Additional Relief For Short Sellers Of Real Property

By: Arlen R. Gunner, Esq.

Numerous homeowners have found themselves in the unenviable position of having to sell their homes for less than the amount they owe. This situation is commonly called a short sale. On September 30, 2010, the California legislature provided some initial relief for short sellers who obtained the consent of the First lien holder to the short sale. The law that became effective on that day created a new Section 580(e) to the California Code of Civil Procedure which required that no judgment can be rendered for any deficiency under a note secured by a First deed of trust or First mortgage for a residence in any case where the owner sells the residence for less than the amount owed at the time of sale so long as the written consent of the lender is obtained. Once the lender gives its written consent, it must accept the net sale proceeds as payment in full, and must fully discharge any remaining indebtedness on the First deed of trust or First mortgage. An exception to this rule occurs if the borrower commits fraud or waste with respect to the residence.

This statute, although well intended, did not protect the borrower in situations where the borrower had also placed a Junior lien on the residence. To correct this problem, the legislature passed an amendment to Section 580(e) on July 15, 2011 which expands Section 580(e) to prohibit a deficiency judgment upon all notes secured by deeds of trust or mortgages which encumber a residence. In any case where the borrower sells a residence for less than the remaining amount of all loans, and at the time of the sale it has the written consents of all lenders, then no deficiency judgment can be obtained against the borrower by any lien holder. The bill also provides that when the note is not secured solely by a deed of trust or mortgage on a residence, no judgment shall be rendered for any deficiency if the borrower sells the residence for a sales price less than the amount owed in accordance with the written consent of the lenders. Additionally, the law prohibits the lender from requiring that the borrower pay any additional compensation or consideration aside from the proceeds of the short sale in exchange for the written consent of the lender.

This new Section only applies if the borrower is an individual. It is not available if the borrower is a corporation, limited liability company, limited partnership or a political sub-division of the state. Nor shall this Section apply to any deed of trust, mortgage or other lien given to secure the payment of bonds or other evidence of indebtedness authorized or permitted to be issued by the Commissioner of Corporations or that is executed by a public utility.

The provisions of this Section cannot be waived and any attempt to do so will be void as against public policy.

This new statute, as amended, does not change existing law where no deficiency can be obtained in connection with the foreclosure of a purchase money loan or a loan that is secured by deed of trust or mortgage that is foreclosed pursuant to a power of sale.

Bruce D. Sires to Speak on Panel at Upcoming IRS Valuation Summit

Thursday, August 25, 2011 at 8:00 AM to 5:00 PM at the Hyatt Regency Century Plaza, Los Angeles
Bruce D. Sires will be a featured panel speaker at the upcoming IRS Valuation Summit presented by the Southern California Chapter of the Appraisal Institute. The Summit will feature several speakers and panels discussing a broad range of topics, including Bruce's panel on "Progressive Planning Strategies for Real Estate and Closely Held Businesses."
For more information on speakers and topics or to register for the event, click here.

Gary F. Torrell's Article "Winning Strategies For Resolving Consumer Complaints" Published in The Corporate Counselor

Gary F. Torrell was recently published in the Summer 2011 edition of "The Coporate Counselor," a publication for in-house counsel provided by The Corporate Law Departments Section of the Los Angeles County Bar Association. Gary was invited to write the keystone article for the Summer issue because of his background as in-house counsel for several corporations.

Gary’s article, entitled "Winning Strategies For Resolving Consumer Complaints," discusses the challenges of defending a corporation against a single or small group of consumers. The article also gives some valuable tips and tricks to assist in-house counsel with navigating the delicacies of defending their company against consumer complaints.

To the full article...

Entrepreneurs Face New Challenges When Selling Their Businesses

By Arlen Gunner

When an entrepreneur sells his business, a lot of things change; not just for the company, but for the entrepreneur personally as well. Regardless of whether the entrepreneur is required to stay involved with the daily operations of the business, or whether he is given a consulting arrangement, there are several factors an entrepreneur should be prepared to face before he signs on the dotted line.

In the sale of a private business, the acquiring party may view the continued presence of the entrepreneur, who presumably commanded the loyalty of his previous employees, as an obstacle for the acquiring company to imprint its own management style on the business and its employees. Many times, consulting or employment agreements with the previous owner do not work out due to the inability of the entrepreneur to adjust to the new set of circumstances in which he finds himself, mainly, no longer in complete control. The adjustment to not being the boss anymore can be very difficult. This, along with the loss of a place to go every day, could be a very real struggle for the seller to contend with.

On the other hand, if it turns out the acquirer is counting on the continued presence of the seller (at least in the beginning) to assist with business operations, the acquirer and the entrepreneur should have a serious discussion prior to the closing of the transaction about the exact role that the entrepreneur will play post-closing. It should be made very clear, not only to the entrepreneur, but also to the employees, exactly who will be running the business and who is at the top of the hierarchy. An ambiguous structure could hinder the integration of the business into the acquiring company. The failure to do appropriate preplanning can cost all the parties involved, so it is imperative that such planning occur prior to the closing.

To the extent that the selling entrepreneur will remain with the company, it is important for him to have a written agreement, which is as detailed as possible, setting forth his duties and authority post-closing. It is wise to have counsel review these documents to make sure that there is no ability of the acquiring company to subvert any authority granted to the entrepreneur post-closing. There should be prohibitions set in place that prevent the acquirer from diluting the seller's authority through direct or indirect means.

In the event that a foreign company is acquiring a business located in the United States, there can be not only managerial differences, but cultural differences that need to be understood and dealt with as well. It may be advisable, once the acquirer determines which senior managers they wish to retain, to have a third-party consultant brought in to analyze the cultural differences and to draw up a strategy in order to best integrate the companies.

Lastly, if the entrepreneur is in the enviable position of retiring from his business or working on a drastically reduced basis, what is he going to do with all this extra time he will have on his hands? Many times people who are creative and active businesspeople have a problem adjusting to the loss of structure usually provided by a business environment. The answer? Develop a hobby! This is a wonderful opportunity for the entrepreneur to expand on existing interests or pick up something new that will at least offer a part-time outlet for his creative energy.

Geoffrey A. Weg to Speak at Whittier Law School 2011 Annual Income Tax Seminar

Friday, June 17, 2011 at 8:30 AM at Whittier Law School, 3333 Harbor Boulevard in Costa Mesa, California

Tax and wealth planning attorney, Geoffrey A. Weg, will be a featured speaker at the 2011 Annual Income Tax Seminar at Whittier Law School on Friday, June 17. The annual seminar is sponsored by the State Bar of California Taxation Section and the California Society of Certified Public Accountants (CalCPA).

This year's seminar will highlight the following topics: the IRS 2011 Offshore Voluntary Disclosure Initiative; FBAR, FATCA and the future of global information reporting; California property tax “Change of Ownership,” including when to report entity change of ownership to BOE; developments in the Office of Professional Responsibility: Practice before the IRS; mergers and acquisitions of Passthrough Entities: And “S” corporations, partnerships and LLCs.

The Program qualifies for 9 hours of CPE for CPAs; 9 hours of continuing education credit for enrolled agents; and 7.5 hours of MCLE and tax specialization credit for attorneys (including 1 hour of ethics).

Registration to this all-day event Register...

Valensi Rose Attorneys to Moderate and Speak at 2011 Entertainment Industry Conference

Wednesday, June 15, 2011 at 8:30 AM to Wednesday, June 15, 2011 at 5:00 PM
Valensi Rose will make a strong showing at this year's Entertainment Industry Conference, presented by the CalCPA Education Foundation. Michael R. Morris, an active member of the conference's planning committee, will once again moderate the tax update portion of the day long event. Joining him in this session on the tax update panel will be tax and wealth planning partner Philip S. Magaram, who will contribute his expertise to this discussion on the current estate and charitable planning opportunities in the entertainment industry. Bruce D. Sires will also be speaking at the conference on the topic of children in entertainment and the various challenges and laws that go along with this special category of entertainers.

For more information on the conference and to register, click here.

Renewing Judgments

By
Laurie Murphy

Don’t let time rob you of your right to enforce your judgment!

Money judgments in California are enforceable for a ten year period, during which time simple interest accrues at 10% per annum. However, unless you renew it, a judgment creditor cannot enforce a judgment after the ten year period has expired. This predicament can easily be avoided since renewing a judgment is very straightforward. The judgment creditor simply needs to fill out and file an application for renewal of the judgment and file it with the court. In that form, the judgment creditor lists the original judgment amount plus any costs incurred after the original judgment was entered plus the accrued interest.

The judgment creditor does not need to wait until the ten years is about to expire in order to review the judgment. In addition, if the case in which the judgment was entered provided for the recovery of attorney’s fees, the judgment creditor can recover the attorney’s fees incurred in enforcing the judgment as well and add them to the original judgment along with interest and other costs. Finally, unlike some other states, there is no limit to the number of times that a judgment can be renewed in California. Even if the judgment debtor moves out of state, most other states permit the judgment entered in California to be enforced in the new state. Similarly, in California, a judgment entered in another state can be enforced if the judgment debtor moves to California.