News & Information

Many businesses and individuals have found that their works (such as photographs, graphics, videos, articles, etc.) have been used without permission on third party websites. Creators of works and entities hosting content should become familiar with their rights and obligations under the Digital Millenium Copyright Act... Read full article.

The Internet Corporation for Assigned Names and Numbers (“ICANN”) continues to move forward with its plan to create new general Top-Level Domains. Although this program can be a great benefit to businesses and consumers, the program also creates substantial threats to trademark owners.

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On July 1, 2009, U.S. Immigration and Customs Enforcement ("ICE") issued 652 notices of inspection ("NOI") to businesses in order to audit I-9 records that contain information regarding an employee's right to work legally in the U.S. This announcement was a substantial departure from previous enforcement mechanisms. In the entire fiscal year 2008, ICE issued 503 similar notices throughout the entire year. A large percentage of the businesses targeted involved companies with fewer than 100 employees, and fell into a wide range of categories, including manufacturing, restaurants, construction, farming and trucking... Read full article.

A seller of goods and products often feels legally compelled to ship goods to a buyer, even though information in the public domain suggests that the buyer is insolvent or near bankruptcy. It should not. A provision in the Uniform Commercial Code, as enacted in Michigan and most other states, empowers the seller to stop delivery unless the buyer pays cash for that delivery and all prior shipments under the same contract. .. Read full article.

Clients considering the sale of their corporation often do not realize that the structure of the sale is often times as important, if not more important, than the selling price. A properly structured corporate sale takes into consideration the many tax and nontax issues that impact the seller and the buyer. This article highlights some of the major advantages and disadvantages of asset sales as opposed to stock sales... Read full article.

Suspension of Non-Elective Safe-Harbor Contributions Permitted

Some 401(k) retirement plan sponsors have elected safe-harbor contribution formulas as a means of avoiding the onerous average deferral percentage (ADP) testing and consequences. These safe-harbor contributions may be made as minimum matching contributions or as fixed minimum employer contribution to all participants of 3% of their compensation (a non-elective contribution). One of the requirements for the non-elective safe-harbor contributions is that they must be made for the entire year. But when economic hardship hits (a frequent occurrence this past year), the plan sponsor using the non-elective safe-harbor contribution approach has been faced with either continuing the contributions when it can least afford it or terminating the plan and eliminating even the employee contributions.
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A sluggish economy has a negative impact on the collection of accounts receivable. Creditors generally hope that being a “squeaky wheel” is enough to “get greased.” However, creditors should also consider taking certain measures to enhance the likelihood of payment. .. Read full article.

Is your company active outside of Michigan? If so, you should determine whether you need to register in other states.

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Officers, members, managers or partners of corporations, LLCs and partnerships may be subject to personal liability for their businesses’ failure to file a tax return or pay taxes. As a general matter, forming a corporation or a limited liability company insulates the owners and officers of such entity from personal liability for the debts of the entity. Unfortunately, these protections do not automatically apply to certain federal and state tax liabilities.

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Each type of business entity in Michigan (other than a sole proprietorship) is run according to a set of statutory rules. The statutory rules control the governance of the entity unless the owners adopt additional documentation modifying the default rules. In the case of corporations, this documentation is called the articles of incorporation and bylaws, for partnerships, the partnership agreement, and for limited liability company (“LLC”) or a professional limited liability company (“PLC”), the operating agreement... Read full article.

Many individuals, typically parents, desire to convey certain real property to their children during the parents’ lifetime because they want to make certain that the property does not pass through probate proceedings at their death or because they want the children to have the use of the property during their parents’ lifetime. However, one important tax consideration is often not taken into account. If the parents deed the property to a child during the parents’ lifetime and the parents do not stay on title as a joint owner, then the children receive the property with the same tax basis that the parents had in the property. The tax basis is essentially what the parents paid for the property plus any capital improvements to the property (such as additions to buildings or other improvements on the property). Typically the parents’ tax basis is very low in relation to the property’s fair market value. Then if the child eventually sells the property, the child will pay capital gains on the difference between the fair market value at the time of sale over the amount of the parents’ tax basis. This can result in a substantial tax bill to the child.
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I was contacted by a client recently in a panic because a woman kept calling her and telling her that she needed a revocable living trust and that if she did not have one, then she would lose a large portion of her estate to legal and probate fees. When I asked who this woman was, my client said that she was with some “law firm.” The mystery woman said that my client had returned a post card asking for such services. Even though my client knew that she had not returned any card, the calls kept coming with greater pressure being applied with each call. .. Read full article.

It often does not occur to parents that when their children turn age 18, they are no longer minors under Michigan law. Once a child reaches 18, he or she has legal independence from parents and the ability to enter into contracts and execute other documents including estate planning documents. Although most 18 year olds have not yet accumulated substantial assets, they should execute certain basic estate planning documents. .. Read full article.

A living Trust is an estate planning vehicle that allows you to transfer assets to the Trust during your lifetime typically to be managed for your benefit by you as the initial Trustee during your lifetime. Upon your death, the Trust would typically provide for distributions to children or other beneficiaries. If you transfer assets to the Trust during your lifetime, those assets will avoid probate proceedings at your death. Trusts can also avoid or minimize estate taxes for married couples who have larger estates. .. Read full article.

This article is intended to provide some insight into the factors to consider in selecting successor trustees of your trust. It is intended as a general guide for informational purposes. It is not a substitute for specific legal advice pertaining to your particular trust.

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The following is a list of some of the typical tasks that a trustee or successor trustee will need to perform. The list is not necessarily in chronological order and is not intended to cover every task that may arise since each trust is different... Read full article.

As a general rule, you should own your car in your own name alone. The primary reason for this is to limit your liability exposure. If your car is involved in an accident, most likely you will be the one driving at the time. If someone is injured as a result and they bring a claim for negligence that exceeds your liability insurance coverage, then only your individually-owned assets will be exposed to that claim. If you are married, your spouse’s assets and many of the assets you own jointly with your spouse will be protected because your spouse is not responsible for your negligent acts. However, if you own your vehicle jointly with your spouse, almost all of your assets, your spouse’s assets, and your joint assets will be exposed to the liability (there are exceptions for certain retirement assets). As an owner of a vehicle, your spouse is responsible for the acts of those operating the vehicle. Therefore, the way to best limit your liability exposure is to have the vehicle titled solely in the name of the person who operates the vehicle most often... Read full article.

Many adult children today find themselves caring not only for their own children but also for their parent. This is a difficult transition for the adult child who has always thought of their parent as strong and independent. It is also difficult for the parent because they need to accept that they are losing some of their faculties and are now vulnerable and in need of assistance. The challenge for the adult child is to know when to move from the traditional role of a child to that of a caretaker for a parent. .. Read full article.

Many clients believe that their Will or Trust will govern the distribution of all of their assets upon their death. If you read those documents, they typically sound all-encompassing. However, in reality, assets such as life insurance and retirement plans are contractual arrangements between the owner of the asset and the company administering the insurance policy or retirement plan. .. Read full article.

Did you know that the burden is upon you to prove that you have repaid your student loans, and that the government is not subject to any statute of limitations in its efforts to recover payments it believes are due?.. Read full article.

In the case of Hughes v Almena Township (2009), the Court of Appeals clarified several statutory zoning requirements, as they pertain to Planned Unit Developments (“PUDs”) and the governmental bodies having authority to review and approve PUDs. The Hughes case was decided under the now-repealed Township Zoning Act (“TZA”), rather than under the Michigan Zoning Enabling Act (“MZEA”), but due to the similar language of the two Acts, the principal rules announced in Hughes remain applicable under the MZEA. .. Read full article.

Section 332 of the Federal Telecommunications Act preserves the authority of local governments to impose zoning regulations on cell phone towers and other personal wireless service facilities. The local government’s zoning authority is limited by several restrictions, including a requirement that the local government must act within a reasonable period of time... Read full article.

Township-Wide Vote Not Required for Annexation of Charter Township Parcel. In the case of Charter Township of Meridian v Ingham County Clerk (September 22, 2009), the Court of Appeals upheld East Lansing’s annexation of a portion of the Charter Township of Meridian. The township challenged the annexation referendum on the grounds that it violated the township residents’ constitutional right to vote and equal protection guarantees because only those qualified electors who resided in the portion of the township to be annexed were permitted to vote on the annexation referendum, as opposed to the entire township electorate.

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The U. S. Department of Agriculture (“USDA”) offers a loan program to communities with fewer than 25,000 people. Under the program, the USDA loans money to a community agency, requiring repayment of the principal plus 1% interest. The community may then re-lend the funds to people, companies or even other units of government, as a method for encouraging and assisting businesses to expand in that local area... Read full article.

In 2007, the Highway Advertising Act, which governs billboards along Michigan highways, was significantly revised. The 2007 amendment generally imposed a limit on the number of billboards permitted within the state, prohibiting the Michigan Department of Transportation from issuing new permits for billboards. To install a new billboard and receive an “interim” permit, an owner must remove an existing billboard and surrender the prior permit... Read full article.

Fee to Monitor Abandoned Homes Held Constitutional. In the case of Kenefick v City of Battle Creek (May 19, 2009, approved for publication July 2, 2009), the Court of Appeals upheld an ordinance requiring that the owner of a vacant or abandoned structure register the property with the city and pay a monthly administration fee. The court found that the words “vacant” and “abandoned” were not unduly vague and that the meaning of those terms could be fairly determined. The court further held that the plaintiff did not provide sufficient evidence to show that the ordinance was being unequally or inappropriately applied or that any suspect class, such as one based on gender or race, was receiving heightened scrutiny under the ordinance. For these reasons, the court ruled that the ordinance was constitutional... Read full article.

A Planning Commission Appointee May Not Assume the Duties of Office Before the Appointment is Approved by the Legislative Body. In Opinion No. 7236, issued on November 4, 2009, the Attorney General concluded that an individual appointed by a municipality’s chief officer as a member of the municipality’s planning commission may not assume the duties of office until after his or her appointment is approved by a majority vote of the members of the municipality’s legislative body. .. Read full article.

Given the state of the economy in Michigan, municipalities will be facing an increasing number of bankruptcy filings by both individuals and businesses. Knowing some basic facts about property taxes and bankruptcy will be essential for municipalities in the future.

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In our February, 2009 issue of the Local Government Bulletin, we reported on the Michigan Court of Appeals decision in the case of Wolverine Commerce v Pittsfield Charter Township (November 20, 2008), in which the court rejected a claim that the defendant-township’s denial of a rezoning request made by the plaintiff was unconstitutional. On May 29, 2009, the Supreme Court issued an order reversing the judgment of the court of appeals and reinstating the lower court's ruling that the township’s denial of the rezoning request violated the plaintiff’s due process rights and amounted to an unconstitutional regulatory taking... Read full article.

In addition to obtaining property by conveyance, Michigan law recognizes that a person may acquire title to property by adverse possession or by acquiescence. Adverse possession is a process by which title to property is acquired by holding the property in a manner that conflicts with the true owner’s rights for a specified period of time, usually 15 years. In order to establish a claim of adverse possession, the person claiming title must prove a variety of elements, including demonstrating that the possession was open, notorious, exclusive, hostile and under a claim of right... Read full article.

While the $789 Billion American Reinvestment and Recovery Act of 2009 is predominately a “jobs bill,” it contains a number of housing-related incentives for homeowners and home buyers. .. Read full article.

Foreclosure consulting businesses are proliferating due to the high residential foreclosure rates brought on by rate increases in adjustable mortgages and by the challenging economy. While there are variations of the foreclosure consulting business, in most cases the consultant looks for homes that are in foreclosure but on which the redemption period has not yet expired... Read full article.

Fewer transactions involving the sale of real estate will escape the State Transfer Tax now that House Bill 6122 has become law. The primary purpose of House Bill 6122 (Public Act 473 of 2008) is to amend the State Real Estate Transfer Tax Act (“Act”) to include the sale of a controlling interest in an entity if real estate comprises 90% or more of the fair market value of the assets of the entity being transferred... Read full article.

The Housing and Economic Recovery Act of 2008 (“The Housing Act”) may change the amount of capital gain that a homeowner may exclude after the sale of a principal residence. The use of a home as anything other than a principal residence is considered a “non-qualifying use” that prevents the homeowner from excluding any gain upon sale from his or her income. Under previous rules, after the owner of a non-qualifying use home used the home as a principal residence for two years, the owner could sell the home and exclude up to $250,000 in gain from his or her income or up to $500,000 for married couples filing taxes jointly. The Housing Act now requires the owner to prorate the amount of gain that can be excluded based on the amount of time the home is used as a principal residence compared to the total length of ownership. .. Read full article.

Bankruptcy of a tenant significantly alters the rights and obligations of tenants and landlords under a lease of real property. The complex workings of the Bankruptcy Code as applied to real estate leases necessitates careful analysis of the unique circumstances of each specific situation to determine the effects of a tenant’s bankruptcy. This article is intended to provide a general overview of the consequences of a tenant’s bankruptcy filing... Read full article.

Recent changes to the Michigan brownfield tax credit program provide real estate developers and owners increased incentive to redevelop brownfield properties. The State of Michigan provides tax credits against the Michigan Business Tax for redevelopment of contaminated, blighted or obsolete properties. For years, the brownfield tax credit program has provided a valuable incentive for real estate owners and developers to redevelop brownfield properties which otherwise might not have been developed due to the high cost of environmental cleanup or rehabilitation of an obsolete building. In April, revised brownfield credit legislation was enacted which raises the amount of the tax credits available and increases the flexibility in realizing the financial benefits of the tax credits... Read full article.

A relatively unusual form of deed is becoming more commonplace and you may want to know what it is and why people are using them. The deed is referred to as a “Ladybird Deed.” Lyndon Johnson reportedly used this type of deed to convey property to his wife upon his death. Essentially, a ladybird deed indicates that if the person signing the deed (the “grantor”) still owns the property at his or her death, then the property is conveyed to one or more people or entities (the “grantees”). The grantor of the deed reserves a “life estate” in the property and the right to sell the property during their lifetime and to retain the sale proceeds. As a result of this retained right to sell, the execution of the deed does not result in a completed transfer of the property because the grantor retains the right to revoke or “undo” the conveyance. If the grantor does not sell the property during their lifetime, then the property passes to the grantees without probate proceedings at the grantor’s death. The grantees record the grantor’s death certificate with the register of deeds office in the county where the property is located to show that they are the new owners of the property. .. Read full article.

Sooner or later, most people involved in the real estate business find themselves in a dispute of some kind. It may involve a buyer and seller, a competitor, a current or former employee, a co-owner, an investor, or worst of all, a customer. Disagreements can range from breach of a purchase agreement, non-payment of a commission, earnest money deposits, undisclosed environmental issues or other problems concerning the condition of the property. .. Read full article.

Using a “drop-down LLC” to sell real property has become popular in Michigan’s commercial real estate industry. This popularity is driven by the seller’s desire to escape substantial transfer taxes imposed by the State of Michigan on a traditional sale. So how does a “drop-down LLC” transaction work?.. Read full article.

Licensing requirements for residential builders and maintenance and alterations contractors, as well as penalties for failure to comply with the licensing requirements, have increased significantly due to new legislation that was signed into law on December 20, 2007. .. Read full article.