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Corporate and LLC beneficial ownership anonymity to reduce starting January 1, 2024

Author By Eli N. Krafte-JacobsPosted on

The anonymity of beneficial ownership of corporate and LLC interests has been a “feature” of small business governance for time immemorial.

This has vexed federal, state and local regulators, as well as private litigants trying to get to the bottom of their ownership puzzle.  And it has been a source of comfort to owners who want — for whatever motivations — to remain anonymous.  As a result, there are limited circumstances in which states (Kentucky, for example) and cities (City of Cincinnati, for example) presently do require disclosure of ownership of LLCs and corporations that hold real property in their jurisdictions.

But, by and large, the beneficial ownership of closely-held corporations and LLCs is a “black hole” in terms of registration of the identities of owners of closely-held businesses and limited liability companies.

In a limited way, that anonymity comes to an end in one year according to a final federal rule issued in September:

  • As of January 1, 2024 the Corporate Transparency Act requires newly-formed LLCs and corporations to disclose information about their beneficial owners to the federal Financial Crimes Enforcement Network (FinCEN) within 30 days, and
  • Corporations and LLCs that existed prior to January 1, 2024 must make that same disclosure by January 1, 2025.

The reason for the new law, according to FinCEN, is “to crack down on illicit finance and enhance transparency…to stop criminal actors, including oligarchs, kleptocrats, drug traffickers, human traffickers, and those who would use anonymous shell companies to hide their illicit proceeds.”

FinCEN has also issued a proposed rule (to be finalized later this year) for sharing the information with other federal, state and local agencies.  From the proposed rule:

FinCEN’s proposal limits access to beneficial ownership information to Federal agencies engaged in national security, intelligence, or law enforcement activities; state, local, and Tribal law enforcement agencies with court authorization; financial institutions with customer due diligence requirements and regulators supervising them for compliance with such requirements; foreign law enforcement agencies, prosecutors, judges, and other agencies that meet specific criteria; and Treasury officers and employees under certain circumstances. FinCEN further proposes to subject each category of authorized recipients to security and confidentiality protocols that align with the scope of the access and use provisions.

In other words, the general public will not have access to beneficial ownership information filed with FinCEN, but it will be shared with state and local law enforcement as appropriate.

These rules will certainly call for the end of 100% anonymity for closely-held corporations and LLCs and a mandatory new federal filing requirement for each entity (presumably updated as ownership changes from time to time).  Whether it will change the way small businesses in America are substantively regulated is yet to be seen.

Please contact Eli Krafte-Jacobs (513.797.2853), Isaac Heintz (513.943-6654) or Casey Jones (513.943.5673) for more information on the Corporate Transparency Act and these new regulations or about your closely-held business issues generally.

Good Lord, please take advantage of generous City of Cincinnati commercial tax abatements

Author By Eli N. Krafte-JacobsPosted on

[Editor’s note: We have many clients regularly buying, improving and holding commercial properties within the City limits of Cincinnati, but they are not availing themselves of the simple and valuable property tax abatements available.  Please contact Eli Krafte-Jacobs (513.797.2853) on your next project to attain these generous and significant property tax savings on your City project!]     

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The City of Cincinnati, Community Reinvestment Area Commercial Abatement Program provides incentives to build and/or renovate commercial, industrial or mixed-use facilities.  These incentives are manifest as property tax abatements and allow the developer (or future owner/operator) to reduce the operating expenses associated with the property.

  • Significantly, the abatement application must be submitted and approved on commercial projects before the commencement of construction. 

Commercial projects in the City of Cincinnati (you need to take care to understand the geographic City limits of Cincinnati) are eligible for a maximum net tax exemption of up to sixty-seven percent (67%) of the improvement value for up to fifteen years.  In all cases, the developer must also enter into a separate agreement with the relevant school board to pay an amount equal to thirty-three percent (33%) of the improvement value as a Payment-in-Lieu of Taxes (PILOT) to be eligible for the abatement program.  This PILOT cost does not further reduce the potential maximum net tax exemption.

The application review process determines the abatement percentage and the number of years for which it will apply.  As part of the application, the developer must submit a $1,250 fee and describe its own development experience, the specific project and why it deserves a tax exemption, any planned community engagement, and anticipated job creation/retention.  Additionally, the developer must submit the following supplemental information:

  1. A detailed breakdown of all sources and uses of funds for the project;
  2. Supporting documentation for such funds;
  3. A post-construction operating pro forma for the building and cash flow analysis;
  4. The developer’s corporate documents evidencing ownership and authority to sign;
  5. Copy of the title deed;
  6. Copy of the proposed construction plans/renderings;
  7. Estimated pre-construction and post-construction real estate taxes; and
  8. Documents evidencing LEED or Living Building Challenge Certification, if applicable.

In connection with the application, Developers can indicate whether they intend to enter into a Voluntary Tax Incentive Contribution Agreement (VTICA), which factors into determining the percentage and length of time of the abatement.  Under a VTICA, the property owner agrees to pay a portion of the abated tax to the municipality for certain uses including, most prominently, the streetcar [applicable as to downtown projects].  City Council has instructed the Department of Community and Economic Development to consider VTICA contributions of fifteen percent (15%) or more of the abatement amount to be a substantial positive factor in reviewing applications.

Factors in Reviewing Application/Determining Level of Exemption:

  1. Must apply prior to beginning any construction activities[1]
  2. Must use a minimum of $40,000 on renovation/construction1
  3. Must result in net, new job creation1
  4. For residential property, can only receive a Commercial Abatement of five (5) or more units
  5. Historic Properties may be eligible for an additional 10-year extension
  6. Election to enter a VTICA, as mentioned above
  7. New construction vs renovation
  8. LEED-certified or not
  9. Handicap accessibility

For assistance with commercial or residential tax abatements (almost exclusively inside the City of Cincinnati), please contact Eli Krafte-Jacobs [513-797-2853]).

[1] These items are absolute requirements

Wealth and real estate investment

Author By Eli N. Krafte-JacobsPosted on

“The major fortunes in America have been made in land.”

John D. Rockefeller

Real estate investment is traditionally cited as one of the primary means that Americans have used to build wealth; a trend that continues to this day.  Whether it is the stability and comfort attained by the middle class or the luxuries enjoyed by the wealthy, with due diligence and hard work, real estate investment can help most Americans achieve their financial goals.  This post is part one of a series designed to provide useful and relevant information to both seasoned and green investors alike.

Types of Investments

The first step when diving into the market is determining what type of investment is most appropriate under the circumstances. While purchasing a personal residence is the most ubiquitous type of real estate investment, there are many opportunities to invest home ownership including: (i) holding rental properties, both commercial and residential; (ii) buying, renovating and selling properties; (iii) subdividing and developing raw land; or (iv) depositing money into real estate investment trusts.  There is no single avenue best suited for all investors, so it is important to gauge your options relative to your goals.

Relevant Persons/Parties

An ordinary purchase and sale requires only two parties, a buyer with cash and a seller with property.  Pragmatically, however, there can be a dozen or more parties to any transaction, which may include, but are not limited to: realtors/brokers, lenders, mortgage brokers, legal counsel, title companies and examiners, surveyors, environmental consultants, qualified intermediaries, accountants, tax professionals, etc.  Each party to a real estate deal is responsible for one or more roles in the process, but they must all work together seamlessly to complete the transaction in an efficient manner.

The Process

The biggest roadblock to jumping into the real estate market is knowing where to begin.  The good news is that there is no correct answer per se.  For example, the first-time homeowner might find it beneficial to meet with one or more lenders prior to searching for a home in order to determine: (i) what is in the buyer’s price range; (ii) what kind of programs might be available as a first-time homeowner; and (iii) to have the sense of certainty that comes with a mortgage pre-approval.  On the other hand, the experienced investor may want to start by meeting with his or her financial and legal advisors to better understand how a new purchase might affect the investor’s bottom line.  Thereafter, for both the seasoned and the green investor, the process is relatively similar: (i) find a property and get it under contract; (ii) perform any remaining due diligence, which includes getting a title examination; and (iii) close on the purchase and sale.

Liability Shield

For those seeking to invest in property other than a personal residence, it is important to decide whether the use of a limited liability company (LLC)—or another vehicle with a liability shield—is appropriate or desirable under the circumstances.  The main reason for purchasing through an LLC is to ensure that personal assets are protected from any claims associated with investment property.  This protection is invaluable in the event someone brings a lawsuit against the investor, but it is valueless if the investor fails to follow certain formalities when creating and maintaining the LLC.  An investor should always speak with an attorney when establishing an LLC or if there are any concerns regarding the ongoing formalities.

Realizing a Return; Tax Consequences

The term “investment” is defined as the action or process of investing money for profit or material result, which begs the question, how does an investor obtain a profit or a material result?  There are two primary ways to turn a profit with real estate investment: rental cash flow and appreciated value.  Rental cash flow is exactly what is sounds like, cash paid to the investor/landlord by tenants of a rental property.  Appreciated value refers to the increased value due to the passage of time.  Additional means of turning a profit include: (i) the increase in resale value after improving the investment property (e.g., updating appliances, replacing a roof, etc.) and (ii) ancillary income from things such as vending or laundry machines, or parking facilities.  Additionally, as with any type of investment, it is essential to understand how taxation will impact the ability to realize a profit.

Advanced Transactions

The savvy investor looks for ways to increase his or her profit margin on a regular basis.  Two of the more prevalent means of doing this include: (i) engaging in 1031 or like-kind exchanges and (ii) purchasing via drop and swap transactions.  The 1031 exchange allows an investor to defer paying capital gains taxes following the sale of an investment property so long as the proceeds therefrom are reinvested in “like-kind property” within a certain period of time.  The drop and swap transaction, which can be performed alongside a 1031 exchange, allows the investor to shield the purchase price from publication, which would inhibit an automatic increase to the tax basis if the purchase price exceeds the auditor’s value of the property.

This introduction to real estate investment is just that, an introduction.  Stay tuned for an in-depth analysis of each section and, as always, be sure to contact a lawyer or tax professional when seeking legal or tax advice.

Other than Never, When to Sign a Contract Without Reading

Author By Eli N. Krafte-JacobsPosted on

Nearly every aspect of the modern world is regulated, in one manner or another, by the use of contractual agreements. As a result of their ubiquity, it is unrealistic to expect the average person to read every word of every contract they sign. To be clear, under no circumstance do we advise signing a contract without reading it, but one must discard reality to believe that such advice will be received, much less heeded. That said, the purpose of this article is to provide guidance for the average person to use when faced with a contract, particularly in light of the general propensity to sign contracts without reviewing them.

Ordinary contracts and adhesion contracts

Insofar as this article is concerned, the most prominent aspect of contract law is the distinction between ordinary contracts and adhesion contracts. Consider ordinary contracts to be agreements between two or more parties that are reached by negotiation. For example: (i) a real estate purchase contract where one party must sell his or her property in exchange for a negotiated purchase price or (ii) an employment contract where one party must perform work in exchange for negotiated income and benefits. As these contracts are bargained for, the parties need to be absolutely sure that the terms agreed upon are, in fact, the terms contained in the written agreement. This concern is exacerbated by the endless spectrum of legal clauses that can be drafted into a contract. As a result, the only way to achieve certainty is to read the contract, and consult with legal counsel regarding any provisions that: (i) you do not understand, (ii) you are not comfortable with agreeing to, and/or (iii) are contrary to your understanding of the agreement of the parties.

On the other hand, adhesion contracts are best defined as agreements between two or more parties wherein the terms are set by one party without negotiation. Examples of adhesion contracts include: insurance contracts, cell phone provider agreements, loan agreements, etc.

Less risk in Adhesion Contracts

Again, this is not advice to sign contracts without reading, but, for those persons who are going to do so anyway, it is worth noting that between the two types of contracts, adhesion contracts pose less concern for a variety of reasons including, but not limited to, the following:

1. If you want the product being offered, then you have to agree to the terms being offered. Why? Because you have no bargaining power to negotiate them. For example, if you walk into Verizon and ask them to change a provision in their cell phone provider agreement, then you will, in all likelihood, leave the store without a cell phone plan.

2. Countless people before you have signed an agreement with identical or nearly identical terms. This does not in and of itself mean that a contract is risk free; however, continuing with Verizon as an example, it is reasonable to equate the number of long term Verizon customers with the acceptability of Verizon’s contractual terms.

3. Other than notice provisions (i.e., requirements to notify other parties upon the occurrence of a triggering event) and negative covenants (i.e., promises to refrain from doing something), consumer obligations under adhesion contracts typically revolve around money to be paid in exchange for a service or product. In other words, the consumer side of an adhesion contract is less likely to have obligations beyond the payment of money.

4. Analyzing a dozen or more pages of legalese can be a burden for the most brilliant of legal minds, so the idea that the average person can read through the same while standing at a check-out counter is nothing short of absurd. While every contractual provision is important, the average consumer is mainly concerned about the cost of the product or service. Thus, the decision to execute a contract is more often based on the consumers’ desire to obtain the service or product rather than their agreeability to convoluted contractual provisions.

5. Unconscionable contract provisions are not enforceable. A provision is unconscionable if it is substantively unfair or oppressive to one party, or otherwise represents a degree of unreasonableness. If there are unconscionable terms in a contract, then a court will either strike the provision from the contract or declare the contract void in its entirety.

Ohio Consumer Sales Practices Act

In addition to those reasons stated above, Ohio consumers are protected under the Consumer Sales Practices Act (the “CSPA”), which states among other things that suppliers cannot commit unconscionable acts or practices in connection with a consumer transaction. A supplier is defined as “a seller, lessor, assignor, franchisor, or other person engaged in the business of effecting or soliciting consumer transactions, whether or not the person deals directly with the consumer.” To determine if a transaction or contract is unconscionable, CSPA asks if the supplier: (i) knowingly took advantage of a consumer because of the consumer’s physical or mental infirmities; (ii) charged a price that substantially exceeded the price of similar property or services that are readily obtainable; (iii) knew the consumer could not receive a benefit from the property or services; (iv) knew the consumer was unable to pay; (v) required consumer to enter a transaction where supplier knew the terms were substantially one sided; (vi) knowingly made a misleading statement that the consumer was likely to rely on, or (vii) refused to make a refund for a return unless there is a sign posted at the establishment stating such refund policy.

The CSPA also regulates suppliers by proscribing unfair and/or deceptive acts in connection with consumer transactions. Moreover, CSPA lists a series of acts and practices that are per se deceptive. That list includes, but is not limited to, a supplier’s false representation to a consumer of any of the following: (i) a product or service contains benefits that it does not have; (ii) a product or service is of a particular grade or quality, when it is not; (iii) a product is new or unused, when it is not; (iv) the product or service is available for a reason that does not exist; (v) a replacement or repair is needed, when it is not; and (vi) that a price advantage exists, when it does not. If a supplier runs afoul of this statute—or any CSPA provision—the consumer may bring a cause of action for the actual damages he or she incurred plus an amount not to exceed five thousand dollars ($5,000.00).

Conclusion

Ultimately, you should read every contract that you sign, regardless of any representations or verbal agreements. It does not matter what you agreed to verbally if you signed a document that states otherwise. This article is not intended and shall not be construed as providing advice to sign documents without reading them. Rather, this article merely offers a pragmatic view of the all-too-common practice of signing contracts without reading them.

Review of Ohio House Bill No. 446

Author By Eli N. Krafte-JacobsPosted on

Powers of attorney are written authorizations to represent or act on another person’s behalf.  The person granting the authorization is the principal and the person to whom authorization is granted is the agent.  A standard power of attorney gives the agent the authority to act immediately and identifies the specific powers that the agent may exercise.  In the case of springing powers of attorney, the document will identify the triggering event that gives the agent the authority to act at some point in the future.

These documents can be immensely useful for a principal suffering from an incapacity, which is to say, an individual who: (1) has an impaired ability to receive and evaluate information, (2) is missing, (3) is detained, be it in the penal system or otherwise, or (4) is outside of the United States and unable to return.  Notwithstanding the cause of the principal’s incapacity, the agent (if given the relevant authority in the power of attorney) may make financial decisions for the principal, purchase or sell property on behalf of the principal, make healthcare decisions, etc.  All of those actions, however, are prevented when the relevant bank, title agency, or healthcare provider wrongfully rejects a lawful power of attorney.

Lawful powers of attorney are often rejected for inane reasons including preparing the power of attorney more than six months prior to the date that the agent presents it or naming a second or successor agent.  Responding to the concerns of the constituency, members of the Ohio House of Representatives recently sponsored House Bill (H.B.) No. 446, which operates to remedy the all-too-common practice of rejecting lawful powers of attorney.  The bill does not alter language in the Ohio Revised Code, but rather, it adds the following to Chapter 1337:

(A)       As used in this section, “acknowledged” means verified before a notary public or other individual authorized to take acknowledgements.

(B)       A person shall not refuse to accept an acknowledged power of attorney for a transaction, or require an additional or different form of power of attorney for any authority granted in a statutory form power of attorney, unless one of the following applies:

  • The person has actual knowledge of the termination of the agent’s authority or of the power of attorney.
  • The person in good faith believes that the transaction is outside the scope of the authority granted to the agent in the power of attorney.
  • The person in good faith believes that the power of attorney is not valid.

(C)       A person that fails to comply with this section is subject to both of the following:

  • A court order mandating the acceptance of the power of attorney;
  • Liability for reasonable attorneys’ fees and costs incurred in any action or proceeding that confirms the validity of the power of attorney or mandates acceptance of the power of attorney.

On January 16, 2018, the Ohio House of Representatives referred H.B. 446 to the Civil Justice Committee, which is where the bill remains today.  The Committee held its first hearing regarding the same on January 24, 2018.

The primary sponsors of the bill are Rep. William Seitz (R) and Rep. John Rogers (D).  The co-sponsors are Rep. Nickie Antonio (D), Rep. John Becker (R), Rep. John Boccieri (D), Rep. Nicholas Celebrezze (D), Rep. Teresa Fedor (D), Rep. Bernadine Kent (D), Rep. Michael Sheehy (D), and Rep. Kent Smith (D).

Ohio corporate law: Dissolution for Corporations and LLCs

Author By Eli N. Krafte-JacobsPosted on
Finney Law Firm attorney Eli N. Kraft-Jacobs

So, you have decided to cease operations, close down your business, and begin the process of dissolving your entity.  You know that there are formalities that must be attended to, but the what/when/how remains elusive.  The first step is to identify if the entity is a corporation or a limited liability company.  Notwithstanding some unique provisions of the Ohio Revised Code, and without discussing the process for nonprofit corporations, professional associations, or partnerships, the following is a general overview of the steps necessary to dissolve domestic corporations and limited liability companies in the State of Ohio.

Electing to Dissolve a Corporation:

A corporation may be dissolved voluntarily by the adoption of a resolution of dissolution by the directors or by the shareholders.  The requirements for dissolving the corporation by resolution of the directors differ from those for dissolving the corporation by the shareholders.

Once a resolution of dissolution has been adopted, and after obtaining the necessary tax clearance, a Certificate of Dissolution shall be prepared, which must include pertinent information for dissolving the corporation.  There are other notification requirements that must be met prior to filing the Certificate of Dissolution with the Ohio Secretary of State.

A corporation may also be dissolved judicially by either: (1) an order of the supreme court or a court of appeals or (2) an order of the court of common pleas in the county where the entity’s principal office is located.  If this is the path your company is taking, the good news is that the relevant court will, purposefully or otherwise, identify the things that need to be accomplished in order to dissolve and wind up the affairs of your company.  The bad news, of course, is that a court is ordering the dissolution of your entity and much of the process will be public record.  If the dissolution occurs pursuant to the supreme court or court of appeals, then the court may either: (a) order the directors to effectuate the dissolution and wind up the entity in the same manner as would occur during a voluntary dissolution or (b) direct the relevant court of common pleas to effectuate the same.  A court of common pleas may only order dissolution in an action brought by the shareholders, the directors, or the prosecuting attorney of the relevant county.

Regarding dissolution in a court of common pleas, if the action is brought by the shareholders, the court may only order dissolution if: (a) the articles have been canceled or the period of existence has expired, (b) the corporation is insolvent and dissolution is the only means through which to protect the creditors, or (c) the corporation has failed or is unable to meet its objectives.  If the action is brought by the directors, the court may order dissolution if there is an even number of directors who are unable to break a deadlock or there is an uneven number of directors, but the shareholders are deadlocked on a vote to elect new directors.  If the action is brought by the relevant prosecuting attorney, the court may order dissolution if it is found that the corporation was organized for, or otherwise engages in, activity including, but not limited to, the following:  prostitution; gambling; loan sharking; drug abuse or illegal drug distribution; counterfeiting; obscenity; extortion; corruption of law enforcement offices or other public officers, officials, or any employees; or any other criminal activity.

Electing to Dissolve a Limited Liability Company:

The process of dissolving a multiple member limited liability company (“LLC”) is similar to dissolving a corporation.  Regarding voluntary dissolutions, an LLC shall be dissolved upon the occurrence of any of the following: (1) the expiration of the period of existence as stated in the operating agreement or the articles of organization, (2) the occurrence of one or more events specified in the operating agreement as causing dissolution, (3) the unanimous written agreement of all members of the LLC, (4) the withdrawal of a member of the LLC unless otherwise stated in the operating agreement, or (5) a decree of judicial dissolution.  A Certificate of Dissolution must be filed with the Ohio Secretary of State in order to effectuate the dissolution of the LLC.

Regarding tribunal dissolutions, a tribunal may declare an LLC dissolved and order the business to be wound up upon the occurrence of any of the following: (1) an event making it unlawful for all or most of the business to continue or (2) a determination by the tribunal that any of the following is or are true: (a) the economic purpose of the LLC is likely to be unreasonably frustrated, (2) a member of the LLC has engaged in conduct relating to the business that makes it not reasonably practicable to carry on business with such member, or (c) it is not otherwise practicable to carry on the business.

The process for dissolving a single member LLC differs from the above process for a multiple member LLC.

Voluntary Winding Up:

Once an entity voluntarily elects to dissolve and files a Certificate of Dissolution with the Ohio Secretary of State, the relevant parties are authorized to proceed with the winding up of the corporation/LLC.  Winding up is the process of selling the assets of the business, paying off creditors, and distributing any remaining assets to the  members or shareholders in accordance with Ohio  law.  This is separate and distinct from a judicial or tribunal dissolution, during which the court will control the process of winding up.

There are some minor distinctions between LLCs and corporations with regard to the winding up process, but they largely follow the same path.

It is important to note that dissolution is not a magic wand with which one may avoid company liabilities.

While the dissolution process may seem straight forward, you should always seek legal counsel to ensure the I’s are dotted and the T’s crossed.

Selling on a land installment contract?

Author By Eli N. Krafte-JacobsPosted on

Imagine you are trying to sell a piece of property, but no one is making any offers.  That is, until a prospective purchaser offers to buy the property on a land installment contract.  You can hardly contain your relief at being able to move on, so you sign the contract without understanding some of the terms, or even what a land installment contract is.  That leads to the questions, “What did I just sign” and “Did I agree to something I shouldn’t have?”

A land installment contract (also known as an installment contract or a land contract) is an agreement between a seller (vendor) of real property and a buyer (vendee), pursuant to which the vendor agrees to sell real property after the vendee pays a series of installments and other obligations set forth in the land installment contract (such as payment of real estate taxes and assessments, utilities, etc.) over a set period of time.  Essentially, the vendor is acting as a lender in the transaction by allowing the buyer to make a series of small payments not unlike a mortgage payment.  From a legal perspective, the vendor is the legal title holder and the real estate and the vendee is the equitable owner of the property.

Selling on a land installment contract can be beneficial when: (i) the vendor has unsuccessfully listed their property on the market for a long period of time, (ii) the vendor does not need the equity from their property in order to pursue the purchase of their next piece of property, or (iii) a prospective purchaser is having a difficult time obtaining traditional financing (in which case a sizable down payment is preferential).

In addition to the standard provisions you need to watch out for (e.g., the purchase price, the closing date, inspection terms, etc.) there are clauses that can be problematic for the selling party.  One such clause is the vendee’s right to make repairs of undisclosed items on the property, and then deduct the cost of such repairs from the final payment.  That clause could sound as innocuous as something like this:

In the event that the vendors fail to pay any amounts due and owing hereunder, the vendees may pay such amount at buyers’ complete and sole discretion, and thereafter deduct the amount of such payment from the final payment.

On its face, this clause doesn’t sound problematic, but when coupled with other clauses in the land installment contract, such as the following, it becomes an issue:

In the event that any representation or warranty of vendors is false, vendees shall have the right, at their absolute discretion, to either: (i) rescind this agreement and refund all amounts paid under the same or (ii) reduce the final payment owed to vendors for any and all losses, liabilities, costs, or expenses associated with vendors’ false representation or warranty; provided, however, that no reduction may occur for losses, liabilities, costs, or expenses associated with any replacement, maintenance or repair of an item on the property that was conspicuously disclosed to vendees.

Essentially, this gives the vendee the power to make repairs on any item on the property that is in need of repair, which need is at the vendee’s absolute discretion.  The scrupulous vendee may elect to fix the most minor damage, regardless of the cost, because the cost will be deducted from the final payment and the vendee won’t lose any money.  Instead, the vendee obtains all of the benefit, and the cost for such benefit will come straight from the vendor’s pocket.

Ultimately, if your property has been on the market for a long period of time and a prospective vendee offers you a land installment contract, you can breathe your sigh of relief, but do not sign the land installment contract until you are absolutely sure you understand the terms contained therein.  It is highly recommended that you seek legal counsel to represent your interests prior to entering into the land installment contract.

Contact Finney Law Firm to see how we can help you with your real estate needs and transactions.

Estate Planning with Digital Assets

Author By Eli N. Krafte-JacobsPosted on

Technology consumes the lives of most Americans.  In fact, humans create an estimated 2.5 quintillion bytes of data each day and an estimated 90 percent of all the world’s data was created in the last two years.[1]  In perspective, 2.5 quintillion bytes of data is equal to about 530 million songs or 90 continuous years of HD video.[2]  Holding power and control over digital assets is advantageous to the owner, but many jurisdictions do not have laws to effectively govern what happens to a deceased person’s digital assets.  Prior to April of this year, Ohio was one of those jurisdictions.

Ohio House Bill 432 (HB432) was signed into law by Governor Kasich at the end of 2016 and it became effective April 6, 2017.  This Bill, otherwise known as the Omnibus Probate Bill, made significant changes to estate administration in Ohio.  Chief among those changes was the adoption of the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA).  Under the original Uniform Fiduciary Access to Digital Assets Act (UFADAA), fiduciaries were authorized to manage digital property such as computer files, web domains, and virtual currency, but it restricted a fiduciary’s access to the substantive content of electronic communications (e.g., email messages, text messages, social media accounts, etc.).  However, HB432 and RUFADAA extended the reach of a fiduciary to include the power to manage a person’s substantive digital assets.

Rather than granting this power across the board, HB432 outlines the means through which an individual may grant such power to his or her fiduciary.  These means include: (1) online tools offered by a custodian or possessor of digital assets and through which an individual can select how their digital assets will be treated, (2) a will, trust, or power of attorney, and (3) the custodian’s terms of service.[3]  The foregoing means are listed in order of descending authority.  In other words, an online tool supersedes the terms of a will or trust, which supersedes the custodian’s terms of service, which supersedes the default RUFADAA rules.

As estate planning catches up with technology, it is important to understand how newly enacted legislation can affect your rights.  With Ohio’s recent adoption of RUFADAA, individuals now have greater control over what happens to their digital assets after death.  As is good practice with estate planning, individuals seeking to exert a measure of control over their digital assets after death should consult with an estate planning attorney.

[1] Bringing big data to the enterprise, IBM.com, https://www-01.ibm.com/software/data/bigdata/what-is-big-data.html (last visited May 25, 2017).

[2] Mikal Khoso, How Much Data is Produced Every Day?, Ne. U.: Level (May 13, 2016), http://www.northeastern.edu/levelblog/2016/05/13/how-much-data-produced-every-day/.

[3] See generally, Ohio Rev. Code § 2137.03 (2017).