December 2010 Archives

When the Ball Drops Signaling the Start of 2011, Californians Will Welcome 725 New Laws!

December 31, 2010, by Law Offices of James V. Sansone

  1. SB 1449: California starts the year by downgrading possession of an ounce or less of marijuana from a misdemeanor to an infraction.  Though the fine remains $100, there's no jail time or notation on your criminal record.

  2. AB 2486, the "Teen Alcohol Safety Act of 2010," opens a "social host" who is 21 or older to the risk of legal liability for property damage, injury or death that results from knowingly serving alcohol to underage guests. 

  3. AB 962: Thumbprints, ID will be required for the sale of ammunition.  Actually passed during 2009, Assembly Bill 962, the "Anti-Gang Neighborhood Protection Act of 2009," takes effect February 1, 2011.  The new law requires handgun ammunition sellers to record a buyer's thumbprint along with other valid identification and make the records available to law enforcement for five years.

  4. AB 119 prevents insurance companies from charging different rates for men and women for identical coverage.

  5. SB 782 prevents landlords from evicting tenants who are victims of domestic or sexual abuse or stalking.  See more new laws for landlords in 2011

  6. AB 1844—informally known as Chelsea's Law and authored by local Assemblyman Nathan Fletcher—will increase penalties, parole provisions and oversight of sex offenders, including a "one-strike life-without-parole penalty" for some.

  7. SB 1411 makes it a misdemeanor to maliciously impersonate someone via a social media outlet or through e-mails.

  8. SB 1317 allows the state to slap parents with a $2,000 fine if their K-8 child misses more than 10 percent of the school year without a valid excuse. It also allows the state to punish parents with up to a year in prison for the misdemeanor. 

  9. AB 12 allows foster youth to acquire state services until the age of 21.

  10. SB 1399 allows California to medically parole state prison inmates with physical incapacitating conditions and ultimately shifts some of the cost of care to the federal government.

  11. AB 97 bans the use of trans-fats in food facilities.

Happy New Year California! 

How Bankruptcy Affects Sonoma County Home Loan Approvals

December 29, 2010, by Law Offices of James V. Sansone

According to the financial news line, when it comes to getting approved for a mortgage loan, a bankruptcy can play a fundamental role in your ability to get approved. This may seem obvious to the average borrower, but there are several factors all potential borrowers need to be aware of that a bankruptcy filing has on the Sonoma County mortgage process.

Sonoma County borrowers will find it trickier to get approved for a mortgage after a bankruptcy filing.  Most lending programs will require a waiting period beginning from the time of the bankruptcy discharge before any loan will be approved.  How long the waiting period will be depends on what type of bankruptcy was filed.  If the potential borrower filed a chapter 7 bankruptcy, the waiting period will be at least two years from the date of discharge.  This information is based on a FHA home loan.  A conventional loan will require a four year waiting period, but it could be longer depending on the lending policies of the financial institution. 

The waiting period is the same on a conventional loan if you have filed a chapter 13 bankruptcy, but on a FHA loan, there is a way to finance a home during your chapter 13 payment plan. FHA mortgage loan programs will consider the filing date of your chapter 13 bankruptcy when calculating the waiting period. A chapter 13 bankruptcy debtor can get approved for a mortgage after one year from filing the bankruptcy petition. However, if you are still in you bankruptcy repayment plan after one year, as most debtors are, the borrower must get approval from the trustee assigned to the case before any additional debt can be taken on, especially a new mortgage.

However, many lending institutions will also require that the potential borrower has reestablished a positive credit history since their bankruptcy discharge.  Reestablishing a credit history must also show no new negative accounts since the bankruptcy filing. For example, if you received a discharge in 2010 and in 2011 your automobile was repossessed, you would not qualify for a new mortgage loan.

There are other loan programs besides FHA mortgage loans and conventional home loans that have different guidelines when considering a bankruptcy. These types of mortgage loans are considered non-traditional mortgages and many of these programs require a larger down payment. Mortgage rates on these programs are also usually 2 to 3 percent higher than a normal conventional mortgage.

The most significant thing to remember after a bankruptcy is to reestablish credit and do not have any new derogatory accounts subsequent to your discharge. You want to show any potential lender that the bankruptcy was a once in a lifetime event and will not happen again. If the loan company believes that there is a habit of bad credit or the likelihood of filing bankruptcy again, your loan request will be rejected.

Bankruptcy is not an automatic loan killer, but if you have filed bankruptcy in the last seven years, it is important to make sure that you are doing everything possible to have good credit, especially if you want to purchase and finance a new home.

What Can Sonoma County Debtors Expect At The Meeting of Creditors?

December 27, 2010, by Law Offices of James V. Sansone

In every bankruptcy case, a Meeting of Creditors is scheduled pursuant to Bankruptcy Code Section 341. Be sure to calendar the date, location, and time of the Meeting.

The purpose of this Meeting is to provide the Panel Trustee and your creditors, an opportunity to examine you, under oath, regarding the information disclosed on your bankruptcy schedules and about information related to your case.

For debtors will file for bankruptcy in the Northern District and who live in Sonoma County, Mendocino County, or Lake County, the Meeting of Creditors is held at the Federal Building located at 777 Sonoma Avenue in Santa Rosa.

Five examinations are generally scheduled for each half-hour time period. Therefore, in most, but not all, consumer bankruptcy cases, you can anticipate that your examination should 10 minutes or less. This does not include waiting time for your case to be called. Don’t take this to mean the examination is not important. It is very important as your answers will determine whether your case moves without incident toward your discharge, or whether the Trustee will seek to investigate your case further, which could lead to additional time and expense.

You should arrive 15 minutes in advance of your scheduled time. Once seated in the meeting room wait for your case to be called. When you hear your case being called, step up to the chairs designated for debtors and present your identification, drivers license (unexpired) & social security card. Be sure to bring your drivers. license or other government issued photo I.D. (e.g. passport), AND your social security card. If you don’t have these items or a suitable substitute at the Meeting, your case will not be heard and will be continued to a different date and time.

You will also need your unexpired drivers license or other government issued picture ID to pass the front door security at the Federal Building. If you forget to bring an ID or your ID is expired, you will not be allowed entry, no matter what your excuse is.

The Trustee will review your identifying information and will ask about it if the information does not match the name, address or Social Security information in the bankruptcy petition.

The Trustee will then swear you in by asking you to raise your right hand and agree to swear or affirm that the information you will be providing is the truth and nothing but the truth.

Among the more common questions are those inquiring about whether the information you provided to your attorney and from which he prepared the bankruptcy petition, schedules, statements and declarations, was from your personal records and presumably known by you to be true, accurate and complete to the best of your knowledge. He will ask whether you signed the documents with the knowledge that they are signed under penalty of perjury. The Trustee will also inquire as to whether you have seen and read a copy of the Bankruptcy Information Sheet you should be provided by your attorney as it is in your petition. Some Trustees may also ask you if you are in the process of inheriting anything. This question has substantial legal relevance that your attorney can explain to you.

The Trustee may also inquire about your marital status, if you are single or separated. There may be questions about how you valued your property (real estate and, sometimes, personal property like guns or collectibles). If you have considerable credit card debt, don’t be surprised if the Trustee asks how you amassed the debt, including, perhaps, a description of the largest recent purchases on credit.

The Trustee may ask whether you have sold, transferred, encumbered or otherwise disposed of any of your personal property during the 2 years prior to filing. If you owe child or spousal support, you may have to indicate to the Trustee to whom you are making or are required to make payments.

If you own a business, the Trustee may have additional questions for you concerning the operation or former operation of the business. He may ask how it was valued on the bankruptcy schedules. The Trustee may also ask for additional documentation and information.

If the Trustee has additional questions for you that cannot be answered at the Meeting of Creditors, he will likely continue the Meeting until the next time he hears cases. Normally, you will NOT have to reappear at the Meeting unless you are advised otherwise. It will be your responsibility to obtain the requested information if it is within your ability to do so.

Once the Trustee has concluded his questioning, he will ask if there are any creditors who wish to ask you questions. If there are any such creditors (very seldom do your creditors appear at the meeting), they will be permitted to ask a limited number of questions.

At the conclusion of the creditors’ questions, and assuming the Trustee has no further questions he will indicate that he is concluding the Meeting. If he announces this at the conclusion of the Meeting, that is a good thing, because you are basically done, except for following-through with any requests for additional information and/or completing any reaffirmation agreements, redemptions, surrenders, or completion of the post petition financial management course.

What Do Sonoma County Landlords Need To Know About Security Deposit

December 24, 2010, by Law Offices of James V. Sansone

There is no longer a formal distinction among tenant deposits, i.e., security, cleaning, last month rent, pet, key, waterbed deposits, etc. California recognizes only a unitary security deposit. This is defined as any advance payment to the landlord to be used to remedy defaults in rent payments, repair of damage to the premises exclusive of normal wear and tear, cleaning upon vacation by the tenant, or to restore damage to specified landlord personal property in the custody of the tenant where the rental agreement so provides. Landlords may not charge any non-refundable deposits or "fees" (Civil Code Sec. 1950.5).

The statute implies, but does not explicitly require, that this deposit be held separate by the landlord. Payment of interest is not required by State law, but several local jurisdictions do require it. Landlords who own rentals in Berkeley, Cotati, East Palo Alto, Hayward, Los Angeles, San Francisco, Santa Cruz, Santa Monica, Watsonville and West Hollywood must pay interest to tenants on deposits. Call the applicable rent board, city clerk or apartment association for further information or requirements.

The security deposit may not exceed three months' rent if the premises are rented furnished, two months rent if they are rented unfurnished. An amount equal to an extra one-half months rent if the tenant has a waterbed (Civil Code Sec. 1950.5).

Within three weeks (21 days) of the date the tenant vacates the landlord must provide an accounting of any charges to the deposit in writing. The landlord may charge for repairs of damages to the premises, exclusive of ordinary wear and tear. (See Civil Code Sec. 1950.5 for a detailed listing of allowable deductions from a security deposit).  The accounting may be mailed to the tenant's last known address together with any refund due. Failure to do this in bad faith subjects the landlord to statutory damages of up to twice the amount of the security, in addition to actual damages.

An experienced Sonoma County, Mendocino County, or Lake County landlord tenant attorney can guide you throughout this statutory maze of requirements.

The Five Most Common Questions I Get Asked about Bankruptcy By Sonoma County Debtors

December 22, 2010, by Law Offices of James V. Sansone

Will my creditors stop harassing me? 

Yes, once your bankruptcy petition is filed an automatic stay immediately takes effect.  Creditors cannot initiate or continue any lawsuits, wage garnishments, or even telephone calls demanding payments.  Secured creditors may be able to get the stay lifted if you cannot continue make payments on your secured obligations (i.e. car loans, mortgages, etc.). 

Once a creditor or bill collector becomes aware that you have filed for bankruptcy protection, he or she must immediately stop all efforts to collect the debt. When your bankruptcy is filed, the court will mail a notice to all of the creditors listed in your schedules. This usually takes a week to ten days. You will receive a copy of the same notice which goes out to creditors.

Will My Spouse Be Affected?

As long as your debts belong solely to you, then claiming bankruptcy should have no impact on your spouse or their credit rating, but sometimes the answer is not quite that simple.

If your spouse has not co-signed or guaranteed any of your debts then those debts belong solely to you. However, if they have underwritten any of your debts, those debts are no longer just yours and your spouse will become fully liable if you file for bankruptcy.

A practice, like mine, that focuses on family law and bankruptcy, will be able to guide you in this regard.

Who Will Find Out I Filed Bankruptcy?

Bankruptcy is a court proceeding. The fact that you filed bankruptcy will be available to anyone at the bankruptcy court or anyone who accesses bankruptcy information online. However, this information is not free. You must belong to the Pacer service center to obtain bankruptcy information.   Attorneys tend to be the ones who have access to this system.  Other people may, but rarely, pay for access to this system.

Notice of a bankruptcy case also goes out to every entity you owe money to.  The bottom line is that past and future creditors, along with court personnel, are usually the only people who will learn of a bankruptcy.

Can I Obtain Credit Again?

Yes! Almost anyone can get credit soon after a bankruptcy.  It's true that bankruptcy deals a devastating blow to your credit and your credit score, but the effects don't have to last a long time.  A bankruptcy legally can remain on your credit report for up to 10 years, but its effect on your credit score can start to diminish the day your case is closed, so long as you adopt responsible credit habits such as paying your bills on time, using only a small portion of your available credit and not applying for too much credit at once.

Most financial institutions, as the one I used to work for, offer "secured" credit cards where a debtor puts up a certain amount of money (as little as $500) in an account at the bank to guarantee payment.  Usually the credit limit is equal to the security given and is increased as the debtor proves his or her ability to pay the debt.

Sonoma County Rental Property Owners and Landlords- Minimize Problem Tenants and Prevent Evictions

December 20, 2010, by Law Offices of James V. Sansone

Ask Connie Cook, every landlord encounters challenging tenants! However, educated landlords know how to screen applicants to avoid potentially disastrous problems and limit evictions. When screening an applicant make sure to ask the hard questions. It is important to know if the applicant has been evicted before, has a criminal background, or has the income to afford your property. Be sure to put into place clear guidelines regarding non-payment of rent, late rent payments, and violating the terms of the lease. Perhaps the most important factor, follow through! Learn how to effectively screen tenants and find the right renter for you with this video!

I Am Not The Custodial Parent But My Marital Settlement Agreement Provides That I Get To Claim a Dependency Exemption For One Of The Two Children, Now What?

December 19, 2010, by Law Offices of James V. Sansone

The custodial parent is entitled to claim the dependency exemption on their taxes unless it is released by the custodial parent to the non-custodial parent. For 2009 and forward, the custodial parent is the one with whom the child resides the greater number of nights during the year, regardless of the divorce decree terms.

In order to claim the exemption, the non-custodial parent must have the custodial parent complete and sign IRS Form 8332 (Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent). The divorce agreement or court order can’t be used to substitute for this form, but the divorce agreement can require the custodial parent to complete the form.

The custodial parent can unilaterally revoke the release of a child exemption for calendar years 2009 and forward, even if the release was made prior to 2009.

The parent claiming a dependency exemption on the child/children is the only parent eligible for the following tax benefits:

  • Dependent Exemption Deduction

  • Child Tax Credit

  • Child and Dependent Care Credit

  • Education Credit or Education Expense Deductions

  • Earned Income Credit

  • Head of Household Filing Status

In any martial settlement agreement that includes a provision for the non-custodial parent to take a dependency deduction for one or more children, the custodial parent preferable must complete IRS Form 8332 when executing the agreement, because in many post divorce situations, it is very difficult to get an ex-spouse to sign off on papers at a later date.

An experienced Sonoma County, Mendocino County, or Lake County family law attorney, and your CPA, will be able to offer you guidance regarding potential tax issues that arise after a divorce.

MADD Would Like to See Random Breath Tests for Drivers

December 18, 2010, by Law Offices of James V. Sansone

According to Terry Davidson of the Toronto Sun, if Mothers Against Drunk Driving CEO Andrew Murie has his way, drivers across Canada could be forced to take a breathalyzer test anywhere, anytime — whether police suspect drunk driving or not.

This new policy would replace Canada’s current, 40-year-old way of doing things, where police can demand a breath test only if they have reason to suspect a driver is too drunk to drive. 

I for one believe, as Nathalie Des Rosiers of the Canadian Civil Liberties Association does, this new policy would be a slippery slope for a free and democratic country such as Canada and the United States. 

DUI attorney Lawrence Taylor is correct when he warned that MADD USA will soon push to make random stops and breath tests their next legislative goal. This is a logical progression in the long series of drunk driving laws and court decisions which have steadily eroded our Constitutional rights.  Where does it end? 

I, like the majority of Americans, recognize that the number of drunk drivers must be minimized, but at what cost?  Remember, there is a very delicate balance between freedom and security.  You can’t have an increase in one without a decrease in the other. 

At what cost to our personal freedom are people willing to accept to gain some sense of artificial security?  I for one value security but at no time do I ever want to live in a police state.  As Thomas Paine once wrote: “It is the responsibility of the patriot to protect his country from its government.”

While government does exist to protect us from each other, government has gone beyond its limits when it decides to protect us from ourselves.

Former Sonoma County Tenant Gwendolyn Smith, This Time Gwendolyn Scott, Is In Oregon

December 17, 2010, by Law Offices of James V. Sansone

Ashland Oregon Landlord Lance Hilt has filed an eviction action against former Sonoma County Tenant Gwendolyn Smith, this time using the name Gwendolyn Scott, for failure to pay rent. Hilt’s case was assigned case number 100027312E, and is filed in the Circuit Court of the State of Oregon for the County of Jackson.  Smith, or Scott, is defending her actions, just as she did in both her Sonoma County eviction cases, arguing about the condition of the subject property and non-compliance with local building permits states Hilt’s wife Pam Vavar. 

The Oregon Courts were forced to push back the trial date to January 2011 after Smith demanded a jury trial.  However, Smith’s delay tactics are not working as well in Oregon based on an Oregon Law, ORS 105.137(6), provides “if both parties appear in court on the date contained in the summons, the court shall set the matter for trial as soon as practicable. . .The trial shall be scheduled no later than 15 days from the date of such appearance. If the matter is not tried within the 15-day period. . .the court shall order the defendant to pay rent that is accruing into court, provided the court finds after hearing that entry of such an order is just and equitable.” 

California has no similar law, which is why Smith was able to prolong her eviction action with Connie Cook for over a year, causing Cook to lose her home after she was unable to pay her mortgage after she lost the rental income from Smith. 

If California had a similar law, Smith would have been forced to pay into the Sonoma County Superior Court the monthly rent that was due under her agreement with Cook.  If Smith was unable to pay the rent, the Court, under a similar statute, would have been able to restore possession of the property to the rightful owner, while still proceeding with the expedited court action for failure to pay rent. 

California should adopt a similar statute.  This would force a tenant to put his or her money where their mouth is and avoid procedural delays based on current California Law. 

The end result would be fair.  If the tenant was able to prove uninhabitable conditions, the Court would refund the tenant some or all of the rent that was paid into the court.  If the landlord prevailed, the court would pay the rent to the landlord.  California needs this type of statute.  It would ensure only tenants  who had a legitimate defense to the payment of rent  could tie up court resources.  It would end the ability of a tenant to live rent free while tying up a landlord in court for several months, or in the case of Connie Cook, over one year.

The New Year Will Give Your Child a Greater Voice in Your Sonoma County Child Custody Hearing

December 15, 2010, by Law Offices of James V. Sansone

AB 1050 amended Family Code section 3042, effective January 1, 2011, to require the family court to consider and give due weight to the child in making an order granting or modifying custody or visitation if the child is of sufficient age and capacity to form an intelligent preference as to custody or visitation, and to require the court to permit a child who is 14 years of age or older to address the court regarding custody or visitation unless the Court determines that doing so is not in the child's best interests.

Under the current state of the law, the court may, but does not have to, allow a child to testify as to their preference as to custody or visitation.  This revised law, along with the newly added Family Code section 217, will cause a major change in the landscape to Mendocino County, Lake, County, and Sonoma County’s day to day family court proceedings.  It will have massive financial and resource consequences upon not only the courts but upon parties to Mendocino County, Lake, County, and Sonoma County’s family court proceedings.

Sonoma County Welcomes Two New Judicial Officers To The Superior Court

December 14, 2010, by Law Offices of James V. Sansone

Peter Ottenweller: Governor Arnold Schwarzenegger has appointed Peter K. Ottenweller to a judgeship in the Sonoma County Superior Court. Click here for more information.

Anthony Wheeldin: The Superior Court of California, County of Sonoma has appointed Anthony Wheeldin to the position of Superior Court Commissioner. Click here for more information.

The Changing Landscape of Sonoma County Family Law

December 13, 2010, by Law Offices of James V. Sansone

Sonoma County family law court rooms, just like Mendocino County and Lake County, are overrun with more cases and family law litigants than current resources can handle.  One way the family courts in Sonoma County, Mendocino County, and Lake County have handled this is by their requirement to have Motions and Order to Show Cause [OSC] proceedings, in particular those concerning economic issues such as child support, spousal support and attorney's fees to proceed by way of declaration, as opposed to live testimony, pursuant to Reifler vs. Superior Court (1974) 39 Cal.App.3d 479, In re Marriage of Stevenot (1984) 154 Cal.App.3d 1051, Code of Civil Procedure Sections 2009 and 2015.5, and California Rules of Court 5.118.

However the Elkins case set into motion a wave of change.  In 2007, the California Supreme Court rendered its opinion in Elkins vs. Superior Court, 41 Cal.4th 133. In Elkins, the husband was in pro per during his dissolution proceedings.  A local rule of court provided that in dissolution trials, parties must present their case by means of written declarations. The husband, did not have any knowledge of the law, and thus was unable to establish an evidentiary foundation for a majority of his exhibits, and the trial proceeded "quasi by default", to the husband's detriment.

On appeal, while the Supreme Court was sympathetic to the need of trial courts to process their heavy case loads in a timely manner, it held that the trial court deprived Mr. Elkins of due process protections, and that same judicial resources and safeguards should be committed to a family law trial as are committed to other civil proceedings.

As a result of the Elkins case, the California legislature enacted AB 939 and AB 1050, which will change the landscape of Family Law proceedings in Sonoma County, Mendocino County, Lake County, and all of California. AB 939 states, among other things, that access to justice requires that parties be able to appropriately address the court and present their cases. It adds Section 217 to the Family Code (effective January 1, 2011), providing in relevant part that a hearing on any Order to Show Cause or Notice of Motion, absent a stipulation of the parties or a finding of good cause to refuse live testimony, the court shall receive any live, competent testimony that is relevant and within the scope of the hearing, and the court may ask questions of the parties. 

Courts will now be able to render decisions not based on a skillful written declaration authored by an attorney, but will actually be able to evaluate the credibility of witnesses' live testimony and make decisions accordingly. While this may be a win for due process, it will create new challenges for courts to determine how to make room on their already too crowded calendars while facing massive financial cut backs.

How Do You Know if Bankruptcy is the Right Soluiton?

December 10, 2010, by Law Offices of James V. Sansone

If you have problems paying your debts, are being threatened with a wage garnishment, or are in risk of foreclosure on your home or repossession of your car, you may want to consider bankruptcy as a way to deal with these problems.

You have the right under federal law to file for bankruptcy relief from your creditors. Bankruptcy allows a person to get a fresh financial start. Bankruptcy can be very useful and effective in resolving financial problems in certain cases. However, it is not the answer to all financial problems or the right step for everyone.

The only way to be sure bankruptcy is right for you is to discuss your situation with a Sonoma County bankruptcy attorney. Every case is different, and the bankruptcy laws change frequently.

The American Bankruptcy Institute suggests bankruptcy may be an option for people who:

  • Have had their wages garnished or bank accounts frozen after judgments,

  • Have most of their debts in unsecured loans, such as credit card bills or medical or doctor's bills,

  • Have debt collection agencies calling at home or work, or

  • Have lawsuits filed against them.

Below are five tips for people who are considering bankruptcy or have filed for bankruptcy. 

  1. Assess your finances. Know what your expenses, income and total debts are. Look at what caused the financial problem and how it can be avoided in the future.

  2. Pull your free credit report. Get an accurate list of all creditors that you owe. Some people make the mistake of thinking that because debt collectors have stopped contacting them about a debt that it is no longer on their record or that if a bank has charged off the debt it is no longer valid. Wrong. If you don't include all creditors on bankruptcy filings you run the risk of going through the entire process and still owing thousands in debt.

  3. Inform all debt collectors and creditors. Bankruptcy law requires that all debt collection calls, letters and efforts to reach debtors cease once a bankruptcy petition is successfully filed in court.  In addition to notifying your creditors, a person who is filing for bankruptcy should immediately tell any debt collector who has contacted them the name of the attorney handling the case, the district the case has been filed in, and the case number. 

  4. Get your credit counseling certificate as soon as possible. One of the pre-filing requirements involves obtaining a certificate of successful completion of credit counseling with a government-approved counseling agency. The counseling can take place up to six months prior to filing. If time is of the essence in filing for bankruptcy and you have not completed the counseling sessions, this can cause delays and problems.

  5. Get an attorney. The bankruptcy laws have become so complex that people should not attempt to file by themselves. Bankruptcy is a very risky process to try to do on your own.  Obtaining a qualified Mendocino County Bankruptcy attorney is a great way to put the bankruptcy laws to work for you right away. 

Choosing The Right Tenants Is Crucial For Sonoma County Landlords Given California's Stringent Tenant Protection Laws

December 8, 2010, by Law Offices of James V. Sansone

If you are offering a place to rent in Sonoma County, Lake County, Mendocino County, or any other county in California, have the prospective tenants complete a rental application. Standard application forms are usually available at Sonoma County stationery stores.  The two most important elements of the application are the employment history and the rental history. Get information for the past three or five years. Then contact each of the applicant's employers and landlords for that period. If the applicant has worked at the same job and lived in the same apartment for that time, you have as good an indication as possible of a quality tenant.

Many areas have companies that specialize in tenant records. They can tell you if someone has been evicted in the past or failed to pay the rent.  General credit bureaus can supply a history of credit payments to landlords if the prospective tenant authorizes a search of the records. This credit information will include the timeliness with which car and credit card payments have been made, bankruptcies, judgments against the tenant, and adverse information from other creditors. 

A word of caution.  Landlords need to take special care to treat all prospective tenants in the same way. The law prohibits many kinds of distinctions that landlords used to make in selecting tenants.

The Fair Housing Act (Chapter 42 of the United States Code, beginning at Section 3601) forbids landlords to discriminate in choosing tenants because of their race, religion, ethnic origin, color, sex, physical or mental handicap, or family status. Landlords cannot refuse to rent to a family with children. It is also illegal under the Fair Housing Act for landlords to harass, intimidate, threaten, interfere with, or evict a tenant because of the same factors. Furthermore, the same law prohibits the landlord from attempting to evict a tenant for filing a complaint or lawsuit charging the landlord with discrimination. 

Remember, the best way to avoid the need to hire an eviction attorney is to select the proper tenant.  A little time and money spent early in the selection process can save a substantial amount of money and time in the eviction process.

Sonoma County Bankruptcy: I Just Filed Bankruptcy, What Do I Get To Keep?

December 7, 2010, by Law Offices of James V. Sansone

The bankruptcy process offers Sonoma County debtors a "fresh start" if they're overwhelmed by their debts. When your bankruptcy case is closed, however, you'll still need basic possessions and assets to move forward. The law recognizes these basic needs and provides various property exemptions for debtors. If property is exempt, it won't be subject to your creditors' claims.

The most common examples of exempt property (items that a debtor may usually keep) can include but are not limited to the following:

  • Motor vehicles, up to a certain value.

  • Reasonably necessary clothing.

  • Reasonably necessary household goods and furnishings.

  • Household appliances.

  • Jewelry, up to a certain value.

  • Pensions.

  • A portion of equity in the debtor's home.

  • Tools of the debtor's trade or profession, up to a certain value.

  • A portion of unpaid but earned wages.

  • Public benefits, including public assistance (welfare), social security, and unemployment compensation, accumulated in a bank account.

  • Damages awarded for personal injury.

If you have questions about what property you will be allowed to retain if you file bankruptcy under Chapter 7 of the Bankruptcy Code, you may want to speak with an experienced Sonoma County, Lake County, or Mendocino County bankruptcy attorney.

New Laws Effective January 1, 2011 That Effect Landlords

December 6, 2010, by Law Offices of James V. Sansone

Post-Foreclosure Protection for Tenants Senate Bill 1149:

Commencing January 1, 2011, a notice to terminate a residential tenant who remains after a foreclosure sale must generally include a statutory notice of the tenant’s rights.  This requirement, which sunsets on January 1, 2013, applies to an immediate successor-in-interest for one year after a foreclosure sale.  The tenant’s rights must be on a separate cover sheet or, for a 90-day termination, incorporated into the notice to terminate.  This new requirement is provided for under newly added California Code of Civil Procedure section 1161c passed pursuant to Senate Bill 1149. 

This new notice should state, among other things:

You may have the right to stay in your home for 90 days or longer, regardless of any deadlines stated on any attached papers. In some cases and in some cities with a “just cause for eviction law,” you may not have to move at all. But you must take the proper legal steps in order to protect your rights.”

Senate Bill 1149 also amended Code of Civil Procedure 1161.2 with the aim to protect against unfair damage to the credit of a residential tenant by generally prohibiting the court clerk from revealing unlawful detainer court records unless the bank or third party investor prevails at the unlawful detainer trial. 

Tenant Protection for Domestic Violence Victims Senate Bill 782:

Starting January 1, 2011, a residential landlord cannot terminate or fail to renew a tenancy based on domestic violence against the tenant or tenant’s household members as specified.  This law applies if the person restrained from contact with the tenant by court order or named in a police report is not also a tenant of the same dwelling unit.  If the protected tenant subsequently allows the person restrained to visit the property, or the landlord reasonably believes the person restrained poses a physical threat to others or to quiet possession by other tenants, the landlord may serve a three-day notice to correct or quit.  To further ensure safe housing for domestic violence victims, this law also requires that, for leases entered into after January 1, 2011, a landlord changes the exterior locks of a protected tenant’s dwelling unit within 24 hours after the tenant provides a written request and supporting court or police documentation as specified. 

So California landlords in 2011 will see even greater protection and stricter notice requirement for tenants.  As you can see, eviction law is highly specialized.  It does not follow the rules of a typical civil ligation.  Therefore, only an attorney with the specialized knowledge required will be able to properly and efficiently carry out your litigation action. 

Contact JVS Lawtoday for your free 1/2 hour eviction consultation.

Bankruptcy Rule Change re: Credit Counseling

December 4, 2010, by Law Offices of James V. Sansone

Chapter 7 debtors are receiving an early Christmas present with new rules that went into effect on December 1, 2010.  Individual debtors will now have 60 days to file a Statement of Completion of a course in personal financial management, official form 23.

The timer begins to run from the date first set for the Meeting of Creditors. This new rule gives the Chapter 7 debtor an additional 15 days to file their Statement of Completion. 

Failure to file this form on time will result in the debtor(s) being denied their discharge. 

Bankruptcy Rule 4004 was amended to provide for the court withholding the discharge if the statement was not filed.  Rule 5009 was changed to require the bankruptcy clerk to send debtors a notice of the requirement and the penalty of no discharge for failure to comply with the rules.

Mortgage Lenders May Not Have As Much Leverage As You Think

December 3, 2010, by Law Offices of James V. Sansone

The laws regarding foreclosure in California depend upon two things, (1) whether the lender chooses to foreclose by a judicial foreclosure or a non-judicial foreclosure, and (2) whether the loan being foreclosed qualifies as seller-provided financing or a "purchase money" mortgage

Judicial Foreclosure is very rare in California and requires the lender to sue the owner in foreclosure and proceed with a trial in a court of law. The entire process can take at least one year, probably longer if the borrow has the legal ability to put up road blocks and argue over the “true” fair market value of the property.

As such, appraisals and other items are required, and there is still an auction. The owner has the right of redemption allowing them to buy it back from the successful bidder at auction for 1 year after the sale, if the lender requests the right to go after a deficiency judgment.  This one year right of redemption makes the property unmarketable. 

So why would any lender opt for a judicial foreclosure?  Simple, if the loan is non-purchase money, they can go after the borrower for a default judgment.  However, this is not as good as one may think. 

The deficiency is not determined by the difference between the loan amount and sale price.  Any deficiency following a judicial foreclosure permitted against the borrower is subject to a “fair market value” limitation. In particular, the deficiency amount is calculated as, and limited to, the difference between the loan balance due on the date of the foreclosure sale less the greater of the foreclosure sale price or the “fair market value” of the property on the date of the sale.  Oh, let’s not forget, if the lender presents a “full credit bid”, this would bar a deficiency against the borrower. 

However, the fun does not stop there.  Let’s say a lender decides to get greedy, this is an actual example from case law, and decides to bid a very low amount of money to preserve their right to chase the borrower for a deficiency.   Well, remember that one year right to redeem?  To redeem, a borrower is only obligated to pay the sales price of the property at auction.  Thus, if the lender under bids the property, the borrower has one year to purchase the property back at that very same price the lender bid. 

What does all this mean?  A lender on a residential property mortgage would be insane to proceed with a judicial foreclosure, absent a potential 7 figure deficiency. 

Because of the cost, length of time, and complications of a judicial foreclosure, lenders usual elect instead to initiate the non-judicial foreclosure process.  The problem for a lender is that a non-judicial foreclosure releases the borrower from liability for any deficiency that results from foreclosing on the property. With the exception of an adverse impact on your credit rating and possible tax consequences, it is as though the loan was "paid in full".

The bottom line on all this is simple.  If you don’t have a vested interest in your home, the lender does not have as much leverage as you think! 


Giving Back The "American Dream": Strategic Defaults

December 1, 2010, by Law Offices of James V. Sansone

State laws regulate the actions that creditors can take when trying to collect on a secured loan. In some cases, states prohibit the creditor from seeking more than the collateral used to secure the loan. This is called “non-recourse” or “anti-deficiency,” meaning that a creditor cannot hold the borrower personally liable for more than the value of the property at the time of sale.

A strategic default occurs when a homeowner stops paying their mortgage even though they are still financially able to do so.  Surprising to many people, a substantial amount of the people that walk away from their homes have excellent credit ratings.  So why would someone strategically decide to leave their mortgage?   In California, there are many good reasons.

Strategic defaults are greatly concentrated in negative-equity markets where home values plummeted during the bubble burst. In California last year, the number of strategic defaults was 68 times higher than it was in 2005.  Homeowners with large mortgage balances generally are more likely to walk away than those with lower balances.  Likewise, people with high credit ratings are much more likely to default strategically than people who have low scores.

Most people believe if they stop paying their mortgage the bank can come after them for a deficiency judgment.  Those people may be surprised to learn, in California, they are probably protected by the many anti-deficiency statutes.

What are the anti-deficiency statutes?   Well, one of them is California Code of Civil Procedure Section 580(b), which states in relevant part:

"No deficiency judgment shall lie in any event after a sale of real property or an estate for years therein for failure of the purchaser to complete his or her contract of sale, or under a deed of trust or mortgage given to the vendor to secure payment of the balance of the purchase price of that real property or estate for years therein, or under a deed of trust or mortgage on a dwelling for not more than four families given to a lender to secure repayment of a loan which was in fact used to pay all or part of the purchase price of that dwelling occupied, entirely or in part, by the purchaser."

In plain English – the statute addresses 2 types of loans:

  • Purchase money loans and

  • Seller carryback loans.

Under the statute, seller carryback loans are not entitled to seek a deficiency judgment against the borrower.  However, there is an exception under California’s case law that does permit the seller to recover against the borrower under certain circumstances.

As for the purchase money loans, there is no deficiency if the subject property is owner-occupied and is a residential property with one to four units.  What does that exclude? (1) Vacation Homes, (2) Home-Equity Lines of Credits, (3) Investment Properties where the borrower does not reside in the subject property, and (4) Apartment buildings more than 4 units.

Many people ask what if my loan is not purchase money?  Well, if the foreclosing lender seeks a non-judicial foreclosure, they generally can’t come after you for a deficiency.  This begs the question, what if the foreclosing lender opts for a judicial foreclosure?  Chances are they won’t.  The reasons why are too complicated to go into detail in this posting, but it essentially is not in their financial best interest and the process will take much longer than the lender can afford to wait.  In the last twenty years, I only know of one residential judicial foreclosure in Sonoma County.

Some people have moral issues with strategic defaults.  People ask me, is it immoral to foreclose, even when you can afford the payments?  Well I ask you this, is it immoral to take all necessary legal steps to protect the best interest of your family? 

I also remind my clients that it was their tax dollars that bailed out the banks that hold their mortgages, yet they have nothing to show for it.   Remember, a mortgage is a legal contract with the penalties for breach explicitly spelled out.  There’s nothing moral or immoral about it.  I advise my clients all the time, whatever legal matter they seek my advice on, in the words of the Godfather, “it’s not personal, it’s just business.”

Other authorities have suggested, and I agree, that the five things to do before you strategically default are as follows:

  • Contact the bank and explain your situation.  Explain how they could prevent the strategic default by renegotiating your loan principal balance, and how a foreclosure will certainly cost them more money in the long run.  They probably won’t do anything, but at least you’ll be able to say you tried.

  • Consult an attorney to make sure that all the anti-deficiency statutes protect you regarding your specific circumstances. 

  • If you have a co-borrower, try and remove them from the mortgage.

  • If you have a co-borrower, try and remove their name from the title.

  • If you plan on making any big purchases in the near future (car, boat, another house…), finalize the deal before you default.

  • Be sure you did not misrepresent anything on your loan application.  If you provided the bank with false information, the anti-deficiency statutes may not protect you!

Let me know your thoughts and opinion.