HICPA and the Hiccups of Home Repairs

Home repairs and renovations can be costly and time-consuming. While some work on your home can be a breeze to have done, other work comes with the stress of ever-changing deadlines and busted budgets. No one needs the added stress of a contractor who does not complete the work or does not complete it well. That is why Pennsylvania passed the Home Improvement Consumer Protection Act (HICPA) in 2009.

There are two primary litigation scenarios we see invoking HICPA. The first scenario occurs when a contractor completes the work but does not receive full payment from the client. Typically, the client withholds payment because the work was not completed to standards and is awaiting further work, or there is a disagreement over the actual contract price. The second scenario occurs when a client pays a contractor the full contract price, but the contractor does not complete the work as agreed. In both scenarios, it is important to have a written contract evidencing the precise nature of the work, the full price and a proposed completion date. Although litigation under HICPA can go both ways, we must recognize that the purpose of the statute is to protect the consumer from fraudulent business practices.

One protection provided by HICPA comes from its requirement that all contractors in the state be registered with the Bureau of Consumer Protection in the Office of Attorney General. Each registered contractor receives a unique identification number, which is to be printed on all home improvement contracts. Registration can be verified online by consumers using the contractor’s trade name, address, telephone number or registration number. By performing a registration search, homeowners can make sure they are working with legitimate contractors who have provided proof of liability insurance as required by HICPA.

HICPA also protects the consumer by requiring that all home improvement contracts include certain elements for them to be enforceable against a client. It also deems certain clauses voidable, such as any provision stating that the contractor shall be awarded attorney fees or costs if the contract becomes the subject of litigation. In fact, it is the consumer who can recover triple their damages as a result of a contractor’s violation of HICPA since a violation of the statute is deemed a violation of the Unfair Trade Practices and Consumer Protection Law, which allows for the recovery of treble damages. This only underlines Pennsylvania’s interest in making sure that consumers are protected from fraudulent business practices by home improvement contractors.

If you find yourself in a legal dispute over a home improvement contract, the attorneys at Cornerstone Law Firm can help. Contact our office today and schedule a consultation.

Short-term Rentals & Long-term Headaches

Having a side hustle is becoming more and more popular by the day, and many people sure could use some extra income. This is why companies like Airbnb and VRBO have become so profitable. If you can take a current asset like your house and use it to generate extra income with little or no additional investment, why not give it try? Of course, not everyone in this rental arena is leasing a single room at a time. Some have taken this on as a larger investment opportunity, purchasing properties for the sole purpose of using them as short-term rentals. Regardless of the avenue chosen, whether the property owner is a person or a type of entity, starting a short-term rental business might not be so easy depending on zoning laws.

Before deciding to enter the short-term rental market, the first step is determining whether the municipality has an ordinance specifically addressing short-term rentals. These are not uncommon in larger cities and areas known for tourism. Even a town like State College passed its first such ordinance last year and already is considering changes to those rules based on how the industry operates practically. This kind of ordinance typically addresses:

  • limits on length of stay
  • limits on the number of nights a property can be rented in a given year
  • limits on the number of rooms which can be rented, occupancy limits
  • parking requirements

A municipality also might have different rules depending on whether an entire property is rented or just a portion of an owner’s already-occupied home, as well as a requirement to register as a landlord or obtain a rental operating license.

Where such ordinances exist, there are not too many questions to ask. The problem is when there is a lack of this kind of clear guidance, which is the case in most municipalities. In those instances, interpreting the local code and determining how it applies to your specific situation can be difficult. A number of different factors can make or break your plan to use the property as a short-term rental based on zoning requirements and prohibitions. These can include:

  • whether the property will be inhabited by the owner while also being partially rented
  • the language of related ordinances regarding other kinds of rentals
  • whether the property is owned by a person or an entity
  • how the code defines terms like “family” or “single-family dwelling”
  • whether the municipality wants to limit traffic in the zoning district

Since zoning ordinances specifically addressing short-term rentals are still generally lacking in Pennsylvania, and particularly in more rural areas, the issue has been brought to the courts on a number of occasions. Unfortunately, those cases have been decided in various ways, which only muddies the waters. Barring these specific ordinances, it is too easy and too common to enter the short-term rental market only to be slapped with a zoning code violation as a result. That is why due diligence is necessary before renting that room or that cabin for the weekend. While variances can be requested, a denial can mean that a rather large investment will not produce the intended return.

If you are considering entering the short-term rental space, your local attorneys at Cornerstone Law can help you navigate this emerging market. Give us a call to schedule a consultation today.

 

If you’d like to read more about rental properties, check out our post on Legal Things to Know Before Investing in Rental Properties.

Legal Things to Know Before Investing in Rental Properties

With the rise of the DIY movement and the expansion of the mobile workforce in the U.S., investors are clambering to purchase rental properties. Whether they are rehabbing and flipping properties or buying them and turning them into rentals, more investors are interested in the potential returns of real estate investment. If you have attended a seminar, read a book or listened to a podcast on real estate investing, or if you are personally interested in investing, here are some legal issues to consider as you move forward in the rental market.

Sheriff’s Sales and Tax Sales are Much More Dangerous Than You Think

It seems almost too good to be true. All of these properties are available at your county’s tax or sheriff’s sale for tens of thousands of dollars less than what they are worth, according to the best estimate you can find. Why not start your investing there? Well, although sheriff’s sales can represent an incredible opportunity to purchase a property, that purchase can bring its own difficulties. For example, a sheriff’s sale does not extinguish junior liens if those lienholders were not properly notified of the sale. Although the senior lienholder (the one trying to sell the property) is technically responsible for notifying all junior lienholders, it is the new buyer who is left with a property encumbered by liens when proper notification is not given.

Also, there are several title problems that can arise long before the sheriff’s sale. Someone who claims to own a property and even has secured a mortgage for it might not have a clean title. Purchasing a property at a sheriff’s sale does not guarantee you a clean title. In fact, it guarantees you nothing at all except that you have title against the lienholder who sold it and, in most cases, against the debtor who previously owned the property. This is not to discourage you from attending a sheriff’s sale or a tax sale. These can be great investment opportunities, but you must do a careful search of any properties you are considering purchasing to make sure that there are no legal problems or a cloudy title lurking in their past.

Form an LLC for Each Property

You should form an LLC for each property you purchase. These often are named for the street address of the property, but that is not a hard and fast rule. Forming an LLC can be relatively inexpensive once you begin to work with a real estate lawyer or business lawyer you can trust, and you should do so for each individual property. The reason you want an LLC for each property is that it protects the property in the event you have problems in other parts of the business. For example, a slip and fall at property A will limit any claims against Property A to that LLC. These claims will not affect the LLCs holding the other properties. Forming LLCs also allows you to sell off individual properties or businesses at a future time more easily, and it can help you to avoid taxes in that case. Managing properties as part of the portfolio also can be easier when you have an LLC for each property. As the ownership of an LLC in Pennsylvania is not a matter of public record, there also is additional privacy protection in this approach.

Eviction and Ejectment

If a tenant stops paying rent, the landlord’s remedy is eviction. If an occupant never had a right to be there in the first place, the remedy is ejectment. That is the basic difference between eviction and ejectment under Pennsylvania law. Unfortunately, evictions are part of being in the rental business and can take several months. In fact, they can take up to a year depending on all the circumstances involved. Even property owners who are very selective find that they occasionally must evict a tenant who stops paying rent or who damages the property. In most counties in Pennsylvania, getting before a District Justice for an eviction hearing can be done quickly, and the time to bring a case is statutorily prescribed. Nonetheless, obtaining the eviction order can be rather difficult as judges might rely on nonlegal reasons for granting a tenant an extension while they clean out the unit or find new housing. These extensions are more common during the colder months.

Anyone considering being a landlord should speak with an attorney and learn more about Pennsylvania’s Landlord and Tenant Act. Understanding landlord-tenant actions can help you avoid some of the cost and time associated with completing an eviction. Furthermore, when you purchase a property at a tax sale or a sheriff’s sale as discussed above, you might have to remove an individual who has no right to be in the property in the first place. This can be the former owner or a regular squatter, in which case an ejectment is necessary. Unfortunately, this process can take as long or even longer than an eviction.

Conclusion

If you are thinking of renting real estate to others, it is important to know the landscape of this area of law. Contact a real estate attorney at Cornerstone Law today to discuss your options and get to know how to better predict potential problems in the rental business.

Reaching Family Settlement Agreements in Estates

When a family member passes away, many factors can combine to create conflict over how to resolve the estate. Oral promises made by the decedent while alive, or a confusing portion of a will, or an apparent change in circumstances since the will was drafted, all can give rise to disputes over how the estate should be settled. In today’s blog, we will discuss how to reach a family settlement agreement designed to resolve the estate and avoid any dispute in court over an accounting.

Negotiating with family can be difficult. Negotiating over assets which might have changed in value can make these negotiations even more complicated. However, in a family settlement agreement, the parties agree that they will sign a document confirming the way that the estate should be settled rather than going to court. In some cases, this is done without any dispute at all. The parties each review the proposed settlement and confirm that they believe it is the appropriate way to distribute the estate assets. Additionally, they waive any claims against the executor of the estate in exchange for their share and confirm the way that all bills were paid and the way that the estate was handled.

Of course, these decisions are not always so easy and can be drawn out in more complicated situations. An executor who proposes a breakdown that the beneficiaries believe does not follow the will appropriately might face an accounting action. If a dispute arises over how to finalize the estate, several things can be done to resolve the matter outside of court. First, the parties can negotiate between counsel for the beneficiaries and the executor. The probate attorney handling the estate represents the executor only and not the beneficiaries, so they will need to retain their own counsel. In a situation with multiple executors, and one in which those executors disagree, the executors may wish to seek their own counsel.

Second, the parties can seek a mediation and go before someone who is not attached to the situation at all and who can help work out the parties’ differences. A mediator should try to find a middle ground where the case can be settled. It is often said that a mediator’s best result comes when they find a resolution that does not please any party completely but that is better than the alternative of spending a lot of money and going to court. Compromise is usually involved, and it is important to remember that a mediation might not get you everything that you want as part of your final agreement. Still, mediations are convenient because they do not force anyone into a decision. They are an effort at finding an appropriate compromise after seeing the facts in light of an outside party’s perspective.

Finally, the parties can submit a dispute to a binding arbitration. The family may be able to pick a family member who is truly neutral or ask a pastor or other community leader to help them resolve the dispute. There also are companies which can be hired to send an arbiter to hear the dispute. With today’s modern technology, these arbitrations can even happen remotely without everyone having to gather in the same place.

There are many other potential ways to reach family settlement agreements, but these are some of the most common. If you are in a probate dispute, or if you believe that your matter can be worked out amicably without going to court but still wish to seek legal guidance, contact the estate administration attorneys at Cornerstone Law Firm to learn more today.

Lions and Tigers and…Gerbils? — Pet Custody in Pennsylvania

The divorce process is a difficult one no matter the circumstances. Most issues related to this process carry an emotional component. While we would expect emotions to run high when the parties are deciding issues such as custody and the disposition of the family home, emotional attachments to certain property also can give rise to disputes. Artwork, photographs or irreplaceable keepsakes can be quite meaningful to either party, and the process becomes more than just dividing up things. Although it is clear to most the difference between determining the fate of a chair shared by the parties and that of their child, it might not be so clear when pets are involved.

It should not surprise us that a common question received by family law practitioners is how the divorce process impacts pet ownership. The bond between an owner and an animal can be very strong, and the reciprocal emotional attachment often experienced cannot be replicated. Determining who gets to keep Fifi can be a big battle when dogs or cats are viewed more like children and when both parties have developed an emotional attachment. The issue is that, unless you reside in a select few states, Fifi will be viewed no differently than a TV or a sofa.

While the parties might come to an agreement regarding custody or visitation of pets, and while they might memorialize their intentions in writing, it just might not matter. Outside of Indiana, Alaska, and California, pet custody is not a legal concept. In Pennsylvania, the Superior Court upheld the view that the disposition of pets during the divorce process is akin to the disposition of property (Desanctis v. Pritchard). Specifically, the Court declined to give any credence to an agreement granting an ex-husband visitation rights to the family dog when the dog had been granted to the ex-wife through their property settlement agreement. The Court viewed this no differently than granting a visitation schedule for a table or a lamp, which it never would entertain. There might be some hope on the horizon for pet-lovers after all.

PA House Bill 1432 introduced in 2019 currently sits before the House Judiciary Committee, and rumor has it that the bill has enjoyed bipartisan support. The bill seeks to establish a set of factors for the court to follow in determining the best result for companion animals. If passed, the proposed legislation would add another avenue for the court to aid in resolving the sensitive issues faced during divorce. Until then, the fate of Fido will be determined like every other car or couch shared by the parties.

If you are going through a divorce and in need of some help, contact Cornerstone Law Firm. You can also read our Family Law Tips on when to file for child support, if you need a divorce lawyer, establishing healthy lines of communication, and more.

Who Gets the House After Our Break-up?

When you live with someone but are not married, this can create a host of legal issues, particularly when one moves out after a break-up. Who gets the house? If one person owned the house and the other simply lived there, and if that person made improvements to the house while living there, is he or she entitled to payment for any of those improvements? What happens if the two of them purchased a home together, but one person paid all the bills for the house? Does that person have a claim to reimbursement for payment of those bills?

First, under Pennsylvania law, unmarried cohabitants have no property rights in one another’s property simply because they live together. Even if you lived with someone for thirty or forty years, you have no legal right to what is essentially a divorce settlement upon separation. Neither party is required to pay spousal support, alimony, or anything of the kind (child support is a separate issue). However, if you purchased a home together, the two of you do have a right to share in the proceeds of the home once it is sold. In most cases, we are able to help the parties negotiate a resolution where one side buys out the other’s interest in the property. This can be a little complicated, especially when the market is very high or very low. The parties have to reach an agreement on what is the fair market value of the property. If they cannot agree, then one party can go to court and ask for what is called a partition. We have covered partitions in other articles, but this is when the property is sold and the money divided between the two.

What happens if only one person owns the property, but the other person has made improvements? In most cases, this will be difficult to prove because the party will have to show that the improvements increased the market value of the property. Claiming that the improvement made the kitchen look nicer, the floors look better, or that it was some other type of cosmetic change is insufficient. Most types of improvements that people discuss making are cosmetic in nature. Even an improvement with a clear function like a deck fits into this category. To prove that these improvements increase the market value of a property is always difficult.

If you are going through a break-up and you feel that you need legal help, our attorneys have experience in this area and can assist you. Call us today and set up an appointment so we can discuss your rights in the property and how to make it a clean break.

Real Estate Closings: The Complete Checklist

Buying and selling homes privately can save you a lot of money in realtor fees and other costs, but it often means you must handle the closing on your own. If you plan to have a private real estate closing without the help of a title company or other closing company, it is important to know what you need. Here is a quick checklist of the things you will need to finalize a closing.

Agreement of Sale

If you have agreed to terms with someone, it is important that you memorialize it in writing. Under Pennsylvania law, real estate contracts are generally unenforceable in court if they are not in writing. Do not simply rely on a handshake deal, but get an agreement of sale. Once this document is signed, it will be the centerpiece of the closing. The agreement of sale acts as the blueprint for all the other documents you must prepare.

Closing Summary Sheet

Often referred to as a HUD-1, the closing summary sheet is important because it shows all the money being moved between the parties. Technically, a HUD-1 refers only to certain types of transactions but in practice is used more broadly. This form shows who will pay which taxes and other closing costs as well as fees to attorneys, realtors, brokers, or other professionals who must be paid at closing. One reason that this document is so important and helpful is that it shows you at a glance the payment every person can expect to receive at the end of the day. This allows the closing agent to write out the checks knowing that everyone has seen and approved of these numbers.

Escrow Account

Although not technically required for a real estate transaction under Pennsylvania law, at least one party typically insists on or prefers to have purchase funds escrowed and split up by the closing agent. If money is escrowed, this usually is reflected both in the agreement of sale and in the closing summary sheet.

Who is Present at the Closing?

You will need to decide who should be present at the closing. Will everyone sign in the same place at the same time, or will they do so remotely or at different times? There is no right or wrong answer to this, although doing it all at the same place and at the same time clearly is easiest. You will need to have a notary available for each person who needs to sign a document so those signatures can be verified and notarized. Mobile notaries and remote notaries are available and can be obtained for unique situations, and modern technology has made it easier than ever to handle your closing no matter where you are.

Deed

The final critical piece of the transaction is preparing and recording the deed. This instrument is how title legally transfers from seller to buyer. Recording the deed puts all other parties on notice of the change in ownership, so there should be no major lapse in time between closing and recording it. It is important that you begin protecting your ownership interest in the property as soon after closing as possible.

If you are heading to closing and need help at any stage of the process, our attorneys can give you advice from beginning to end. We also can assist with securing a location for your closing. Call Cornerstone Law Firm today for any questions about your real estate closing.

When a Contractor Doesn’t Finish the Job

Cornerstone Law Firm offered a legal tip to Redfin on how to handle things when a contractor doesn’t finish a home renovation project.

“If you find yourself in a situation where a contractor has not performed as agreed upon, you have legal remedies. You can first reach out to your state’s Attorney General’s office and file a complaint. The office will investigate the claim and encourage the contractor to remedy the issue if your complaint has merit. If this doesn’t work, you can file a complaint at a local District Court, which can handle judgments up to $12,000 and is designed to be accessible to the public. You can also research other options to take against licensed contractors who don’t honor their contracts. For example, Pennsylvania’s Home Improvement Consumer Protection Act provides strong statutory language against contractors who fail to abide by the requisite legal requirements in entering into and completing home improvement contracts.”

For an extensive overview of ways to deal with unfinished renovations, read the full article here on Redfin’s blog.

 

May 2021 Update

May 2021 has been filled with trials and advanced litigation for the attorneys of Cornerstone Law Firm. On the civil side, attorney Joel Ready spent time litigating a partnership dispute in Lehigh County court, giving advice to several businesses to avoid personnel and human resources litigation, promulgating discovery in personal injury cases based in Berks County and preparing for a summer of trials. A number of Cornerstone Law’s criminal clients were able to obtain trial dates this month, allowing them to finally pursue their innocence in a proceeding before a jury.

On the transactional side, several businesses hired Cornerstone Law Firm to draft contracts and to create new bylaws and other operating agreements for their businesses and nonprofits. These ranged from employment agreements to more complex inter-business cooperation agreements, and also agreements to resolve potential areas of dispute between rival businesses.

Attorney Crossett has been involved in several mediation for personal injury clients, obtaining settlement for car accident victims and those injured in other accidents. Furthermore, Attorney Crossett has finalized complex land deals this month for clients with conflicting real estate claims.

At Cornerstone Law Firm we are happy that the world is slowly getting back to normal, and we are looking forward to the nice weather in the summer months!

Right of Partition

When you own land with someone else and you stop getting along with that person, what can you do? Especially when someone owns a large piece of investment property with someone else, it can be very difficult to figure out how to work with someone who doesn’t want to spend the money to keep the property up or who doesn’t have the same vision as you do for the future of the property. Here are two ways that you can handle a real estate dispute with a co-owner:

1. A Written Agreement Between the Parties

The most obvious and best way of approaching a problem like this is a written agreement with your co-owner that clearly lays out the responsibilities of each party. Whether the property is making money or not, a written agreement can help to clarify how much money each party is required to put into the property and how profits will be split up. 

You might think that a 50/50 agreement is the simplest way to handle something like this but often, it’s not. Perhaps one party is willing to make the financial investment into the property to clean it up or improve it, but expects a higher percentage of the returns in exchange. And what do you do if one party wants out during an up year for the property? How much do you have to pay them? Can one owner force the other to take a fair buy-out offer?

Drafting a clear agreement means thinking about possibilities that you may not want to consider, but in our experience, figuring this out now will save you pain and money down the line. Indeed, just having an agreement sometimes helps avoid breakups and keeps all parties involved happy with the investment that they’re making in the property.

2. A Partition Action

Unfortunately, many parties don’t start talking about these issues until a conflict has already arisen. If you’re in this boat, don’t panic! There is still a legal way to get out of the situation. In this case, you can either divide the property in two, or have a court order that it be sold and have the profits of the sale split between the owners.

How do you split a property in two? You can do this by reviewing the technical drawings for the buildings or property and agreeing to a line drawn through the property along an appropriate dividing line. In some cases, the parties can agree to give a valuable but small piece to one side and leave a larger but equally valuable piece to the other party. This process typically involves lawyers, appraisers, real estate agents, and brokers to find the proper balance.

But in many cases, the best remedy is for the parties to agree to sell the property. But what if the other party doesn’t want to sell? What if they think that the status quo is working out just fine? Or, what if vindictively, they just want to keep you from benefiting from the property?

In that case, you can petition a court for an order to sell the property in lieu of having it partitioned. In other words, if you prevail in proving that the property is not going to be usable or valuable if it’s split in two, you can have a court order the property sold the open market. At that point, they’ll usually come to the negotiating table. If they want to keep the property, they’ll have to put up fair market value for your half.

Trust an Experienced Real Estate Attorney with Your Concerns

If you have a problem like this with real estate, you should contact an experienced real estate attorney. Partition actions can be complicated, and there are many issues to consider. If you have questions about your situation, contact Cornerstone Law Firm, and let’s discuss how we can help you.