Feb 282017
 

Dagnabbit! I can’t make things work!

Imagine your buyer client calling you in panic or frustration because the lights in their new home keep going on and off… the garage door is opening by itself… and the thermostat refuses to affect the temperature of the house. Would your first instinct be to suspect the house is haunted? (Bonus point available–that’s called a stigmatized property. Is that a required disclosure in Maine?)

Well, there might just be another explanation and an item for you to add to your closing checklist. (You do have one, right?)  Here’s a link to a recent article in USA Today reporting how “As the Internet of Things finds itself into houses via connected devices, more and more homes contain hot new tech gadgets that can all too easily become unlocked digital backdoors.”

In non-technical language, if the seller forgets to reprogram his smartphone, he could end up opening the garage door of the home he sold.

Speaking of closing checklists,  the article includes a link to a one-page “smarthome checklist” created by the Online Trust Alliance. It’s not exactly free of technical terms but is definitely worth a look. Sorry if it makes your head hurt! Those with kids have access to technical support with this language and these devices.

Seriously, there are some potential issues here to think about–including what electronics “go with the house” and what programming changes need to happen when a property changes hands.

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Feb 242017
 

One of the challenges we face in real estate courses is making certain our content is current. Come to think of it, that’s a challenge for real estate licensees as well!

There’s an old story claiming that someone once asked Albert Einstein for his phone number and he had to look it up. He supposedly remarked that “an intelligent person doesn’t store information, he knows where to find it.” That makes some sense and carries with it the importance of knowing what we don’t know so we do not give out false information. Einstein had the confidence required to admit he didn’t know the answer to what many would consider a fairly simple question.

So if I asked some number of licensees (particularly those who recently completed the sales agent or associate broker course about the Maine Nonresident Withholding Tax on real estate sales, I suspect many would give an incorrect answer because some rates changed for 2017. When Ben Franklin opined that “In this world, nothing can be said to be certain, except death and taxes,” he didn’t mean the amount would be certain–just the existence.

You’d be correct (well, nearly) if you cited the default calculation as 2.5% of the purchase price. “Nearly” is added because the withholding only applies if the sales price is $50,000 or more.

You might also remember there are some alternative calculations and that each requires a waiver from the Maine Department of Revenue. One of those calculations is based on a “small profit.” Those are the rates that have changed for 2017. Those rates are currently 10.1% for residential property and 8.1% for commercial. With a waiver, the seller may be allowed to have the smaller of the two amounts (2.5% of the purchase price, 10.1% of the profit for residential) withheld.

If you think this is starting to get complicated, you get a sticker. Like Einstein, you may be concluding the best answer to the question “How much is the Maine Nonresident Withholding?” is “We’d better look it up.” Actually, an even better answer is “We’d better consult a tax specialist.” (If your client doesn’t have an accountant or tax advisor, like Einstein this might involve a phone book or its Internet equivalent.)

From an estimating point of view, the safe calculation is the default calculation of 2.5% of the sales price. After all, that is the most the seller will have withheld. If your client is a “do-it-yourself” type you can offer him or her the link to the Maine Revenue Services Website. It’s a very user-friendly place with lots of information and all the forms one may need. (Forms and information use the abbreviation REW-Real Estate Withholding.) Note that any request for a reduction in withholding must be made at least five days before closing.

While there’s no minimum on how helpful we should be with our clients, there may be some limitations when it comes to the amount of knowledge we have–particularly in areas such as taxes that extend beyond our area of expertise. Personally, I think a client who is a nonresident of Maine needs to know he or she may be facing at 2.5% withholding from proceeds at closing. We can and should also explain that there are alternative calculations, waivers, and exemptions and these should be discussed with a tax professional well before closing. In the interest of accuracy, perhaps “the less said, the better.”

Another option might be to provide all nonresident sellers with the Notification to Sellers of Withholding Requirement–it could become part of your listing packet and be included on your listing checklist.

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Feb 102016
 
Photo courtesy of Pixabay

Photo courtesy of Pixabay

A recent accident in Harrison, Maine involving a fire truck raises more questions regarding private roads, a complex topic that has always affected those dealing in real estate. In spite of recent efforts to clear up issues surrounding abandoned and discontinued roads, the legal and practical aspects of going over the river and through the woods can be daunting.

As reported in The Sun Journal, a Harrison Fire Department truck slid down a hill while responding to a carbon monoxide alarm, suffering major front end damage. Fortunately, the driver escaped with only a few scratches.

As a former volunteer firefighter, I can recall some heartbreaking calls when we found ourselves unable to reach a home on a private road that was poorly maintained–or not maintained at all. Those were simpler times and a call to the road superintendent would bring a plow, sander, or in some cases the town grader, even if the road wasn’t officially maintained by the town. But precious minutes were lost. Difficult judgments had to be made quickly–is this road passable? Am I going to risk people and equipment if I proceed?

Those decisions are no less simple today. If anything, they have become more difficult as entities and individuals must consider liability and legality. Some towns are adopting ordinances and policies to deal with these issues.

Property purchasers need to be aware of the potential issues and problems if access to the property is anything other than a public road. Since this is truly a local issue, research and diligence are required. Happily, buyers do not need to make split second decisions, but they do need to be aware that purchasing property on private roads always means assuming risks.

Reading the entire article will heighten awareness, certainly. And if you read all the way to the end, you’ll discover an interesting story of how some homeowners “solved” a problem with access to their properties.

 

 

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Oct 092015
 

The following article is reprinted with permission from the September 2015 edition (Volume 4, Number 9) of Maine Woodlands, a monthly publication of Small Woodland Owners Association of Maine. It includes some interesting background and insight into today’s forestry and land use laws.


 

pine_tree_400_clr_17374Newspapers and magazines have been reminding us it’s the 800th anniversary of the Magna Carta, the “Great Charter   signed under duress by King John in 1215. It turns out that, in addition to protecting the traditional rights of the barons, it also created medieval forest rights that are still with us today.

Almost everyone knows that in 1066, William, Duke of Normandy, defeated Harold Godwinsson, King of England, at Hastings, and took the crown for himself as William the Conqueror.  He turfed out the feudal lords owing homage to the crown, replacing them with his own retainers and relatives. England became involuntarily Normanized. What you may not learn ln school is that these kings enjoyed the hunt. Medieval monarchs circulated around their domains, requiring hospitality from their barons. At every stop a hunt was virtually mandatory. Hunting was not only recreation, it was business, part of the proper upbringing of a knight or young nobleman. Hunting supplied familiarity with movement on horseback in rugged and unfamiliar terrain, training in teamwork, and exercise in marksmanship — all important martial skills. And the venison was popular at table. Some centuries passed, though, before literacy was considered essential to an aristocrat’s upbringing.

In their legal tradition kings  did not  own the wildlife, but they controlled hunting rights. King William marked our hunting reserves he personally controlled. These, he called “forests.” The original foresters, then, were the royal game wardens and managers.  Historians estimate England at the Conquest was 15% tree-covered (FIA had not yet been invented). Many of the royal forests contained farmland, pastures, marshes, and even villages. Some of William’s Royal Forests exist today, at least in outline and popular geography, though not in legal form. The New Forest is a popular tourist destination.

Within the forests, it was not only unlawful to take venison — the big game, though a modern hunter wouldn’t consider the animals “big”— but also to harm the “vert,” the habitat. So, within the forest’s limits, neither baron nor commoner could clear shrubby or wooded land for crops. The kings also owned manors and woods in their own name, so- called demesne” lands. But “Royal Forests” were areas where the king controlled the hunt on lands of feudal tenants. The kings at times went to extremes, evicting local farmers and burning villages. The opening of Mel Brooks’ Robin Hood film recalls this.

The King’s control over hunting went down poorly with the lords and barons, who, being Normans, also liked to hunt. Worse, the villeins (farmers) could not kill game animals that fed on their crops. Deer must move freely — no fencing for livestock or to protect crops. Dogs in and near the forest had to have claws removed. “Fence months” were periods when forests were closed to grazing to avoid disturbing does giving birth. Since grazing was a key use, this was a major blow. This was equal opportunity confiscation and oppression, though the poor rarely dined on venison. The Royal Forests disrupted the local economy. Robin Hood got in trouble with the law for two things: robbing the rich to help the poor, and killing the King’s deer.

The Normans and their Angevin successors were serious: Initially, poaching the King’s deer was punishable by death. By 1215, 140 years after Hastings, Royal hunting forests had been extended. They were controlled by Royal “Forrest Lawes,” administered by Forest courts. With this, and various taxes, the barons were fed up. They caught King John at a weak moment and forced him to sign Magna Carta.

What you don’t learn in school is that among ringing declarations of rights of “free men — the barons, not the common folk — there were several clauses dealing with forest rights. The subject was so detailed it was soon necessary for the King to issue a separate Forest Charter (1217). It repealed the death penalty for poaching deer, replacing it with a fine, or a year in jail if unable to pay. It created new “verderers courts” to administer the forest laws. Some of Richard’s and Henry’s expansions were “disafforested,” and rights returned to local feudatories and villages. Later, entire books were devoted to details of Forrest Lawes, referring specifically to the Royal hunting forests, not woods and coppices generally.

Does any of this look familiar? The heritage of the Middle Ages influenced English legal thinking for centuries. Massive tomes on Property Law, which law students suffer through, often begin with medieval property rights, including forest law. Under Maine law today, as in Richard’s time, the government does not own the wildlife. Instead, the “ferae naturae” are the trust property of the entire society and its people. Government administers them as a trust. Landowners and others often differ on how to manage wildlife, and hunting (Sunday hunting, anyone?) No legislative season passes without the introduction of numerous bitterly contested bills concerning what is to be hunted, when, and how. Some things never change.

Lloyd C. Irland is a forestry consultant, sometime teacher, and writer. While in forestry school he was a history geek who took courses in Medieval History for fun.

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