Wire fraud is on the rise everywhere and the Federal Reserve is being asked to take a more proactive role in preventing it, especially as it relates to real estate transactions. Two key points are:
1. All parties involved in the real estate transaction need to help educate customers on the dangers of wire fraud and on the ways to protect data and funds. For example, by encouraging consumers to call their known reputable source at a verified number to verify instructions before transmitting funds.
2. Financial institutions on the receiving end should match not only the account number but also the payee’s name when there is a wire transfer. Oftentimes fraudulent wire instructions will say the transfer is to be sent to the attorney’s trust account, for example, but instead it goes to the criminal’s personal account as beneficiary.
If you intend to wire funds to us and suspect anything may be wrong with the instructions, please phone us to verify. If we have sent you instructions and you suddenly receive an email asking you to wire to a different account, phone us to verify. We have only (1) IOLTA account, so we will never change our instructions and ask you to wire to a different account.
Clients have begun to inquire about transferring firearms in their estate planning. Unique rules and procedures apply to certain firearms – such as NFA firearms, even in estate planning. Limited liability companies (LLC’s) were once the preferred method, but LLC’s require annual maintenance fees to the state and even separate tax returns. Now, “gun trusts” that are prepared as part of an estate plan can be used to pass on the trust creator’s firearms after their death. Prepared separate from a conventional revocable trust, a gun trust may provide access to more people than the original owner, may provide for changes in the law over time, and may require trustees that are more likely to be knowledgeable of firearms and the legal requirements that surround them. A gun trust will not pass on other assets, only the guns, and a separate conventional trust is still needed for other assets. Using a gun trust can provide for the legal, safe transfer of NFA firearms and even keep those weapons in trust for several generations.
Written by J. Kirk Trombley, Esq.
1. An offer is accepted by the seller and a contract is signed by both parties, marking the effective date of the contract.
2. At the same time , a deposit is paid to an attorney, broker or escrow agent. The deposit does not become the property of the seller until the closing takes place.
3. The buyer reviews and signs off on any disclosures. These disclosures vary based on property type, but often include things like known flaws with the property, prior improvements or repairs, radon gas and lead paint disclosures.
4. The buyer may elect to perform inspections of the property as agreed upon in the contract and these inspections must be completed by a certain date, which is usually within 10-15 days. Based on the outcome of inspections, buyers have a certain number of days to provide the seller with a report revealing any defects and the buyer may elect to ask the seller for repair work, closing cost credits or a reduction in the sale price due to flaws that were uncovered.
For those borrowing to purchase a home, the mortgage process can be the most stressful part of the transaction. It’s best to start as early as possible and be ready to produce lots of documentation.
The detailed steps that make up closing are:
1. A title search is performed to determine if there are any liens or assessments on the title. Provided that the title is clear, the closing proceeds as planned.
2. A buyer’s attorney or title company begins preparing the paperwork to convey title to the property and schedule the date for closing.
3. A final cash figure for what a buyer needs to bring to the closing in the form of a cashier’s check is calculated. This is based not only on a mortgagees closing costs, but also the proration of property taxes and utilities..
4. A final walk through may be performed the day of or before closing to verify the property is in the same condition it was in when the process began.
5. At the closing table the buyer and seller sign all closing documents. At the conclusion of the closing the representative from the title company or your attorney will record the deed and any other documents with the appropriate registry of deeds.
After all of the documents have been signed and payments exchanged, buyers generally take possession of the keys unless a separate agreement has been reached to allow the seller stay in the property for a period after closing.
An important thing to consider if you are paying off a home equity line of credit, also referred to as a HELOC. These are usually open ended loans that allow you to borrow on them for a designated period of time. Therefore, if you pay off the balance, the mortgage that is the security interest for repayment may not get discharged. When paying the loan in full, you must request in writing to have the loan marked paid in full and discharged.
New laws went into effect on December 1, 2016 which give overtime a whole new meaning. The Department of Labor, Wage and Hour Division, finalized the changes to the Fair Labor Standards Act last May. The new changes guarantee a minimum wage for all hours worked during the work week and overtime pay of at least one and one-half times the employee’s regular rate of pay for hours worked in excess of 40 in a work week.
The Department of Labor (DOL) has updated the overtime law before, but this new implementation is quite different from past adjustments made. This change increases the White Collar Exemption salary threshold by more than 100%. Generally “white collar” exemptions in the past applied to people that worked in offices or other professional environments. Below are the four major changes:
The White Collar Exemption salary threshold was previously $455 per week or $23,660 per year. This has now increased to $913 per week or $47,476 per year. This means that salaried employees making less than $47,000 per year must be compensated for anything over 40 hours.
The Highly Compensated Employee salary threshold has increased from $100,000 per year to $134,004 per year.
There will now be automatic updates to the salary threshold every three years with the first update due to go into effect on January 1, 2020.
The final rule is quite involved with lots of exemptions, details and clauses.
Two key factors are:
The 40-hour benchmark must be calculated on a weekly, rather than a monthly basis. Therefore, an employee that works a lot of overtime at the end of the month, but less than 40 hours at the beginning of the month, is entitled to overtime for any week that they worked for more than 40 hours.
Employees do not have to be approved for the overtime that they work.
The new law has wide ramifications beyond employees making less than $47,476 a year. Employers will need to balance rather they will adjust an employees’ pay, modify their job descriptions or add in disciplinary actions for working overtime. This can all have an impact on employee morale and the amount of time off that employees are given.
It is important for an employer to figure out which of their employees will fall under this new law. The DOL has published a fact sheet which can be found at https://www.dol.gov/whd/overtime/fs17a_overview.htm, to assist with this. If an employer fails to comply with this law they may be subject to an IRS audit, DOL audit or even litigation. An employer will still have the flexibility to choose the options that work best for their workplace
For those that may not know, there is a specific law that covers Condominiums and how they are set up. That law is RSA 356-B and is known as the Condominium Act. Much of this Act covers the establishment of a Condominium, but in 2010, RSA 356-B:70 was added which established a Committee to Study the Laws relating to Condominium and Homeowners’ Associations. The governance of associations has frequently been a problem area.
As a result of that Committee, the Condominium Act was amended and a number of new laws took effect on August 1, 2016. The changes target governance of the Association. Associations often operate informally and consult an attorney only when problems arise. The new laws are aimed at providing more structured governance and greater protection to unit owners once the condominium has been established.
As recently as August, 2017, a woman was accused of embezzling $100,000 from a NH condo association. She was arrested and charged with two counts of theft by unauthorized taking. This charge is a Class A felony and is punishable by a maximum sentence of 7 ½ to 15 years in prison. This is not a random thing, theft of a condominiums funds happens more often than you would think.
One of the major ways these thefts occur is by one of the board members receiving a kickback for work performed or by having personal work done for themselves and rolling it into the associations bill. With that in mind and in an effort to control this type of theft, one of the new laws requires any contractor licensed by the State of New Hampshire who performs work to disclose on the bill any referral fee paid by the contractor.
Some other key changes are:
• Boards may not use social meetings to evade the open meeting requirements
• Roberts Rules of Order Newly Revised are the default procedural rules
• The board must send proxy voting forms with control numbers assigned for each owner
• Electronic noticing and meetings are allowed
If you are a condominium owner don’t be afraid to ask questions of the board. Make sure that you regularly see the bank statements rather than to just rely on being shown a copy of the financials once a year at the annual meeting. If you do find that a board member has been embezzling, consider taking legal action, don’t just let it slide. Often, once they think they got away with something they will continue taking advantage of you in the future.
In New Hampshire, the Department of Revenue Administration is responsible for equalizing the value of property in each municipality. Equalization is used to accurately apportion county and school district taxes among the cities and towns and to distribute state revenues to the cities and towns.
To equalize property values, the Department of Revenue Administration annually conducts a sales/assessment ratio study for each municipality. The information provided on the PA-34 form is needed to assist the Department in determining whether a particular sale involved is an “arms-length transaction” and should be included in our equalization sales/assessment study.
Under Homestead Exemption laws any property designated as a homestead is exempt from execution and sale by creditors for the payment of debts. The protected amount differs in each state, but in New Hampshire every person is entitled to $120,000 of his or her homestead to be exempt from the rights of creditors.
There are exceptions to the above and the following debts have precedence over the rights of homestead:
• The collection of taxes;
• The enforcement of liens of persons having done work for the construction, repair or improvement of the homestead;
• In the enforcement of mortgages on the property;
• In the enforcement of liens filed by homeowner or condominium associations for unpaid assessments.
No deed can convey or encumber the homestead right, except for a mortgage made at the time of purchase to secure payment of the money used to purchase the home, unless it is executed by the owner and spouse, if any. This is why, when a new mortgage is taken out or the property is conveyed, the husband and wife must both sign to release rights of homestead.
Since the time that the original loan was made, you may have taken out a second trust deed on the house or had mechanic’s liens, child support liens or legal judgments recorded against you. These are all events that could result in serious financial losses to an unprotected lender. Regardless if it has only been 6 months or less since you purchased or refinanced your home, a myriad of title defects could have occurred. While you may not have any title defects, many homeowners do. The only way for a lender to adequately protect itself is to get a new lender’s policy each time you purchase or refinance your home.
Remember, title companies offer a refinance transaction discount if your last policy was written within 3 years. Be sure to ask us how it can save you money.
Just as soon as one type of wire scam is uncovered it seems like a new one pops up. One of the latest versions involves the perpetrator sending the funding lender wiring instructions to a legitimate account belonging to an innocent, unknowing title company. In verifying the account number, the lender will see that the funds are being wired to a legitimate title entity.
Once the wire has gone through, the scammer contacts the unknowing title company and states that the funds were sent in error. The scammer gives the title company instructions for sending the funds back, but those instructions are fraudulent and the funds will be sent to the scammer. The title company then confirms that it was not entitled to the funds and sends them back using the account information that it has received from the scammer.
The lesson to be learned here is that if you receive wired funds in error, the wire should be rejected. In doing so, the funds will automatically go back to the original sender.
Everyone needs to be vigilant in dealing with wire transfers, verifying information by directly contacting the other parties through secure channels and being skeptical when instructions are changed at the last minute or appear out of the ordinary.