THE LAW OFFICE of DOMINIC SILVESTRI, PLLC



Gov. Snyder Approves Bill That Allows Landlords to Refuse Medical Marijuana Tenants

On Tuesday, January 10, 2017, Governor Rick Snyder signed a bill that allows Landlords to refuse to rent to medical marijuana tenants. Under Senate Bill 72, Section 7(c) of the Michigan Medical Marijuana Act (MCL 333.26427) was amended with the following language: “(c) Nothing in this act shall be construed to require any of the following: (3) A private property owner to lease residential property to any person who smokes or cultivates marihuana on the premises, if the prohibition against smoking or cultivating marihuana is in the written lease.” In short, so long as Landlords include language in their written lease that prohibits the smoking or growing of marijuana, he/she will be within their legal rights.  But what about Michigan’s Fair Housing Act? Under the Michigan Fair Housing Act, it is illegal for a Landlord to refuse to rent to someone with a disability or handicap.  A handicap is defined under the Act as any physical or mental impairment which substantially limits one or more of a person’s major life activities. If a prospective tenant is a registered medical marijuana patient, presumably that individual has been diagnosed as having a disability (remember the MMMA requires a physician to certify that the patient has a “debilitating medical condition“). Which law takes priority? The bill’s sponsor, Republican Sen. Rick Jones of Grand Ledge, said two rental homes in his district were destroyed after they were “turned into greenhouses to grow marijuana without permission.” He says growing marijuana for medical purposes “doesn’t trump safety or private property rights.” While the concern for property owners and landlords is understandable, it will be interesting to see how this new law will be reconciled with current Anti-Discrimination and Fair Housing laws that prohibit landlords from discriminating or refusing to rent to tenants who may have a disability that is treated with the use of medical marijuana. Under these laws a Landlord is not permitted to ASK a tenant or prospective tenant whether they even have such a disability....
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Michigan Medical Marijuana Act and Landlord Tenant Laws

If you are a landlord or tenant in Michigan, it is crucial to understand how the Michigan Medical Marijuana laws affect your rights. At first glance you might think: what does smoking pot have to do with my investment or my tenancy?! From a Landlord’s perspective: If your tenant is a qualified patient, it could prevent you from accessing your own property. From a tenant/qualified patient’s perspective: it could get your registry card revoked or worse – face criminal charges. In 2008, Michigan voters approved the enactment of the Michigan Medical Marijuana Act (MMMA). This act allows a qualifying patient who has been issued, and possesses, a state issued registry identification card the right to consume and grow marijuana. Specifically, each registered qualifying patient is allowed under state law to cultivate (i.e., grow) marijuana for the qualifying patient and is allowed to keep up to 12 marijuana plants kept in an enclosed, locked facility. This last provision of MCL 333.26424 is a clause that could have serious impacts for either a landlord or a tenant. Most landlords have a clause built into their leases that allows them reasonable access to the property (if you’re a landlord and you don’t have such a clause built into your leases, you have additional problems).  Lets say you have a tenant that is a registered patient or caregiver and is legally growing their own plants? Under the law, your tenant must keep these plants “in an enclosed, locked facility.” This means that NO ONE – except the patient or caregiver – has access to this locked facility or room.  Not even the landlord.  What if you, as the property owner, wish to sell your investment property, during an existing lease term? You still can…however, neither you nor your prospective buyer can access any such locked room(s).  What if you, as the property owner, need to make reasonable repairs to the property (as you are obligated to do, under the current Landlord-Tenant laws)? Nope. If an owner cannot reasonably access his or her property, that may be cause for a breach of the lease agreement. However, how can such a denied access be enforced? To enforce this access would force a tenant to violate the MMMA. As a tenant, if you allow anyone (other than yourself and/or your caregiver) access to the locked facility/room, you are in clear violation of the MMMA and may...
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Why Every Landlord and Tenant Should Have an Attorney.

Why Every Landlord and Tenant Should Have an Attorney. Let’s be honest: Most people don’t WANT an attorney. Most people only hire us when they NEED an attorney. Determining when they NEED an attorney is, for the most part, purely subjective. Until a lawsuit gets filed. Then it becomes objective. And necessary. Today, as I sat in court during a FULL Landlord-Tenant docket, I watched as the Judge dismissed multiple lawsuits in which a Landlord was, while representing himself/herself, trying to get his property back from a tenant – and failed. I also observed judgments being granted against individual tenants who chose to represent themselves – and yet had at least 2 valid legal arguments to be made in their defense.  In nearly every one of these cases, there was a common thread. The common thread was that the losing party failed to have an attorney representing them. The losing party also clearly did not have an attorney review any of the documents prior to court or prior to the lease relationship. In the words of Julia Roberts in Pretty Woman (follow me for a second): “Big Mistake…Big…Huge!”   I often hear from both landlords and tenants a million reasons why they did not hire an attorney before the lease relationship began: “we were in agreement on everything”, “its not like this is a million dollar listing”, “we got along”, “we were friends”, “attorneys are too expensive”, etc. Having an attorney review your documents, on behalf of a Landlord or Tenant, can often protect BOTH parties. Often the attorney can provide that objective (some might call it “cynic”) perspective to potential issues that neither party thought about. If you’re a Landlord, your attorney can point out areas that might prevent you from successfully getting your property back if your tenant defaults on their lease.  If you’re a Tenant, your attorney can point out liability issues that were never mentioned when you and your landlord were loving on each other. Either way, the up front costs are WAY more economical than hiring an attorney the night before trial to clean up a mess. And definitely WAY more economical than representing yourself, spending 4 hours sitting in court for your case to be called – only to have it dismissed or judgment rendered against you within 2 minutes. Just don’t hate the...
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1031 LIKE KIND EXCHANGE FOR REAL ESTATE

A 1031 like kind exchange for real estate is a provision in the IRS tax code that allows a person or entity to defer paying tax on any gain from the sale of real estate. Here’s how it works in a nutshell: Say you own a commercial property or rental home and want to sell. If your sale price is substantially higher than what you paid for the home you may end up owing the IRS taxes on the gain in value, after the sale.  However, section 1031 of the IRS Code allows you to “defer” paying this tax IF you use those funds to purchase another “like kind” commercial/investment property. Here’s the caveat: you cannot actually take possession of the sale funds. They must be held by an escrow agent the IRS refers to as a “qualified intermediary.” The benefit of utilizing this method is that, currently, you are not limited on the number of exchanges and can continue to “defer” the tax gain indefinitely. If you have properly set up a good estate plan, you and/or your estate could potentially use those funds to grow your investment and defer paying the taxes, indefinitely. Here’s a good graphic to give you an idea of the time frame requirements: For more details (i.e., if you really can’t sleep at night, or are a nerd like me who is interested in this stuff) here is a great Forbes article that gives a good summary: http://www.forbes.com/sites/robertwood/2014/03/10/7-key-rules-about-1031-exchanges-before-theyre-repealed/ Have questions? be sure to consult your attorney and tax advisor. Disclaimer: neither Dominic Silvestri nor Dominic Silvestri PLLC are tax attorneys or tax advisors. You should not rely on an article, published as a blog, for your legal or tax advice. Nor does such an article on a blog constitute an attorney-client relationship....
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FANNIE MAE HOME BUY-BACK PROGRAM ALLOWS HOMEOWNERS TO BUY THEIR FORECLOSED HOMES BACK

FANNIE MAE HOME BUY-BACK PROGRAM ALLOWS HOMEOWNERS TO BUY THEIR FORECLOSED HOME BACK During the last 7 years, many of my clients, whose homes were underwater and were going through foreclosure, often asked: “why can’t I just buy my home back for current market value?” This was a legitimate question as many times the lenders (or their respective investor/backers) would simply sell the home for the current market value after foreclosing on it.  To be honest, I posed that question numerous times to nearly every  lender. Unfortunately, the response was the same: “We just don’t do that.” What????? Why Not??? Times have changed. Late last year, The Federal Housing Finance Agency (FHFA, the agency that oversees Fannie and Freddie) directed Fannie Mae and Freddie Mac to alter one of their policies relating to the sale of real estate owned (REO) properties in their current inventory. Under the new policy change, former homeowners who lost their home and who are able to repurchase their home – or a third-party able to purchase on their behalf – may do so at the fair-market value. In the past, the homeowner could only repurchase the home for the full loan value.  This was often pointless – especially if the full loan balance was much higher than the home’s fair market value (i.e., the home was underwater). This new policy means that a homeowner does not have to pay the full loan value, but only the current fair market value. This is definitely a move in the right direction – especially if the lenders were going to forgive the deficiency between the loan balance and the fair market value. This may also give families a chance to stay in their home. But wait, there is a catch: If your home was foreclosed upon, it must still be in Fannie’s or Freddie’s real estate inventory portfolio in order for this program to have any effect. If its been sold by Fannie or Freddie, you’re out of luck. sorry. At first I was skeptical. However, just recently, my firm was able to successfully secure a home re-purchase for one of my clients.  To be perfectly honest, I don’t think Fannie Mae has fully implemented this program as of the date of this writing. Not surprisingly, I say this because no one could provide me with any guidelines, rules or directives as to how anyone is to be...
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TILL DEATH DO US PART? SAME SEX MARRIAGES AND REAL ESTATE IN MICHIGAN:

TILL DEATH DO US PART? SAME SEX MARRIAGES AND REAL ESTATE IN MICHIGAN: This June, in Obergefell v. Hodges, 576 U.S. ____ (2015), the U.S. Supreme Court ruled that same-sex marriage bans were unconstitutional, overturning state bans on same-sex marriage, including Michigan’s. However, this ban raises some interesting issues when it comes to applying it Michigan real estate law. For example, Michigan requires any Deed conveying property to a male to include the male’s marital status (but the same does not hold true for females). Originally this was developed as a way to protect a woman’s dower interest (interestingly, dower interest only applies to women…not men). Dower Michigan is the only state providing dower rights exclusively to widows. As a result of the confusion that will likely occur in applying the Dower Statute (MCL § 558.1) to same-sex marriages, the Legislature should modify or abolish this statute. In the meantime, whenever any couple, heterosexual or same-sex, is acquiring an interest in real property, and if each member of the couple wishes to hold an interest, both should be named as grantees on the deed. Deeds & Land Contracts Michigan law currently requires that contracts transferring or mortgaging real estate state the marital status of any male grantors (due to the Dower Statute) but not female grantors. MCL § 565.221. In light of the uncertainty in applying Michigan’s Dower Statute to same-sex couples, all deeds and contracts should state the marital status of all grantors, regardless of gender. Tenants by the Entirety A married couple is presumed to take property as tenants by the entirety (Butler v. Butler, 122 Mich. App. 361 (1983)), which status confers special benefits. Until the Legislature acts to remove doubts about these title issues, however, same-sex married couples should consult with their attorney as to the pros and cons of taking title as tenants by the entirety or tenants in common (or other form), and the form of title chosen should be unambiguously specified on the...
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