Blog

July, 2013

What Happens to a Federal Tax Lien After Chapter 7 Bankruptcy?

July 29th, 2013

Posted in Bankruptcy Information,IRS & Tax Information

Many taxpayers assume that the IRS cannot collect for income taxes that were owed prior to, but discharged in, a Chapter 7 bankruptcy.  That is not always the case.  It is true that the Chapter 7 bankruptcy discharges the IRS claim as to personal liability (assuming all elements for dischargeability are met); however, many times the IRS will record a federal tax lien for the amount(s) owed.  If the federal tax lien is recorded prior to the bankruptcy, it will usually survive a Chapter 7 discharge.  A tax lien that was recorded prior to the Chapter 7 bankruptcy attaches to most pre-bankruptcy property, including property that would otherwise be exempt from creditors under Florida law such as a taxpayer’s homestead, IRA, or 401(k).  The lien gives the IRS the ability to seize or demand payment up to the value of the secured property after bankruptcy.

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House Bill 87: The Foreclosure “Rocket Docket”

July 24th, 2013

Posted in IRS & Tax Information

House Bill 87 was signed on June 7, 2013 and aims to speed up the foreclosure process.  Homeowners are now subject to a Judgment of Foreclosure as soon as 45 days after being served with a complaint.  See Fla. Stat. §702.10.   Upon request by a lienholder and after examination of the court file, the Court “shall promptly” enter an order to show cause.  Upon hearing on the order to show cause, which can be held as soon as 45 days after service of the initial complaint, if the Court determines that homeowner is unable to show “good cause” as to why the foreclosure judgment should not be entered against him or her, the Court may enter the same.  This limited time frame severely cripples the Homeowner’s ability to pursue foreclosure alternatives such as loan modification or short sale.  Thus, a homeowner who is served with a foreclosure complaint and who wishes to keep his or her home or who wishes to seek foreclosure alternatives should, now more than ever before, immediately seek the services of an attorney.  A link to House Bill 87 in its entirety is below.

http://www.myfloridahouse.gov/Sections/Documents/loaddoc.aspx?FileName=_h0087er.docx&DocumentType=Bill&BillNumber=0087&Session=2013

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Condominium and Homeowner Associations Must Have Specific Authority to Evict Problem Tenants

July 22nd, 2013

Posted in Condominium & Homeowner Association Law

A frequent question by condominium and homeowner association boards is whether the association may evict the tenant of an owner who has repeatedly violated Association rules.  In the situation where the association is not the owner of a unit and thus not the landlord, the association must possess specific statutory or contractual authority to evict a tenant.  The only specific authority granted to condominium and homeowner associations to evict is found in F.S. 718.116(11)(b) (Condominiums) and F.S. 720.3085(8)(d) (HOAs), respectively, if a tenant does not pay rent to the association upon receipt of a written demand where the owner is delinquent in payment of a monetary obligation to the association.  The Condominium and HOA Acts respectively provide the association with remedies at law or in equity, however, the association would first need in those situations to proceed through any alternative dispute resolution routes before filing suit.  Accordingly, an amendment to the association’s governing documents specifically providing the power to evict for violations is recommended and counsel should be contacted to discuss the approval of membership required to be obtained.

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Mortgage Forgiveness Debt Relief Act

July 16th, 2013

Posted in IRS & Tax Information

Ordinarily, the deficiency that remains after a short sale or a foreclosure is treated as income pursuant to IRC §61(a)(12) which states, “[e]xcept as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) […] income from discharge of indebtedness.”  That income is reported on Form 1099-C and is taxable unless an exclusion applies. One of these exclusions may be the Mortgage Forgiveness Debt Relief Act.  Homeowners who lose their primary residence in foreclosure or through a short sale may not have to report up to $2 million of the cancelled debt as income if the cancelled debt is “qualified principal residence indebtedness.”  Qualified principal residence indebtedness is any debt secured by the principal residence that was incurred to buy, build, or substantially improve the same.  This exclusion is set to expire on December 31, 2013 unless it is extended as in 2012.   This along with other applicable exclusions can be found on IRS Form 982 .

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We Have Condominium Owners Who Do Not Pay Their Dues. Can We Deny Them Use of Their Parking Spaces in Order to Force Payment?

July 16th, 2013

Posted in Condominium & Homeowner Association Law

A condominium association is specifically prohibited by law from suspending use of parking spaces by unit owners, or occupants, licensees, or invitees of unit owners.  See F.S. 718.303(4) (2013).  However, the condominium association is able to suspend use of other certain common elements and condominium property, including any amenities (pools, tennis courts, etc.).  Before doing so for reason of non-payment (which by law is described as non-payment of a monetary obligation to the Association that is more than 90 days past due), the Board must approve such suspension at a Board meeting and provide written notice of the suspension to the unit owner and, if applicable, the unit owner’s occupant, licensee, or invitee by mail or hand delivery.

The Board is encouraged to discuss with counsel other potential enforcement actions that may be considered in order to collect past due amounts owing to the Association from delinquent owners.

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