Lead-based paint was primarily used in homes built before 1978, but its effects are still being felt today. Lead is a toxic substance; exposure to lead increases the level of lead found in your blood, which can cause learning and other behavioral disorders. Chipped or cracked lead-based paint can increase your exposure to the lead in the paint. In 1978, Congress banned lead-based paint, and a variety of federal guidelines were put into place.
As a landlord or property manager, under federal law you are required to do the following to protect yourself: 1) If the property was built before 1978, you must provide a disclosure to your tenants stating whether or not you have any knowledge of lead-based paint being present in the home; 2) Include a warning statement about lead-based paint in your lease; 3) Give your tenant a copy of the federal HUD/EPA pamphlet "Protect Your Family from Lead in Your Home" (which your real estate agent or real estate attorney should be able to provide); and 4) Avoid the use of lead-based paint and other lead-based products when making repairs.
As a landlord in Illinois, you must also abide by the following practices: 1) If a lead hazard is found on your property, you must mitigate the hazard using regulated procedures; 2) If a tenant is found to have lead-poisoning, you must allow a public health agency to inspect your property; 3) You must allow the local public health department to inspect your property if at least two units in your rental building have received lead-based paint mitigation notices in the past five years; 4) You must allow the local public health department to inspect your property if a pregnant woman or the parent of a small child requests an inspection, which they may request so long as at least two units in the building have received lead-based paint mitigation notices in the past five years; 5) If any unit in your rental building has received a lead-based paint mitigation notice, you must post a notice stating as much in the common area of the building; and 6) If your building or rental property houses two or more families, you must post a lead hazard warning sign when construction is being performed.
Some municipalities in Illinois, such as the City of Chicago, have other requirements also. Prior to entering into any lease, make sure you are familiar with the rules in your city. It is important to be diligent and provide all notices and warnings required by law, both for your safety and for the safety of your tenants.
Sunday, November 30, 2008
Tuesday, November 25, 2008
Qualified Personal Residence Trusts (QPRT) and Depressed Real Estate Values
Home values seem to be dipping every month, and face it, you're not getting any younger. Have you considered that upon your death, the value of your home might be enough to push your estate from non-taxable to taxable? If you were to die in 2008 and your estate was valued at less than $2,000,000, there would be no federal estate tax. But if the value of your house (or anything else, for that matter) causes you to exceed that magic number, then presto -- your estate is paying taxes.
A QPRT (Qualfied Personal Residence Trust) is essentially a way to move your home out of your estate, thereby lowering the value of your estate upon your death. At the same time, you still get to live in your home while you're alive.
How does this work? Let's say your house was worth $750,000 in early 2007 but is only worth $500,000 now. Let's also assume that your goal is to leave your house to your children upon your death. You can lock in the lower value of $500,000 by gifting the house into a QPRT right now with your children as the beneficiaries of the QPRT. The trust must be created for a fixed amount of time (10 years is standard, but not required). The trust terminates either when that time expires, or upon your earlier death. At that point, your beneficiaries inherit the house. The house is not considered as part of your estate, and is therefore not subject to estate tax.
So what's the downside? Well, there are a few things -- first of all, when you gift your house into the QPRT, you have to file a gift-tax return with the IRS in the year that you gifted the house. Currently, the IRS allows you to gift up to $1,000,000 tax-free during your lifetime. So if your house is worth $500,000, you won't owe any gift tax right now. If your house is worth more than a $1,000,000, you will. Second, you do have to continue to pay the costs associated with living in the house during the term of the trust, although you would have to do that anyway. Third, once the term of the QPRT expires, if you are still alive, you will have to pay fair-market rent to the beneficiaries of the QPRT to continue living there, or risk scrutiny from Uncle Sam.
If you are concerned about your beneficiaries and the tax burden they may face upon your death, now is a good time to act. By creating a QPRT, you can take advantage of current depressed real estate values to help protect your heirs in the long run. Even if you do not feel a QPRT would be a viable estate planning device for you, there are other estate planning tools out there that may be right for you. Whatever you do, make sure your family is financially prepared in the event of your death.
A QPRT (Qualfied Personal Residence Trust) is essentially a way to move your home out of your estate, thereby lowering the value of your estate upon your death. At the same time, you still get to live in your home while you're alive.
How does this work? Let's say your house was worth $750,000 in early 2007 but is only worth $500,000 now. Let's also assume that your goal is to leave your house to your children upon your death. You can lock in the lower value of $500,000 by gifting the house into a QPRT right now with your children as the beneficiaries of the QPRT. The trust must be created for a fixed amount of time (10 years is standard, but not required). The trust terminates either when that time expires, or upon your earlier death. At that point, your beneficiaries inherit the house. The house is not considered as part of your estate, and is therefore not subject to estate tax.
So what's the downside? Well, there are a few things -- first of all, when you gift your house into the QPRT, you have to file a gift-tax return with the IRS in the year that you gifted the house. Currently, the IRS allows you to gift up to $1,000,000 tax-free during your lifetime. So if your house is worth $500,000, you won't owe any gift tax right now. If your house is worth more than a $1,000,000, you will. Second, you do have to continue to pay the costs associated with living in the house during the term of the trust, although you would have to do that anyway. Third, once the term of the QPRT expires, if you are still alive, you will have to pay fair-market rent to the beneficiaries of the QPRT to continue living there, or risk scrutiny from Uncle Sam.
If you are concerned about your beneficiaries and the tax burden they may face upon your death, now is a good time to act. By creating a QPRT, you can take advantage of current depressed real estate values to help protect your heirs in the long run. Even if you do not feel a QPRT would be a viable estate planning device for you, there are other estate planning tools out there that may be right for you. Whatever you do, make sure your family is financially prepared in the event of your death.
Friday, November 14, 2008
Is the Developer Liable for Providing False Square Footage and Ceiling Heights?
Condominium owners often wonder if the information they were given about the size of their unit is correct. They find themselves asking questions such as: Is it really 1,000 square feet? Or: That second bedroom looks kind of small -- Did I get cheated? Is the ceiling really 10' high? Isn't that what my contract said it should be?
Well, there are two ways that developers and architects can measure footage of a condominium unit, and both are widely accepted: 1) From inside wall to inside wall -- meaning, from the surface of the drywall on one wall, to the surface of the drywall on the wall across from it; this is commonly called the "paint to paint" measurement. 2) From the outside wall of the unit to the middle of the opposing wall.
In a recent case, Kirkpatrick v. Strosberg, 2008 Ill.App.LEXIS 358 (1st Dist. 2008), the condominium owners sued the developer because they felt that the square footage of their units was less than what the developer had stated when marketing the property. However, the court found that the developer measured from the outside wall of the unit to the middle of the opposing wall, and that this was a standard practice. Therefore, the developer was not held liable on this count.
However, in the same case, the condominium owners also alleged that the developer had stated that the ceilings in the units were 9' high, when in fact they were only 8'6" high. The developer claimed that per the contract each unit buyer had signed, the dimensions were simply approximate and subject to adjustment. The court found that on this count, the developer had acted in bad faith because the location of pipes, ductwork, and other items built into the ceilings could not possibly allow room for 9' ceiling heights.
Of course, each case is different. If your fellow condominium owners feel that they were deliberately misinformed when purchasing their units, then their best bet is to consult with an experienced condominium attorney to determine if they have a case against the developer.
Well, there are two ways that developers and architects can measure footage of a condominium unit, and both are widely accepted: 1) From inside wall to inside wall -- meaning, from the surface of the drywall on one wall, to the surface of the drywall on the wall across from it; this is commonly called the "paint to paint" measurement. 2) From the outside wall of the unit to the middle of the opposing wall.
In a recent case, Kirkpatrick v. Strosberg, 2008 Ill.App.LEXIS 358 (1st Dist. 2008), the condominium owners sued the developer because they felt that the square footage of their units was less than what the developer had stated when marketing the property. However, the court found that the developer measured from the outside wall of the unit to the middle of the opposing wall, and that this was a standard practice. Therefore, the developer was not held liable on this count.
However, in the same case, the condominium owners also alleged that the developer had stated that the ceilings in the units were 9' high, when in fact they were only 8'6" high. The developer claimed that per the contract each unit buyer had signed, the dimensions were simply approximate and subject to adjustment. The court found that on this count, the developer had acted in bad faith because the location of pipes, ductwork, and other items built into the ceilings could not possibly allow room for 9' ceiling heights.
Of course, each case is different. If your fellow condominium owners feel that they were deliberately misinformed when purchasing their units, then their best bet is to consult with an experienced condominium attorney to determine if they have a case against the developer.
Monday, November 3, 2008
Act Quickly to Protect Duplicate Real Estate Tax Payments!
Many times property owners forget that they have escrowed money with their lender for property taxes. As a result, Illinois counties often receive duplicate tax payments on an individual parcel of property -- one from the bank and one from the property owner. If your bank is escrowing your taxes and you erroneously make a duplicate tax payment, you should submit a property tax refund request to the county. To do so, you can go online to your county treasurer's website and follow their instructions. Most of the time, you will receive a refund within a few months.
But what happens if you forget to request the refund? How do you get your money back? Well, in Illinois you can get duplicate tax payments back as long as you submit your request within five years. The court recently confirmed this in Alvarez v. Pappas, 208 Ill.LEXIS 315 (2008). In that case, the plaintiffs were unaware that their bank was paying their tax bill directly to the Cook County Treasurer's office, so they inadvertently paid it themselves as well. Eventually, they sued Cook County for the return of the overpayment.
Unfortunately for the Alvarezes, they lost. The Illinois Property Tax Code states that there is a five-year statute of limitations for a property owner to request a property tax refund. After that, the taxing authority does not have to refund the money.
But please don't misunderstand me! If you realize that you have submitted a duplicate tax payment, you should request your refund immediately. The longer you wait, the harder it will be to get your money back and the more red tape you will have to deal with! You also don't want to have to go to court to get your tax money back, as that will be a costly and time-consuming process.
But what happens if you forget to request the refund? How do you get your money back? Well, in Illinois you can get duplicate tax payments back as long as you submit your request within five years. The court recently confirmed this in Alvarez v. Pappas, 208 Ill.LEXIS 315 (2008). In that case, the plaintiffs were unaware that their bank was paying their tax bill directly to the Cook County Treasurer's office, so they inadvertently paid it themselves as well. Eventually, they sued Cook County for the return of the overpayment.
Unfortunately for the Alvarezes, they lost. The Illinois Property Tax Code states that there is a five-year statute of limitations for a property owner to request a property tax refund. After that, the taxing authority does not have to refund the money.
But please don't misunderstand me! If you realize that you have submitted a duplicate tax payment, you should request your refund immediately. The longer you wait, the harder it will be to get your money back and the more red tape you will have to deal with! You also don't want to have to go to court to get your tax money back, as that will be a costly and time-consuming process.
Subscribe to:
Posts (Atom)
