It doesn’t matter if you’re ending a personal relationship or a business partnership. As the old song says, “breaking up is hard to do.” And while there’s no guarantee that you and your significant other, spouse or business partner(s) will always get along, the good news is that there are simple things you can do to reduce your chances of getting involved in a nasty “business divorce.” Here are just a few tips to keep in mind.

First and most importantly, make sure you create a comprehensive shareholder, partnership and/or operating agreement to begin with. These documents serve as the foundation of your business, and as such should address any and all eventualities. In other words, a well-crafted agreement should set forth exactly what will transpire if and when a dispute between partners or shareholders arises.

For instance, make sure the agreement includes stipulations for what will happen if one or more parties will continue to operate the business after the other(s) leave. These may include, but are not limited to non-disclosure and confidentiality agreements, non-compete and non-disparagement agreements.

Of course, the provisions in these agreements won’t do any good if they can’t be enforced due to changes in case law or business statutes. So don’t take it for granted that the stipulations in the initial agreement will always be valid. Ask your business attorney to review the document(s) from time to time to ensure that they’re still enforceable and make any changes when need be.

Speaking of your business attorney, you can rely on them for more than just resolving disputes. An experienced attorney at Loshak Law PLLC may also be able to provide much needed insight into the operational and financial ramifications of a “business divorce.”

If you are concerned about the tax implications, an experienced business attorney can also advise you about the effects of a complete or partial liquidation, substantial change in ownership, recapitalization or similar changes resulting in multiple entities. Once that’s been done, he or she can offer advice about who should be held responsible for payment.

Another important “rule of thumb” to keep in mind is that it is sometimes prudent to avoid doing business with friends or family. All too often, these relationships conflict with running a successful business and commonly lead to conflicts of interest. If you insist on having this type of business arrangement, it is crucial that you are fully aware of your legal rights and obligations. In these situations, it is also important that you don’t forget who you are in business with, and what their real reasons for joining the business may be.

Even in a best-case scenario where there are no disputes over any relevant issues, a dissolution plan should be prepared to ensure legal closure. This is especially important if the business is being liquidated because assets are distributed and the books are closed during this process. It is also important to ensure that applicable steps are taken with the Florida Department of State and that creditors are notified accordingly.

These are just a few of the precautions you can take to reduce the chances of getting involved in an ugly – and expensive “business divorce.” To learn more about how we can help protect your business, contact an experienced business attorney at Loshak Law PLLC today.

Proactive asset protection techniques can be implemented for individuals, businesses, and as part of an estate plan. Many of our clients are very successful at generating wealth, but few know how to protect their assets from lawyers, creditors, banks, former or current spouses, children, relatives, and vexatious litigants. The lawyers at Loshak Law PLLC can create a proactive defense plan to protect your hard earned money, but you must plan in advance! If there is already a judgment entered or law suit filed against you, most asset protection techniques will not be effective retroactively.

The following are some of the useful asset protection tools that can help limit your liability and exposure to the aforementioned vultures.

Florida Homestead Exemption
The Florida Constitutional homestead exemption offers virtually absolute protection for your primary residence from the demands of creditors with some limited exceptions. Courts have liberally expanded definitions of the Florida homestead exemption to include more than just a single family house. Condominiums, manufactured homes, and mobile homes are also afforded homestead protection from creditors in Florida.

Limited Liability Company
Limited Liability Companies (a/k/a LLC) are entities which can protect your real estate investments, securities investments, and business assets while at the same time limiting the managers’ and owners’ personal liability. With regards to real estate, LLC’s are the preferred method for protecting landlords’ and developers’ investments. LLC’s also provide the benefits of pass through taxation similar to a partnership or s-corporation.

Irrevocable Trust
Irrevocable trusts with a “spendthrift” provision can be very effective in protecting beneficiaries’ assets from creditors. Since the grantor of the trust relinquishes all ownership of the assets transferred into it, creditors of the individual grantor or beneficiary generally cannot attach their beneficial interest in the trust income and principal. However, once established, an irrevocable trust usually cannot be changed and this inflexibility can cause unwanted consequences. Irrevocable trusts can also minimize income and estate taxes while efficiently transferring wealth to the next generation as part of an estate plan.

Annuities and Life Insurance
Florida provides unlimited protection from creditors for annuity balances and assets in cash value life insurance policies. For example, Florida statutes provide protection for “inherited IRAs” so that they can be claimed exempt from creditor actions, even in bankruptcy settings. Also, a “payable on death” account option will avoid probate administration and immediately pass to your beneficiaries.

Call the attorneys at Loshak Law PLLC today at 954-334-1122 or contact them via e-mail for a free consultation on an asset protection strategy for you, your business, or as part of an estate plan.

Not all that long ago, it was not unusual for someone to retire from the same company where they began their career after decades on the job. In fact, it was largely recognized as standard practice. Today it is practically unheard of.

In either case it begs the question: Is it okay to ask clients or customers to “follow” them to their new company? In Florida, the answer is: it depends. Specifically, it depends on whether the employee is subject to a non-solicitation agreement – and the extent of any such agreement.

Keep reading to learn more.

What is a non-solicitation agreement?

In the context of Florida business law, solicitation is a term used to describe activity in which someone who has left one company encourages clients or customers to do business with another one. The other company in question is usually one that the employee has joined or started.

A non-solicitation agreement prevents employees from accessing and using valuable information – namely client/customer lists – for their own benefit after leaving the company.

Are non-solicitation agreements enforceable?

To be enforceable, a non-solicitation agreement must comply with the requirements set forth in Section 542.335 of the Florida Statutes. This means that it must:

Be created to protect legitimate business interests – A non-solicitation agreement should be implemented to protect meaningful relationships with customers, patients, or clients; or goodwill associated with any such customers, patients or clients. If a Florida court determines that your business created a non-solicitation agreement for any other reason, it has the discretion not to enforce it.
Not be too limiting – Any such agreement cannot be so restrictive that it interferes with an employee’s ability to make a living. Accordingly, it must be implemented for a specified time and geographic region. In most cases, these agreements should be implemented for a maximum of two years.
Be explicit – As with other relevant contracts and/or agreements, it should be straight forward and easy to understand. Use of confusing or convoluted language may prompt a court to decline to enforce the agreement.

Relevant cases

In other words, a non-solicitation agreement must be “reasonable” to be enforced. Since this is a subjective term, we’ve included some relevant case law.

For example, in Austin v. Mid State Fire Equip., 727 So. 2d 1097, 1098 (Fla. 5th DCA 1999) the court determined that a non-solicitation provision met this criteria since it only restricted a former employee from soliciting any of the former employer’s customers and disclosing confidential business information.

In another case, Milner v. Tassy, 377 F. Supp. 2d 1209 (S.D. Fla. 2005) the court also ruled that a non-solicitation clause was reasonable. In this case, the court reached its decision because the agreement was implemented for a specified period (two years) and only barred solicitation of the former employer’s customers, including prospective customers that the former employees dealt with or obtained confidential information from.

Contact Loshak Law PLLC for all your business contract needs

If you need help drafting a non-solicitation agreement, want to know whether its the right option for your Florida business, or are involved in a dispute involving a non-solicitation agreement, contact the legal team at Loshak Law PLLC today at (954) 334-1122.

Contracts – by a South Florida Business Attorney – Not Exactly Pie

Contracts drafted by a South Florida business attorney don’t exactly conjure up warm fuzzies the way donuts do for Homer, do they? Just the thought of them gives the average person a headache. Even Google doesn’t like contracts – not the business kind, anyway. Try to Google anything specific to business contracts and you’ll get a bunch of results for multi-million dollar deals offered to men who throw and catch balls. Otherwise, the subject of contracts is not something most people want to read willingly.

Who wants to read an article about something that’s known to be long, dry, incomprehensible, and contain the kind of fine print that will bite you in the butt when you least expect it? That’s what makes this Simpson’s gif hilarious. An angry Homer, pulls away from Marge, defiantly crosses his arms and proclaims, “We’re not signing anything unless it’s a contract!”

Actually… Homer would be pleased to know his insistence on a written contract is the right idea. If you gain an understanding of contracts through Homer Simpson’s eyes, at the most basic level, you’ll finally be able to cast the misconceptions aside and put contracts in their proper perspective, which will then enable you to use them as another tool to help you achieve your business goals.

Simply Defined

Let’s look at the most basic definition of a contract from Wikipedia: “A contract is a voluntary arrangement between two or more parties that is enforceable by law as a binding legal agreement.” Surprisingly, perhaps, the word “written” is nowhere to be found in this definition – which brings us to the first of four common misperceptions about contracts.

If it’s Not in Writing, It’s Not a Contract

We bet you’ve heard it before. It’s not an uncommon belief among most people that if it isn’t on paper, then it doesn’t exist. Taking advantage of this misconception, some individuals and businesses even use it to their advantage to avoid rendering services or making payment.

In reality, just having a discussion with a salesperson or service professional and agreeing upon certain terms can sometimes form the basis for an oral contract. In these types of scenarios – oral agreements – intent is a major factor. When one of the parties has performed their end of the agreement, fulfilling their end of the “contract,” courts are more likely to deem the agreement enforceable.

OK Then, Who Needs a Written Contract?

Now that you know oral agreements may be enforceable in court, you definitely want to get that contract in writing. If you don’t, and you find yourself in court for a perceived breach, how are you going to prove orally-agreed upon terms? A written contract avoids the problematic “he said, she said” arguments that plague breach of oral contract lawsuits. Very simply – a contract in writing clearly defines expectations of each party and what happens when those expectations aren’t met. This creates a “meeting of the minds,” which forges the way for a productive, long-term relationship and increased profits. The black and white of written words does not allow for emotions, opinions, or selective memory, and may settle disputes without the need to step foot into a courtroom.

Contracts are Costly

Convinced that professionally-drafted contracts are expensive, many people turn to the internet and opt for DYI contracts. More often than not, DYI contracts are problematic and require an attorney to totally revamp them, which is more costly and time-consuming than having an attorney draft a contract in the first place. Add in lost potential revenue and time spent on discovering skewed/onerous terms – and now you’ve got one costly contract! This all-too frequent scenario perpetuates the myth that contracts are expensive.

Contracts are Complicated

Ridiculously long, complicated contracts are fodder for jokes and movies, but this doesn’t have to be the case. A contract need not be 30 pages of legalese in 8-point font whose purpose is to serve the lawyer. In fact, Paul Lippe, founder of Legal OnRamp stated, “Contracts today are a roadmap for dispute resolution.” A contract’s purpose is quite the opposite of instilling fear and uncertainty. Lippe notes, “… contracts – and the process by which they are developed and agreed – should be assisting in generating clarity and shared understanding for all those who they affect.” In fact, a good contract should be comprehensible and user-friendly enough to serve as a reference guide. Keep in mind, the ultimate purpose of drawing up a contract in the first place is to create the conditions that will yield the outcome you want.

Your First Step

In an unpredictable, fluid business climate, the only thing we know for sure is change is inevitable. Whether you’re just starting up a business or your business agreements are oral and/or don’t accurately reflect how you conduct business, consult with an attorney now.

At Loshak Law PLLC, we operate with a business mindset because our ultimate goal in partnering with you is to contribute to your business success. Contact us today for a free consultation at (954) 334-1122.

Transactions involving buying and selling businesses involve complicated factors. If you are contemplating selling your business or looking to buy a business, you will need to ensure that you fully appreciate the agreements and contracts which you sign as apart of the deal.

Your lawyer will work with you to negotiate a favorable transaction and explain any aspects of the contracts to you so that you are fully informed when you enter those agreements. Your attorney will also draft documents and perform necessary research to protect your best interests.

If you are looking for a legal representative to help sell or buy a business, contact Loshak Law PLLC at 954-334-1122 for a consultation.

How a Lawyer Will Help You Sell Your Business

You built your business but now decided it is time to sell the company and move on to other pursuits. Selling a business is complicated because not every aspect of the sale involves something tangible. Part of your company’s value will depend on how you structured your business, developed goodwill, and created a functioning entity that will last even actor you exit.

Your lawyer is one of the professionals that will determine your company’s value. This process is complicated and often technical. Various professionals may place differing values on a business, but your attorney will serve as your legal advocate in the process and work to ensure that you get a fair deal.

When you present the information about your business to buyers, your lawyer will help detail the facts in ways that will help the buyer see your company’s value. Your attorney will also make sure that all of the transaction documents and steps meet all legal requirements.

How a Lawyer Helps You Buy a Business

If you are buying a business, your attoreny will likely have more work to do as a part of that process. It is your lawyer’s job to ensure but you consider each factor before completing the purchase. Your lawyer will help research the company’s liabilities, assets, and equity. Many business sales will also include specific conditions. Your attorney will review these documents and counsel you of any conditions that could have negative impacts.

Your attorney will also draft legal documents related to the sale. The terms of these contracts may vary, so your lawyer will have to negotiate for provisions that work to your benefit. Sometimes you will need to negotiate a consulting relationship with the seller. If you need information from that person to learn more about how to conduct the business, your lawyer can draft a separate consulting agreement that will detail the terms and time period where the seller will provide you with assistance and training.

Types of Business Sales

It is important to remember there are two types of business sales. You might be selling the legal entity, which is your business. For example, if you own a business you organized as an LLC, you may sell an interest in that legal entity or shares or stocks in that business. When a person or company purchases the entire legal entity, they will also become the owner of any corporate liabilities. In these cases, lawyers for the buyer will want to review documents carefully for any potential legal vulnerabilities.

It is also possible to complete an asset sale. In these instances, the buyer purchases the business’s assets but will not take over the legal entity. The buyer can limit their legal liability by taking this path. This type of business sale is more common in Florida because buyers feel more comfortable about their legal exposure when purchasing assets rather than legal entities.

Purchasing a business has legal implications and official requirements. Your lawyer may have to contact officials in your state and file forms with various agencies. You may also need a specific type of business license, which your attorney can help you obtain.

Whether you are buying or selling a business, your lawyer will want to ensure that your contract does not lead to court battles and costly litigation. Your attorney will know what to look out for when drafting and negotiating terms to protect you from possible legal exposure.

Hiring a Lawyer to Help Sell or Buy a Business

Selling your business is a major decision, and you will want to ensure that the agreement honors all of your hard work. Buying a business is also a significant step in a person’s life and a substantial investment. Individuals on either side of these transactions should feel confident about the terms to which they agree.

Loshak Law PLLC serves clients in Palm Beach, Broward, and Miami-Dade. If you are looking to buy or sell a business in South Florida, call us today at 954-334-1122.

As the number of Coronavirus, or COVID-19, cases across the United States continues to increase exponentially, so do the number of government restrictions. In Fort Lauderdale, like many other parts of Florida and the country, all public and private beaches and parks are closed. Large gatherings have been prohibited. As per Broward County’s emergency order, all “non-essential” businesses are closed.

Fort Lauderdale Mayor Dean Trantalis ordered the closure of all large gyms, fitness centers, fitness studios, dance studios, and gyms. The same directive applied to all nightclubs, bars, and similar businesses. The mayor also limited restaurant operations to takeout, outside pickup, drive-through and delivery services. These limitations, implemented in an effort to slow the spread of COVID-19, are now expected to remain in effect until at least April 15, 2020.

Likewise, the Governor of Florida Ron DeSantis announced on March 30, 2020 that he is issuing Executive Order 20-89 aimed at restricting businesses and facilities deemed “non-essential” from operating until April 15, while also requiring mandatory self-quarantine for travelers arriving into the state from certain locations.

Meanwhile, many affected businesses in South Florida are already paying a steep price for compliance, as the shutdowns have resulted in decreased income and layoffs.

If your business is struggling, we may be able to help. Keep reading to learn how.

Immediate Fallout

In a recent news report, the owner of a small Fort Lauderdale event planning company explained how the restrictions have all but decimated her business, essentially forcing her to cancel all events until further notice. In the meantime, she is making considerable sacrifices to ensure her employees are paid.

Similar stories are emerging throughout Broward County and all-over South Florida. In addition to cancellations, local and regional businesses are now coping with contractual and delivery issues as a result of the restrictions. To make matters worse, many people do not know how to protect their rights.

The Importance of Force Majeure Clauses

The inclusion of a “force majeure” clause in a contract is one way to ensure your rights. This clause discharges your businesses from the performance of its contractual obligations in certain situations. Specifically, it does so when circumstances beyond your control make the fulfillment of contractual obligations either:

Inadvisable;
Commercially impracticable;
Illegal; or
Impossible

Examples of these kinds of circumstances include wars, earthquakes, and hurricanes, however there is currently no Florida law or precedent that includes viruses or “pandemics” as qualifying events to trigger the enforcement of a force majeure clause. That being stated, we anticipate that Florida courts will soon take up that very question, providing an answer to many affected business owners.

“Impossibility” as a Legal Defense

If your contract does not contain a force majeure clause but you still need a way to get out of it, you may have other options. In Florida, individuals and businesses may use the defense of “impossibility” or “impracticability” to avoid their contractual obligations under certain circumstances. Generally, these circumstances must make it objectively impossible for one or more parties to the contract to perform.

“Acts of God” and governmental action are among several types of business risks which implicate the impossibility defense, according to the Middle District of Florida in the case of Harvey v. Lake Buena Vista Resort, LLC, 568 F. Supp. 2d 1354, 1367 (M.D. Fla. 2008). Death or disability, physical destruction, embargos, and other circumstances that would involve extreme difficulty, expense, or injury may also be excused under the doctrine of impossibility.

For now, it is important to remember the following during the current unprecedented circumstances we all find ourselves in:

Understand and evaluate the ways in which the pandemic is impacting or may impact your business and the ability to fulfill your contractual obligations. Consider the other party’s obligations as well, taking into account whether they may also be adversely affected. Ask a qualified lawyer whether the circumstances allow for the invocation of a force majeure clause by either party.
Stay abreast of the latest developments. While the current circumstances may not protect you from contractual liability based on a force majeure clause, further restrictions may.
Seek legal advice. This is key because every contractual clause governing performance is different and can be interpreted differently based on governing law.
Carefully document the scope of any business interruptions, along with all actual and anticipated costs. Remember to be mindful of the other party’s costs, as well.
Assess your insurance coverage to verify whether you have relevant policies.
Think about alternative ways, if any, to fulfill contractual obligations.
If possible, try to come up with mutually acceptable solutions to legal issues, such as an agreement to reschedule your event or payment.

How the Lawyers at Loshak Leach Can Help

As South Florida business and contract lawyers, we can help in several ways. Specifically, we can review any contracts, purchase orders, or any other aspects of your business impacted by COVID-19. Depending on your circumstances, we may be able to help secure funds, draft contracts, or find other solutions tailored to you. Simply contact us online to schedule an appointment or call us at (954) 334-1122 today.

What is a Florida Land Trust?

A Florida Land Trust is a private legal agreement between one or more parties for the purpose of holding title to real estate. The legal rights and obligations of the parties to the land trust are governed by the provisions of the Florida Land Trust Act. The land trust separates property ownership between the property’s legal ownership in the trustee’s name and the property’s beneficial ownership by the trust beneficiaries. The beneficiaries completely control the use and conveyance of the real estate while legal record title is held in the name of the trustee. A Florida Land Trust can be used in connection with an estate plan, real estate transaction, or as part of a business deal.

Benefits of a Land Trust

Privacy: Record title to the real estate is held in the name of the trustee while the beneficiaries (a/k/a owners) remain anonymous. Under Florida law, the trust document does not need to be recorded, so the trust terms are also hidden. Moreover, this makes it very difficult for creditors to discover the true owners of the property and attach their interest.

Creditor Liens: Normally, a creditor’s judgment recorded with a county’s official records becomes a lien on all real property titled in the debtor’s individual name. When title to real property is held in a land trust, a judgment creditor will not acquire a judgment lien on the property owned in a land trust merely by recording the judgment in the county where the property is located. However, judgment creditors can still reach the beneficial interest of a trust beneficiary, but it requires a more difficult and expensive legal process.

Probate Avoidance: If the trust agreement is drafted carefully and correctly, the ownership interest of a deceased land trust beneficiary will automatically pass to his or her heirs or beneficiaries, thereby avoiding a costly and time consuming probate administration process.

Alternative to Business Entity: A land trust can be used as an alternative to the formation of a business entity, such as an LLC or partnership, to hold title to real estate. Business entities must file with the Florida Secretary of State and pay annual filing fees. Conversely, a land trust is not filed with the Florida Secretary of State and there are no annual filing fees.

Homestead Exemption: The beneficiaries of a Florida Land Trust qualify for Florida’s Homestead Exemption for tax purposes and for protection from forced sale by a judgment creditor.

How to Create a Land Trust

You should always consult with and retain an attorney if you want to create a land trust and not try to create one on your own. The experienced attorneys at Loshak Law PLLC routinely help their clients establish land trusts for various purposes. Call our office today at 954-334-1122 or contact us online to schedule your free consultation.

It’s something savvy real estate investors have known about for years. Now we’re letting you in on the not-so-closely guarded secret. Under Section 1031 of the Federal Tax Code, people can defer payment of capital gains taxes on the sale of a property that has appreciated, as long as they reinvest the proceeds in another property. However, there’s a catch – to take advantage of this opportunity without running afoul of the IRS, you must play by the rules – and there are quite a few. Here’s what you need to know to stay out of trouble:

First of all, as IRC Section 1031 (a)(1) stipulates: “No gain or loss shall be recognized on the exchange of real property held for productive use in a trade or business or for investment, if such real property is exchanged solely for real property of like-kind which is to be held either for productive use in a trade or business or for investment.”

In other words, you can sell a property that has appreciated and use the money to buy more real estate as long as the new property is kept for business use or as an investment. Or, to put it another way, if you own a commercial garage that you lease to a mechanic or body shop, you can sell it and use the money to buy an empty lot where you want to build something else. On the other hand, if you are a mechanic who leases the commercial garage and you want to retire, sell your business and use the money to buy a house in the country, you can’t do a 1031 exchange because you don’t own the property.

Here are some other things to keep in mind regarding purchases and sales in 1031 exchanges. You can’t use your primary residence in a 1031 exchange, and all properties involved in a 1031 exchange must be located in the United States. Finally, as a taxpayer, you can sell a property to a related party in a 1031 exchange but the transaction is subject to a two-year holding period. And as a taxpayer, you cannot buy property from a related party in a 1031 exchange.

Another important rule pertains to the deadline for identifying the new property once the sale of the old property is finalized. Once the first part of the transaction in a 1031 is legally concluded, you have 45 calendar days to find a new property to buy. If you haven’t entered into a contract on a new property within the specified time, you must still provide a detailed list of the properties you are interested in before the deadline expires. While there are no limits on the number of properties you can identify within the 45-day window, there is a limit on the total value of the new properties if you choose more than three. Specifically, it cannot equal or exceed twice the value of the property you sold.

In addition to the deadline for finding the new property/properties, there is a deadline for closing on it (or them). As stipulated in Section 1031, you have roughly six months (180 days) to purchase and close on one or more of the new properties after the closing of the old one. Because the 45-day deadline for identification and the 180-day deadline for closing on the new property/properties run simultaneously, the actual window for closing on the new property can be limited to 135 days. In any case, the subject of the transaction must be one or more of the properties included on the 45-day identification list.

Here are some more rules to keep in mind:
• You cannot handle the transaction yourself
• The person or entity who held title on the property that was sold must also hold title on the new property/properties
• To delay full payment of the capital gains tax on the old property, the new property must be worth at least as much or more than the old one.

Clearly, this is a valuable tool for investors. But as we have seen, it is also a complicated process. If you’re a real estate investor, business owner, or just a savvy real estate buyer, contact us today to find out how Loshak Law PLLC can help you complete a 1031 exchange today!

Across the state of Florida and the entire country, debates are raging about when to reopen the national and state economies. Meanwhile, the Corona virus continues to spread (albeit at a slower rate) and the economy continues its downward spiral, with over 26.5 million Americans facing unemployment and no real signs of recovery. Amid this turmoil, many are finding it difficult to make their mortgage or student loan payments, let alone ordinary monthly bills. For residents and businesses in South Florida unable to meet their financial obligations as a result of the pandemic, there are several relief options available.

Executive Order Addresses Evictions and Mortgage Payments

In an executive order signed April 2, 2020, Florida Governor Ron DeSantis put a temporary halt on all foreclosures and evictions statewide. As per Executive Order 20-94:

Any statutes allowing mortgage foreclosure causes of action under Florida law are suspended and tolled for 45 days from the date of the Executive Order, including any extensions.
Any statute providing for an eviction cause of action under Florida law, solely as it relates to non-payment of rent by residential tenants due to the COVID-19 emergency, is also suspended and tolled for 45 days from the date of the Executive Order, including any extensions.

Governor DeSantis’ Executive Order also stipulates that nothing contained therein “shall be construed as relieving an individual from their obligation to make mortgage payments or rent payments.” In other words, if you are able to meet these financial obligations, you should continue to do so.

Understanding Mortgage Forbearance Afforded by the CARES Act

The CARES Act also provides temporary relief to homeowners now struggling to pay their mortgages due to financial hardship stemming from the COVID-19 pandemic. Under the Act, mortgage forbearance is available to homeowners with FHA, VA, USDA, Fannie Mae and Freddie Mac and similar government-backed mortgages.

A forbearance allows a homeowner (i.e. the “borrower”) to halt or reduce his/her mortgage payments for a short pre-determined period. In general, your lender or loan servicer may offer a loan forbearance because it allows both parties to avoid time-consuming and costly legal battles or collection attempts. Due to the CARES Act, the forbearance process has been streamlined with most lenders, as they rush to comply with the new federal guidelines.

Forbearance or similar relief options may also be available to homeowners with non-government backed or private loans. Because the terms of these loans may differ, it’s important to check with your lender or loan servicer about the specific options available to you.

Here is a list of available relief options from the 10 largest lenders and loan servicers in the US:

Quicken Loans – Mortgage Assistance During COVID-19
TD Bank – Options for U.S. Customers in Response to the COVID-19 Pandemic
Huntington Bank – COVID-19 Relief Programs and Support Resources
Regions Bank – Resources for Business and Individuals
SunTrust Mortgage – Mortgage Assistance Programs
Cooper – Mortgage Assistance Support
Flagstar Bank – COVID-19 Mortgage Payment Assistance
Bank of America – Client Resources
Wells Fargo – COVID-19 Resources and Support
JP Morgan Chase – COVID-19 Update and Resources

No matter what type of mortgage or loan you have, keep in mind that forbearance does not nullify your normal payment obligations. Generally, you are still responsible for repayment of any missed or reduced payments in the future, unless your lender has agreed to “forgive” all or some of the loan. Again, this means you should continue to make regular monthly mortgage payments if you are capable of doing so.

Relief Options for Federal Student Loans

The CARES Act also provides relief to individuals who can’t afford to pay certain federally held student loans due to financial hardship associated with the pandemic. As stipulated in the CARES Act, principal and interest payments on these loans are automatically suspended through September 30, 2020. Even if you normally have auto-pay set for these loans, the automatic suspension will stop any such payments.

You should be aware however, that not all federal student loans are held by the Department of Education or subject to the provisions of the CARES Act. For example, commercial lenders actually own some loans made through the Federal Family Education Loan (FFEL) Program. Furthermore, the college or university you attended may own certain Perkins Loans given to their students. It is therefore important to see if provisions of the Act are applicable to your specific loan(s) or if different options may be available.

Suspension of Certain Lawsuits in Florida

Finally, if you are currently involved in litigation of any sort, you should be aware that a suspension of many Florida court proceedings remains in effect through the end of May 2020. These include non-essential court matters, such as civil jury trials.

All such matters should be “rescheduled, postponed or canceled,” as per Administrative Order AOSC20-23 issued by Florida Supreme Court Chief Justice Charles Canady on April 6, 2020. The only exception is for those matters that “can be conducted by conference call or other technology that would prevent the need for in-person appearances.”

On April 21, 2020, Chief Justice Canady also established the “Workgroup on the Continuity of Court Operations and Proceedings During and After COVID-19” to develop a working plan for the continuation of court operations and proceedings in a manner that protects health and safety. The Workgroup is made up of various judges statewide and is tasked with presenting its findings to the Chief Justice “as they are developed” to avoid costly time delays.

If you are a current client with Loshak Law PLLC, please contact us to see how your case may be affected.

Loshak Law PLLC is Here to Help

The COVID-19 pandemic continues to cause financial hardship for many Floridians and people across the country. If you have specific financial concerns associated with your debt obligations or inability to pay your bills, please feel free to reach out to Loshak Loshak LLP to see how we can help. You can reach us online or by calling our Fort Lauderdale office at (954) 334-1122.

Category: Business