https://www.djshealaw.com/articles/ Recent content in Articles on Law Offices of Dennis J. Shea Hugo en-us Wed, 07 Mar 2012 17:00:00 -0500 https://www.djshealaw.com/articles/100-percent-plan/ Wed, 07 Mar 2012 17:00:00 -0500 https://www.djshealaw.com/articles/100-percent-plan/ <p>In chapter 13, the debtor pays the unsecured creditors a percentage of what is owed, over a period of either 36 or 60 months. The length of the plan is primarily a function of how much the debtor has available based on projections included in papers submitted in the case. Under some circumstances, it may be advisable for the debtor not to pay a percentage of what is owed, but instead pay 100% of what is owed.</p> https://www.djshealaw.com/articles/distributions-from-tribes/ Mon, 01 Jan 0001 00:00:00 +0000 https://www.djshealaw.com/articles/distributions-from-tribes/ <p>Many American Indian tribes earn significant income from gambling enterprises and other such businesses. The tribes frequently allocate the tribal income and distribute it to members of the tribe. The resulting income stream to the member of the tribe may be quite significant. It is not unusual for such allocations to exceed $20,000 per month.</p> <p>If a tribe member who receives such distributions files Chapter 7 bankruptcy, does the member-debtor retain the right to receive postpetition distributions from the tribe? Or, are such distributions property of the bankruptcy estate under Bankruptcy Code § 541? If they are property of the estate, may the Chapter 7 trustee sell the rights to the income stream and use the proceeds of sale to pay creditors in the bankruptcy?</p> https://www.djshealaw.com/articles/duty-to-investigate/ Mon, 01 Jan 0001 00:00:00 +0000 https://www.djshealaw.com/articles/duty-to-investigate/ <p>An attorney who fails to reasonably inquire into the facts being presented to him by a bankruptcy client risks incurring sanctions for not doing so. In <em>In re Kayne</em> (Orton v. Hoffman) 453 B.R. 372 (9th Cir. BAP 2011), an attorney&rsquo;s failure to properly investigate and accurately state the facts in a client&rsquo;s Chapter 7 petition cost him more than $20,000 in sanctions. That figure was the amount of attorney&rsquo;s fees incurred by the Chapter 7 trustee to investigate and pursue the matter.</p> https://www.djshealaw.com/articles/good-neighbor-fences/ Mon, 01 Jan 0001 00:00:00 +0000 https://www.djshealaw.com/articles/good-neighbor-fences/ <p>In 2013, the California legislature enacted the &ldquo;Good Neighbor Fence Act of 2013.&rdquo; The Act appears as section 841 of the Civil Code. It replaces a boundary-fence statute which had been on the books since 1872. The older version pertained to the costs of maintaining fencing by adjoining landowners. However, it said nothing about the initial construction of a fence. Moreover, it was addressed to the problems of a time when fencing was an issue primarily between owners of agricultural property. Much has changed since 1872. Nowadays fencing issues largely arise between owners of adjacent residential property.</p> https://www.djshealaw.com/articles/discharge-income-taxes/ Mon, 01 Jan 0001 00:00:00 +0000 https://www.djshealaw.com/articles/discharge-income-taxes/ <p>Income taxes can be discharged in bankruptcy under certain conditions but in general, taxes are considered to be a priority debt in bankruptcy. This means that in a taxing authority generally has a claim on any estate distributions which is superior to claims of general unsecured creditors. This priority of tax claims does not, however, affect a secured creditor&rsquo;s properly-perfected security interest in collateral.</p> <h3 id="dischargeability-requirements">Dischargeability Requirements</h3> <p>Frequently a more important issue than that of priority of tax debts is the issue of whether such debts are dischargeable. It is possible to discharge such debts, including federal and state income taxes. However, in order to discharge taxes, certain conditions must be met.</p> https://www.djshealaw.com/articles/discharge-sba-loans/ Mon, 01 Jan 0001 00:00:00 +0000 https://www.djshealaw.com/articles/discharge-sba-loans/ <p>Are SBA loans dischargeable in bankruptcy? Generally speaking, yes, they are. But first some background.</p> <p>Certain obligations of an individual to the government are nondischargeable. The most common examples of such obligations are taxes and school loans. The nondischargeability of school loans is almost absolute. The debtor may obtain a hardship discharge of school loans, but doing so is extremely difficult. Income taxes, however, are treated more leniently than school loans. Income taxes are generally dischargeable after three years, so long as the tax return was timely filed and certain other conditions are met.</p> https://www.djshealaw.com/articles/prescriptive-easement/ Mon, 01 Jan 0001 00:00:00 +0000 https://www.djshealaw.com/articles/prescriptive-easement/ <p>Taking a prescriptive easement is similar to taking title to land by adverse possession. The elements of proof necessary to prove either a prescriptive easement or taking title by adverse possession vary from state to state. In California, the clearest difference between the two concepts is that in order to take title to property by adverse possession, the claimant must have paid taxes on the property for at least five years. What the claimant must prove is that his or her use of the neighbor&rsquo;s property was, for a period of at least five years, (1) open and notorious; (2) continuous and uninterrupted; (3) hostile to the true owner; and (4) under claim of right.</p> https://www.djshealaw.com/articles/failure-to-list-assets/ Mon, 01 Jan 0001 00:00:00 +0000 https://www.djshealaw.com/articles/failure-to-list-assets/ <p>Any property, including assets such as real estate and claims against third parties, must be listed on schedules of the debtor&rsquo;s bankruptcy petition. Properly scheduling such assets gives notice of their existence to the Chapter 7 trustee and to creditors in the case.</p> <p>In theory, all assets are available to be liquidated and the proceeds distributed to the unsecured creditors. However, this rule is subject to a large number of exceptions and exemptions. For example, in most states, including California, a debtor with equity in his or her residence can protect some or all of the equity from unsecured creditors by the homestead exemption. A debtor who is not an owner of real property may exempt any property, up to a value of more than $20,000. In addition, there are numerous other exemptions, for certain retirement funds and the like.</p> https://www.djshealaw.com/articles/holographic-wills/ Mon, 01 Jan 0001 00:00:00 +0000 https://www.djshealaw.com/articles/holographic-wills/ <p>In California, in order to be effective, a will normally must be signed by the person making the will (the &ldquo;testator&rdquo;) and two witnesses. However, a document may be admitted as a will under certain circumstances even if it is not witnessed. If a document intended to be a will is written in the testator&rsquo;s own handwriting, it may be accepted by the court as a will. This type of will is generally referred to as a holographic will. It is best if the document is dated in the testator&rsquo;s own handwriting, but not absolutely necessary.</p> https://www.djshealaw.com/articles/terminate-real-estate-sales-contract/ Mon, 01 Jan 0001 00:00:00 +0000 https://www.djshealaw.com/articles/terminate-real-estate-sales-contract/ <p>The California Association of Realtors publishes forms which are used for the vast majority of residential real estate transactions in the state. The forms are well-written. They are reviewed thoroughly before publication. They are revised from time to time. Some of the changes which appear in revisions are based on the decisions of the courts interpreting this or that provision in the standard-form agreement.</p> <p>Among the forms published by the C.A.R. is the California Residential Purchase Agreement and Joint Escrow Instructions. This is an eight-page form, set in small type face, which includes some detailed language designed to facilitate the sale of the property.</p> https://www.djshealaw.com/articles/antideficiency-protection/ Mon, 01 Jan 0001 00:00:00 +0000 https://www.djshealaw.com/articles/antideficiency-protection/ <p>A purchase-money lien is created by a deed of trust given to a lender to secure repayment of a loan which was used to pay all or part of the purchase price of real property. A purchase-money loan in which the proceeds were used to provide all or part of the purchase price of an occupied dwelling for not more than four families is entitled to antideficiency protection in the event of foreclosure. (California Code of Civil Procedure section 580b.) This means that if the lender forecloses but recovers less than the amount due on the loan, the lender may not hold the borrower liable for the remaining balance.</p> https://www.djshealaw.com/articles/obligation-to-pay/ Mon, 01 Jan 0001 00:00:00 +0000 https://www.djshealaw.com/articles/obligation-to-pay/ <p>Must a financial institution holding a note and deed of trust on residential property pay interest on insurance proceeds which it has received from the borrower&rsquo;s insurer?</p> <p>The short answer is: &ldquo;Yes, probably.&rdquo;</p> <p>A standard-form deed of trust with respect to residential property usually includes language requiring the borrower to maintain casualty insurance on the property. The deed of trust also usually specifies that in the event the property is damaged and the insurer pays on the policy, the borrower is to turn over the insurance proceeds to the lender while it is determined how the funds should be used.</p> https://www.djshealaw.com/articles/liability-designated-broker/ Mon, 01 Jan 0001 00:00:00 +0000 https://www.djshealaw.com/articles/liability-designated-broker/ <p>To what extent may a California real estate broker who is the designated officer of a corporate brokerage licensee be held liable for the negligent acts of agents associated with the corporate licensee?</p> <p>In California, corporations and individuals both may become licensed real estate brokers. In order for a corporation become a broker, an individual who holds a broker license must be appointed as the corporation&rsquo;s &ldquo;designated broker.&rdquo; The designated broker is responsible for supervision and control of the activities of the officers and employees of the corporation. These requirements are set out in California Business &amp; Professions Code § 10159.2. If the designated broker fails to comply with the requirements of § 10159.2, his or her real estate broker license may be suspended or revoked.</p> https://www.djshealaw.com/articles/auto-loans-in-bankruptcy/ Mon, 01 Jan 0001 00:00:00 +0000 https://www.djshealaw.com/articles/auto-loans-in-bankruptcy/ <p>Reaffirmation of a car loan is necessary in a Chapter 7 bankruptcy in order to ensure that the lender cannot repossess the car after the bankruptcy case closes.</p> <p>Prior to the enactment of the 2005 amendments to the Bankruptcy Code, a debtor could stave off repossession of a car so long as the payments remained current. The theory behind that was that the debtor was not in default if he continued to make the payments. This was procedure was given the nickname &ldquo;ride-through.&rdquo; Some of the federal Courts of Appeal held that a ride-through was permissible. Others rejected it. The Ninth Circuit Court of Appeals, whose decisions apply in California and other western states, held that a ride-through was permitted. (In re Parker, 9th Cir. 1998.)</p> https://www.djshealaw.com/articles/real-estate-broker-liability/ Mon, 01 Jan 0001 00:00:00 +0000 https://www.djshealaw.com/articles/real-estate-broker-liability/ <p>When may a real estate broker be held liable for acts of an agent? For most purposes, real estate agents associated with a brokerage firm operate independently from the firm. In other words, they are not required to work any particular hourly schedule, and they decide for themselves what opportunities to pursue. Generally this means that for many purposes, such as taxes, the agent is an independent contractor with the brokerage firm, and not an employee of it. However, for some purposes the agent may be considered an employee of the brokerage.</p> https://www.djshealaw.com/articles/social-security-overpayments/ Mon, 01 Jan 0001 00:00:00 +0000 https://www.djshealaw.com/articles/social-security-overpayments/ <p>What happens if the Social Security Administration (&ldquo;SSA&rdquo;) overpays a recipient? The recipient owes the government amount of the excess payments. As a result, the SSA may reduce the recipient&rsquo;s future benefits by the amount of the prior overpayments until the excess payments are recovered.</p> <p>Must Social Security overpayments be repaid if the recipient files bankruptcy? In other words, can the government recover the past overpayment amount by reducing future benefit payments?</p> https://www.djshealaw.com/articles/short-sales-antideficiency/ Mon, 01 Jan 0001 00:00:00 +0000 https://www.djshealaw.com/articles/short-sales-antideficiency/ <p>The purpose of selling a property by way of a short sale is to protect the seller from a possible deficiency judgment in connection with a recourse loan. A recourse loan is a loan with respect to which the lender may recover from the borrower the difference between the amount of proceeds received at a foreclosure sale and the amount owed at the time of the foreclosure. That amount is called a &ldquo;deficiency.&rdquo; Laws which prohibit a lender from obtaining a deficiency judgment are called &ldquo;antideficiency&rdquo; laws.</p> https://www.djshealaw.com/articles/filing-bankruptcy/ Mon, 01 Jan 0001 00:00:00 +0000 https://www.djshealaw.com/articles/filing-bankruptcy/ <p>Frequently a person contemplating filing bankruptcy is involved in a situation which is changing as time goes by. For example, perhaps the debtor has recently become unemployed or expects to become unemployed in a few months. Maybe the debtor recently inherited money. Maybe the debtor is the owner of a luxury item like an expensive car, in which there is significant equity. Maybe the debtor is contemplating selling property. Maybe the debtor is about to file for divorce.</p> https://www.djshealaw.com/articles/effect-of-bankruptcy/ Mon, 01 Jan 0001 00:00:00 +0000 https://www.djshealaw.com/articles/effect-of-bankruptcy/ <p>I frequently receive calls from prospective clients asking what the effect of their filing bankruptcy would be on their residence. There are several different scenarios which can play out. Which scenario applies to a particular debtor depends upon the bankruptcy chapter chosen, the amount owed on the property, and whether and to how much the loan is in arrears.</p> <p>A bankruptcy case is opened by filing a bankruptcy petition with the Bankruptcy Court. Immediately upon the filing of the petition, an &ldquo;automatic stay&rdquo; comes into effect. The automatic stay operates to prevent creditors from taking any acts in connection with collecting on the debt. Among other things, this means that any pending foreclosure sale would need to be canceled or postponed.</p> https://www.djshealaw.com/articles/sold-out-lender/ Mon, 01 Jan 0001 00:00:00 +0000 https://www.djshealaw.com/articles/sold-out-lender/ <p>Complications can arise when there are multiple mortgage loans against a borrower&rsquo;s property. A senior lien is one which has priority over the claim of a junior lien. Regarding real property, a first mortgage loan creates a senior lien, while a second mortgage loan &ldquo;goes behind&rdquo; the first mortgage as a second mortgage. The lien of the second mortgage is junior to the lien of the first mortgage.</p> <p>If the first lender&rsquo;s foreclosure process is completed, the result is a trustee&rsquo;s sale. This is an auction of the property, usually conducted at the courthouse of the county in which the land is located. If the amount generated at the trustee&rsquo;s sale exceeds the amount owed to the first lender, then the surplus belongs to the borrower. However, if there is a second mortgage, the second lender will receive the surplus to the extent of the amount of the borrower&rsquo;s second mortgage debt.</p>