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In the earlier series on real estate closing, Wynn at Law, LLC mentioned easements. In fact, we bring up the topic every time we review a title or write an article about one. The reason is simple, just like the old proverb that good fences make good neighbors: Clearly defined easements keep property owners out of court.
An easement on a property allows a landowner to grant access to a part of his or her property. You grant access without giving up ownership of that part of the property. It’s a binding agreement. Where we see this commonly throughout southeast Wisconsin is allowing access to a walking path, a driveway, a community pier, or a utility line crossing the property. Without an easement in place for access to such things, anyone attempting to access the path, pier, driveway or utility pole would be trespassing on the property. You can see the legal ramifications.
That means: Talk to your attorney anytime the word comes up. Here are a few spots in which the topic may come up.
If you are buying a property
Two easement issues Wynn at Law, LLC sees frequently are easements for driveways and for lake rights or lake access. When there are disputes over the area of the easement, or the size or the situations for which the property can be used, it can sour a neighborhood. Nobody wants to be ‘that neighbor,’ especially when you’re new to the neighborhood. By the way, if a lender is involved, the lender may take issues with driveway easements. Driveway easements require you to have legal access to your property. Imagine the difficulty clearing up the easement specifics after the closing.
If you are selling a property
When you know of an easement exists, you should disclose that to potential buyers on the real estate condition report. If you do not have a written easement in place or it is not recorded with the Register of Deeds Office, Wynn at Law, LLC can assist you in drafting and recording the easement.
Your relationship with your neighbors is the important aspect of easements. It is important to have a lawyer review easements on your property because it is your property.
 
Image by Anna Koldunova, used with permission.
The post In real estate law, there’s no such thing as an ‘easy’ easement appeared first on Wynn at Law, LLC.

Restaurant Closings in New York City and BankruptcyAs reported by many newspapers and websites, a significant number of restaurants are closing in New York City. These closings are due to the high cost of rent, insurance,  overhead and the increase in the minimum wage to $15 per hour for the restaurant staff. A restaurant consultant who meet with me stated that a Ray Kroc associate told an individual not to open a restaurant unless they were prepared to clean the bathroom and wipe the floor themselves due to the thin margins in many restaurants. At Shenwick & Associates,  we have seen a significant uptick in bankruptcy filings by restaurant and restaurant owners and we have developed a legal strategy to deal with these situations.We focus on the financial issues related to the restaurant first and then to the owner of the restaurant second. Most restaurants are owned by LLC or Subchapter S corporations. We first  review the assets and liabilities for the restaurant and a recent budget showing revenue and expenses for the year to date. We review that information with  the owner and determining whether the restaurant should  close or file for bankruptcy and we then focus on issues related to the owner of the restaurant.Restaurants are eligible to file for chapter 7 or chapter 11 bankruptcy. Chapter 7 is a liquidation where the restaurant is closed or chapter 11 is a reorganization where the business can attempt to reorganize its debts. In the Southern and Eastern District of New York (Manhattan, Brooklyn, Queens and Nassau county)  historically on average only one out of 10 businesses are able to successfully reorganize (file and confirm a chapter 11 plan of reorganization). There are many reasons for the low percentage of success, but many of those factors related to the cost and expense of filing chapter 11 bankruptcy and the inability to obtain financing and capital from third parties or banks.The option that most restaurant owners face is  either to close the restaurant or file Chapter 7 bankruptcy for the LLC or S Corporation that owns the  restaurant. In Chapter 7 bankruptcy a bankruptcy trustee closes the restaurant and liquidates any inventory, furniture fixture or equipment and attempts to collect accounts receivable. The chapter 7 trustee then takes those monies, if any  and distributes them to creditors after paying legal fees and court costs.It's the restaurant does not have significant amounts of furniture fixture or equipment or accounts receivable, the owner may be better off closing the restaurant itself and selling or auctioning off any furniture fixture and equipment and attempting to collect its own accounts receivable. Additionally, if the restaurant lease has a term of 3 years or more and is below market the restaurant owner may be able to assign (sell) the lease to a 3rd party. A Chapter 7 bankruptcy trustee is permitted to bring lawsuits to  recover monies that may have been paid to third parties ( preference actions)  or recover money or property paid to a third party ( fraudulent conveyance actions)  and the bankruptcy trustee will want to review the books and records for the restaurant, its checking account  and tax returns. The owner of the restaurant will have to go to one meeting at the courthouse (called the 341 hearing) and cooperate with the bankruptcy trustee. These factors often affect whether a restaurant will file for chapter 7 bankruptcy or just close.Notwithstanding the fact that the restaurant is owned by an LLC or Subchapter S corporation, members of the LLC, including the officers, directors,  shareholders or the individuals that signed the checks may be liable for certain debts of the restaurant after it closes (discussed below). Some of those debts may be “responsible person taxes” which are trust fund taxes such as sales tax or  FICA/FUTA taxes withheld from an employee's wages or the FICA/FUTA tax penalties. Sales tax and FICA/FUTA  taxes are not dischargeable in personal bankruptcy, so those debts should be paid prior to the restaurant closing or paid from the sale of furniture, fixtures and equipment, collection of accounts receivable or from the sale of the lease. Next, if a member of the LLC or a shareholder guaranteed a lease obligation, or guaranteed debts  to a supplier, they be personally liable ( discussed below). There are 2 types of lease guaranties, good guy guaranties and lease guarantees and the type of guaranty can affect the amount owed by the restaurant owner. If a supplier to the restaurant is not paid, the restaurant is generally liable, however in certain instances, the supplier will look for a “deeper pocket” and sue the individual arguing “alter ego” or “piercing the corporate veil” and attempt to sue not only the restaurant but the owner of the restaurant as well.The owner of the restaurant, may also be liable personally for wages not paid to the restaurant staff under the New York State Business Corporation law.A restaurant owner with significant business debts may need to file a Chapter 7 bankruptcy or attempt an out-of-court workout with respect to the monies that it  owes. To determine whether a restaurant owner should file bankruptcy or attempt to do an out-of-court workout with its creditors, we need to see a list of assets or property that the restaurant owner owns, a list of  liabilities or money or property owed to third parties and an after-tax monthly budget, showing what the restaurant owner earns what it pays in personal and business expenses.Unfortunately, in many instances after the restaurant is closed, the restaurant owner needs to file a Chapter 7 or Chapter 13 personal bankruptcy and James Shenwick is available  to help address these issues. Jim Shenwick 212 541 6224, [email protected] 

How New York’s Taxi Titans Roiled Cities Hundreds of Miles Away

In the early 2000s, a group of New Yorkers did something unexpected.

They bought a bunch of taxi medallions that allowed them to own and operate vehicles hundreds of miles away, in Chicago. Medallions in that city were considered such an inexpensive commodity that Chicago had, at times, given them away free.

This turned out to be an early sign of a takeover of taxi markets across the country by some New Yorkers who were about to teach drivers in other cities a painful lesson.

The real taxi money wasn’t made by charging passengers; it was made by raising the price of medallions and financing loans to drivers who wanted to buy them.

The scheme started in New York.
In May, The Times’s Brian M. Rosenthal exposed the financial maneuvers that helped lead to the collapse of the taxi industry in New York City.

His series detailed potential market manipulation of taxi medallion prices and showed how some of the people who manipulated those prices also made money by providing drivers with high loan amounts, long loan lengths, steep fees and interest-only terms.

The Department of Justice and the New York attorney general soon opened investigations into the industry. The city arrested a debt collector, waived $10 million in fees owed by medallion owners and strengthened regulations.

The taxi titans expanded their operations to Chicago …
Symon Garber, a New York fleet owner, along with a group of partners, began buying medallions in Chicago and lending to other buyers. They eventually bought 800 of the city’s 7,000 medallions.

Michael Levine, a legend in New York’s taxi industry, bought more than 500 medallions in Chicago. Mr. Levine also was involved in a company that provided at least 750 loans to medallion owners.

At least 40 other New Yorkers bought Chicago medallions, including Michael Cohen, President Trump’s former lawyer, records show.

… and to Boston, Philadelphia and elsewhere.
Then some of the same people who roiled New York’s industry expanded their operations. Medallion prices soared to $700,000 in Boston, $550,000 in Philadelphia, $400,000 in Miami and $250,000 in San Francisco.

But in Chicago, New Yorkers eventually bought almost half of that city’s medallions, records showed. The average cost of a medallion there — less than $50,000 in 2006 — rose to nearly $400,000 before prices began plummeting in 2013.

Today, a Chicago taxi medallion is worth $30,000 or less.

“In retrospect, it should’ve set off alarm bells” that New Yorkers were entering Chicago’s market,” said Michael Negron, who was a policy adviser to Rahm Emanuel, a former Chicago mayor. “Outside investors were coming in to upend the industry, and everybody kind of missed it.”

The New Yorkers who bought medallions in Chicago and elsewhere said in interviews with Mr. Rosenthal that they were never accused of breaking any laws. They said that as New York medallion prices rose, it made sense to pursue new opportunities.

By: Steven P. Taylor
Law Office of Steven P. Taylor, P.C.

On August 23, 2019, the Honoring American Veterans in Extreme Need Act of 2019 (HAVEN Act) was signed into law.   The Haven Act provides for exclusion of disability benefits paid by the U.S. Department of Veterans Affairs and the U.S. Department of Defense from the calculation of an individual debtor’s disposable income used for bankruptcy means testing for purposes of determining whether a veteran headed for bankruptcy would have to file a Chapter 13 repayment plan case.

According to the 2018 VA Annual Benefits Report,  4.74 million US veterans—or 25 percent of the total veteran population—receive VA disability benefits.   Veterans also make up a disproportionate share of bankruptcy filers. Nearly 15 percent of both Chapter 7 and Chapter 13 bankruptcy filers are veterans, who make up approximately 10 percent of the overall population. Approximately 125,000 veterans in Indiana and across the country filed for bankruptcy in 2017 alone.

Like the Social Security Act assists those citizens receiving social security benefits, the Haven Act assists these honored veterans and their surviving dependents in obtaining an opportunity for a fresh start.  Disabled veterans have earned their disability-related benefits in defense of our nation, and these disability-related benefits honor their service and the sacrifices that they have made. Forcing disabled veterans  and their surviving dependents to dip into these funds to pay off creditors dishonors their service and sacrifice.

Prior to the HAVEN Act, a disabled veteran declaring bankruptcy must include his or her disability benefits as part of disposable income which could force the disabled veteran to file for a Chapter 13 debt reorganization bankruptcy vs. Chapter 7 bankruptcy.  By contrast, current bankruptcy law explicitly exempts Social Security disability benefits from this disposable income calculation.   The  HAVEN Act now excludes VA and DoD disability payments made to veterans or their dependent survivors from the monthly income calculation used for bankruptcy means testing as well.  Now, more disabled veterans and their surviving dependents will now be eligible to file a Chapter 7 liquidation case where only nonexempt assets are sold to pay creditors.

TALK TO A BANKRUPTCY ATTORNEY
Not all veteran or DOD benefits are excludable from the disposable income calculation. For this reason, if you want to file for bankruptcy to obtain a fresh start, consider talking to a knowledgeable bankruptcy attorney in your area first to learn about your options.

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