1. Do I Need a Lawyer?
The honest answer to this question is that it all depends on your unique situation. More often than not, you are better off protecting yourself with a qualified attorney unless you have years of experience practicing law or you have a thorough understanding of legal matters. When in doubt it is best to contact an attorney for a consultation to make sure you aren’t making a huge mistake. In many cases, not having a lawyer is a colossal error that could make you vulnerable to financial ruin.
2. Why Do I Need a Lawyer to Start a Business?
It takes a lot more than filling out paperwork to start a business. Any business that doesn’t think about the future is doomed to failure, but the proper planning and compliance with the law will help you structure your organization in the most favorable manner concerning liability and taxes. In addition, many people have other business law needs such as contract formation and litigation services. If you lack an intimate understanding of business law, you undoubtedly need a trusted attorney to start your business.
3. What is Business Law?
Business law is an umbrella term that covers many different facets of legal matters concerning businesses. It is an incredibly large branch of law that covers things such as:
- Business formation
- Transactional business law
- Nonprofit entities
- Joint Ventures
- Employment Agreements
- Reviews of Commercial Leases
- Independent Contractor Agreements
- General business matters
4. What Types of Options Do I Have for Business Formation?
There are many different types of businesses, and the type that you choose to form your organization depends on many factors. No one type is inherently better or worse than any other type, but there are things you need to think about in advance regarding your tax structure, whether or not you will sell your stock, and what type of liability constraints there are on your business. The IRS defines the basic structures of businesses as follows:
- Sole proprietorships
- Limited Liability Companies (LLC’s)
5. Why Do I Need a Lawyer to Purchase a Property?
Whether you knew it or not, the purchase contract for a property is one of the most crucial steps to buying property. Before you sign on the dotted line, you need to be aware of all aspects of the contract. Furthermore, you need to make sure that the title of the property you are purchasing doesn’t have any outstanding liens so that no one else has a rightful claim to your new property. Having an attorney to guide you through this process is invaluable and an attorney can save you a lot of headaches, time, and money.
6. What Is a Short Sale?
A “short sale” is a term to describe a transaction where the sale price of the property will not besufficient to generate proceeds to pay off the existing mortgage or mortgages, and where thelender(s) agrees to accept less than full payoff. It is a type of loan modification. Essentially, the lender agrees to sell your home for less than the value of the total mortgage amount.
7. Who Qualifies for a Short Sale?
Generally a short sale is granted by the lender to homeowners who have experienced a financial hardship that prevents them from continuing to pay on the mortgage. Rather than foreclose on the home, which is a huge expense to the lender and very devastating to the homeowner’s credit, a short sale may be done instead of foreclosure.
Some of the common hardships that lead to a short sale include the following: loss of a job, a serious illness, divorce, financial stresses from liens or delinquent taxes, and even the death of a spouse or loved one.
8. Would It Be Easier to Let My Home Foreclose?
It may be easier because the seller really doesn’t need to communicate as often with the lender. However, there are some potentially damaging consequences. In some states, a lender may seek a deficiency judgment following a foreclosure to try to get back the money you still owed on the home. The lender may then try to place liens on other properties, garnish your wages, or even repossess vehicles to recoup their losses. This is why a Short Sale may be a better option for a distressed homeowner in that a deficiency judgment and the negative consequences might be avoided. For more detailed information, seek advice from your CPA or legal counsel.
9. What Is the Seller’s Advantage for Doing a Short Sale?
The best reasons to do a Short Sale is to try to avoid a lender from pursuing a deficiency judgment against the homeowner. The next reason is preserving the homeowner’s credit.
Both a foreclosure and a short sale will negatively impact a homeowner’s credit, however, a foreclosure is much worse. Foreclosures will remain as a public record on a person’s credit history for 7 years or more. This will hurt the person’s ability to get a new home loan and will put him or her in a high risk category causing much higher interest rates. It could also impact career choices as many employers now check a person’s credit report as part of the hiring process. Also, homeowners who are police officers; security officers, military, and/or CIA could possibly be terminated from their position or lose their security clearance if they have a foreclosure on their credit score.
10. Will Filing for Bankruptcy Affect a Short Sale?
Yes, if you have put the home under bankruptcy protection then the home cannot be sold as a short sale until the home is released or discharged from the bankruptcy. Notify your real estate agent to discuss the options available to you.
11. Why Do Banks and Lenders Accept Short Sales?
If a bank forecloses on a home they must repossess it, make repairs, change the locks, pay the taxes, and pay for a variety of legal fees. A short sale often costs less than what it cost to foreclose on the home, so the bank has actually saved money. Another reason is that in this distressed housing market with so many foreclosures, the bank doesn’t want too many foreclosures (or bad debts) on their books. This prevents them from borrowing more money from their resources, so they are unable to give out new loans to increase their revenue streams.
12. How Much Will It Cost Me to Do a Short Sale?
In most cases you will not have any out of pocket expenses. Under no circumstances should you pay the Realtor or your attorney. Your lender will pay for their services with the proceeds of the sale of the home.