The Durable Power of Attorney is traditionally one of the basic documents executed when undertaking your estate planning, creating a mechanism to handle your financial affairs prior to your death.  However, because of the broad powers granted in it, you should analyze the associated risks and benefits before signing one.  In some circumstances, you are better off without it.

First, what is a “power of attorney”?  Through a power of attorney, you designate the person or persons (your “agent”) who you are legally authorizing to handle your affairs.  The designation may be limited in duration or in scope.

By designating a power of attorney as “durable” (and incorporating the appropriate language), the authority will remain in place even if you become mentally incompetent.  Therein lies the value of this document in estate planning – it creates an easy means for someone to be appointed to manage your financial affairs should you become unable to do so.  For maximum usefulness, the durable power of attorney should have no limitations or restrictions thereby allowing your agent to handle whatever may arise, whether anticipated or not.

But such broad powers are susceptible to abuse by a designated agent.  Once you deliver a validly-executed Durable Power of Attorney to your agent, you run the risk that your agent may perform acts which you do not approve or which may not be to your benefit.  You may be able to recover any funds improperly spent by your agent.  However, you not only run the risk that your agent may be judgment-proof (e.g., has no collectable assets) but also incur the costs of attorney fees to collect such funds.

If you lose your mental competency prior to executing a durable power of attorney, a court-appointed guardianship may then be the only recourse available for someone looking to oversee your affairs.  A guardianship proceeding can be both costly and time-consuming in comparison to the execution of a durable power of attorney yet both achieve the same results.

A guardianship will also require that the court first declare that you are not mentally competent to handle your affairs – a declaration which can be an emotionally unbearable consequence for many families.

In most instances, the durable power of attorney will be your best option, but the risks should first be understood.  The estate planning attorneys of Bogin, Munns  Munns are glad to consult with you on this and other matters when arranging your estate planning.

John Wright is a corporate attorney with Bogin, Munns, & Munns, P.A., a full service law firm with offices in Orlando, Clermont, Kissimmee, Deltona, Daytona Beach, Ocala, Melbourne, Gainesville, and Leesburg, Florida.  Mr. Wright works out of the Melbourne and Kissimmee offices of the firm and welcomes questions and comments regarding the above and can be reached at jwright@boginmunns.com.

NO LEGAL ADVICE: This blog entry is not intended as legal advice nor should you consider it as such. It is intended only as general information.  You should not act upon this information without retaining professional legal counsel. Please keep in mind that merely subscribing to or reading this blog or otherwise contacting Bogin Munns & Munns, P.A. in the manner that you have will not establish an attorney-client relationship with our firm. Bogin Munns & Munns, P.A. cannot represent you until the firm knows there would not be a conflict of interest and the firm determines that it is otherwise able to accept the engagement. The engagement would also be confirmed by a written agreement.

As Seen In the July / August 2010 edition of orlandoREALTOR

By: Henry M. Cooper, ESQ.

Under the Protecting Tenants At Foreclosure Act of 2009, certain tenants now have right post foreclosure sale. This act provides that when a foreclosure occurred on a federally-related mortgage loan or on any dwelling or residential real property, the party taking title to the property via a Certificate of Title post foreclosure sale assumes the property subject to the rights of a “bona fide tenant.” If this new owner desires to evict the bona fide tenant, the new owner must now give the bona fide tenant a 90-day notice to vacate. This assumes, however, that the bona fide tenant is current in rent payments and otherwise in good standing under the terms of the bona fide lease. If not, normal eviction procedures are applicable.

Notwithstanding the foregoing, if a “bona fide lease” was entered into before the date of the foreclosure sale, the bona fide tenant has the right to remain in the property until the expiration of the term of the bona fide lease. The bona fide lease may be terminated prior to the expiration of the term of the bona fide lease; however, if the new owner has sold the property to a purchaser who will occupy the property as a primary residence subject to the 90-day notice to vacate.

The act defines “bona fide tenant” to mean a tenant who is not the mortgage or the child, spouse, or parent of the mortgagor. In addition, the act defines “bona fide lease” to mean a lease that requires the receipt of rent that is not substantially less than the fair market rent for the property.

READ THE FULL PUBLICATION HERE.

– Henry M. Cooper, Esq., is a shareholder and handles the residential real estate practice of Bogin, Munns, & Munns, P.A., a full service law firm with offices in Orlando, Clermont, Kissimmee, Deltona, Daytona Beach, Ocala, Melbourne, Gainesville, and Leesburg, Florida.  He welcomes questions and comments regarding the above and can be reached at hcooper@boginmunns.com.

NO LEGAL ADVICE: This blog entry is not intended as legal advice nor should you consider it as such. It is intended only as general information.  You should not act upon this information without retaining professional legal counsel. Please keep in mind that merely subscribing to or reading this blog or otherwise contacting Bogin Munns & Munns, P.A. in the manner that you have will not establish an attorney-client relationship with our firm. Bogin Munns & Munns, P.A. cannot represent you until the firm knows there would not be a conflict of interest, and the firm determines that it is otherwise able to accept the engagement.

There was a time when a handshake and your word was as good as any written contract. Those days, unfortunately, have long since past.  Today, reaching an agreement and getting it in writing is a key to any successful transaction.  Most people will enter into hundreds of contracts during the course of their lifetime, such as: entering into an employment agreement, opening a bank account or applying for a loan, renting an apartment or house, purchasing a vehicle, hiring a contractor to make home repairs, ordering products to be used in your business, entering into a partnership agreement, leasing an office for your business, purchasing an existing business, and buying a home.  Here are a few suggestions to keep in mind when you are considering entering into your next contract.

Read it (Yes, even the fine print)!

I am absolutely shocked how often people say to me: “You must be an attorney because nobody else spends time to read that paperwork.”  When you enter into a contract, it is important to know what it is that you are agreeing to do (or not do).  The need to read and understand the terms of the contract becomes even more critical the higher the cost at issue.  It is often said that the ‘American Dream’ is to own your own home or business.  Although these generally are the largest single investments people will ever make, many people do not take the time to read the stacks of paperwork that make up the contract.  If you are not going to read the paperwork yourself, at least hire an attorney to ensure that you are buying exactly what you think you are buying.  The terms that make up a contract really do matter.

Clarify it!

It has been said that the practice of law is simply the science of words.  An outrageous example of this was Bill Clinton’s response to a question before the grand jury, wherein he famously stated “It depends on what the meaning of the words ‘is’ is.”  Do you and the party you are entering into a contract with have the same understanding of what the terms mean?  If there is ever a dispute and you are unable to come to a prompt agreement, you may end up spending a lot of time and money having the court interpret the terms for you.  At that point, the control over the interpretation may be out of your hands completely.  For guidance on making that determination, the court may look at things such as: 1) the history of previous dealings between the parties, 2) the understanding that is common in the industry, 3) the terms as developed by our lawmakers or in the courts, and 4) public policy considerations.  As a result, the court’s interpretation of the terms of the contact may end up being the exact opposite of what you actually intended the terms to mean.  Always make sure the terms are clear and unambiguous before you sign the contract.  If you are not clear about a term, ask for clarification before you sign the contract.

Keep it!

Make sure that you always keep your original contract, as well as any modifications and correspondence regarding the contract.  It would be nice if everyone kept their word and abided by the promises contained in their contracts.  Since that is not the case, however, you may need to hire at attorney to enforce your contract.  Having all relevant documentation related to your contract is critical in this regard.  An attorney cannot give you thorough legal advice about your rights without the documentation of the contract any more than a doctor should give you a diagnosis of illness without doing a thorough examination.

Consult an Attorney!

Being penny-wise by not hiring an attorney up front may end up being pound-foolish for you in the end!  Spending a little money to have a qualified attorney review your contract (and revise as necessary) at the beginning will give you peace of mind that your intent will be carried out with less stress, headaches and expense in the long run.  If you would like to consult with an attorney to review your contract, call Bogin, Munns & Munns, P.A. at (352) 332-7688 in Gainesville or (407) 578-1334 in Orlando.

– Adam S. Towers , Esq., is a shareholder and manages the Gainesville office of Bogin, Munns, & Munns, P.A., a full service law firm with offices in Orlando, Clermont, Kissimmee, Deltona, Daytona Beach, Ocala, Melbourne, Gainesville, and Leesburg, Florida.  He welcomes questions and comments regarding the above and can be reached at atowers@boginmunns.com.

NO LEGAL ADVICE: This blog entry is not intended as legal advice nor should you consider it as such. It is intended only as general information.  You should not act upon this information without retaining professional legal counsel. Please keep in mind that merely subscribing to or reading this blog or otherwise contacting Bogin Munns & Munns, P.A. in the manner that you have will not establish an attorney-client relationship with our firm. Bogin Munns & Munns, P.A. cannot represent you until the firm knows there would not be a conflict of interest, and the firm determines that it is otherwise able to accept the engagement.

While non-compete agreements were once a rarity, they have become somewhat common in the modern workplace.  Issues regarding the drafting, interpretation, and enforcement of such agreements are common topics for the employment lawyers at Bogin, Munns, & Munns, P.A.  In this regard, the firm both meets with and often represents employers seeking to draft or enforce such agreements as well as the employees that are subject to same.

Generally speaking, there are numerous common misconceptions as to the legality of non-compete agreements.  Prospective clients often believe that such agreements are either always enforceable or that they are rarely enforceable.  The reality, however, is that neither is true.  The courts look to a number of factors on a case by case basis in determining whether to enforce the terms of a particular agreement.  Accordingly, getting advice from a qualified and experienced attorney regarding such agreements is certainly prudent for both affected employers and employees.

In Florida, non-compete agreements are governed by both statute and the decisions interpreting same.  In this regard, section 542.335 of the Florida statutes provides the courts with both authority and some guidance as to the enforcement of non-compete and other related restrictive covenants.  For example, as noted in such statute, such agreements must be in writing and executed by the affected employee to be valid.  They must also, generally speaking, be reasonable in scope, time, and geographic area.  However, the mere fact that an agreement may be unreasonable in one or more of these areas will not absolutely preclude enforcement as the courts are authorized to limit the application or length of the restrictive period while still enforcing same.

Additionally, it should be noted that merely having an agreement and a breach of same does not mean that the courts will enforce such agreement.  In many cases, the key issue is whether the employer seeking enforcement can articulate one or more legitimate business interests supporting such restrictive covenants.  While section 542.335 provides several examples of such legitimate business interests, it is, of course, advisable to speak to a qualified attorney as to the specific facts of your matter.

Ultimately, a dispute involving a non-compete agreement can be a costly endeavor for the affected employee, the prior employer, and even the new employer.  In addition to money damages, such claims often involve requests for injunctive relief as well.  Moreover, Florida law allows for the recovery of attorney fees by the prevailing party in litigation regarding such agreements.  Of course, prudent actions by both employers and employees can often avoid litigation, but that is not always the case.  The employment attorneys at Bogin, Munns, & Munns, P.A. can offer advice and assistance at any stage of a matter involving these agreements and have significant experience in drafting, enforcement, and defense of same.

– Joseph Shoemaker, Esq., is an attorney with Bogin, Munns, & Munns, P.A., a full service law firm with offices in Orlando, Clermont, Kissimmee, Deltona, Daytona Beach, Ocala, Melbourne, Gainesville, and Leesburg, Florida.  Mr. Shoemaker works out of the Leesburg office of the firm and welcomes questions and comments regarding the above and can be reached at jshoemaker@boginmunns.com

NO LEGAL ADVICE: This blog entry is not intended as legal advice nor should you consider it as such. It is intended only as general information.  You should not act upon this information without retaining professional legal counsel. Please keep in mind that merely subscribing to or reading this blog or otherwise contacting Bogin Munns & Munns, P.A. in the manner that you have will not establish an attorney-client relationship with our firm. Bogin Munns & Munns, P.A. cannot represent you until the firm knows there would not be a conflict of interest, and the firm determines that it is otherwise able to accept the engagement. The engagement would also be confirmed by a written agreement.

The first part of this article discussed the economic realities test which is applied in minimum wage, overtime, and Family & Medical Leave Act cases.  If the case at issue involves, for example, race discrimination under Title VII, sex discrimination, disability discrimination, etc., then the courts apply the common law test to determine whether the worker was an employee or an independent contractor.

The elements of the common law test are: (1) the intention of the parties (i.e., did the parties intend to enter into an employee/employer relationship or did they agree to create an independent contractor relationship); (2) the skill required in the particular occupation (this element is similar to economic reality test element number four); (3) the party furnishing the equipment and the place of work (this element is similar to economic reality test element number three); (4) the method of payment, whether by time or by the job (this element is similar to economic reality test element number two); (5) the type of employment benefits provided (i.e., if the employer provides the worker with medical insurance, then this factor tends to prove employee status); (6) the manner in which the work relationship is terminated (i.e., if the worker can be terminated at-will, then that tends to prove employee status); (7) the importance of the work performed as part of the business of the employer (this element is similar to economics reality test element number six); and (8) the manner in which taxes on income is paid (i.e., if the employer deducts standard payroll taxes, then this factor tends to prove employee status).

There are subtle differences between the economic realities test and the common law test.  The critical difference is that the common law test is generally regarded as setting a slightly higher threshold to proving employee status.  However, the courts are generally in agreement that even under the common law test, both tests are designed to measure the degree of control that the purported employer exerts over the employee.  Therefore, the fact that an employer does not offer insurance benefits may have less to do with independent contractor issues and more with the fact that the employer simply does not wish to incur this cost.  Furthermore, some courts have construed an employer’s unilateral refusal to deduct payroll taxes as a condition of employment not as proof of independent contractor status but rather proof that it exercises substantial control over the worker.  Should you have any questions regarding your current arrangement, feel free to contact one of the employment attorneys at Bogin, Munns & Munns, P.A. to coordinate a consultation.

– Daniel Perez, Esq., is an attorney with Bogin, Munns, & Munns, P.A., a full service law firm with offices in Orlando, Clermont, Kissimmee, Deltona, Daytona Beach, Ocala, Melbourne, Gainesville, and Leesburg, Florida.  Mr. Perez works out of the Melbourne office of the firm and welcomes questions and comments regarding the above and can be reached at dperez@boginmunns.com

NO LEGAL ADVICE: This blog entry is not intended as legal advice nor should you consider it as such. It is intended only as general information.  You should not act upon this information without retaining professional legal counsel. Please keep in mind that merely subscribing to or reading this blog or otherwise contacting Bogin Munns & Munns, P.A. in the manner that you have will not establish an attorney-client relationship with our firm. Bogin Munns & Munns, P.A. cannot represent you until the firm knows there would not be a conflict of interest, and the firm determines that it is otherwise able to accept the engagement.

In all contracts there is an implied covenant of good faith and fair dealing.  The purpose of the implied duty of good faith is to protect the parties’ reasonable commercial expectations.

This legal concept is fair and just and can often be relied upon by a party to a contract; however, there are limitations.

This duty of good faith and fair dealing must relate to the performance of an express term of the contract.  It is not an abstract and independent term of a contract, which can be asserted to claim a breach when all other terms have been performed pursuant to the contract requirements.

The implied duty of good faith and fair dealing cannot be used to vary or modify a fully specified, unambiguous term of a contract.  A court will not  do that; it will not apply this legal doctrine in that manner.

Sometimes parties to a real estate contract or other contractual dispute seek to claim a breach of contract when things don’t go their way, even though there has been no breach of any particular contract term.  This is not the proper application of this doctrine.

It is more properly raised when there is an express contractual duty or obligation on the part of one party, but such party has sole discretion in complying with such duty, but acts unfairly or in bad faith in carrying out that duty.

One example where application was appropriate, was where a party to a contract agreed to “vigorously pursue… recovery of underpayments” but was given “sole discretion” to determine whether it was a justifiable expense and exercised bad faith in exercising that discretion.

An example where application was not appropriate, was where a buyer of real estate agreed to pay an additional $5 million bonus if the buyer was able to obtain approval to construct 600,000 square feet or more of air conditioned saleable space.  In this instance the contract did not impose on the buyer any duty to seek such approval and therefore there could be no implied duty to act in good faith in seeking such approval.  In other words, there was no express duty to which the implied duty of good faith could relate.

In contractual dispute negotiations, the doctrine of implied duty of good faith and fair dealing can be very useful, but its application must be clearly understood.

– Rulon D. Munns, Esq., is a managing shareholder of Bogin, Munns, & Munns, P.A., a full service law firm with offices in Orlando, Clermont, Kissimmee, Deltona, Daytona Beach, Ocala, Melbourne, Gainesville, and Leesburg, Florida.  He welcomes questions and comments regarding the above and can be reached at rulon@boginmunns.com.

NO LEGAL ADVICE: This blog entry is not intended as legal advice nor should you consider it as such. It is intended only as general information.  You should not act upon this information without retaining professional legal counsel. Please keep in mind that merely subscribing to or reading this blog or otherwise contacting Bogin Munns & Munns, P.A. in the manner that you have will not establish an attorney-client relationship with our firm. Bogin Munns & Munns, P.A. cannot represent you until the firm knows there would not be a conflict of interest, and the firm determines that it is otherwise able to accept the engagement.

HB 0337 and SB 968, if enacted, would amend Florida Statutes 718.116 by providing condominium owners who are delinquent on their assessments an opportunity to receive a “notice of delinquency”.  The notice would specify each assessment sought by the association, the date of the assessment or charge, and the corresponding interest, fee and cost attached to such unpaid assessments.  Notice would need to be provided prior to any restriction, penalty or condition being placed upon that unit owner.  It also would prohibit a condominium association from imposing penalties during a 20 day notice period or while an objection made during the notice period is unresolved.  The notice requirement would not apply if the association has been in lien collection or foreclosure proceedings against the same unit owner within the proceeding 12 months or if the unit owner acknowledges in writing he or she owes the debt to the association.  Once past the notice period, delinquent unit owners could be restricted from running for office, holding office, serving on committee, leasing their unit or using common areas.

The Senate version of the bill is passing through committee and is presently with the Judiciary Committee.  The House version of the bill is now in the Criminal and Civil Justice Policy Council.   So far, other than minor editing of the language, both versions of the bill are being treated fairly favorably.

Condominium Association boards should also be aware that there are numerous other potential bills that may affect their governance.  To contact your legislator on any of these issues or to review these bills or track their progress, go to online sunshine at http://www.leg.state.fl.us.

Please contact Bogin, Munns and Munns if you desire a legal opinion or analysis of these bills or how these proposed laws would effect your association.  With nine offices including South Daytona and Melbourne, Bogin, Munns and Munns can assist condominium associations in our coastal communities navigate these proposed legislative changes.

– Jeremy Hill, Esq., is a personal injury attorney with Bogin, Munns, & Munns, P.A., a full service law firm with offices in Orlando, Clermont, Kissimmee, Deltona, Daytona Beach, Ocala, Melbourne, Gainesville, and Leesburg, Florida.  Mr. Hill works out of our Daytona office.  He welcomes questions and comments regarding the above and can be reached at jhill@boginmunns.com.

NO LEGAL ADVICE: This blog entry is not intended as legal advice nor should you consider it as such. It is intended only as general information.  You should not act upon this information without retaining professional legal counsel. Please keep in mind that merely subscribing to or reading this blog or otherwise contacting Bogin Munns & Munns, P.A. in the manner that you have will not establish an attorney-client relationship with our firm. Bogin Munns & Munns, P.A. cannot represent you until the firm knows there would not be a conflict of interest, and the firm determines that it is otherwise able to accept the engagement.

You have a home that you are leasing to a tenant.  Your tenant fails to pay you rent and refuses to vacate the property.  You may or may not be able to evict the tenant for non-payment or otherwise remove the tenant from the property.  Your ability to do so greatly depends on the type of written agreement entered into by and between you and the tenant.

If you entered into a typical written lease agreement with your tenant, you would most likely be able to evict the tenant after giving the tenant the proper 3 day notice to pay rent or vacate.  You may thereafter file an action for possession with the county court to regain possession of the property.  This eviction procedure is on an expedited docket and may be completed in less than 30 days.

If the lease agreement contains an option to purchase, however, you may find that you are prevented from filing an eviction due to the tenant’s timely exercise of its option to purchase.  A lease with an option to purchase is typically entered into when a buyer wants to purchase the home but needs some time to acquire a down-payment or build up his credit score.  The lease with an option to purchase gives the buyer the right to purchase the property from the owner within a certain period of time at a mutually accepted purchase price.

Under Florida law, once the tenant exercises its option to purchase, the tenant is then considered an equitable owner of the property and cannot be evicted.  The proper legal method for removing the tenant in this instance is ejectment.  Ejectment is a statutory remedy found under Florida Statute Ch. 66 providing a person with a superior title interest in a property to request that the court order the current occupant to vacate the property restoring possession to the superior title owner.  The occupant, however, may file a betterment petition with the court seeking reimbursement for the value of the improvements made by the occupant to the property while possessing the property.  Ejectment actions are also under the jurisdiction of the circuit court and not the county court.  Thus, these actions usually are more time consuming and expensive to prosecute.

It is imperative that a landlord/owner of a property consult with a competent real estate attorney to determine their rights, obligations, and remedies concerning rental property issues prior to entering into any agreement with a prospective tenant.

– Henry M. Cooper, Esq., is a shareholder and handles the residential real estate practice of Bogin, Munns, & Munns, P.A., a full service law firm with offices in Orlando, Clermont, Kissimmee, Deltona, Daytona Beach, Ocala, Melbourne, Gainesville, and Leesburg, Florida.  He welcomes questions and comments regarding the above and can be reached at hcooper@boginmunns.com.

NO LEGAL ADVICE: This blog entry is not intended as legal advice nor should you consider it as such. It is intended only as general information.  You should not act upon this information without retaining professional legal counsel. Please keep in mind that merely subscribing to or reading this blog or otherwise contacting Bogin Munns & Munns, P.A. in the manner that you have will not establish an attorney-client relationship with our firm. Bogin Munns & Munns, P.A. cannot represent you until the firm knows there would not be a conflict of interest, and the firm determines that it is otherwise able to accept the engagement.

Typically, a realtor/property manager conducts a detailed investigation concerning the prospective buyer/tenant to ensure that this person is capable of performing his obligations under the subject transaction.  However, how many realtors/ property managers perform the same due diligence with their clients?  In this market, it is vital that you as a realtor/property manager perform proper due diligence when asked by an owner to sell and/or manage a residential property.  At minimum, prior to accepting the listing/management agreement you should perform the following due diligence of your potential client:

1.         Research the public records to ensure that your client is the title owner of record to the property.

2.         If you have a corporate client, make sure the person you are dealing with is the authorized representative of the company.

3.         Research the clerk of the county court records to verify your client does not have a pending foreclosure suit, Notice of Lis Pendens, or bankruptcy.

4.         Research the county tax records to determine if your client is current on his taxes.  If not, that is the first red flag.

5.         Call the homeowners association and find out if your client is current on his assessments.  This is also a sign that your client is experiencing financial difficulty.

6.         Request from your client proof of payment of the last 4-5 mortgage payments to determine whether he is delinquent or not.

7.         Request from your client a current certificate of insurance on the property.  You do not want to manage an uninsured property.

Florida real estate law and regulations are very comprehensive and contain very specific requirements that are constantly evolving.  It is imperative that a realtor or property manager consult with a competent real estate attorney concerning rental property issues.

– Henry M. Cooper, Esq., is a shareholder and handles the residential real estate practice of Bogin, Munns, & Munns, P.A., a full service law firm with offices in Orlando, Clermont, Kissimmee, Deltona, Daytona Beach, Ocala, Melbourne, Gainesville, and Leesburg, Florida.  He welcomes questions and comments regarding the above and can be reached at hcooper@boginmunns.com.

NO LEGAL ADVICE: This blog entry is not intended as legal advice nor should you consider it as such. It is intended only as general information.  You should not act upon this information without retaining professional legal counsel. Please keep in mind that merely subscribing to or reading this blog or otherwise contacting Bogin Munns & Munns, P.A. in the manner that you have will not establish an attorney-client relationship with our firm. Bogin Munns & Munns, P.A. cannot represent you until the firm knows there would not be a conflict of interest, and the firm determines that it is otherwise able to accept the engagement.

Have you heard in the news that you can get paid for letting your home go through foreclosure?  There is a new government program that does provide financial incentives to the borrower.  The U.S. Treasury Department issued Supplemental Directive 09-09 which is being called HAFA.  HAFA is a part of a previous program called HAMP (Home Affordable Modification Program).

HAMP provided guidelines for Loan Modifications while HAFA provides guidelines for Short Sales and Deeds-in-Lieu of Foreclosure.

• A “Loan Modification” is where the borrower keeps the house and the mortgage but the terms of the mortgage are changed to make the payment more affordable.
• A “Short Sale” is where the home is sold for less than is owed on the mortgage.  This is done with the mortgage lender’s approval.
• A “Deed-in-Lieu of Foreclosure” is where the borrower gives the home to the mortgage lender in exchange for canceling the mortgage loan.

The lender must first evaluate the borrower for a Loan Modification under HAMP.  The new HAFA directives will require lenders to then consider whether a borrower is eligible for a Short Sale or a Deed-in-Lieu.  The new HAFA directives will take effect on April 5, 2010, and expire on December 31, 2012.

All of the following criteria must be met to be eligible for HAMP and HAFA:

1. The home is the borrower’s homestead property;
2. The mortgage is a First Mortgage originated before Jan. 2, 2009;
3. The mortgage is delinquent or reasonably will be in the future;
4. The current mortgage balance is less than $729,750.01; and
5. The mortgage payment exceeds 31% of the borrower’s gross income.

If a borrower qualifies for a Short Sale under the new HAFA directives, the lender will be required to forgive any deficiency on the mortgage loan.  This will be a big help to borrowers because many borrowers who sold their home in a Short Sale are now being pursued by collections agencies to collect the deficiencies owed to the banks.  The HAFA Short Sale directives prohibit the lenders from reducing Realtor commissions below 6% and provide the following financial incentives:

1. • $1,500 for borrower relocation assistance
   • $1,000 for services to cover administrative and processing costs
   • $1,000 match for investors for allowing a total of up to $3,000 in short sale proceeds to be distributed to 2^nd mortgage holders

The new directives require the borrower to make an effort to sell the home through a Short Sale before they can sign a Deed-in-Lieu of Foreclosure.  If the lender accepts a Deed-in-Lieu (DIL) under the new HAFA directives, the lender may not require a cash contribution or promissory note from the borrower and must forfeit the ability to pursue a deficiency judgment against the borrower.

The borrower may request their lender evaluate whether they are eligible for a Short Sale or DIL.  If the borrower is not eligible, then the lender must notify them in writing and explain why.

Bogin, Munns & Munns, P.A. is a full-service law firm with experienced commercial lawyers who represent many banks and mortgage lenders.  If you are a loan servicer who is interested in legal representation and assistance with the HAMP and HAFA directives, you can call our office at (407) 578-1334 to schedule a consultation.

– Zana Dupee, Esq., is an experienced attorney with Bogin, Munns, & Munns, P.A., a full service law firm with offices in Orlando, Clermont, Kissimmee, Deltona, Daytona Beach, Ocala, Melbourne, Gainesville, and Leesburg, Florida.  Mrs. Dupee works out of the Gainesville office of the firm and welcomes questions and comments regarding the above and can be reached at zdupee@boginmunns.com

NO LEGAL ADVICE: This blog entry is not intended as legal advice nor should you consider it as such. It is intended only as general information.  You should not act upon this information without retaining professional legal counsel. Please keep in mind that merely subscribing to or reading this blog or otherwise contacting Bogin Munns & Munns, P.A. in the manner that you have will not establish an attorney-client relationship with our firm. Bogin Munns & Munns, P.A. cannot represent you until the firm knows there would not be a conflict of interest, and the firm determines that it is otherwise able to accept the engagement. The engagement would also be confirmed by a written agreement.