Sugarman Law

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Building A House + President Once More (June Was About My ‘Why’)

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My business coach talks about how everyone should know their ‘why’ – their reason for doing what they do. In fact, we had one of our yearly retreats in June and did a lot of mindset work. I really came back with great clarity around some decisions in my business. The concept of ‘why’ also played a huge role during this month for me. 

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Protect Your Assets Before It’s Too Late

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When you get the newsletter this month, I will have just seen Bob Seger and the Silver Bullet Band at Jones Beach. One of my favorite songs is Night Moves. But it means so much more to me now than it did when I was younger. Instead of thinking about young love, my attention is now drawn to the line near the end of the song, “Strange how the night moves, with Autumn closing in?” So, this month is focusing on “Autumn closing in” and how you can make sure your assets are protected and how to make things easier for your family when you pass.

Let’s create some scenarios to help understand why this is so important.

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You Signed It, They Signed It…But What If That Didn’t Happen? Contracts 101

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We sign contracts all the time. In fact, every time you visit a website that uses cookies and you hit ‘accept’ when it pops up or you download an app and agree to the terms and conditions, you enter into a binding agreement.

Contractors, make sure you have the proper licenses in place. If the homeowner does not pay the bill and you don’t have the proper licenses in place in New York, you cannot sue. If your contract doesn’t cover what you are trying to enforce, like extra costs, it might be difficult to recover. If you want legal fees, if you have to sue, make sure that provision is in the contract.

If you are going to agree on something via text or email, save the correspondence. Print it out. If something does go wrong, that exchange can be part of the lawsuit.

Contracts protect both parties. Even if it’s a friend doing the work or you are doing work for a friend and you think you can trust them — when money is involved things get complicated.

Get things in writing upfront and ease the stress later.

Leases

Contracts are vital here. If you are going to lease a property, ensure the tenant knows what is expected of them. If you have a unit and you do not want them to use the basement, spell that out. If rent is due on the 1st, spell that out. If the tenant is responsible for maintenance, make it clear from the beginning.

On the flip side, if you are a tenant, ensure you know what is expected. If the landlord says you can have a pet on the unit, for example, but you don’t have that in writing, it could be trouble later.  

Events

If you are hiring a caterer, make sure everything is spelled out in the contract. You don’t want to get an extra bill later because they said they used three extra pans of ziti. Know what is involved, the taxes, gratuity, etc.

If you book a venue, make sure the contract outlines if something happens – what if there is a flood or a power outage? What is the refund policy?

On the other side, if you are a caterer and you expect 50% of the cost upfront and 50% after the event, put it in the contract. If the person does not pay you the balance, you have the signed contract to back you up.

If you are doing linens for an event and they get ruined, make sure the contract outlines added cleaning fees.

You can’t enforce something that isn’t there. Think about all the possible scenarios and get them into the contract.

Freelance Work

Let’s say you are going to cut grass in the neighborhood. Make sure you have something in writing that outlines your costs and how you expect to be paid. It doesn’t have to be complicated. A simple, one-page agreement can work.

If you are the person using the lawn services, make sure there is a contract of what you are willing to pay for work done. You don’t want to find out the person did extra tree cutting without your knowledge and sent a $500 bill.

If you are designing your friend’s wedding invitation, make sure your contract states that they need to approve the final design before printing, so they can’t come back to you with changes that cost you more money.

Cultural Differences

Breach of contract can be different in other countries. Not all cultures feel the same about a verbal agreement. While in some countries, word is bond, that is not the case for others and cannot be enforced in a court of law.

If you are working with someone out of the United States, make sure you are both on the same page (literally) with a contract that fits both of your needs.

A Few Things To Remember

-Contracts do not have to be robust. They can be as simple as a one-page outline. But that document is gold if it’s needed later.

-Add language into your contracts to leave room for modifications. Put something like “any updates to this process may be discussed and changed via email.”

-Use e-sign services for convenience and put language in such as, “an emailed copy can act as an original, etc.”

-Make sure both parties expressly understand the contract before signing it.

If you need help drafting, reviewing or dealing with a contract, call me. I can help at any stage of the process.

Your Mortgage Is Past Due…Do You Know Your Options?

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Anything can happen at any time and suddenly, you can’t pay your mortgage. It’s a scary thought. And it can happen to just about anyone. Most recently with the government shut down, people missed several paychecks and if they didn’t have savings to pull from, many became late on payments to the mortgage lender and other creditors.

First, what is considered late?

Typically, you have a 15 day grace period built into your mortgage. If you need to go past those 15 days, you will need to pay (typically) a 2% late fee plus your regular monthly payment. Look at your statement for specific details. Don’t stress if you just need a few more weeks, it’s already there for you. Even if you are consistently one month behind, generally you won’t go into foreclosure just yet (although you may receive constant telephone calls from your lender).

But, be forewarned that if you fall more than three months behind, typically your mortgage company most likely won’t accept anything but the full past due amount, plus penalties, to stop from going into active foreclosure. And you might already be receiving notices of default from your lender. This is the time to take action and call me. We will provide you with an in-depth analysis of the options available to you and hopefully give you some peace of mind.

However, if you find yourself in this position, here is a general overview of some of your options:

Modification. This is a good route if your hardship issues are short-term, you are less than 6 months behind and you have equity in the house. Even if you have been served with foreclosure papers, this could still be an option. Essentially, a modification means that after an extensive financial review, the lender modifies the terms of the existing mortgage by lowering the interest rate and extending the term, thereby reducing your monthly payment.

Imagine it as if the lender tries to stretch the payment into something you can afford according to your debt-to-income ratio, and allows you to pay off the mortgage within a certain period of time. The lender’s financial review is much like the process of qualifying for a mortgage and you will need to produce the same financial documents. Some of the documents we need are two years of signed tax returns, two months of bank statements, two months of pay stubs, the bank statement for the loan, recent utility bills, profit and loss statements if you are a business owner, etc. The bank will look at your case to determine if your hardship warrants a modification. Every person, every loan, every lender is different. So even if you know someone who has done this with success, it doesn’t mean the process will look the same for you. Even the timeframe differs, it’s typically a 60-90 day review time, but I have seen modifications take longer.

Short Sale. If your house is underwater you can consider a short sale. A short sale is when the property is worth less than what is owed on the property and the lender agrees to take less to pay off the mortgage. This can be a lengthy process, but your house can be listed exclusively, so you won’t have signs on your door or in your yard. All the real estate and attorney fees, transfer taxes, etc. are generally paid from the proceeds, so there is no upfront cost to the homeowner. A negotiator will work with the bank to agree on a fair price for the home and it acts like a regular closing after that. You can even pre-sign everything so you don’t have to attend the closing.  One of the drawbacks is if you have extensive judgments, tax warrants or other liens on your property which need to be negotiated and paid off at closing.

Deed in Lieu of Foreclosure. Not everyone is a candidate for this option. If you have a second mortgage or any judgments or liens on the property, the bank will not agree to take back the property. This option is where you sign the deed over to the bank and walk away. The house is considered bank-owned and your credit report typically reflects the matter as “paid as agreed,” which won’t affect you as badly as a foreclosure.

If you are planning on going any of these routes, the first thing to know is do not be afraid. You have options, you have people that can support you and help you understand all you need to do. Be ready for the bank to start calling and asking for money.

There are also other debt relief options, like filing for bankruptcy. Every situation will be different. Talk to trusted advisors.

We offer a free 30-minute consultation at Sugarman Law, P.C. to discuss your situation and what route would best suit you. Email us or call to schedule.