Why you may be able to walk away from your second mortgage and owe nothing to the Bank?

In not too distant past, when the economy was booming and real estate values were sky high, a lot of people took out second mortgages as home equity lines of credit on their homes.  Since then, the economy has taken a major beating and most homes lost substantial value, thus placing many homes upside down in terms of what the home is worth vs. what is owed on it.  For many, the value of their home does not exceed the balance on their first mortgage, and the home value does not reach at all to the second mortgage.

Now, there may be a solution to this problem.  Through Chapter 13, people can get rid of their second mortgage at a great discount, often for as little as five or ten cents on the dollar.  So, for example, if you have a second mortgage on which you owe $50,000.00, Chapter 13 may allow you to pay as little as $5,000.00 or even $2,500.00 total, over the course of up to 5 years, and wipe out the rest of your liability on the second mortgage.  This could be a major benefit for homeowners and is worth looking into. For more information contact us at (708) 974-0000 to find out how we can help you reduce your mortgage debt and keep your home. Convenient locations in Chicago (Jefferson Park), Oak Brook and Palos Hills.

Divorce Law – Consideration of Prenups

Prenups are often a great consideration that must be take in to account when a divorce is contemplated or actually being litigated. The Illinois Uniform Premarital Agreement Act (Act) (750 ILCS 10/1 et seq. (West 2012)), which applies to any prenuptial agreement executed on or after January 1, 1990, provides that an antenuptial agreement is unenforceable only if the party against whom enforcement is sought proves that: (1) he or she did not execute the agreement voluntarily; or (2) the agreement was unconscionable when it was executed and, before execution of the agreement, the party was not provided a fair and reasonable disclosure of the other’s property, did not waive the right to such disclosure in writing, and did not have (and could not reasonably have had) an adequate knowledge of the other’s property. 750 ILCS 10/7(a) (West 2012). “ The Act omits the previous common law requirements that an enforceable agreement must also be ‘fair and reasonable’ and must not result in an ‘unforeseen condition of penury’ for the party challenging the agreement. Thus, the Act expresses a public policy of enforcing contracts as written absent evidence of fraud, duress, or lack of knowledge.” In re Estate of Chaney, 2013 IL App (3d) 120565, ¶ 19 n. 2, 377 Ill.Dec. 344, 1 N.E.3d 1231. The statute does not allow a court to invalidate a premarital agreement merely because it results in a disproportionate allocation of assets to one of the parties.”  In re Marriage of Heinrich, 2014 IL App (2d) 121333, 7 N.E.3d 889, 380 Ill.Dec. 26 (Ill. App., 2014).  Facts that are considered when the validity of a prenup is to be an issue in a divorce proceeding include:

A. Entered into by people legally able to be married?  If one party was already married or too young to marry, the marriage is invalid, and the prenup never actually took effect.

B. Whether the prenup was in a written format and signed by both parties BEFORE marriage.

C. Agreements presented immediately before the wedding day or after one party or one party’s family has spent a large amount in preparation for the wedding can be considered executed under duress and not freely entered into.

D. Coercion or pressure by one party on another to sign the document can be critical. It is not enough that the pressure is merely that one party will refuse to go through the wedding.

E. Did both parties have reasonable time to review and consider the proposed prenup agreement?  If the drafting party had an attorney, did the other party have the benefit of an attorney?

F. Is there proof of full and accurate financial disclosure prior to signing?

G. Does the agreement provide for  provisions such as waiving child support or establishing “custody” prior to divorce.

H. Does the agreement leave one party significantly worse off than the other? Is the drafting of the document patently unfair? What the court will look at is whether no reasonable person would have entered into the agreement that was reached.

I. Although modification or elimination of spousal support does not invalidate the agreement as a whole, “If a provision of a premarital agreement modifies or eliminates spousal support and that modification or elimination causes one party to the agreement undue hardship in light of circumstances not reasonably foreseeable at the time of the execution of the agreement, a court, notwithstanding the terms of the agreement, may require the other party to provide support to the extent necessary to avoid such hardship.”  750 ILCS 10/7(b).


Real Estate Transaction Basics – Foreign Corporations

A foreign corporation is a corporate entity formed in a state different than Illinois. Such corporations, if they transact business in Illinois, must be registered to do business in Illinois. Now there is a somewhat convoluted test to determine what “doing business” in fact consists of, but for purposes of a real estate transaction this test is more likely than not necessary. The reality of this scenario can be much simpler. For purposes of the real estate transaction the best course of action is to secure a certificate of good standing from the state of incorporation of the business entity purchasing/selling the real estate. An additional, but not necessarily a required, step is to then secure verification that the foreign corporation has filed to transact business with the Secretary of State here in Illinois. A resolution is to be executed by the board of directors authorizing the transaction and authorizing a party to sign the documents. Basically following the process necessary for a domestic Illinois corporation

Personal Injury and Workplace Injuries

If you were injured as a passenger in a vehicle you have legal rights and remedies for your injuries. Receive proper compensation for your injuries. Make sure your medical bills are fully covered. The attorneys at the firm of Wator & Zac, LLC are experienced in handling personal injury cases.  For further information click the link and read more. If you, a family member or friend have been injured call us at (630) 974-1744 or email us at info@myillinoisatty.com for a consultation. Convenient locations in Chicago, Oak Brook and Palos Hills.

Marriage & Divorce – 2006 Rewrite Cont’d

To continue our previous topic we are discussing the revamped Illinois Marriage and Dissolution of Marriage Act (IMDMA). Part of the modified statute is a rethink in terms of child custody. It used to be that except for certain specific categories of decisions it was the custodial parent that made every day decisions related to health, education, etc. The non-custodial parent was given certain rights to provide input, but in reality it was the custodial parent deciding and the non-custodial parent was oftentimes simply along for the ride. The 2016 rewrite provides for the previous “winner-take-all” model of parenting rights to be essentially broken up into categories that delegate responsibilities according to these categories and reflect the experience, education and abilities of each parent. The example most often cited is the non-custodial parent who is a doctor – the child’s medical decisions being delegated to this parent. Another example is the Harvard professor non-custodial parent being granted responsibilities related to education decisions. Decisions can be set up as joint or individual to a particular parent. The question that does arise is whether this freedom choice provides to much room for the categorization process to become extremely adversarial amongst the parents based on the breakdown of the marriage. But on the other hand the ultimate decision does rest with the court and if the parties cannot agree there is always the prospect of trial and a binding ruling by the court.

Marriage and Divorce – 2016 Statute Rewrite

Effective January 1, 2016 Illinois law regarding divorce, custody, visitation, alimony (properly called maintenance under the law) and child support underwent a major overhaul. Over the course of the next few posts we will attempt to address, at least in short format, some of the more salient and underlying changes. The law as written required significant amendments to the Intergovernmental Missing Child Recovery Act of 1984, the Criminal Code, the Uniform Child Custody Jurisdiction and Enforcement Act, the Illinois Domestic Violence Act, the Illinois Probate Act and several others. The fact is that the issues and legal ramifications of divorce run across the entire spectrum of possible legal issues and as comprehensive rewrite as this latest incarnation of the Illinois Marriage and Dissolution of Marriage Act impacts them all. A very basic aspect that was amended starting this year was the elimination of grounds for divorce. Moving forward divorce will be on the basis of an irretrievable breakdown of the marriage. The time frames for filing have been reduced so that parties seeking an uncontested divorce (meaning they have agreed on its terms and conditions) need not wait any time period prior to filing. Parties who are not in agreement have a six month wait period (down from the previous two year period).

Concept of Transmutation in a Divorce

Whenever we meet with a new client in regards to a possible divorce one of the threshold questions we ask is – What do you and your husband own? In many cases this questions is much harder to answer then many people think, for various reasons. Even when we do establish the “marital estate” the concept of transmutation (or lack thereof) can muddy the waters for us. The presumption in divorce proceedings that if you bought it during the marriage, then it is marital property. Therefore, it is front and center in the division of the estate during the court proceedings. According to the Illinois Marriage and Dissolution Act certain property is deemed non-marital by virtue of the manner in which the spouse acquired ownership or if they owned the property prior to the marriage (just to use a couple of examples). Transmutation is a legal premise used to establish that what was in fact non-marital property has become part of the marital assets due to the non-marital asset being mixed in (commingled in the parlance of attorney-speak) with marital assets. The Divorce Act provides for a two-pronged analysis to determine if transmutation has occurred: (1) the non-marital assets must be commingled with marital assets; (2) the commingling must result in a loss of identity between the marital and non-marital assets. Most of the analysis (i.e. most of the contentious fighting) relates to the second prong of the test. Once the non-marital property has been mixed in there is a rebuttable presumption that the property is marital. This means that the spouse whose property is now being claimed as marital property (and thus subject to division within the divorce) can attempt to make efforts to show that the transmutation did not in fact occur based on facts and circumstances. One of the most difficult areas where this comes into play is the matter of money that winds up in the couple’s joint account. At what point does this money become marital property? At the moment of deposit? When they use the money for a joint asset (like paying the mortgage)? Well the law here in Illinois has instituted the “Conduit Rule” for such funds transfers which states that where the marital account merely serves as a conduit through which the non-marital funds flow, then no loss of identity in fact occurs and thus transmutation is not a valid claim. A factor used to determine transmutation of funds under the Conduit Rule is how long the funds were on the account (Husband transfers $75,000 from his non-marital account established from life insurance proceeds after his father’s death into a joint account then wires the money two weeks later for the purchase of a condo – very strong argument that the condo is not a marital asset). Take the same scenario in the prior sentence and keep those funds there for 18 months pending finding a condo to buy then the husband has a problem making the argument against transmutation. Another factor is the proportion of non-marital funds as opposed to marital if the non-marital funds are kept on account for a long period of time, marital funds are deposit in the joint account and moneys are consistently disbursed from the account during the marriage. When non-marital funds are mixed with marital money then the passage of time tends to create a logistical nightmare in proving which funds paid for what costs (marital or non-marital). Did that check for $5000.00 two years ago pay for taxes on the alleged non-marital cabin in Wisconsin or were those funds of the married couple (which scenario provides a complication in terms of keeping the cabin non-marital – but enough headaches for one blog post). The moral of this post is that if you have non-marital assets the best thing you can ever do is keep them separate and apart from anything joint. If you have a $500,000 account from your deceased grandmother keep that money on an account in your name. Pay for your expenses. Pay for your spouses birthday gifts. Go on a trip. Just don’t put the money in a joint account and leave it there. Because money complicates things and money gets complicated in a divorce the minute too many pairs of hands have access to it.

Make Sure You Got All Your Money Before You Give a Release in a Mechanic’s Lien Scenario

In a recent case the court held that once a release is recorded on title to a property removing the mechanic’s lien previously filed by the unpaid contractor, there is no recourse and any claims based on the lien are waived forever. So even if the release is executed and recorded based on a settlement agreement where the property owner fails to comply with the terms of the settlement, once the release was recorded the lien claim was waived. Other recourse, like a breach of contract claim, remained, but the contractor was barred from return to any action under the Mechanic’s Lien Act. Oxford 127 Huron Hotel Venture, LLC v. CMC Organization, 2014 IL App (1st) 130265.

Case Law Update – Mechanic’s Liens

The validity of mechanic’s liens filed and the subject of timely foreclosure actions are subject to the veracity and accuracy of the information represented in the mechanic’s lien documents that form the basis of the action. Honest mistakes in information in the lien do not invalidate the document. The statute will invalidate a lien wherein the lienholder seeks to assert a claim based on fraud. Where the mechanic’s lien claimants were mistaken in the timeframe for completion of work that formed the basis of the lien by a week nor could another claimant confirm the date of completion of work, the appellate court found that such could be deemed an honest mistake instead of an attempt to defraud the parties. North Shore Community Bank v. Sheffield Wellington, LLC, 2014 IL App (1st) 123784.

Illinois Real Property Disclosure Report – Mandatory or Else!!!!

Realtors, ever “forgotten” to get a disclosure signed by your client? Ever forget to make sure the other realtor gets their client to sign? Beware it can come back and bite you! And cost everyone in the end!!!!

The right to completed Real Property Disclosure Report attendant to a real estate transaction is absolute. Until such is provided to a prospective buyer in a real estate transaction in Illinois the seller has failed to comply with the statute’s obligations for disclosure (leading to buyer’s right to terminate the contract). Furthermore, the report must be fully completed. A seller cannot cherry-pick questions to answer in order to avoid the obligation for disclosure. Messerly v. Boehmke, 2014 IL App (4th) 130937.