We’re back…

We took a two year hiatus, and the best we can do is this?

Oh well, here goes.

We recommend everyone who writes a lot read this awesome book. It’s called Point Made: How to Write Like the Nation’s Top Advocates. It dissects the writing from top US Supreme Court advocates, and gives real world examples you can use in your own writing. Here’s the cover:

Or <<Click here>>

My favorite part was the author’s imprimatur upon sentences beginning with “and” or “but.” These can be “crisp” sentences, he says. We agree.

The other takeaway is that MSWord spell check can also count percentage of passive sentences, and even “score” your writing for readability.

Even if you’re not a lawyer, it gives you an insight into the power of words and structure. If you think these attorneys are not spinning as much as Fox News, think again.

Commercial Real Estate: Anti-deficiency statute rendered commercial guaranty unenforceable because the definition of the obligations secured by the Deed of Trust was too broad

It is standard practice in Washington for commercial lenders to take a separate guaranty from their borrower’s members/shareholders when they lend to the entity.  This way the lender may pursue a deficiency – if there is one – against the guarantor(s) after the nonjudicial foreclosure.  An exception to Washington’s anti-deficiency statute, RCW 61.24.100(10) allows this.  The Washington State Court of Appeals recently declined to enforce a guaranty under the anti-deficiency statute because the deed of trust secured obligations arising under “Related Documents” in addition to the payment of the note.  The deed of trust’s definition of “Related Documents” included “guaranties … whether no or hereafter existing, executed in connection with the indebtedness.”   The nonjudicial foreclosure extinguished the guaranty under the anti-deficiency statute because it was a “Related Document” secured by the deed of trust.  The case is First-Citizens Bank & Trust Company v. Cornerstone Homes & Development, LLC, et al., No 43619-1-II (Dec. 3, 2013).

What They’re Saying About Asset Protection Trusts

Earlier this week there was a fairly in-depth colloquy between Oregon trust and estate attorneys that was broadcasted on the Oregon Bar Association’s listserv.  Below is a selection of the various comments – unattributed.

First, the question from John Doe attorney:

Greetings:  I have been asked to consult with Client on setting up a trust to “protect assets.” Client says the intention is to put client owned real property into an irrevocable trust prior to starting a new business to “avoid scrutiny.”  I’m not sure what the client’s real hot button concern is at the moment.

My opinion of such trusts is generally that, in order to get the asset far enough out of grantor’s control to make it effective, grantor has to endure too many negative consequences to make it worthwhile.  Do any of the assembled masses have particular thoughts or experience you are willing to share on the topic?

If there is a particular reference that anyone would suggest, I would be grateful to be pointed in that direction too.

And here are the responses:

1. There are ways in which an irrevocable trust can offer protection, and there are DEFINITELY tradeoffs, as you correctly note.  As a starting point, I would read this article from Forbes on the Mastro bankruptcy (up here in Washington State), and consider how his asset protection plans did not work out so well.

2. Interesting case. There are a number of similar examples across the country where people on the cusp of financial oblivion take desperate measures to stash enough to preserve the good life. That said, asset protection planning is a hot topic and is becoming a big practice area all across the country. People read about it and it appeals to them in concept, although they don’t know very much about the execution. [John Doe’s] client seems to be concerned about protecting personal assets from claims of potential future business creditors. Much of that can be accomplished with careful entity structuring for the new business. Maybe that’s all that is needed here. Continue reading

Washington Supreme Court comes down on MERS

Yesterday the Washington Supreme Court issued its case in  the Certified Question of Bain v. Metropolitan Mortgage.

Here’s the Opinion.

The primary issue before the court was whether MERS can be a lawful beneficiary on a deed of trust, with the power to appoint trustees under the Washington Deed of Trust Act when it does not actually hold the promissory notes that secures the deed of trust.

The court held that only the actual holder of the promissory note evidencing the debt may be a beneficiary with the power to appoint a trustee to foreclose.  Or, as the court put it, “if MERS does not hold the note, it is not a lawful beneficiary.”

The court declined to answer what the legal effect is, if any, of a foreclosure, when MERS did foreclose as the beneficiary.

Our gut is that what is in the past is in the past, unless a borrower can prove fraud, or actual damages, based on Brown v. Household Realty, 146 Wn. App. 157, 189 P.3d
233 (2008) (holding that where the grantor of a deed of trust fails to invoke the remedies provided by the deed of trust act (ch. 61.24 RCW) before the deed is foreclosed in a trustee’s sale, the grantor waives claims based on the underlying obligation secured by the deed). But see RCW 61.24.127 which narrows Brown to some extent.

Can They Take My Retirement? Basic Asset Protection Explained

Over  time we accumulate assets. We borrow money to buy a home and repay it.  The home usually appreciates in value (except for recently). Some of  us buy CDs or stocks, bonds, and life insurance. Or we contribute to an  individual retirement account (IRA) or a 401k.

These assets can be protected from creditors to some extent.    Continue reading