Friday, September 12, 2014

Access of Evil?

It comes as no surprise that there are a thousand issues to think about before you buy property. Naturally one would think of major issues like price, location, improvements on the property (like buildings and so on), and a host of other aspects. But there is one other facet of buying property that does come as a surprise, at least to some folks.
            At this point, as you likely have predicted, it's time to take yet another imaginary journey. Picture it: a beautiful piece of property on the Oregon coast. This particular piece of property overlooks the ocean on one side and abuts Highway 101 on the other side. It has a couple of large pine trees on the coastal side that sway in the (ever-present) breeze. Empty and undeveloped, this piece of land is quite nice.
            One day, Daggett the Dreamer happens to drive by this wonderful piece of property. Upon seeing the breathtaking view and the “For Sale” sign on the side of the road, he stops abruptly in the middle of the highway, causing a local behind him to swerve and smash his truck into the nearby ditch. Completely oblivious to the wreckage, Daggett continues to stare at the breathtaking view and the sign. He punches the number on the sign into his cell phone. Satisfied, Daggett moves along again.
The local is shaking an angry fist out of his window. But Daggett has already gone.
            Eventually Daggett the Dreamer stops dreaming his wonderful dream and buys that piece of land. 
            After the sale has closed, Daggett wants immediately to begin building a road so that he can bring in some equipment and start constructing his dream house. 
             So he levels out an approach from the highway and fills it in with gravel.
One day, however, as Daggett is driving in on the gravel road, he hears a loud “pop!” He stops his truck and gets out. Casually, he looks at the surface of the road, only to find it littered with nails and sharp-looking tacks. Suddenly, he hears a low snicker. Daggett turns, and from the corner of his eye he spots a gnome-ish looking fellow disappearing into the trees. Daggett can make out only one word on the back of fellow’s t-shirt: “ODOT.”
This was odd. Daggett knows that ODOT doesn’t employ gnomes, much less gnomes who sabotage peoples’ driveways. All the same, Daggett figures he should give ODOT a call.
            Sure enough, ODOT knows nothing about the gnome. But they do point out one major problem: ODOT controls access to this particular stretch of highway, and Daggett doesn’t have an “approach permit” for his driveway. 
             Daggett thinks this is ok. "Fine," he replies. He’d be happy to apply for an approach permit. 
             ODOT shows him where to get the application.
            A few days go by and Daggett continues to use his driveway. Once again, he hears a loud “pop!” This time Daggett flies out of his truck in a flash, but once again he is too late. The road is littered with nails and tacks, and the gnome scurries off into the trees. Daggett is furious.
            Daggett calls ODOT again. ODOT, naturally, denies any association with the vigilante gnome. But they do point out another problem— they cannot process Daggett’s approach permit. Daggett’s property doesn’t have a reservation of access, they say. Without a reservation of access, he can’t even apply for an approach permit.
            Daggett shakes his head against the phone. “Huh?” he replies. “So what do I do?”
            “Well,” ODOT calmly explains, “you can apply for a grant of access.”
            “Ok,” says Daggett, trying to compose himself. “How do I do that?”
            “Well,” ODOT begins again, “the process usually takes from about six to twelve months. There’s a $2000 application fee for our efforts, with no guarantee that the grant of access will be approved.”
            “Huh?” repeats Daggett.
            If  your grant of access is approved,” ODOT goes on, “you’ll also have to pay the fair market value of that grant of access… in other words, the difference between the value of your property with the access and the value of your property without it.”
              “Auggh!” cries Daggett. He nearly loses his mind. In a fit of unnatural rage, he suddenly takes his cell phone and throws it over the cliff and into the ocean.
            It's a travesty. No one knows what happened to Daggett after that. Legend has it that he bought an “ODOT” shirt... and can sometimes be seen on the side of the highway, hunched over, carrying a bucket full of very sharp nails and tacks. But no one can say for sure.
            So, what’s the moral of this story? Check your access rights before you buy property, of course! Even then, things can go awry, and (you guessed it) a lawyer gets involved. Sometimes even the utmost caution can still lead to difficulty.
            But at least you won't end up like Daggett.

Wednesday, July 16, 2014

Big Bob's Blunder

Now here’s something that has little to do with real estate— but it’s the kind of issue that so many people and businesses encounter that it’s worth addressing. Just for fun.
Here’s how it goes: let’s pretend that there’s a business owner named Big Bob who owns and operates Big Bob’s Burgers. Big Bob’s Burgers does very well, selling thousands of burgers a week. Sales are spectacular. Big Bob is making buckets of Benjamins, and things couldn’t be better.
One day—as occurs so often in this blog— things go awry.
Two customers are sitting at one of Big Bob’s booths, enjoying their burgers and a couple of sodas. One of the customers tells the other one a joke, and the other one laughs so hard that he spits a mouthful of soda in the first customer’s eye, blinding him. It’s a freak accident. All the same, the now-blind customer takes Big Bob to court.
It’s a debacle. After the jury deliberates for two days, the verdict comes down. Big Bob loses. He must now pay $1.2 million in damages for the customer’s tragic loss of vision, possibly a result of all that high fructose corn syrup. Big Bob is devastated. His business is over.
Big Bob’s Burgers will be sucked dry from the lawsuit. Still, Bob is sure that that, in the end it will all be okay, because he set up an LLC for his business that will at least protect him from having to sell his personal assets… you know, his house, his car, his belongings. In particular, it will protect his mint condition, sky-blue, ’66 Corvette Sting Ray that he stores in his garage and takes out for a spin on special occasions. At least all of that stuff is safe.
Knowing this, Big Bob relaxes somewhat in his seat. But just as he’s about to get comfortable, the judge looks down at Big Bob from the bench and gives him some bad news.
“Big Bob,” she admonishes, “I find that the LLC under which you were operating your business never had any separate accounting. You never separated it from your personal expenses.”
“So?” shrugs Big Bob. “I never cheated on my taxes, judge.”
“I don’t care,” continues the judge. “The point is, I believe that your LLC was not a distinct entity. I am therefore subjecting your personal assets to satisfy this $1.2 million judgment.”
“What?” exclaims Big Bob. He begins to wobble. Visions of the ’66 Sting Ray being hauled away on the auction trailer begin to pass before his eyes, and he goes white. He falls to his knees. Casting his head to the heavens, he wails: “Noooooo…!
            It’s Bob's worst nightmare. At moments like these, we could ask the same old question: how could this have happened? If this is the end result, why even form an LLC in the first place? The answer is that, although one may form an LLC very easily, it’s not as straightforward to make sure that the LLC is doing its job— protecting the stuff you individually own. Like most things, it’s not as simple as filing some paperwork and letting it be.
            But the story goes on.
Let’s say that Big Bob ends up losing everything he owns, but eventually he manages to rebuild his empire. This time he gets the help of a longtime buddy, a fellow by the name of Fairweather Friend, who decides to join him in his new venture. Bob and Friend register with the Oregon Secretary of State as an LLC. They’re going to rebuild this thing together.
And this time, they are going to separate the accounts.
By and by, things are going pretty good for the business. Big Bob starts selling burgers, and after a few years his business is booming again. Over the years, however, it turns out that Fairweather Friend wasn’t much help. After only a few months of enduring the usual difficulty of starting a business in its beginning stages, Friend bailed out and moved to Tennessee to try and become a country singer. Business wasn’t Friend’s game. So Bob had to do nearly everything on own.
Bob was okay with it, though. Forgive and forget.
One day, however, Friend shows up in Bob’s now thriving restaurant. Friend sees the tasty menu, the hordes of people, and the busy cash register. Friend smiles. After ordering a large fries, he strolls around the back of the restaurant to Bob’s office, and knocks on the door. Bob answers.
Before Bob can even open his mouth, Friend blurts out quickly:
“I want half.”
Now  what? Does Bob half to give ‘em half? Even though Friend bailed out after a couple of months and Bob did all of the work? The very basic and drastically oversimplified answer is ‘yes.’ Big Bob and Friend never had an “operating agreement” that might have prevented this scenario— the kind of agreement that typically says who gets what and when. But there was no operating agreement. And without it, the law says that Friend gets half.
Bob gulps. After his customary heart attack, he calms down. He takes a breath.
“Well,” Bob says to himself as he stares at Friend standing there in the doorway. He shrugs and thinks it over quickly. “50% isn’t so bad. Life could be worse.”
It's better than losing your '66 Sting Ray.

Thursday, June 26, 2014


You’re a happy property owner. You have a house, (let’s say), that you’ve owned for 30 years. The house sits on a piece of land that’s about 3 acres in size, where there’s a wide lawn, a wooded area, and a pond that your grandkids like to fish in. The property is beautiful. You love living there, and you plan on living there until you die.
            One day, you get a knock at your door. You open it up, and standing there on your porch is a government employee. The government employee is squinting in the sun, holding a clipboard, and when you open the door he gives you a smile.
            “Hi there,” he says casually. “How are you doing?”
            You eye him carefully. “Fine,” you reply.
            “Nice piece of land you’ve got here…” remarks the government employee. He glances around at the well-kept and peaceful surroundings, nodding agreeably.
            “Thank you,” you quickly answer, waiting to get to the point. You peer at the government employee’s shirt and notice that there’s a name tag there. “What can I do for you,” you pause, squinting at the name tag, “Bert?”
            “Anyhoo,” Bert whistles, “I’m stopping by today because I wanted to let you know that the Department of Transportation is gonna be building a road,” he says, gesturing with his left hand at the center of your quaint fishing pond, “… right through… here…”
            “Huh?” you say.
            Stop for a moment. If you’re reading this story, don’t get upset, but Bert is right about the road. He is exercising the governmental power of “eminent domain,” also known as “condemnation,” or a “taking.” One could say that the last term is the most fitting, particularly because it’s the power of the government to “take” your land to build roads, schools, parks, shopping centers—yes, sometimes even shopping centers (but fortunately, not so much in Oregon)— and whatever other project that ostensibly serves a public purpose. Sometimes even a government regulation can result in a taking, depending on the circumstances. The point is, simply, that this sort of thing happens all the time.
But here’s the catch: the government has to pay you for your land. That’s your constitutional right. When the Framers wrote the Constitution, that’s the day they gave you the right to be paid a fair amount for the land that the government takes. It’s also the day they gave real estate attorneys a job.
            Anyway, forget about all of that for a moment. Let’s go back to you and Bert.
            “Well,” you say to Bert, a little taken aback, and nearly stumbling in the doorway. The thought of giving up your land for some dirty, stinky road starts to bring a tear to your eye, but you know that Bert is right, because you read this blog. You try to collect yourself. “Fine,” you blubber. “How much are you gonna give me for it?”
            “Hmmm,” says Bert. He seems to mull it over for a second. “Five hundred bucks.”
            Five hundred bucks?” you retort, your jaw hanging out. “But my grandkids go fishing in that pond! And the pollution! Imagine it, Bert! Once the road goes in, there will be cars, and exhaust… do you have any idea what that will do to my land? I’ll hardly be able to live here anymore!”
            Bert nods and puts on a concerned look. He thinks it over. “Okay,” he finally relents. “Okay… five hundred and five bucks.”
            And that’s that. There’s no need to finish this story. We could wrap up the whole saga by saying that you end up slamming the door in Bert’s face, or that the two of you get into a wrestling match. But neither of those scenarios would solve anything, no matter how much you might want to put Bert into a headlock.
            So where does that leave you? Well, it’s almost impossible to stop the government from building that road (or school, or park, or shopping center) through the middle of your pond. But here’s where a condemnation lawyer can come in hand. He or she can get you a fair offer for your land, so that even though you won’t be able to keep your pond, you’ll at least get enough compensation to create other options for yourself. In the end, it’s not the perfect remedy, but it’s something. And it’s the way our constitution has worked for well over two hundred years.
            On top of that, of course, the whole condemnation process is not as simple as what’s described here. There are appraisers, and experts, and juries, and on and on… but the lawyer is there to help you navigate through this entire maze successfully, so that the government gives you a square deal. That's his or her job-- to even the score a little bit.
            Finally, there's at least one more advantage to retaining a lawyer in these kinds of cases: if all goes right, you can send the bill to Bert.

Tuesday, June 17, 2014

The "Notice Me" Game

For the last two and a half months, “Robbie the Renter” has been living in his apartment rent-free. Well— practically  rent-free. To be more specific, Robbie has simply refused to pay his rent over the past two and half months… and despite this nonpayment, his landlord still can’t seem to get him out. How is this possible?
If you’re like most people, you have rented some type of residence in your life. Maybe you’re a tenant, and you rent from someone who owns your current particular apartment, house, or other building. Maybe you own the building and rent to someone else. These, of course, are familiar arrangements. But no matter what your arrangement may be, state laws usually have a lot to say about nearly every relationship that exists between a landlord and a tenant. Oregon laws are no exception.
            And, too often, the outcome of these laws can leave both landlords and tenants saying the same thing: 
            Take, for instance, our delinquent tenant, Robbie the Renter. Let’s pretend that the first of the month goes by, and Robbie’s check doesn't come in. On the third of the month, Lulu the Landlord calls Robbie and tells him that he hasn’t paid. Robbie promises to bring the check in right away. Lulu says okay.
A couple more days pass, and Robbie’s check still isn’t there.
On the sixth day of the month, Lulu decides to take action. She mails a 72-hour eviction notice to Robbie stating that he either needs to pay rent or get out: she also posts a copy of this notice on Robbie’s front door. 72 hours later, Robbie still hasn’t paid. Lulu wisely decides not to do anything rash (such as changing the locks) but instead files a “Forcible Entry Detainer” action in the Clatsop County Circuit Court.
A few days later, Lulu appears in court.
But Lulu doesn’t win. Her action is dismissed. Robbie gets to stay.
It turns out that Lulu hadn’t waited long enough to deliver the notice. Lulu could have delivered a 72-hour notice on the eighth day, but not the fifth. If Lulu had insisted on giving notice on the fifth day, she could have delivered a 144-hour  notice. But a “blend” of the two methods simply won’t fly. Thus, Robbie gets to stay.
Lulu decides to try again. By this point, Robbie has been there for a couple of weeks without paying rent, so Lulu delivers another 72-hour notice, positive that this time it will work. This time Lulu’s not going to bother posting it on his door: Robbie knows he’s supposed to get out. Instead, Lulu simply sends the notice by first class mail. She waits for another 72 hours.
Not surprisingly, the 72-hour time period passes and Robbie still doesn’t pay. Lulu files again in court. She makes another appearance at the courthouse.
This time, Robbie has a lawyer. Lulu shrugs, sure that it won’t matter anyway. Furthermore, she wonders where Robbie has the money to get a lawyer. But she has more important things to think about. So she shows up in court, and then presents her case. At the end of it you can guess the outcome.
Lulu loses.
Once again, her action is dismissed. It turns out that although Lulu had delivered the notice at the right time, she hadn’t delivered it in the right way: she hadn’t delivered the notice personally or posted it on the premises in addition to the first class mail. True, she could have given the notice by first class mail alone, but then she would have had to “state and wait” for an extra three days. So, one more time, Robbie gets to stay.
But that’s not all, unfortunately. Lulu also gets to pay Robbie’s attorney bill.
Yes, not only does Lulu get blessed with Robbie’s legal fees, but she also gets to start all over again.
At this point, there’s no need to wonder what happens to Lulu and Robbie next. It’s enough to say that there are very specific restrictions as to when, where, and how a landlord may try to evict a tenant— even if the tenant is clearly in default. Oregon law is particularly protective of tenants in this regard because tenants are often taken advantage of by underhanded landlords (and lawyers). These laws can be a good thing: but they can often catch you by surprise.
So what can you do to know your rights as either a landlord or a tenant? Well, to start, there are several online resources available that can help steer you in the right direction. In many situations, a lawyer’s help can be indispensable. But no matter what your circumstances, it’s always smart to do a little digging before you act.
Otherwise, you might end up discovering your rights and obligations the hard way: