than the person claiming to be the owner, if a deceased person is listed as the owner, or if the appraiser's records say the property is owned by an estate or trustee, it would be a good idea to have your owner/client invest in a title search.  You should also consult a real estate attorney to determine what procedures are necessary to identify the correct seller or sellers.
 
For more Outside the Box Real Estate Solutions, sign up for my FREE newsletter at http://www.dean-law.com/special-offer/.
 
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Florida's Amendment 1 - How it Affects You and Your Clients - Part 2
27 June 08 09:23 AM | Dean Hanewinckel | with no comments
 
 
In January, 2008, the citizens of Florida approved Amendment 1 to its state constitution and changed the property tax system in Florida.

The amendment has four major provisions:

1. Increased homestead exemption.

2. Portability of the Save Our Homes benefit.

3. $25,000 tax exemption for tangible personal property.

4. 10% annual cap for non-homestead property.

In today's issue we will discuss provisions 3 and 4.

$25,000 Tax Exemption for Personal Property

The third part of Amendment 1 is a $25,000 exemption on all tangible personal property such as machinery, furnishings, fixtures and equipment.  This will provide a small relief for businesses who get nothing from the homestead exemption increase and Save Our Homes protability.

According to the National Federation of Independent Business, about 1.3 million businesses file tangible personal property tax returns in Florida, paying an average of $450 per year.  This provision will also benefit landlords as the exemption will apply to furniture and appliances in rental properties.
 
One type of taxpayer who will benefit from this exemption is the mobile home owner.  More than 1.1 million Floridians currently live in mobile homes or manufactured housing parks and communities.  The tangible personal property tax for those living on a leased lot in a community is levied against their porches, sunrooms, storage rooms and carports.  With the $25,000 exemption, most of them will no longer pay any tax at all.

10 Percent Cap for Non-Homestead Property

Part 4 of Amendment 1 provides a ten percent cap on annual increases in the assessment of non-homestead property, both residential and non-residential.

Owners of second homes and rental property endured the largest property tax increases over the past several years.  Some of the most urgent lobbying for property tax relief came from owners of second homes. 
 
Despite these factors, they will only receive modest relief under the new law.  According to Florida Tax Watch, an independent watchdog group, single year increases in taxable value generally fall below 5 percent, making the 10 percent cap "so high as to be of little value to most properties."
 
Many people involved in these issues believe that Amendment 1 is only a start.  Because of Governor Crist's commitment to tax relief, it seems likely that many of the deficiencies in the law will be addressed by the legislature and the Governor in the near future.

TO LEARN MORE ABOUT FLORIDA HOMESTEAD, VISIT OUR WEBSITE AT www.dean-law.com.

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Florida's Amendment 1 - How it affects you and your clients
26 June 08 03:11 PM | Dean Hanewinckel | 2 comment(s)
 
Part 1
 
In January, 2008, the citizens of Florida approved Amendment 1 to its state constitution and changed the property tax system in Florida.

The amendment has four major provisions:

1. Increased homestead exemption.

2. Portability of the Save Our Homes benefit.

3. $25,000 tax exemption for tangible personal property.

4. 10% annual cap for non-homestead property.

In today's issue we will discuss the first 2 provisions.

Increased Homestead Exemption

An additional exemption of $25,000 was created to lower the taxable value of homestead property for all taxes except those levied by school districts.

The exemption will apply on the assessed value of the homestead property that exceeds $50,000. This means that, if the just valuation of your homestead property is $100,000, the first $25,000 of value and the assessed value between $50,000 and $75,000 would be exempt from taxes. However, the value between $50,000 and $75,000 would still be used to determine the amount of school tax.

Portability of the Save Our Homes Benefit

Under Save Our Homes, the assessed value of homestead property cannot increase more than 3% each year. Previously, if you sold your homestead and bought a new home, the taxable value of the new home would be equal to the just valuation. All of the benefits you accrued in your old home under the Save Our Homes amendment would be lost. As a result, some new homeowners suffered a large increase in property taxes even though the market value of the new home was not greater than that of the old one.

Now, under Amendment 1, you can transfer some of the Save Our Homes benefit to your new home.

If the market value of your new home is the same or greater than your old home's market value, the entire difference between market value and taxable value will be applied to your new home.

This is explained by the following illustration:

                       Market Value           Taxable Value        Difference

   Old Home          $300,000                 $200,000           $100,000                 

   New Home         $400,000                 $300,000           $100,000
 
The market value of your old home at the time you sell it is $300,000. You have lived in it for 12 years and the taxable value at the time of sale is $200,000, creating a difference of $100,000. The market value of your new home at the time you purchased it is $400,000. Amendment 1 allows you to transfer the $100,000 difference from your old home and therefore the taxable value of your new home starts at $300,000. Prior to Amendment 1, the taxable value of the new home would have been equal to the market value: $400,000.

If the market value of your new home is less than that of your old home, you will not receive the entire difference. Instead, the new home's difference will be the same percentage of its market value as the old home's difference is of the old home's market value.

                      Market Value     Taxable Value   Difference    % Difference
 
   Old Home        $300,000            $200,000      $100,000       33.33%
 
   New Home       $200,000            $133,333      $ 66,667       33.33%

In this example, the old home's Save Our Homes difference is 33.3% or 1/3 of its market value. The new home's difference would be 33.3% of its market value, or $66,666. Therefore, the taxable value of the new home would be $133,334.

Under Amendment 1, if you establish a new homestead and, (1) qualify for the homestead exemption by January 1 of a particular year and, (2) you had a homestead exemption on your old home in either of the two immediately preceding years and, (3) you apply for the homestead exemption and Amendment 1 transfer (of the difference) by March 1 of the particular year, then you will be able to transfer all or part of the difference (see examples above) to your new home.

When you apply for the exemption on your new home, you will have to include a copy of your notice of proposed property taxes on your old home and sign a sworn statement that you are entitled to the assessment reduction.
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Dealmaking Outside of the Box
09 June 08 01:12 PM | Dean Hanewinckel | 1 comment(s)
Sometimes a simple, straightforward application won't bring a deal to fruition.  Fortunately, knowing your buyer and seller and inserting a little imagination can make you a hero.  Here is a situation that requires a little "outside the box" dealmaking.

Your seller owns a highly appreciated property, has an interest in leaving some of his eatate to charity and wants to pay for the education of his grandchildren.
 
He has the idea that  he will pruchase an annuity with the proceeds of the sale and use the annuity payments to finance the education expenses.  His problem is: the sale will generate a large capital gain, the tax on which will greatly diminish the proceeds and thus the size of the annuity.
 
Your solution is a charitable remainder trust or "CRT."  When a CRT is established, a donor transfers property to an irrevocable trust but retains (either for himself or for one or more non-charitable beneficiaries) a variable annuity from that trust. At the end of a specified term, or upon the death of the beneficiary, the remainder interest in the property passes to the charity the donor has specified.
 
A gift to a charitable remainder trust will qualify for income and gift tax charitable deductions (or an estate tax charitable deduction).  The donor receives an immediate income tax deduction for a portion of the amount that will pass to the charity at the end of the term.
 
Because a CRT is exempt from federal income tax (the income and gains of the trust are only taxed when they are distributed to the noncharitable beneficiaries as part of the fixed percentage of trust assets distributed each year), they are frequently used to defer income tax on gains about to be realized. For example, if a donor has an appreciated asset that is about to be sold, the donor can give the asset to a charitable remainder trust, reserving the right to received a fixed percentage of the value of the trust for life, or a specified time, and the asset can then be sold by the trust and the proceeds of sale reinvested without payment of any federal income tax on capital gains. The capital gains will be taxable to the donor only as they are distributed to the donor as part of the annual distributions from the trust.
 
In this case your seller creates the CRT and deeds the property into it.  The trustee of the CRT then sells the property.  As described above, no capital gains tax is due and the full proceeds of the sale are available to invest and provide an income.  The seller then receives regular distributions from the CRT equal to a pre-set percentage of the assets in the trust.  These distributions are taxable to the seller, a portion as capital gains and a portion as ordinary income.  However, the income can be offset in whole or in part by a carry-forward of the charitable deduction received as a result of the donation of the property to the CRT.  These distributions are used by the seller to fund his grandchildren's educations.
 
After the payment period (either the seller's lifetime or a specified number of years), the property remaining in the CRT is distributed to the charity or charities named by the seller in the CRT.
 
This solution is available only when you inquire of the seller his goals and intentions for the sale and proceeds of the property.  Once you have this information, as well as other financial data, you can begin to craft a solution for the seller.

If you have any circumstances that lend themselves to outside the box dealmaking, send me an e-mail at dean@dean-law.com . I look forward to brainstorming with you and coming up with creative solutions to your real estate challenges.
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Shared Use Ownership
06 June 08 10:57 AM | Dean Hanewinckel | 2 comment(s)

How can you sell more real estate? The secret in this market is structuring a deal that provides the most value to your buyer and seller. This article introduces you to a new concept that makes owning a vacation home in our area more affordable and more practical to buyers. This concept is Shared Use Ownership.

Our area has traditionally been a favorite place for snowbirds to spend their winters. The weather, the activities and a business community that caters to them make this an appealing location for a second home.

While most of these visitors rent their accommodations, many have found that purchasing a vacation home or condominium unit is a good investment. However, the poor real estate market, together with rising expenses, has caused these persons to question the wisdom of putting so much money into an asset they will only use a few months of every year.

This is extremely frustrating to the real estate professional, especially with the glut of condominium units and homes on the market. Shared Use Ownership is a method that will make investment in these properties more appealing to buyers.

Shared Use Ownership is an arrangement in which a group of individuals or families co-own and share the use of a vacation home or condominium unit. It is based on a written agreement between the co-owners that covers, among other issues, the allocation of occupancy and sharing of expenses of the property.

The buyer under a Shared Use Ownership can enjoy many benefits. Among them are:

1. It costs less to purchase the property. Since the buyer is only purchasing a shared interest in the property, he only pays a fraction of the purchase price.

2. A co-owner has the benefit of ownership but only pays for the period of time he would use the property. The buyer is not paying for months where the property would be vacant. Ideally, each co-owner would occupy the property for a period of time proportionate to his ownership share. Ownership groups could be assembled based on their anticipated usage period. A group could consist of a retired northern couple who want to occupy the property in the winter, a European couple who prefer the spring, a Florida family who wants a summer get-away, etc.

3. Each co-owner would have lower expenses. Property taxes, insurance, maintenance fees, utilities and other expenses of ownership would be shared by all of the co-owners. This also eliminates the need to lease the property during vacant months to help meet expenses.

4. A co-owner can share in the appreciation of the property. As an owner of a share of the bricks, mortar and dirt, and not just an interval period (as in a timeshare), the co-owner has a tangible investment.

STRUCTURE AND MECHANICS OF A SHARED USE OWNERSHIP ARRANGEMENT.

The co-owners together would share the cost of acquisition, the expenses and the maintenance of the vacation home. They would also share the occupancy and use of the home, setting a schedule under which each owner is allocated certain weeks or months.

Shared ownership is not a time share or fractional ownership project. Those arrangements are usually set up by a developer and purchasers would buy an interval or pre-arranged week of usage.

The Shared Use Ownership arrangement is flexible. The method of structuring the ownership, allocating the use, and sharing the expenses can be set up differently and uniquely for each property. There is no developer, no set structure, and these arrangements are usually limited to a maximum of six owners or families. This arrangement works with houses as well as condominium units.

An owner can choose his partners in the vacation home. All of the owners together can then decide on the appropriate legal structure of the ownership. It may be a limited liability company, corporation or tenants-in-common.

The owners would then, with the help of an attorney, prepare the user agreement, which is the centerpiece of the Shared Use Ownership arrangement. The user agreement sets forth how the owners will allocate the occupancy, share the expenses, manage the property and settle disputes. It will also address when a co-owner can sell his interest and under what circumstances the owners would sell the property.

The user agreement will also govern such issues as whether the property can be rented to third persons and how the home will be decorated. It provides the method for setting a budget so that all expenses are paid and a reserve maintained to pay for repairs and maintenance. Under the agreement each co-owner is required to contribute his share of the expenses on a regular basis and procedures are included to address an owner who is delinquent in payments. This ensures that the owners can meet the expenses of the property as they come due.

WHAT IS THE REAL ESTATE AGENT'S ROLE?

In addition to your usual duties of marketing the property and bringing the buyer and seller together, you may wish to actively participate in assembling the purchase groups. It is interesting to note that in existing Shared Use Ownership arrangements, groups of complete strangers have been just as successful as groups of family members and friends.

You as the real estate agent, can put together ownership groups based on their occupancy period requirements, their financial situation and their preferences in which type of property they wish to own.

This also creates opportunities for you or your company to manage the property and, if the owners agree, to act as rental agent for unoccupied periods.

HOW I CAN HELP

I will work with a select number of Realtors in a joint marketing program I have developed.  It is designed to attract buyers to Shared Use Ownership through a system of advertising, seminars, internet marketing and direct mail.

Once you have assembled a potential group of buyers, I can set up the ownership entity and draft the user agreement and other documentation. I can write the title insurance and conduct the closing. I can also provide agreements and checklists regarding the management, operation and leasing of the property. I will also share checklists and questionnaires with you to use to help put together an ownership group.

If you are interested in the value of this unique program, I would be happy to personally discuss this concept with you. Please, e-mail me at dean@dean-law.com and put "Shared Use Ownership" in the subject line or call me at (941) 473-2828.

I look forward to working with you.
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