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By Matthew A. Quick In the case of Anderson v Kohler, the court held that an oral contract to sell a piece of property was not enforceable, because price and time-for-performance terms were indefinite, and no performance was demanded, nor were any funds tendered, within a reasonable time.
NOTE: a written contract should always be used during a real estate transaction. Without it, no enforceable promise is made.
By Matthew A. Quick Before going through the process of drafting, printing, signing and traveling to file your document (or sending it off in the mail), be sure it complies with the following, pursuant to MCL 565.201, or the Register of Deeds will not accept it:
1. The name of each person purporting to execute the instrument is legibly printed, typewritten, or stamped beneath the original signature or mark of the person.
2. A discrepancy does not exist between the name of each person as printed, typewritten, or stamped beneath their signature and the name as recited in the acknowledgment or jurat on the instrument.
3. The name of any notary public whose signature appears upon the instrument is legibly printed, typewritten, or stamped upon the instrument immediately beneath the signature of that notary public.
4. The address of each of the grantees in each deed of conveyance or assignment of real estate, including the street number address if located within territory where street number addresses are in common use, or, if not, the post office address, is legibly printed, typewritten, or stamped on the instrument.
5. Each sheet of the instrument must comply with all of the following requirements: (a) Has a margin of unprinted space that is at least 2-1/2 inches at the top of the first page and at least 1/2 inch on all remaining sides of each page. (b) Displays on the first line of print on the first page of the instrument a single statement identifying the recordable event that the instrument evidences. (c) Is electronically, mechanically, or hand printed in 10-point type or the equivalent of 10-point type. (d) Is legibly printed in black ink on white paper that is not less than 20-pound weight. (e) Is not less than 8-1/2 inches wide and 11 inches long or more than 8-1/2 inches wide and 14 inches long. (f) Contains no attachment that is less than 8-1/2 inches wide and 11 inches long or more than 8-1/2 inches wide and 14 inches long.
By Matthew A. Quick When inspecting the deed to property, the buyer may find the word "Trustee" following the name of the person purported to be the trustee of a trust managing the property, but if the deed contains no other reference to a trust or trust powers, it does not itself constitute notice of a trust. Michigan Land Title Standard 8.2.
Michigan law provides that when an express trust is created, but is not contained or declared in the deed to the trustees, and the trustees then convey the property to a purchaser (for valuable consideration and without notice of the trust) the title to the property shall vest in the purchaser for value. MCL 555.20.
In sum, more than just the word "Trustee" after the name of the trustee in the deed is required to give notice that the subject property may only be conveyed pursuant to the rules of a trust.
By Matthew A. Quick Remember trustees, if a trustee of an express non-testamentary trust directly or indirectly conveys trust real property to himself or herself in an individual capacity, the title acquired is not marketable unless the trust instrument authorizes the conveyance. Michigan Land Title Standard 8.7.
By Matthew A. Quick Before acting on the hope of reconstructing your condo, consider what the court held in Picerno v 1400 Museum Park Condominium Association. Owners of adjacent condo units sought to construct a common front door in the hallway of the condo complex and connect their two entrances. The court held that particular modification would diminish ownership interests of other condo unit owners, per declarations that each owner has an undivided interest in common elements. The Condominium Property Act requires that renovations are subject to limitations in condominium instruments, therefore the condo owners that wanted to renovate should have complied with the requirements of the condo declarations, which in this case, were to seek approval of board and of other condo unit owners.
By Matthew A. Quick Avoiding probate seems to be the goal in everyone's mind and, most often, for good reason. Although probate may be necessary at times, it can be time consuming, public and costly (with probate court fees and costs and publication fees alone averaging approximately $800 for an estate with property worth $200,000).
Remember, probate is the court process of distributing the property of someone's estate (what someone owns at death). If there is a will, the probate process distributes property pursuant to it. If there is not a will, the probate process distributes property pursuant to state law. A common misconception is that a will allows an estate to avoid probate. In fact, the opposite is true. In order for a will to be used, it MUST go through the probate process.
There are two main alternatives to relying on probate (that is relying on only a will or nothing at all). The first is the use of a trust, which is an agreement that requires a trustee to hold property for the use and benefit of someone else. Trusts are a great utility for families with loved ones that have special needs or minor children, because of certain protections and distribution provisions that are offered. However, sometimes a trust is not necessary.
If someone has basic wishes for distribution of his or her estate, designating beneficiaries on the titles of the property he or she wish to distribute is the effective and efficient alternative. Beneficiary designation works in the following way: as for a deposit account (checking, savings, investment), a "Transfer on Death" provision can be added allowing the owner of the account to give the funds of the account to another upon his or her death; as for a house, a deed can be written to create an interest for someone else upon death by use of a Lady Bird provision (a provision that states the owner shall own the real estate for his or her life and do with it whatever he or she pleases, but if the owner continues to own the real estate upon death, the real estate shall be transferred to certain beneficiaries); as for vehicles, a form can be filed with the Secretary of State by a spouse or heir (for more info on this click here); and personal property may be transferred before death or entrusted to someone to help distribute it after death.
Ask your attorney to help because beneficiary designation can be a bit daunting, but, if done correctly, it can save time and money.
NOTE: a will should always be prepared as a safety net, even if a trust or beneficiary designation exists. If an estate is planned to avoid probate, and organized appropriately, the will is not used.
By Matthew A. Quick
For a more general article on real estate tax proration go here.
Real estate taxes in Cook County are annually paid in two installments (typically due about March 1st and August 1st) and are paid in arrears, which means the taxes paid in 2018 are for taxes accrued in 2017. Cook County has adopted an accelerated billing method, which means the first installment of taxes is 55% of the previous year's total tax amount. It is considered accelerated billing because a tax is levied on real estate without the County ascertaining the tax rates (in other words, a portion of the tax is paid before the actual amount of tax is calculated). Therefore, the first installment of taxes alone cannot be used to determine the entire year's tax obligation, because the entire year's tax obligation has not yet been calculated.
To prorate Cook County taxes for a home sale, look to the last ascertainable full tax year. For example, if a home sale occurred in May of 2018, at a time when the taxes for 2017 were being paid, then 2016 will be the last fully ascertainable tax year, because the 2017 taxes had not yet been calculated (bills are typically published in June showing the full year tax less the March payment). Once the most recent full tax year has been found, look to the real estate contract to determine the proration rate (typically between 105% and 110%). Finally, determine the closing date and count the number of days into the year the date represents (June 15th is 166 days). Let's prorate!
Assume that the closing date was set for June 15, 2018. The last fully ascertainable tax year was 2016 and the total tax for that year was $10,000. We will assume a proration rate of 110%. We know the March 2018 payment was in the amount of $5,500 (55% of the last full ascertainable tax year).
Second Installment for 2018 is determined by multiplying the last fully ascertainable tax year ($10,000) by the 110% proration factor (10,000 x 1.10 = 11,000) and subtracting the amount already paid in March payment (11,000 - 5,500 = 5,500). Thus, the tax proration credit for the 2nd installment of 2017 taxes (paid in 2018) would be $5,500.
The proration for the days leading up to closing is determined by again multiplying the last fully ascertainable tax year ($10,000) by the 110% proration factor (10,000 x 1.10 = 11,000). Determine the amount of days from January 1, 2018, to June 15, 2018 (166 days). Reduce the amount of the total prorated tax ($11,000) to the amount of tax owed per day ($11,000/365 = 30.137). Multiply the amount of days by the amount of tax per day (166 x 30.137 = $5,002.74). Thus, the prorated amount for the days spent at the property for 2018 (to be paid in 2019) would be $5,002.74.
The total amount of tax based upon this proration would be $10,502.74 ($5,500 + $5,002.74).
The tax proration is credited from the seller to the buyer at closing, because, as noted above, the taxes will not become due until a later date.
By Matthew A. Quick The court in In re Estate of Grace Ellis, Deceased, held that a tort claim for intentional interference with expectancy of inheritance is not limited by the 6 month limitation period of the Probate Act where a charitable entity was unaware of its bequest in prior will until two years after later will had been admitted to probate, and thus did not choose to forgo opportunity to contest probated will, as it never had that opportunity.
By Matthew A. Quick The court in Glavinskas v William L Dawson Nursing Center, Inc, held that a disabled person is not accountable for negligence of his representatives. The disabled person's guardian and attorney in a personal injury suit did not adequately protect the disabled person's interests and the court allowed the disabled person to pursue their claim regardless of the negligence of the guardian and attorney.
By Matthew A. Quick Terminating the lease of a tenant can be tricky, mainly because of the rules involved. The situations where particular attention needs to be paid concern tenancies from year to year, month to month, and week to week (these tenancies are also known as a periodic tenancies).
If a periodic tenancy is year to year and does not involve farmland, 735 ILCS 9-205 states that:
60 days' notice, in writing, shall be sufficient to terminate the tenancy at the end of the year. The notice may be given at any time within 4 months preceding the last 60 days of the year.
If a periodic tenancy is year to year and involves farmland, 735 ILCS 9-206 states that:
The notice to quit shall be given in writing not less than 4 months prior to the end of the year of letting. Such notice may not be waived in a verbal lease.
The statute then prescribes the following notice:
You are hereby notified that I have elected to terminate your lease of the farm premises now occupied by you, being (here describe the premises) and you are hereby further notified to quit and deliver up possession of the same to me at the end of the lease year, the last day of such year being (here insert the last day of the lease year).
Alternative rules exist if the real estate involved is farmland and the lessor is a life tenant.
For a periodic tenancy from week to week, where the tenant holds over without special agreement, 735 ILCS 9-207 provides, "The landlord may terminate the tenancy by 7 days' notice, in writing, and may maintain an action for forcible entry and detainer or ejectment." Further, involving periodic tenancies other than week to week that are less than one year, the statute provides, where the tenant holds over without special agreement, the "The landlord may terminate the tenancy by 30 days' notice, in writing, and may maintain an action for forcible entry and detainer or ejectment."
735 ILCS 9-208 further states:
Where a tenancy is terminated by notice, [under the sections detailed in this article], no further demand is necessary before bringing an action under the statute in relation to forcible detainer or ejectment.
By Matthew A. Quick If you are looking for easy, how about property automatically transferring to a beneficiary upon the owner's death, without probate or any other administration. Deposit accounts (checking, savings) can have transfer on death provisions, so too can individual retirement accounts and life insurance. When it comes to vehicles, state law provides an opportunity to designate a beneficiary right on the title in the event the owner dies. 625 ILCS 5/3-104 provides:
The Secretary of State shall designate on the prescribed application form a space where the owner of a vehicle may designate a beneficiary, to whom ownership of the vehicle shall pass in the event of the owner's death.
Further, 625 ILCS 5/3-107 provides:
The Secretary of State shall designate on a certificate of title a space where the owner of a vehicle may designate a beneficiary, to whom ownership of the vehicle shall pass in the event of the owner's death.
If it fits into your estate plan, visit the Secretary of State to designate a beneficiary on your title. This process provides a great alternative to placing a vehicle in trust or having joint vehicle owners (too much liability!).
If, however, a beneficiary was not designated prior to the passing of a decent, consider the use of a small estate affidavit or attorney's affidavit. More information can be found by clicking here: Vehicle Title Transfers . Here is the Illinois Secretary of State Small Estate Affidavit.
The lesson: There are easier alternatives to transferring a vehicle than opening a probate estate. Please contact me with any questions.
By Matthew A. Quick The court in Reger Development, LLC v National City Bank, found that a bank may require a borrower to make full repayment on a commercial loan even though the borrower was current on the note at time the bank made demand. The terms of the promissory note in this case allowed the bank to make demand for full repayment at any time, and a duty to act in good faith, relied upon by the borrower, does not apply to lenders seeking payment on demand notes.
By Matthew A. Quick Michigan law provides for a waiver of certain property rights that are normally automatically afforded a surviving spouse. When considering premarital (prenuptial) or postmarital (postnuptial) planning, estate and succession planning should be a very large part of the consideration. MCL 700.2205 states the following:
The rights of the surviving spouse to a share under intestate succession, homestead allowance, election, dower, exempt property, or family allowance may be waived, wholly or partially, before or after marriage, by a written contract, agreement, or waiver signed by the party waiving after fair disclosure. Unless it provides to the contrary, a waiver of "all rights" in the property or estate of a present or prospective spouse or a complete property settlement entered into after or in anticipation of separate maintenance is a waiver of all rights to homestead allowance, election, dower, exempt property, and family allowance by the spouse in the property of the other and is an irrevocable renunciation by the spouse of all benefits that would otherwise pass to the spouse from the other spouse by intestate succession or by virtue of a will executed before the waiver or property settlement.
By Matthew A. Quick A question that comes up frequently: If one spouse sets up a trust in his or her name only, and funds it with marital property does the other spouse have any right to the property in the trust upon death?
Upon death, the other spouse does not have an interest in the trust and there is nothing under the Estate and Protected Individuals Code (the law that controls this area) that gives him or her any rights under the trust. Not even elective rights may be made against the trust.
By Matthew A. Quick The court in The Board of Directors of the Warren Boulevard Condominium Association v Milton, found that an eviction complaint was appropriate when filed by condo association against condo owner where she failed to pay $4,484.00 in assessments and sought possession of condo unit and rents accruing through trial, costs, and attorneys fees. Condominium Property Act allows for forcible entry and detainer action to be filed, based on unpaid assessments, and court properly ordered condo owner to pay monthly $178 assessments during pendency of lawsuit.
By Matthew A. Quick The court in Schaaf v Astrue, held that a claimant could be denied disability benefits based on claimant's loss of partial use of one arm. The court opined that an administrative judge could properly find that claimant's injury was not severe enough to prevent him from performing light duty work. Further, the administrative judge was not required to give controlling weight to a treating physician's contrary opinion since said opinion was not supported by medically acceptable clinical and laboratory diagnostic techniques to document any of claimant's symptoms that would prevent him from working. Moreover, an administrative judge could discount claimant's contention that he suffered from extreme pain where medical records did not show that claimant made similar claim.
By Matthew A. Quick The court in Jerman v Carlisle, McNellie, Rini, Kramer & Ulrich, LPA, et al., held that the bona fide error defense in §1692k(c) does not apply to a violation resulting from a debt collector’s mistaken interpretation of the legal requirements of the FDCPA.
By Matthew A. Quick The court in K. Miller Construction Compay, Inc v McGinnis iterated that oral contracts are enforceable and quantum meruit relief is available even if the Home Repair and Remodeling Act was not followed. Specifically, the Act states that “[p]rior to initiating home repair or remodeling work for over $1,000, a person engaged in the business of home repair or remodeling shall furnish to the customer for signature a written contract or work order.” The court opined that recovery is available under both theories listed above even if the the agreement is not in writing.
By Matthew A. Quick The court in Sperl v C.H. Robinson Worldwide found that a principal-agent relationship existed between Defendant company and truck driver, as company owned the load of potatoes driver was hauling, and controlled method of payment and manner of driver's work performance, including imposition of fines if driver did not arrive at company's warehouse within certain time. With the court's finding of an agency relationship, the company was entirely liable for the driver's negligent conduct.
This case, among the many others, highlights the importance keeping people and entities, and their respective practices, completely separate, whether it is by separating control, accounting, etc. The liability protections built around a business can be rendered worthless if steps are not taken to ensure formalities are being followed.
By Matthew A. Quick The court in Hirsch v Optima, Inc, 397 Ill App3d 102 (2009) found where a builder knew of leaking and flooding problems of a condominium and told owner to not disclose leakage, a claim for fraudulent misrepresentation and consumer fraud can stand where indirect misrepresentation is alleged. Negligent performance of voluntary undertaking can be established without element of reliance, if theory is that tortfeasor's conduct increased risk of harm.