| SAFEGUARDING PROPERTY RIGHTS
Title Insurance
Q. What is meant by the term "good title"?
A. Good title, also called “marketable title,” means
you legally own your home and have
the authority to sell it. Traditionally, this was determined by a study
of the public record to
determine the chain of ownership back to the very beginning of the property,
as well as
any encumbrances such as liens on the property. This study is called an
abstract, and some
buyers, especially in rural areas, still rely on an abstract and a lawyer's
opinion as to what
it shows for evidence of title. But metropolitan mortgage lenders, who
rarely know much
about any specific property, have made abstracts obsolete by insisting
on title insurance.
The chief problem with the abstract system is its lack of accountability.
What
happens if the abstract company or the lawyer issuing an opinion on the
property fails to
uncover a flaw in the title and it costs you, the new owner, a great deal
of money? You
could sue, but you'd have to prove that someone was negligent. With title
insurance, the
insurer agrees to pay covered claims whether anyone was negligent or not.
Essentially it's
a thorough search of the public record, just like abstract and opinion,
but backed by
insurance.
Q. How does title insurance work?
A. Title insurance is the opposite of your home's casualty and
liability insurance, which
repay you in case of injury or damage occurring after the effective date
of the policy. Title
insurance only covers matters that occurred before the policy's effective
date, but were
discovered later. Instead of having to pay premiums year after year to
maintain the
coverage, you only have to pay once to be covered as long as you own the
property. Note,
however, that many lenders insist on a new policy before refinancing,
to make sure their
new loans will have first priority. They want to know if you have taken
out a second
mortgage, obtained a home improvement loan, or been subject to a court
judgment
between the original mortgage and this one. (For more information about
title insurance,
see the "Buying and Selling a Home" section.)
Q. What's the difference between an owner's policy and a mortgagee
policy?
A. The owner's policy covers losses or damages you suffer if
the property really belongs
to someone else, if there is a defect or encumbrance on the title, if
the title is
unmarketable, or if there is no access to the land. The latter could occur,
for example, if
you would have to cross a private road to get home and the owner of the
road refuses
permission. The lender's mortgagee policy includes all four of these protections.
But it
protects only the lender (although the owner is protected indirectly if
the home is lost
since the loan is paid off and the owner's personal liability is limited).
Particularly
important policy clauses for the lender are the ones that cover losses
the lender would
suffer if another creditor were first in line. Owner's policies are more
expensive, and in
fact, if the same insurer issues both, the concurrent mortgagee policy
will probably cost
far less--in part because the insurer doesn't have to search the records
twice. The limit of
the owner's policy is typically the market value of the house at the time
of the purchase,
while the mortgagee policy is for the amount of the mortgage. The premium
is based on
the amount of coverage, and may vary greatly by state. If you are refinancing,
your new
title insurer will probably rely on the work of the individual or company
who did a title
search when you bought the home. If you provide the prior policy as evidence
of a good
title, the new insurer will simply bring it up to date by checking what
you have done to
affect it, such as loans or partial sales. If a big problem surfaces that
the original title
insurer should have caught, the second insurer may go after the first
to cover the claim.
Likewise, if you have an abstract, the insurer may bring it up to date
and base the policy
on that. Contact a lawyer if you have questions about your title policy.
What Isn't Covered by Title Insurance
Title insurance policies are standard in most states, although the
forms may vary
somewhat from state to state. An owner's policy usually does not cover
one or more of the
following matters (often referred to as standard exceptions), unless,
in most states, an
additional premium is paid and the necessary evidence is furnished
to the title company.
(In some states all you have to do is ask to eliminate the standard
exceptions, and furnish
appropriate information.) When the evidence is furnished and the insurance
coverage is
given, this is frequently referred to as extended coverage. The standard
exceptions are:
• claims of people who turn out to be living in the house (such
as the prior owner's
tenants or someone living without your knowledge in your lake cabin)
if their presence
there is not a matter of public record;
• boundary line
disputes;
• easements or claims of easements not shown by
public records
• unrecorded mechanic's liens (claims against
the property by unpaid home
improvement contractors); and
• taxes or special assessments
left off the public record.
(In addition, in much of the country, and particularly in the western
states, mineral and/or
water rights are a standard exception.)
Other important exclusions from coverage include zoning; environmental
protection laws; matters arising after the effective date of the policy;
subdivision
regulations, building codes and the effect of any violation of these
rules; matters known to
be created, suffered or assumed by the insured; and matters not shown
in the public
records and not disclosed to the insurer. Exclusions need to be removed
by special
endorsements and probably will result in additional premiums. As noted,
title insurers will
also list as a special exception anything they find that might turn
into a claim, whether it
be this year's property taxes or the power company's easement across
the property, even in
a policy "without exceptions." Check your current policy
to see what's on the list, in case
there's anything you should be concerned about. |
Ownership Options
Q. How does the deed affect property ownership?
A. The ownership description on the deed has long-term significance--both
in the duration
of the title and whether you are free to transfer your interest to someone
else. Today, the
most common form of ownership is "fee simple." (The term "fee
simple" comes from
feudal England, where a noble landholder would grant an estate, called
a fee, to a faithful
subject in exchange for service or money. If the lord intended for the
tenant to be able to
keep the estate in the family after he died, he would include the phrase
"and his heirs" in
the legal document. That's still the phrase to include on a deed if the
owner is to hold the
property in fee simple, able to sell it or bequeath it).
Fee simple is the most complete form of ownership, because, in theory,
title in fee
simple is valid forever. People who own property in fee simple may sell
it, rent it out,
transfer it to their beneficiaries, and to some extent limit its use in
the future. Under some
of the older forms of ownership, such as an "estate for years,"
the title reverts to the
former owner at some specified time.
While it is still possible to transfer property as a life estate, it is
rarely done
because it severely restricts the new owner's ability to sell the property.
A life estate, for
example, would allow owner A to bequeath or give the house to B, perhaps
his wife, until
she dies, then to C, their child. Owner B could not sell the house, but
only has the right to
live in it. People often used a life estate to lower estate taxes, but
today most people would
prefer the flexibility of a trust to gain the same end. Sometimes people
use a life estate to
give title to a descendant who may better qualify for financing, while
retaining an assured
roof over their head.
The way in which your deed lists ownership has critical long-term implications,
including who can transfer interests to someone else, how much of the
property is
available to one owner's creditors, whether the property goes through
probate when one
party dies, and whether the surviving owner faces a tax on any capital
gain when it is time
to sell. Couples who have children from previous marriages may want their
home equity
transferred to their children at death rather than to their spouses. It
is important to think
about what you want the deed to accomplish, because depending on your
state law, at least
four ownership options are available--sole ownership, joint tenants, tenants
in common,
and tenants in partnership. In some states, married couples also may opt
for tenants by the
entirety. (For more on these topics, see the chapters on buying and selling
a home and
wills and estate planning.)
Q. What is the most common form of ownership?
A. For couples, whether or not married, joint tenancy is the
most common form of
ownership. Under joint tenancy, each person owns an undivided interest
in the real estate.
At the death of one joint tenant, the interest of the decedent, by operation
of law, is
immediately transferred to the surviving owner, who becomes the sole owner
of the
property. When property is held in joint tenancy, the beneficiaries of
a deceased joint
tenant have no claim to the property, even if the deceased mistakenly
tried to leave the
property to them. Most couples choose this form of ownership to avoid
having their home
involved in probate.
Tenancy by the entirety operates similarly but requires that the tenants
be spouses
and the property is their homestead. This form of ownership is not recognized
by some
states. Consult an attorney to determine the form of ownership most advantageous
to you.
Q. What is a tenancy in common?
A. Tenancy in common gives each owner separate legal title to
an undivided interest in the
property. This allows the owners the right to sell, mortgage, or give
away their own
interests in the property, subject to the continuing interests of the
other owners. When one
owner dies, the interest in the property does not go to the other owners.
Instead, it transfers
to the decedent's estate. This might be an appropriate form of ownership
for those who
want their beneficiaries, rather than the other owners, to inherit their
interest in the
property.
Q. What's the difference between joint tenants and tenants in
common?
A. Two or more people who own a home as joint tenants or as tenants
in common are each
considered the owner of an undivided interest in the whole property. That
is, if there are
two owners, each owns half, but not a specific half such as the north
half. If there is a
court judgment against one owner, the creditor may wind up owning that
person's interest
in the house. In some states, an owner may sell his or her interest to
someone else whether
or not the other owner approves. Such a sale ends a joint tenancy, so
the new owner
becomes a tenant in common with the remaining original owner(s). (The
arrangement is
complex if, say, A, B, and C own a house as joint tenants and A sells
her interest to D. B
and C are still joint tenants with respect to two-thirds of the property,
but tenants in
common with respect to D's third.)
The chief difference between joint tenants and tenants in common is the
"right of
survivorship." If one joint tenant dies, the property automatically
belongs to the other
owner or owners, avoiding probate. If three people own it and one dies,
the other two
automatically each own half. If the owners are tenants in common, the
other owners have
no rights of survivorship--they would inherit the deceased's interest
in the property only if
it was specified in his or her will.
Q. How do you stipulate that you are joint tenants?
A. The deed must specify that the property is held as joint tenants.
The usual language for
this is "Mary Smith and Amy Smith, as joint tenants with right of
survivorship and not as
tenants in common." That way if there is a question, say from Mary
Smith's children who
think they should inherit her half-interest in the property, the intent
of the owners will be
clear.
It is especially important to specify joint tenancy on the deed. Otherwise
the law
assumes that the owners are tenants in common (except, in some states,
where their
ownership constitutes tenancy by the entirety if they are married to each
other, as
explained below).
Does Owning a Home Affect Your Estate
Ownership in a property could very well affect your estate, depending
on its terms and the
type of ownership you have in the home. For example, if you are a
joint tenant, your home
will pass directly to your joint tenant and will not be a part of
your estate. As you acquire
equity in your home, your estate could be vulnerable to federal estate
tax or state
inheritance tax if the equity along with your other assets exceeds
certain statutorily
established sums. If you do not have a will, you should consider preparing
one now that
you own a home. (For more details, see thesection on estate planning). |
Q. What is tenancy by the entirety?
A. If the co-owners are married to each other, at least one other
option may be available,
depending on their state law. The other form is for married couples to
share ownership as
a "tenancy by the entirety." Its roots lie in the common-law
concept that a husband and
wife are one legal entity. As with a joint tenancy, this form bears a
right of survivorship; if
one spouse dies, the other automatically owns the property.
In most states that still recognize this form, a husband and wife who
purchase
property together are considered tenants by the entirety unless the deed
very specifically
states that they are tenants in common (or joint tenants) and not tenants
by the entirety.
Otherwise, a deed saying "to John Smith and Mary Smith, his wife,"
creates a tenancy by
the entirety.
What if one spouse wants to transfer a half interest to someone else during
the
marriage? The ability to do so depends on where the couple live. In most
states that
recognize tenancy by the entirety, the property can be sold only if both
spouses sign the
deed, indicating that each is selling one-half interest. However, in some
states either
spouse may transfer his or her interest--including the right to survivorship.
Therefore, it is
important to know what law applies in your state.
Q. In what states are these various options available?
A. Sole ownership, joint tenancy, and tenancy in common are available
in all states,
though certain specific details of ownership may vary by state. Tenancy
by the entirety is
available in about 40 percent of the states, most of them in the eastern
half of the country.
See the next answer for the community property states.
Q. Are there any special considerations if you live in a community
property state?
A. Nine states--Wisconsin, Louisiana, Texas, New Mexico, Arizona,
Idaho, Nevada,
Washington, and California--plus Puerto Rico have adopted a different
concept of the
relationship of husband and wife, which is rooted in Spanish law. These
states consider
any property acquired during a marriage, except by gift or inheritance,
to be "community
property." Each spouse owns half of the community property. Each
may transfer his or her
interest without the other's signature. But there's no right of survivorship;
when one spouse
dies, half of the couple's property--including half of the house--goes
through probate.
If you live in a community property state, the law assumes that if you
acquired
your house during the marriage by the efforts of either spouse, it is
community property
unless you specifically say otherwise in the deed. Both husband and wife
must sign to
transfer the property to someone else.
Q. Which form of ownership is best?
A. That depends on your circumstances. You or your spouse may
want to be able to
bequeath half of your house to someone else. For example, if you are in
a second marriage
with children from the first, you will want to avoid joint tenancy with
your spouse because
your children could not inherit your interest. But if you want to avoid
having the house
tied up in probate after one of you dies, joint tenancy might be a good
idea. If you are
married and have reason to expect creditors to come after your house,
you may want the
protection offered by a tenancy by the entirety, if available in your
state, because property
owned by both of you in that form generally isn't subject to a judgment
against one
spouse.
If you live in a community property state, be aware of two significant
tax
advantages of holding the house as community property rather than as a
joint tenancy. The
first advantage has to do with tax on capital gain, which is the difference
between the
selling price and the house's "basis," its cost when you took
possession. If you hold the
property as community property, when the surviving spouse inherits the
whole, the
property receives a new tax basis (called a "stepped-up" basis)
which reflects its current
value. The practical effect of this is to minimize capital gains taxes
if the survivor sells it
soon thereafter. Let's say the property was purchased initially for $50,000
and is now
worth $150,000. Without the stepped-up basis you could owe capital gains
taxes on
$100,000, but with it you would owe nothing if it sold for $150,000. But
if you hold it as
joint tenants, only half an interest changes hands when one spouse dies,
which means that
only half the property gets a stepped-up basis. The capital gain upon
sale is likely to cost
you thousands of dollars.
The other tax advantage to community property involves estate taxes. Every
American may bequeath up to $675,000 without paying federal estate taxes.
(In some
states, you still may be liable for state inheritance tax on lower amounts.)
If you and your
husband have more than $675,000 and hold all your property as joint tenants,
it will not be
part of your husband's estate when he dies. You will own all the jointly
held property free
of federal estate taxes. However, your estate has increased substantially,
and since it
exceeds the $675,000 exemption it will be subject to federal estate taxes
when you die. If
you live in a community property state, your husband's one-half share
of the couple's
community property is his estate. The portion passing to you as his spouse
would not be
subject to federal estate tax because of the marital deduction. The remaining
portion of the
estate, if it exceeds $675,000, would be subject to tax.
Q. Should a married couple ever title their house in only one
name?
A. One of the chief concerns when considering property ownership
in a single name is
liability for court judgments. For example, take the case of a house in
the husband's name
alone. Let's say he loses a lawsuit over a car accident and his insurance
won't cover the
judgment. Because the property is solely his, it could be sold to cover
the judgment. (In
twenty-two states some protection is offered through a homestead exemption,
which
allows families of two or more people to keep a small house to live in.
But the maximum
lot size and value are usually quite small; in one state, for example,
it is a quarter acre and
$2,500 value.)
Some people might want to title the house in only one name precisely to
avoid
such judgments. For example, a doctor without malpractice insurance might
want to deed
the house to her husband. But consult an attorney about all the aspects
of your situation,
including tax and possible fraud implications, before making such a decision.
Changing the Form of Ownership
It's fairly simple to take care of the paperwork of changing the form
of ownership.
Basically you sign a new deed and file it with the local recorder
of deeds. But using the
wrong deed or the wrong wording can result in serious consequences.
Consult an
experienced property lawyer to make sure you consider all the aspects
of your situation
and get it done correctly. A straightforward change will probably
have a minimal cost.
it. |
Q. How does the form of ownership affect the property settlement
in a divorce?
A. In about 90 percent of all divorces, the property is divided
up by the parties themselves
in out-of-court settlements, often with the help of lawyers and mediators.
Husband and
wife decide what is fair and reasonable in a process of give and take.
In contested
divorces, it's up to the judge to decide who gets what. Years ago, courts
in most states had
no authority to redistribute property in a divorce, so their job was to
sort out the legal
titles. Only jointly held property was subject to judicial division. But
today courts are
more concerned with what is fair than with whose name is on a deed. They
consider a
wide range of factors, from the length of the marriage to the needs of
each party.
So who gets the house? If there are minor children, usually the home goes
to the
custodial parent. If there are other assets to divide, the non-custodial
parent may get a
bigger share of them to balance out loss of the home. If not, courts typically
award
possession of the house to the custodial parent until the children grow
up. Then the house
is to be sold and the proceeds divided between the parties. If neither
party can afford to
maintain the home, the court may order it sold promptly and the equity
spl
Handling Property Constraints
Q. What is a lien?
A. A lien, which dates back to English common law, is a claim
to property for the
satisfaction of a debt. If you refuse to pay the debt, whoever files the
lien may ask a court
to raise the money by foreclosing on your property and selling it, leaving
you with the
difference between the selling price and the amount of the lien. (Your
mortgage lender,
though, should be first in line for payment.) It is possible to lose a
$200,000 house over a
$5,000 lien, though any homeowner with a house of such value probably
would find a way
to satisfy the lien.
There are several types of liens, any of which creates a cloud on your
title. For
example, a "mechanic's lien" or "construction lien"
can occur if contractors or
subcontractors who worked on your house (or suppliers who have delivered
materials)
have not been paid. They may file a lien at the local recording office
against your
property. If the lien is not removed, it can lead to foreclosure or inhibit
your ability to sell
your home. Liens often are filed in connection with divorce decrees. If
two homeowners
divorce, the court often will grant one of them the right to remain in
the house. When that
owner sells it, however, the ex-spouse may be entitled to half the equity.
The divorce
decree would probably grant that spouse a lien on the property for that
amount. If
everything goes as it should, the ex-spouses will get the full payment
of their respective
shares at the closing.
Unfortunately, things don't always go as they should. Suppose the woman
you
bought your house from was subject to such a decree, but her ex-husband
had given her a
quit-claim deed to the property conveying ownership to her but not mentioning
his lien.
She might leave town with both halves of the equity--and the lien would
stay with the
property. The ex-spouse still has a right to extract his equity from the
sale. In that case the
title insurer may disclaim responsibility, because the lien was not filed
in the land records;
however, some courts have ruled that insurers cannot do that. When a divorce
occurs,
insurers are on notice that this problem could arise--they should check
the divorce decree.
The best protection for someone purchasing a house subject to a divorce
decree is to have
a lawyer examine all relevant documents to make sure this problem does
not occur.
Likewise, if you bought a home with your spouse but later divorced, your
own
divorce decree might give your former spouse a lien on the home for half
the proceeds.
That lien can hinder your ability to sell the home if your former spouse
refuses to release
the lien. A careful divorce lawyer will build a release mechanism--such
as an escrow
containing the deed and release--into the divorce decree.
Q. Can a lien be filed for unpaid child support?
A. Many states impose a lien on the property of divorced parents
who fail to pay child
support. That lien would have to be paid off before the property could
be sold.
Removing a Lien
If you discover a lien on your property, see an attorney to determine
the best course of
action. If the lien is valid, and for an affordable amount, the
advice might be to pay it and
clear the title. However, just paying it off is not enough. Have
the payee sign a release-oflien
form, and file it at the county (or "land title") recording
office to clear the recorded
title. You can then decide whether to pursue the person responsible.
If the amount of the
lien is major and you believe it is not your debt, consult with
your attorney about what
action to take.
Although you have a right to keep trespassers off your land, under
the law it is possible
for a trespasser who uses the property for many years to actually
become the owner. This
entitlement is called adverse possession. It is very unlikely to
occur in an urban or
suburban area, where lots are relatively small and homeowners know
when someone else
has been using their property continuously. But if you own an unvisited
beach house or
hunting cabin, you might not know that someone has been living there
continually for
years.
Adverse possession is similar to a prescriptive easement, where
a court declares
that, for example, your neighbor has a right to keep his hedge on
a strip of your land
because it has been there for forty years. The difference is that
while prescriptive
easements concern use of the land, adverse possession concerns actual
ownership. For a
claim of adverse possession to succeed, the trespasser must show
that his occupation of
your property was open and hostile, which means without permission.
As with
prescriptive easements, granting the person permission to use the
property cancels his
claim to ownership by adverse possession. The occupation must also
have continued for a
certain number of years, generally ten to twenty years but sometimes
fewer, depending on
the state. And in many states, the trespasser must have paid local
property taxes on the
land.
This last requirement provides a way to avert loss of a property
through adverse
possession. If you suspect that someone has been living in your
hunting cabin, check the
property tax records for that county to see whether anyone has made
tax payments on it.
A bit of vigilance will prevent problems in this area. You should
post "no
trespassing" signs to warn people that this is private property.
Erect gates at entry points
and keep them locked. Ask trespassers to leave, and call the police
if they refuse. If you
suspect that someone will keep on using your property (such as for
a road to obtain lake
access) despite your efforts, consider granting written permission
to keep on doing so,
especially if the use doesn't interfere with your use. This will
bar adverse possession,
which requires that permission not have been granted. To make the
arrangement clear, ask
for a written acknowledgment, and, if reasonable, a fee or payment. |
Q. What constitutes an encroachment?
A. An encroachment occurs when your neighbor's house, garage,
swimming pool, or other
permanent fixture stands partially on your property or hangs over it.
In the case of a neighbor's roof overhanging your property or his fence
being two
feet on your side of the line, your rights might be tied to the prominence
of the
encroachment and how long it has been in place. If it was open, visible,
and permanent
when you bought your home, you may have taken your property subject to
that
encroachment. The neighbor may have an implied easement on your property
to continue
using it in that manner. If the encroachment is less obvious, you may
only discover it
when you have a survey conducted for some other purpose. In that case,
you might have a
better chance of removing the encroachment.
A house addition could be an encroachment if it starts twenty-three feet
back from
the sidewalk and the local setback ordinance requires twenty-five feet.
The neighbors
could band together and sue you, hoping you would be forced to raze your
addition. Or
you might have to live with your neighbors' disapproval, perhaps after
paying a fine to the
city for the violation.
It is even possible to encroach on an easement, for example, by locating
the apron
of your swimming pool on the telephone company's easement across your
property for
underground cables. In that case, the company would have a right to dig
up the concrete
and charge you for it.
Q. What can you do about an encroachment?
A. First, demand that the neighbors remove the encroachment.
If they refuse, you could
file a quiet title lawsuit or ejection lawsuit and obtain a court order.
Of course, this isn't
the best if you wish to maintain neighborly feelings, especially if the
fixture in question is
merely the cornice of his house. Further, if prior owners of the neighboring
property have
used that bit of your land for quite a few years, your current neighbor
could ask a court to
declare a prescriptive easement to maintain the status quo.
Second, you can sell the strip of land to your neighbors. Perhaps you
didn't know
quite where the boundary line was anyway, so you might agree on a new
one on your side
of the encroachment and file it with the county recording office.
Third, you can grant written permission to use your land in that way.
This
maneuver can actually ward off a claim for prescriptive easement or adverse
possession,
because perfecting either of these claims requires showing that the use
was open and
hostile (without permission). If you like this neighbor but may not like
those who follow,
you might grant permission only as long as that neighbor owns the property.
Your attorney
could draw up a document granting permission and file it for you.
The primary question when someone has encroached slightly onto your property
is
how important it is to you. Typically, disputes over encroachments arise
when discord is
present among neighbors. If everyone is getting along fine, chances are
you can live quite
happily even though your neighbors' fence does creep onto your land.
Government Rights to Property
Q. Can the government force me to sell my property?
A. Since ancient times, governments have had the right to obtain
private property for
governmental purposes. In the United States, this power, called eminent
domain, is limited
by the Constitution's Bill of Rights, which grants people the right to
due process of law
and just compensation if deprived of their property. The federal government
and
individual states may delegate their condemnation power to municipalities,
highway
authorities, forest preserve districts, public utilities and others. These
authorities may force
the purchase of private land for public purposes, such as constructing
a new freeway or
expanding a school playground. The scope of government's activity has
expanded so much
in recent years that almost anything counts as a public purpose.
If the government wants your land, you may hear about it informally at
a public
hearing on the matter. The best approach at this time may be to rally
the neighbors in
hopes of influencing the authorities' plans. For example, the town might
be persuaded to
narrow the proposed road that would eat up some of your yard. Your first
official notice
will be a letter indicating interest in acquiring your property (or a
portion of it) for a
certain purpose. That's when informal negotiations should kick into high
gear. With or
without your consent, the government then has your property appraised
and makes you an
offer, called the "pro tanto award," which you may accept or
refuse. If you accept it, the
government may ask you to sign a document waiving your right to sue for
more money.
Some governmental units offer a bonus to entice people into accepting
the pro tanto
award, because it's cheaper than going to court. In a typical project,
about 75 percent of
the property owners accept the government's initial offer. The rest sue
for more, but threequarters
of them settle the case before trial.
If you think the offer is too low, retain a lawyer experienced in eminent
domain
cases to negotiate for you and prepare your case for possible trial. If
the case does go to
trial, it's a battle of experts who testify to the value of the property,
which is ultimately set
by the jury.
Q. Can the government seize my property without paying me?
A. Although the federal government is scrupulous about due process
of law in cases of
eminent domain, it is far less diligent in a different and relatively
new area. If the police
suspect you of certain specific crimes, particularly drug trafficking,
the law allows them to
seize any of your property that might have been used in the commission
of the crime or
purchased with the proceeds of the crime. For example, if your tenant
grows marijuana in
the basement of your rental house, the police might seize the house, sell
it, and keep the
equity to fund further law enforcement efforts. Since 1985, law enforcement
officials have
seized more than $2.6 billion worth of houses, cash, cars, and other assets.
Many critics are disturbed because civil forfeitures do not require that
the owner be
convicted of a crime. Government officials are free to seize property
without warning or
compensation if they believe it is linked to criminal activity. So it
is up to the owners to
prove that their property should be returned. The value of the property
forfeited has no
relation to the seriousness of the crime, as an Iowa man learned when
he lost his $6,000
boat because he caught three fish illegally. In a California case, a couple
held a second
mortgage on a house occupied by a businessman convicted of running an
interstate
prostitution ring. Federal agents seized the house and kept it for five
years while it fell into
disrepair. The owners had to go to court to regain their property.
A growing number of critics are calling for legal reform in this area,
but in the
meantime, make sure there is not even an appearance of criminal activity
in any house or
vehicle you own. If your property is seized by the government, retain
a knowledgeable,
assertive lawyer as fast as you can.
Fees for Eminent Domain Cases
Some attorneys who specialize in eminent domain cases work on a contingency
basis;
their fee is a given percentage of the difference between the initial
offer and the ultimate
settlement. You might want to set up a fee arrangement where you pay
a flat fee or hourly
rate for initial review, negotiation, and counteroffer, then switch
to a contingent fee if the
matter turns into a lawsuit. |
|
