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from Local Attorney, Michael H. Wasserman

Friday, December 27, 2013

Washington Post: Underwater homeowners could face extra tax burden in 2014


by Michael H. Wasserman, Attorney at Law

The Mortgage Forgiveness Debt Relief Act expires Tuesday at midnight. Sadly and perhaps all to predictably, Congress has three bills pending that would extend tax relief for underwater home owners, but has not acted to move any of them forward for passage.

As new years approaches, several buyer-clients and I find ourselves standing on the sidelines watching several short sales that were "all but" approved but have ground to a full stop over the last several weeks, for no apparent reason.

Waiting to see what happens next, if / when the Sellers lenders approve any or all of these deals next year. 

  • Will Seller's attorneys advise their clients of the tax liabilities their clients will now face?
  • Will they kill deals outright
  • Delay closings until (?) Congress acts? (Will Congress act to extend the tax relief law?), or,
  • Will they sell their clients down the (tax liability) river to close contracts (and get paid)?

More on this mess, reported here.

Sunday, February 3, 2013

Cook County Property Tax Bills are Here!


by Michael H. Wasserman, Attorney at Law

Cook County property owners wee mailed last week. Better start asking around if you did not receive yours yet - those bills are all due by March 1st. If you know a property's PIN, you can look them up at the County Treasurer's web site. If you do not know the PIN, you can look that up at the Cook County Assessor's site.

How to Hold  Your Cook County Tax  Bill

QUICK TIPS FOR HOME BUYERS

Home buyers especially for first time home buyers, should not panic after looking at a 1st installment tax bill. Sure it looks like a 10%  increase over last year. Yes, the tax bill may (probably will?) go up, but for now - it is just too soon to tell. First installment bills are estimates only. They are automatically set at 55% of the previous year's levy. County and Municipal taxing bodies still have to finalize their respective budget processes and the actual tax bills will not be computed or sent out until they do, We should see that in late summer or this fall.

Buyers who are closing on home purchases in the coming  months likely will put less money down on the closing table compared to similarly situated buyers who closed in December or January. Mortgage lenders calculate tax escrow deposits based on the number of months until the next tax bill is due. More months till the next bill = fewer escrow dollars collects at closing.

IMPLICATIONS FOR HOME SELLERS

Imminent tax bills present timing issue for sellers plain and simple. Sellers who pay their own taxes have to decide whether or not to pay taxes now (or asap, anyway), or have them paid at closing (by the title company, from proceeds of sale). That decision really boils down to a matter of cash flow and convenience.

Letting the title company pay is certainly easier in practice and on the wallet. Convenience however carries a price, in this case typically $50 plus any applicable late tax payment fees the County would charge for payments after March 1st. 

Sellers paying themselves have the added task of documenting their tax payments for the Buyer,and title company. Best, if possible, to pay asap, and to promptly forward proof of payment to their attorney. Historically, the county has not always been particularly swift in posting tax payments to its website. 

Sellers who escrow for property taxes have a different headache scenario - Depending on when the lender sends payment, a closing may be scheduled before the County posts receipt of the payment. Sellers may be asked to hold back money from the sale proceeds until the tax payment can be verified. Sellers and their attorneys should be proactive in their coordination between lender and title company to try to avoid that. 

FOR HOMEOWNERS WHO RECENTLY BOUGHT (OR WHO JUST HAVE NOT LOOKED IN A WHILE) 

This is a great time to double check a couple of things about your tax bill:

Do you have all of the tax bills effecting your property? 

I have already heard from several people who received a bill for a condo apartment, but not the associated parking space tax bill, or who own homes built on more than one lot who did not get all expected tax bills. Not getting the bill does not excuse payment.

If you did not receive a tax bill that you thought you were going to get, check with the County (and//or your lawyer) to get your address updated with the Treasurer's office.

If you escrow, make sure your lender is paying all of the bills. A shocking number of newly set up escrows may pay the apartment but not the parking (or vice versa), and some manage to transpose digits in the PIN and pay a wrong bill instead.

Are you claiming all available Exemptions?

Exemptions lower tax bills. If you qualify, why pay more than you need to.

The homeowners exemption, must be affirmatively claimed for newly acquired properties. If you do not ask for it, you will not get it. Make sure you get it in the first place. Properties that received the Homeowner Exemption last year, will automatically receive the exemption this year if residency does not change.

However, Homeowners Exemptions can be "lost" if an owner transferred title into a land trust, or added someone else into title by quit claim deed. renew automatically from year to year. If you made any changes to your title, make sure you renew the exemption.

Senior Citizen Exemptions, Senior Freezes, Disabled Persons', Disabled Veterans' and Returning Veterans' Exemptions are also available and must be applied for annually.

Applying now, or correcting mistakes now will help assure that tax savings can be realized when second installment bills come out this fall.

Sunday, January 20, 2013

Tools of the Trade - CookCountyAssessor.com

Assessor's Web Site Screen Grab

by Michael H. Wasserman, Attorney at Law

Whenever a client hires me in connection with a local real estate purchase or sale, one of the first things I do is check out the local county assessor’s web site. For Cook County transactions, that would be here. The property search function allows home buyers, owners, and the professionals that represent them, many data points that can be critical to their deals. I am on this site every day.

What the Assessor’s Office Does

The Assessor sets the valuations (worth) of each of Cook County’s 1.8 millions parcels of property. These assessments are then plugged into the mathematical formula used to calculate our annual property taxes. Your property’s assessed value, in part, determines how much you will pay in property taxes. Taxes are likewise impacted by the use (or failure to claim) any of several recognized tax “exemptions.”

Why I Search

A check in with the County Assessor helps me assure clients that their purchase/sale deals are property documented and that they are being treated fairly in the allocation of real estate property taxes. I look for a couple of different things:

Property Identification

As obvious as this may seem, it is pretty important to confirm that the property my client is buying is the one that he or she actually intends to buy, and that it is described correctly in the contract. First stop is always a search to confirm the correct Property Index Numbers (PINs). Far too often they are wrong, or incomplete, or missing altogether from the contract. Likewise, a street address may be wrong or incomplete too. Searching a property by PIN can confirm a street address. Similarly, searching by street address can help identify the correct PIN. Knowing the PINs enables a searcher to check and confirm property tax amounts,  payment statuses & delinquencies, and make a preliminary title determinations.


Assessment History

Knowing the property's assessed value is pretty critical too, as it may help in evaluating the risk of a steep tax bill increase or decrease in the coming year. This is important in order to allocate property tax liabilities at closing. The County re-assesses every parcel of land once every three years. The Assessor's web site shows two years of assessments. We can see if an assessment has changed or if it is due to be changed soon.   A large drop off may possibly result in a lower tax liability. A steep rise may lead to tax increases. Knowledgeable buyers and sellers can leverage this information while negotiating their contract tax pro ration factors.

Exemption Status

Many homeowners are entitled to claim any (or all) of seven types of “exemptions” that can lower overall tax bills.  The search function allows two different paths to determine a property owner's historical use of these exemptions. Homeowners and Sellers who discover that they have failed to claim exemptions they were otherwise entitled to may be able to file “certificates of error” to claim a refund of such over-payments. These most commonly seem to involve missed “homeowners exemptions.” Very often, those refunds more than cover my legal fees for the overall sales transaction!

Buyers who discern that an exemption is going to be lost going forward may also be able to negotiate with their Sellers to either preserve the exemption or to adjust tax allocations accordingly. This happens most often in cases where the sellers are senior citizens or estates of recently deceased elders.  Successful efforts here can also realize significant property tax savings.

New Construction / Condo Conversions

New construction and condo conversion/rehabilitation deals present unique tax liability challenges for Buyers, their counsel, and their mortgage lenders. Very often a single tax parcel will be divided into separate pieces for each new apartment in a building or home in a subdivision. Taxes for prior years may also have been  assessed against vacant/undeveloped land. In such circumstances, Buyers face likely steep tax increases going forward, once the county adjusts property assessments to allow for the new construction. Knowing the timing of such changes are critical for the Buyer's planning purposes and for any Lender tax escrows.

The assessor's web site also includes some excellent other resources including a well stocked forms library and tools to help owners appeal to have their property assessments lowered.

Wednesday, January 16, 2013

How to Keep Your Mortgage Approval Approved


by Michael H. Wasserman, Attorney at Law

A must read from Broderick Perkins over at Realty Times for all home buyers who want to use mortgage financing. A shocking number of folks manage to sink their own ships by making one of these four mistakes along the way.


  1. Do Not make random, large, undocumented cash deposits, transfers, or withdrawels - Your lender is going to see these on your bank statements and unless you can explain / prove where the money came from / is going, you are at risk
  2. Avoid Big Purchases - Resist the temptation to buy a new car or furnishings for your new home until after the closing. It will show up on your credit report, lower your score, and scare the bejeezus out of your lender.
  3. Pay your Bills - Harken back on the advertising slogan - Just do it. Even if you want or need to dispute the charges with your creditor. Timing is everything and now is not the time to slip up. Credit scores man. They mark down for late payments. 
  4. Do Not open a new credit line or account (and as Perkins notes, even the one with that sweet o% interest teaser). You will get plenty of credit offers once you close. Trust me.
  5. Keep your day job, (don't give it away). OK, you cannot always control for this one, but do not take chances by switching employers or switching industries before the closing. Your lender's underwriter has evaluated your loan based on your current job and earnings. Not on what you hope to make, or what you want to do, going forward 

Other mistakes buyers make here? Please do share.

Realty Times - How to Keep Your Mortgage Approval Approved

Tuesday, January 8, 2013

Doing Good, Doing Good Work


by Michael H. Wasserman, Attorney at Law

My clients, and the friends that refer them mean the world to me.  In their honor, I donate a portion of my fee from each successful Chicago area real estate closing to a worthy charitable organization selected by my clients from a list of ten pre-approved organizations.

The Thanks to You program - now in its third year is both my expression of gratitude to my clients and our collective efforts to build a stronger communities.  Together, we have shared nearly $10,000 with worthy organizations that support better education, better health, and the fine arts. 2011 marked the first time a client matched my pledge. 2012 marked the first time a Realtor did so too. I work with some terrific people.

This year's program should be even better. Our 2013 grant recipients will be:


  • WORKING IN THE SCHOOLS - Promotes literacy and the love of reading among low-income and minority students in Chicago Public Schools by providing one-on-one tutoring and mentoring.
  • READING IN MOTION - Provides at-risk children from Kindergarten through 3rd grade with the key tools required to achieve grade-level reading, through the power and discipline of the arts.
  • ALZHEIMER'S ASSOCIATION - The leading, global voluntary health organization in Alzheimer care and support, and the largest private, nonprofit funder of Alzheimer research.
  • RESPIRATORY HEALTH ASSOCIATION - A Chicago agency that promotes healthy lungs and fights lung disease through research, advocacy and education through community-based interventions.
  • WEST TOWN BIKES - Promotes bicycling among Chicago’s youth with a focus on under-served populations. WTB teaches independence, professional skills, environmental stewardship, & the importance of exercise & good nutrition. Earn-a-bike youth programs offer instruction in bike building, mechanics, & bike safety. (Even a little science too!)
  • GIRLS IN THE GAME - Girls who grow up playing sports develop into healthier, happier and more successful women. Chicago’s leading girls' health and fitness organization empowers making healthier choices and develops confidence and leadership skills needed to succeed on and off the field. 
  • EMERGENCY FUND - Provides immediate no red tape, short term financial aid to low income individuals and families on the brink of crisis. Crisis Solution Grants may cover transportation passes, food vouchers, eye glasses, prescription medicine, and clothing, rent, and/or utilities of clients in need.
  • GREATER CHICAGO FOOD DEPOSITORY - Chicago’s food bank, distributes donated and purchased food in Cook County, equivalent to  135,000 meals every day.
  • TREE HOUSE HUMANE SOCIETY - A cage-less, no kill cat shelter dedicated to the rescue & rehabilitation of sick, injured & abused stray cats, with a particular .focus on the care and placement of stray cats with special physical & emotional needs.
  • TIPITINA’s FOUNDATION - Supports New Orleans’ & Louisiana unique musical culture by providing youth band instruments, workshops, internships and coop work spaces to local artists


Do let me know if you want to know more about this project, these organizations, or of course, if you are interested in working together on your next home purchase or sale.