Posted by: Joshua Marks | October 28, 2009

What Entity Should You Select For Your New Business?

In the rush to embark on a new entrepreneurial adventure, people often overlook the importance of taking the time to select the proper entity in which to structure their business. Selecting the proper entity has both tax and non-tax implications that require every business owner to engage in proper planning and consult with tax and legal professionals.

Before ordering inventory, hiring employees or printing up some fancy business cards, every business owner should ponder these issues:

1. How will the business be managed?
2. How will ownership interests be transferred?
3. Does the ownership structure need to maintain flexibility?
4. What happens if an owner dies, retires, or files for bankruptcy?
5. How will owners be compensated?
6. What are the tax consequences to owners who invest capital in the business?
7. To what extent will owners have liability for debts and conduct of the business?
8. How will profits be taxed?
9. What type of benefits will be extended to employees?

One form of entity that has gained significant popularity is the limited liability company—also known as the “LLC”. An LLC is formed by filing a Certificate of Organization with the Department of State and can have as few as one “member” (owner). Some of the key characteristics of an LLC include:

-very flexible structure;
-can be taxed as a partnership
-members of the LLC are not liable for debts and liabilities of the LLC
-less formalities than a corporation
-no annual fee for members
-operating agreement controls the relationship of the members

Whether you select an LLC, a corporation, an LP, or some other business entity is an important consideration that is best dealt with well in advance of the start of your new business. Be sure to meet with an accountant and an attorney, who are experienced in business formation, to review which entity will best help you achieve your business goals.


I notice that there routinely is one thing that annoys most buyers and sellers who are engaged in a real estate transaction—the amount of paperwork involved. On the seller’s side, you have the listing agreement, agreement of sale, addendums, affidavits of title, deed, etc; on the buyer’s side there is the agreement of sale, addendums, loan application, promissory note, mortgage, title insurance documents, affidavits, etc. In this era of “going green”, is it really necessary to waste all of this paper just to document the sale of one single house? Unfortunately, the answer is yes..and we have the old English Parliament to blame for passing “An Act For Prevention of Frauds And Perjuries” in 1677.
More commonly known as the Statute of Frauds in most jurisdictions today, this law requires that certain types of contracts be placed in writing and signed by the parties. One such contract that is required to be placed in writing is a contract for the sale of an interest in land (real estate). The contract must not only be placed in writing, but must typically contain the material terms of the agreement such as a description of the property, purchase price, method of payment, and settlement date. While there are a few scenarios that allow for the transfer of an interest in real estate to fall outside of the Statute of Frauds, most transactions must be properly documented in writing–such as the Standard Agreement For The Sale of Real Estate often utilized by realtors in the Commonwealth of Pennsylvania.
In addition to the legal requirement to place real estate transactions in writing, it is also a very necessary practice so that there is evidence of all aspects of the sale to which the parties agreed. Imagine if a seller verbally agreed to include a refrigerator, window treatments and ceiling fans in the sale of his home, but never placed this in the written contract. If the seller actually removed these items from the home, it would be much more difficult for the buyer to prove that they were part of the sale (and the bargained for sale price) if he had to engage in a battle of “he said, she said” with the seller.
While this is a fairly minor example of the type of dispute that can arise between a buyer and seller, I can assure you that I have represented many clients who were involved with disputes over certain matters that were never placed in writing…..don’t let a similar situation affect your next real estate transaction.
Whether you are gifting property to a family member, buying or selling your home or amending the terms of a previously executed agreement of sale, always put the terms and conditions agreed to in writing….while you may end up using a few more sheets of paper, you will save yourself a lot of money on future legal bills—and that’s always a good thing (although my fellow attorneys may beg to differ).

Joshua M. Marks, Esq.

Posted by: Joshua Marks | September 3, 2009

Flat Fee Billing Model

In an effort to assist our clients through these difficult economic times, we are offering flat fee arrangements for certain legal matters. Check out this article discussing the flat-fee model for law firms; and, please feel free to contact us in order to find out if we can handle your legal transaction for a flat-fee.

Posted by: Joshua Marks | September 2, 2009

What Is Title Insurance?

I have often found that many homebuyers lack a fundamental understanding about title insurance. While most past clients have admitted to briefly discussing the topic with their real estate agent, they don’t seem to understand its purpose or function–only that it will be an additional expense on the settlement sheet for which they are responsible.

What is Title Insurance?
Title insurance is a policy of insurance that protects against losses arising from defects in and/or claims against the title to property. Examples of such defects and/or claims include tax liens, easements, mechanic’s liens and ownership claims by third parties.

Lender’s Policy/Owner’s Policy
There is no legal requirement to purchase title insurance prior to acquiring a property. In practice, any lender will require you to obtain, at a minimum, a Lender’s policy of title insurance for an amount equal to the loan. This protects the lender’s investment in the event of a third-party claim. The insurance remains effective until the loan is repaid.

A homebuyer will also want to obtain its own protection of the equity in the property since a Lender’s only policy extends solely to the loan amount. This requires an Owner’s title policy for the full value of the home. Typically, the additional cost to add Owner’s coverage to the cost of the Lender’s policy is small; all the more reason for any homebuyer to get the necessary coverage. By way of example: If the sale price of a home is $500,000.00 and the homebuyer is borrowing $400,000.00—the title insurance policy would include Lender’s coverage in the amount of $400,000.00 and Owner’s coverage in the amount of $500,000.00.

Is title insurance similar to other types of insurance?
No. Most insurance policies protect against events that happen after the policy is issued, such as a car accident that happens 6 months after purchasing a new car. Title insurance in most cases protects against losses arising from events that occurred prior to the issuance of the policy. The coverage afforded by these policies typically does not extend into the future. The exception to this is certain enhanced title insurance policies, which offer coverage of a limited amount of future occurrences that are spelled out. All homebuyers should check the state in which they are buying in order to determine if such policies are available.

Is title insurance required for a refinance of the existing loan?
Yes. The lender will require you to purchase a new lender’s policy because 1.) the existing policy terminates upon the full payment of the mortgage and 2.) the lender wants to protect itself from any title issues that have arisen since you took title to the property. The good news is that you won’t need to obtain a new owner’s policy and title companies generally offer a discounted premium if your last policy was acquired within a certain amount of time.

Posted by: Joshua Marks | September 2, 2009

The Perils of Buying Condo

Purchasing a condominium is a popular choice for homebuyers of all ages who wish to dispense with the expensive and seemingly endless responsibility of maintaining a home. Although living in a condominium may allow for some to enjoy a more relaxed lifestyle, there are potential legal hassles involved in buying a condominium that can often make the transaction more complex than buying a home.

In Pennsylvania, as in most states, there is a statute that addresses specific requirements of condominium ownership—i.e., The Pennsylvania Uniform Condominium Act. The essential purpose of the law is to require the original seller of condominium units (often the builder or entity associated with the builder) to fully and accurately disclose the characteristics of the condominium units being offered for sale. This is accomplished by providing the prospective purchaser with a Public Offering Statement. The Public Offering Statement typically discloses a description of the condominium, number of buildings/units, a description of the common elements, list of common expenses and maintenance, the purpose and manner of operation of the condominium association, a description of the declaration, taxes, title and a host of other issues
surrounding the creation and maintenance of the condominium.

In addition to the Public Offering Statement, a condo purchaser, upon giving a deposit, usually receives the Agreement of Sale, Declaration of Condominium, By-Laws of Association, and Rules/Regulations of the Condominium Association. It is imperative that these documents be reviewed prior to executing the Agreement of Sale (or within the timeframe allowed for canceling the Agreement of Sale if permitted by the purchaser’s particular state statute). Why? They provide significant detail about a variety of issues such as: permissible use of the property, calculation of condo fees and assessments, the cost of certain options and upgrades to a particular unit, calculation of taxes, environmental concerns, etc.

Often times, there are specific restrictions regarding re-sale of a unit and rules concerning home improvements. I currently represent one client who was told by the builder that she could not re-sell her unit because only 50% of all units have been sold at this time. Another client is being threatened with fines by the condo association because he installed hard wood floors in violation of a rule that requires all units to be 80% carpeted. Unfortunately, these clients failed to thoroughly read or have an attorney read all of the pertinent documents previously mentioned.

If you do not read these documents and subsequently violate the rules and regulations of the Condominium Association, you can bet that swift action will be taken in the form of fines, penalties and potential litigation. Most, if not all, Condominium Associations will even secure a lien against your property if the dispute lingers and you fail to pay your fines and assessments.

Suddenly, your comfortable life-style of condo-ownership will have quickly lost its appeal.

Posted by: Joshua Marks | August 4, 2009

Time For Customer Feedback

This is an exceptional time in the legal profession to be a smaller-sized firm. In order to capitalize on our experience, flexibility, and lower overhead–and in an effort to provide exceptional service to our clients, we welcome your comments and answers to the following questions:

1. Do you prefer flat fee or hourly billing arrangements? Why?
2. If you leave a message at your attorney’s office (either with a secretary or voicemail), how quickly do you expect a response?
3. How often would you like to be updated about your case?
4. If you needed an attorney, would you seek one out on the internet?
5. What are the most important qualities you are looking for in your attorney?
6. What is your biggest complaint about your past dealings with attorneys?

We appreciate you taking the time to help us learn how we can better serve clients in the future. If we can help you in any way, please email or visit

SUITE 3510

Posted by: Joshua Marks | July 22, 2009

Due Diligence In Real Estate Transactions

The acquisition of commercial real estate is often riddled with complex issues. Before closing on any purchase, a buyer needs to be thorough in his/her due diligence. It is imperative that the buyer learn as much as he/she can about the property, existing conditions and restrictions, title issues, zoning ordinances, tenants, existing leases and environmental hazards. Below is a list of 20 items that should be part of any due diligence investigation:

1. Identify any underground or aboveground storage tanks;
2. Determine if any materials or substances have been released or disposed of on the property;
3. Determine if asbestos has ever been located on the property; if so, obtain information regarding the removal/disposal process;
4. Obtain test results for radon and any remediation;
5. Obtain test results for drinking water;
6. Determine whether lead paint issues exist;
7. Identify record owners of the property and trace past record owners to insure chain of title;
8. Review leases of tenants;
9. Obtain from seller any plans, surveys or diagrams regarding the property;
10. Investigate property’s compliance with zoning and land use regulations;
11. Conduct physical inspection of the property; obtain copies of any inspection or engineers’ reports from seller;
12. Get up to date rent roll;
13. Obtain copies of last five years property tax bills;
14. Determine necessity for termite and mold inspections;
15. Obtain any service contracts;
16. Evaluate insurance needs;
17. Obtain all necessary approvals and permits for intended use of the property;
18. Review copies of title insurance policies from seller
19. Obtain title commitment/Order judgment and lien searches
20. Have legal representation throughout the transaction.
To find out what else should be a part of your due diligence investigation or if you have any questions, send me an email and I will be glad to help!-

Posted by: Joshua Marks | June 25, 2009

Property Management Fees

Posted by: Joshua Marks | June 22, 2009

Posted by: Joshua Marks | June 19, 2009

Primer On Short Sales

With homeowners defaulting on their mortgages at a record pace, many people are practically begging their lenders for some form of relief or assistance in order to prevent themselves from ending up on the street. While it is certainly disconcerting to receive collection letters and threats of impending foreclosure from a lender, those who are falling deeper into debt and enduring difficulty making their monthly mortgage payments need not despair. The “short sale” is one alternative worth considering as a viable means for resolving your debt with the lender and dealing with a home that is no longer affordable. Here are some basics you need to know before starting the “short sale” process.

What is a Short Sale?
A “short sale” occurs when the net proceeds from the sale of property is not sufficient to satisfy the outstanding mortgages on the property, and the seller does not have the financial ability to make up the difference. The lender is asked to take less than the full amount owed in order for the sale to be completed

What Causes A Short Sale?
Sometimes a short sale is brought about because the homeowner borrowed more than he/she could afford to pay back and miscalculated his/her financial status. Often, the short sale arises because of an unforeseen change in the homeowner’s life, such as a long-term illness, disability, divorce or loss of employment, which has dramatically affected the person’s income such that the mortgage payments are no
longer affordable.

Why is the short sale a viable option for the seller?
A foreclosure can have a devastating impact on someone’s credit report that has a lasting effect for years to come. A short sale is typically reported on a credit report as a debt that is “settled for an amount less than what is due”. While this will cause a dip in credit score, it will be nowhere near as harsh as the reporting of a foreclosure.

Why would a lender agree to a short sale?
The answer is very simple: Lenders do not want to own houses. Lenders are in the business of loaning money, not in the business of stockpiling real estate. There have been numerous reports that banks can face fees of up to $50,000.00-$60,000.00 in actually foreclosing on a property. From a business standpoint, the lender will make out better if the property is put on the market and given an opportunity to attract a buyer through private sale.

How does the short sale process work?
Most lenders have a short sale package containing documents that the seller must submit in order to have the short sale approved. Such documents include: hardship letter from seller/borrower explaining why the short sale is necessary, seller’s financial statement, two most recent pay stubs, two most recent bank statements, two most recent tax returns, copy of an Agreement of Sale with buyer, copy of proposed settlement statement (HUD-1) demonstrating net monies to the lender. Once the package is submitted to the lender, a negotiator is assigned to the file who handles the short sale on behalf of the lender through closing.

Miscellaneous Points to keep in mind
-If you find a buyer, don’t expect closing to take place quickly. It may take 60 days, 90 days or even longer, depending on the lender, to get approval from the negotiator for the short sale to go forward.
-Lenders are not properly staffed to handle the number of short sale requests. In order to make sure that your file doesn’t linger on someone’s desk, you need to be persistent—your agent or attorney should make frequent calls to the negotiator in order to insure that your short sale moves forward.
-You must negotiate for the release of both the property and the underlying personal debt secured by the note. If you fail to do this, the lender may not forgive the personal debt.
-It is wise to consult with an attorney and real estate agent who has been through this process before and has significant experience working with lenders. Also, attorney’s fees come out of the lender’s net proceeds. Therefore, you will not have to pay out of your own pocket for an attorney to assist you in the transaction.

CHECK OUT A CLIP FROM MY VIDEO PRESENTATION ON SHORT SALES TO A GROUP OF REALTORS AT KELLER WILLIAMS —click this link or cut/paste into your browser and then press play!!

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