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Monday, March 30, 2015

Splitting home equity in divorce when one party owned the home before marriage


 ED. - This is a guest post by my friend and local attorney Kathryn Wayne-Spindler. Kathryn specializes in family law, which encompasses estate planning and divorce and child protection types of cases. I end up getting involved in the disposal of the family home in many divorce cases and it is not unusual that the property may have been owned by one of the parties in the marriage before they even met. So, I asked Kathryn to comment for a post on what happens and how the court decides who gets what in divorce cases involving that scenario. Below is her reply:

In Michigan, the courts typically prescribe an “equitable” division of assets during divorce proceedings. This includes the equity in the family home. One factor that alters the “even” split, however, is if one of the parties owned the home before the marriage.
In the case of one party owning the home prior the marriage, the courts will usually return the down payment and any equity accumulated before the marriage, to the original owner. The remainder of the appreciated value would be split according to whatever formula the courts deem appropriate for the rest of the couple’s assets.

This holds true for marriages lasting less than 10 years. Long-term marriages are different because the assets have become so co-mingled over the years that determining which equity should be attributed to the down payment or other factors, becomes too difficult. Divorce Attorney Kathryn Wayne-Spindler said, “The definition of long-term marriage depends on the judge. Some say more than 10 years, but certainly 15 or more would count as a long-term marriage.”
In a long-term marriage, the proceeds from the sale of the family home, no matter who purchased it originally, would be split equitably. As Kathryn Wayne-Spindler has said, “equitable does not necessarily mean even. The courts start at a 50-50 split but take infidelity, each party’s income potential, and many other factors into account.”

The courts also consider the amount of divisible assets when deciding who gets the profits from the house. So even if one party owned the home before the marriage, if the house is the couple’s only valuable asset, some of the proceeds will be awarded to each person. “In these cases, the goal of property division is to make sure that neither party will be left destitute,” said Wayne-Spindler.

In cases where the couple has been married less than 10 years and they do have other assets to divide, the original owner would need to provide documentation of the original property purchase including closing papers and cancelled checks showing the amount of the down payment.
Then a historical appraisal would be performed. A certified appraiser, like Norma Nicholson of Nicholson Appraisal Services in Milford, MI, would look at the value of the home at the time of the marriage. She would take into account the comps at the time, features and improvements. In addition to the retroactive appraisal, the certified appraiser would do a current appraisal. The difference in the two amounts gives the court a value of the divisible equity of the home.

In Michigan, in the last decade especially, housing values have been on a roller-coaster path. There are, unfortunately, cases where the house was purchased for a high price and actually lost equity because of market conditions. “In that situation, the equity was likely lost forever.” The good news is that property values in this state are rebounding in 2015 and many homeowners are finding increased equity in their homes once again.

In summary, if the marriage lasted less than 10-15 years and there are other divisible assets, the original down payment and equity accrued before the wedding would generally be returned to the party that originally owned the home. The equity accumulated between the marriage date and divorce would then be split equitably.

Ed. - So, like many areas of the law each case may end up slightly different, depending upon many factors; however, it does appear that at least some of the equity that may have accumulated during a marriage that lasted 10 years or more will be split. This may not be what either party wanted to hear, but there are very few outcomes in a divorce that end happily for either side. Should you become involved in a divorce situation or one that seems to be headed in that direction, seek the advice of  good attorney. If you are in the Milford, Michigan area I can think of no better attorney than Kathryn Wayne-Spindler.


Monday, March 16, 2015

What’s that white stuff on my lawn?

The snow has finally melted in our area and my lawn has this whitish/grey stuff that looks like cotton
candy on it. What’s that?

Well, as you might have guessed, it is not cotton candy; it’s a a disease - mold that is growing in your lawn. It’s called snow mold and it’s very common in the northern tier of states and in Canada. Below is a little about it from Wikipedia –

Snow mold is a type of fungus and a turf disease that damages or kills grass after snow melts, typically in late winter.[1] Its damage is usually concentrated in circles three to twelve inches in diameter, although yards may have many of these circles, sometimes to the point at which it becomes hard to differentiate between different circles. Snow mold comes in two varieties: pink or gray.
Gray snow mold (Typhula spp. or Typhula blight) is the less damaging form of snow mold. While its damage may appear widespread, it typically does little damage to the grass itself, only to the blades.[1] Unlike most plant pathogens, it is able to survive throughout hot summer months as sclerotia under the ground or in plant debris.[3] Typhula blight is commonly found in United States in the Great Lakes region and anywhere with cold winter temperatures and persistent snow fall.[4][5]
References:
1.  "Snow Mold Fact Sheet". University of Rhode Island Landscape Horticulture Program. Retrieved 2012-10-07
2. "RPD No. 404 - Snow Molds of Turfgrasses". Univ. of Illinois Extension. July 1997. Retrieved November 11, 2011.
3. Ash, Cynthia (February 2000). "SNOW MOLDS in LAWNS". University of Minnesota. Retrieved 2012-10-07.
4. Kerns, J.P. (2011). "Turf diseases of the Great Lakes region". Univ. of Wisconsin Extension. Retrieved November 11, 2011.
5. Johnston, William H. (December 2003). "Snow Mold Control in the Intermountain Northwest". U.S. Golf Association. Retrieved November 10, 2011.

I live in Michigan and get grey snow mold in my yard every spring (the picture above was taken in my front yard). Apparently it isn’t really all that harmful to the grass, but perhaps I could do a better job of raking the lawn before the first big snowfall to get it ready for winter. The grey splotches in your lawn now will disappear as the weather warms and certainly be chopped away with the first mowing of the lawn. The mold doesn’t go away, it just goes dormant and remains underground until next winter’s snows.

If you would like to read about alternatives to control snow mold in your lawn, here is a link to an article from the University of Massachusetts that discusses several fungicides that you might use.  Apparently, since the banning of Mercury-based fungicides, there has not been a single fungicide that can effectively control all of the various strains of snow mold, especially the pink type.  

Snow mold is just one of the molds that can infest lawns and you are likely to see most of the other types over the course of a summer, either in your yard or as neighbor’s lawn. Some of the molds are not associated with the grass, but may be growing on the roots of trees, especially trees that were cut down but the roots left to rot. Guess what eats those roots? That’s right – molds.


 So, the bottom line is that you should not necessarily be overly alarmed by the snow mold; but, perhaps take some action this summer and fall to treat your lawn, so that it does not return next year. You won’t see it all summer, but it is still there, underground, just waiting for that first big snow to start growing again. You may still get “fairy rings” and mushroom s popping up from time to time in your lawn and those are forms of molds too, but that’s a different story and usually less harmful to the lawn.

Thursday, March 12, 2015

About BPOs, CMAs and Appraisals…


Would be home buyers may occasionally hear that the listed price was based upon a BPO. Sometimes, if the property is to be a short-sale the sellers will hear that term, too; as the bank or mortgage company tries to determine a fair market price.  Normal sellers will always hear the term
CMA or Comparative (sometimes Competitive) Market Analysis; and both buyers and sellers will certainly hear the term Appraisal before the deal is done. All of those terms refer to processes done by professionals in an attempt to determine the value of the property. They are all industry terms and all sound better that SWAG (Scientific Wild-Assed Guess), which it also what they all are.

Of the three terms the one with the most science involved is the appraisal, or at least that is what the appraisal industry works hard at portraying. Buried in the fine print of every appraisal is a little sentence or phrase that points out that the work is an opinion about the price.

Like all of these processes, the appraisal involves real data, mainly from past sales of similar homes, and lots of real work as the appraiser tries to adjust the data that he or she has to work with to level the playing field and make the comparison of the “subject property” reflect as close as possible the current value of the house being appraised. There is no intrinsic value to any house and the most honest assessment of value that I’ve ever heard is that any house is worth what someone else is willing to pay for it. Unfortunately, there is also usually a mortgage company involved and so the value becomes whatever the mortgage company says it is worth – thus the need for the appraisal.

So what do the appraisers use to determine a house’s market value? They start with the assumption that the house is worth what others have paid for exactly the same house. Their job is made immensely easier if the house is in a tract sub with lots and lots of recent sales of houses of exactly the same floorplan and amenities. That does happen, but the reality is that no two houses are ever built exactly alike, so the appraisers challenge is to make “adjustments” for the differences.  That’s still fairly easy in big developments; but, what happens when the house being appraised is custom built and off away from other similar houses. That’s where the appraiser starts applying all of his scientific and experience skills to try to create that level playing field, so the houses can be compared as a market.

Appraisers like to work with as little distance involved as possible, so most like to work with similar homes that are within a mile or two, but they will go out further is necessary.  Staying local takes a lot of the neighborhood factors out of the comparison. They also need the homes to be the same in terms of amenities – number of bedrooms (and locations in the floorplan) and baths, style (i.e. single story, multi story, split level, etc.) and age of the build, garage size, basement finish and much more. The appraisers use the term comps or comparable, because they want you to believe that they are looking at a group of houses that are the same (comparable) as the one that you are considering and that it is logical therefore that your house should sell for the same as those examples. It’s a reasonable and logical conclusion to draw.

The appraisal process does have flaws. The appraiser has seldom done more than drive by the comps, so they may not have a good feel for the materials, finishes or conditions inside. They try to make up
for that by looking at all of the MLS pictures that were on line for the comps. So they try to make adjustments for any differences that they note; adding on value or taking off value for those differences. The other flaw is that they are using data from past sales, so the market may have moved on from those sales, sometimes rather rapidly as is has over the last year or so. So they make adjustments for that, too. You start to see why there is that little statement about it being an opinion; a highly informed one of the appraiser is good and has worked hard at it; but an opinion none the less.

Now, BPOs and CMAs are similar processes but done by real estate professionals and dome without nearly as much rigor as an appraiser uses. Banks and mortgage companies hire local real estate professionals to render opinion about the current market value of properties that they are going to put on the market  as short-sales or as foreclosures. Most of the time a Realtor® hired to do a BPO will be required to at least visit the property to assess it’s condition. After that the process is much the same as with the appraisal, but without all of the adjusting efforts.  The Realtor will look for comps, usually within 3-5 miles of the subject property and using sales that are within the last six months within the market area. The agent will use comps that have the same number of bedrooms and baths and other key amenities; but they make no real effort to agonize over the details and make adjustments. They need to get it within a ballpark range for the bank. Because BPOs are ordered and paid for by the lender, they tend to be conservative on the value. They also tend to involve “distressed homes” that may have been damaged or vandalized, many times by the previous owner.

The Realtor that you call to list your house will do a Market Analysis (usually called a CMA) to try to determine what a fair market price will be for the house. He or she will likely find 3-5 similar
homes that have sold within a 3-5 mile radius of your home and 3-5 homes that are similar and are currently on the market.  Realtors tend to be optimistic about the market and forward looking, so they will almost always come up with the highest “value” for your home. They are trying to answers two questions -  what do I think I can get for this house on today’s market and what do I think it will appraise for if I get that price? As a Realtor, I never use the word comps when I present CMA’s that I have done. I’m careful to use the term “similar homes”, because I understand that I have not applied the rigor that an appraiser would to the selection of the homes, nor do I try to make all of the adjustments that an appraiser would. Certainly I take into consideration things like no garage or no basement and style of the house when looking for similar sold or active homes. If necessary I might make a gross adjustment for a major difference, like no garage when all of the similar homes have one.


The bottom line on all of these is that they are the opinion of the preparer, some done with great rigor and some not. The more “cookie-cutter” your house is that more likely they are to be fairly accurate. Things like location (different school districts, for instance, or located on water) or land content (1/2 and acre vs a place with 5-10 acres), and differences in amenities like finished or unfinished basements can make huge differences in the “values” returned by these processes. They are what we have to work with and it is up to you to question how the market value was determined. Like everything lese in life it should make sense to you and if it doesn’t get a second opinion. You’ll note that nowhere in any of these processes do factors like what you need to get or want to get for your house;  or even what your neighbor down the street got last year for his house (unless it is exactly the same as yours). The market doesn’t care what you need. What all of these processes are trying to determine is what someone might pay for it now. Hopefully you’ll be happy with what you can get. Call me or your Realtor to find out more or visit my web site www.themilfordteam.com.

Thursday, March 5, 2015

5 reasons to consult an attorney when you sell a house


ED. - This is the first of what I hope will be several guest posts by local attorney Kathryn Wayne-Spindler. Kathryn is a friend and my personal lawyer and possibly a future client. Kathryn's practice is focused upon family law areas, with divorces, estates, child custody issues and more, many of which end up involving the disposition of real estate. I have recommended her to many of my clients and used her for my own estate planning. I've asked Kathryn to put together a series of posts on topics that delve into the legal aspects of real estate transactions and I look forward to her guest posts.

The real estate market in Southeastern Michigan is active. With Spring (hopefully) around the corner, For Sale signs will begin popping up in front yards like so many crocus and daffodils. Selling real estate can be a tricky legal business. If you are contemplating selling your home in 2015, an attorney, in conjunction with your Realtor, can help you navigate the process smoothly.

Here are the top five reasons real estate sellers seek the counsel of an attorney:

1 – Purchase Agreement Review - On the sales side of the transaction, an attorney can help you and your Realtor if there are specific exceptions or requirements that go beyond the typical Purchase Agreement. An attorney can also help you determine your rights if a sale falls through or a contract is broken.

2 – Divorce. One of the unfortunate bi-products of divorce is the requirement to sell the family home. For most families, their house is their single largest asset. In order to split the family’s property equitably, quite often, the home is sold and the profits divided according to the formula set out in the divorce settlement. This is a somewhat common occurrence so most real estate agents have encountered divorce sales. However, the real estate agent may not be familiar with the intricacies of your particular settlement. Reviewing real estate sales documents with your divorce attorney may ensure that you are getting as much equity from your home as possible.

3- Probate. When dealing with an inherited house, many people seek the assistance of an attorney in conjunction with a real estate agent. For families who inherit homes, there might be mortgage questions, liens, joint ownership, and/or estate tax considerations. If you are considering selling an inherited home, an attorney can help answer some of the legal questions that go along with your real estate ones.

4 – Tax questions. With constantly evolving tax laws, it can be tough to know your rights and liabilities especially when it comes to an infrequent life event – like selling a home. Although Real Estate agents may answer most of your questions, consulting an attorney can clear up legal issues that a Realtor may not be familiar with.
“For example, the income tax consequences of a sale, particularly if the seller makes a large profit, may be considerable. An attorney can advise whether the seller can take advantage of tax provisions allowing for exclusion of capital gains in certain circumstances,” according to the FindLaw article, “Why You Need a Lawyer When You Buy or Sell a House.” - See more at: http://realestate.findlaw.com/buying-a-home/why-you-need-a-lawyer-when-you-buy-or-sell-a-house.html#sthash.VNhs9vFp.dpuf

5 – Short-Sales or Foreclosures. When it comes these particular home sale situations, you will probably want as much information as possible about what your future holds. A Realtor and an attorney can work together to reduce the negative impact to your credit and get you started on a path to financial recovery.

A Real Estate professional is your obvious first-choice when it comes to assistance during the home sales process. In addition, an attorney can foresee legal issues and eliminate them before they become impassable obstacles to the successful sale of your home. For more information on how an attorney can help smooth you home sale experience, contact Milford attorney Kathryn Wayne-Spindler, at 248-676-1000. You can visit her web site at - http://www.kssattorney.com/

Wednesday, March 4, 2015

In the Huron Valley area, why would you look anywhere else?

I created and maintain a web site called Move to Milford (www.movetomilford.com ). It is a web site with a mission to try to keep up with and share information about what’s going on in the Huron Valley area – mainly Milford, Highland and White Lake, the Townships in the Huron Valley School District. In addition, because it is Milford Village centric, it contains an enormous amount of information about the Village and links to important sites from organizations that are located in the Village and immediate surrounding areas. If it’s information about Milford it’s probably there or there’s a link to the organization’s web site where it can be found on the Click on Milford page.

One of the features of the site is the poster wall. Did you ever notice while you were walking along in downtown Milford that many of the local stores have posters in their windows? Well, I go get those posters from the various organizations, plus many that never make it to the windows downtown and post them on the “Poster Wall” at the Move to Milford site, right next to the calendar of ‘Things to do in the Valley”. That calendar has all of the events that I can find that are upcoming. If it’s not in that calendar column, there’s a good chance that it’s in one of the seasonal calendars or brochures that organizations like the “YMCA” or the Huron Valley Recreation and community Education program or the Milford Library put out. You’ll find all of those calendars, schedules and brochures there, too; along with a link to the Milford Cinema, so that you can see what’s currently showing there.   And where I could find them on web sites all of the calendars of the various organizations in the area are there, too.

Sometimes you just need the answer to questions like where would my children go to school, if I lived in the area. There’s a link to help answer that question and another to help you evaluate the schools in the area. Maybe you want to know if there are ordinances about outbuildings in Village or Township – there’s a link there to all of the ordinances for both on the Click on Milford page. Maybe you’ve looking at moving into a home that is on a lake in the area and you’d like to know about that like, like how deep it is or how many acres it covers – there’s a link for that, too, on the Real Estate Readings page.

While we’re on real estate stuff, there’s a ton of great information available through this site, like what has sold in the area. I track eight townships that surround Milford and report on all of the sales above $20,000 (let’s face it, any less than that and the sale was for a tear-down house and mainly just to get the land). I don’t just report the sale prices, but also the percentage of sale price vs. asking price, the square footage of the home, the number of bedrooms and baths, the days that it was on the market and the asking and sold price per square foot. For each of those eight areas I also calculate the average and median asking and sold prices, so that you get meaningful statistics about each area. I’ve been doing this for some time, so there is 5-7 years’ worth of data there and the data is updated every week. There are also capabilities there to search for homes in the area – I am a Realtor, after all – using various methods, including map-based searches.

If you do happen to be thinking of buying or selling a home, there’s a ton of great reading material about the real estate process – things that buyers and sellers need to know. Much of that I write myself, but there are also lots of great links to things that go beyond my real estate expertise, like mortgages and insurance. There’re links to the various programs for first time buyers, to help them get the assistance that they may need and links to sites that focus on short sales and foreclosures for homeowners who might be desperate for some help or advice.

As in any small town there are lots of local businesses and I maintain a business referral page for many of the local businesses  that I know and can recommend, It’s not Angie’s List, I guess it is Norm’s list, but more importantly it is a list of businesses and people that I trust. I feature a single business each month with a more detailed write up about it and the owner. If it’s not there, use the links to the Huron Valley Chamber of Commerce or the Highland-White Lake Business Association to search for other local businesses. We also have lots of great restaurants in Milford and they are all listed on the Restaurants page. Maybe what you are hungering for is spiritual, so there’s a page for area churches. Maybe you are interested in the history of Milford, well there’s a great article about Milford’s history and a link to the Milford Historical Society Web site. If you are interested in the arts I also track what’s going on at the Village Fine Arts Association in Milford and at the Huron Valley Council for the Arts in Highland. Both organizations have very active calendars of events and opportunities for artists and would-be artists.


Hopefully you get the picture that you can find almost anything that you might be searching for at this site. I search the Web so that you don’t have to. Spend some time exploring the site and I think you’ll want to bookmark it and use it as your go-to site for what’s going on in the Huron Valley. And if there’s something that you’d like to see there that I haven’t thought of, contact me on the About Us page and let me know.