A collection attorney from outside Florida called me about enforcement of an equitable lien on property. He obtained a judgment from a Florida court against a Florida debtor declaring that the creditor had an equitable lien on real property owned by the debtor and that the debtor held title in constructive trust for the creditor. The attorney wanted me to send him a form for perfecting his lien and trust.
Many people who invested in real estate at the end of the boom are in financial trouble. I have been getting more and more inquiries from individual investors facing foreclosures of their investment properties. Often, people tell me they are discussing "short sales" with their mortgage lenders. In a short sale, the lender allows the house to be sold for less than the mortgage balance. The borrower avoids a deficiency judgment. The lenders would rather get most of their mortgage through a sale arranged by the owner then take the property back at a foreclosure sale. Borrower should beware of short sales.
Continue Reading...Man owns several rental properties and a primary residence. He is concerned some of his rental properties will be foreclosed as the falling real estate market has made it impossible to sell the homes for enough money to pay the mortgage and rental income does not cover monthly expenses. One of the rental home is owned free and clear. The man asked whether he can protect the free and clear home by deeding it to his adult child and having the child move into the home as the child's primary residence. The man understands the transfer would be a fraudulent conveyance if one of his homes went into foreclosure and resulted in a deficiency judgment in the near future. His question is whether a creditor could take the transferred house occupied by the child and whether this is a viable asset protection plan.
Most of my knowledge about offshore bank accounts comes from my clients' experiences. This past week one of my new clients spoke with me about an offshore bank account he had previously established and funded. I asked him how he accesses his money from a bank located in another country. Specifically, I asked whether the bank issued him a debit card which he uses to make payments in the U.S. or whether he uses a credit card tied to his offshore bank account.
I found an interesting issue in a California bankruptcy case concerning fraudulent conveyance. A bankruptcy corporation paid many expenses within one year of bankruptcy including salaries and other money due to corporate insiders who had provided services to the corporation. The Trustee filed a complaint alleging the payments to insiders were fraudulent transfers. Some corporate insiders were Florida residents. The bankruptcy trustee sued these Florida insiders under the fraudulent conveyance sections of the bankruptcy code and under Florida's fraudulent conveyance statute. A jury returned a verdict against the insiders, in favor of the bankruptcy trustee, finding that there were fraudulent transfers and that such transfers were made "with malice." The court entered a verdict against the Florida insiders finding them jointly and severally liable for the total amount of fraudulent transfers by the debtor corporation and imposing $2 million punitive damages. The individuals are considering whether a fraudulent transfer judgment can include punitive damages.
I often receive calls, like this one, where a potential debtor is concerned that asset protection planning can affect his spouse. This man wanted to open a new bank account with his wife as "tenants by entireties" and deposit some of his separate money in the account. There were currently no judgments or lawsuits against the caller, but he was involved in a business disagreement which he feared could lead to a lawsuit and liability. He wanted to better protect his assets, but he did not want to make his wife involved in his problems.
Continue Reading...I received a call from an out-of-state businessman who anticipated a large judgment. He had already listed for sale his current home and anticipated moving to Florida. He already had a vacation home in the Caribbean. He fired off several quick questions, each of which are common questions about Florida homestead and warrant repeating. His question were: 1. Does it make any difference if I title my Florida homestead just in my name because my wife and I separate our assets? 2. Does it matter if I spend several months a year in my Caribbean home. 3. Is there anything I have to file with the State of Florida to get residency and homestead protection, and 4. Does it matter if I return to the state of my previous residence for weeks at a time for business reasons?
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