All posts by tfsammons

Smooth Murabaha Closing

Real Estate-Purchases

I recently helped an Islamic client complete a “Murabaha” closing. Islam prohibits payment of interest. This makes it difficult (if not impossible) to buy a property using a mortgage.

Devon Bank has a Murabaha program that works quite well. At closing the Buyer assigns the contract to the bank, the seller deeds the property the bank and the bank immediately transfers the house to my Buyer for the original purchase price plus the bank’s “profit.”

There is no reference to interest payments in the loan documents and all of the bank’s profit (interest) is rolled into the loan agreement. The bank sent a representative to the closing to help us all out and it closed easily.

One potential pitfall: There are two deeds in a Murabaha closing. One from Seller to Bank and a second one from Bank to Buyer. If you are closing in a town that has a transfer tax make sure you get an exempt stamp for the second deed.

Ding Dong the Exemption Postcard is Dead

Real Estate-Purchases

I just received a letter from the Cook County Assessor telling me that I did NOT need to fill out a homeowner’s exemption packet this year. For years, the county insisted on annually mailing postcards (and in recent years a packet) to every homeowner in the county. Homeowners were forced to sign and return the card in order to qualify for the homeowner’s exempetion for real estate taxes (reducing taxes about $400.00). Needless to say many people overlooked the cards or they were lost in the mail

The county has wisely dispensed with the yearly application. Now you only need to apply for the exemption if you just bought your property.

This change came out of left field. I called the assessor on April 16 and was told the packets were late and would be mailed soon. No one will miss filling out what was really an unnecessary form.

Which multiple listing service is for me?

Real Estate-Sales

When you list your home for sale with a real estate agent, the agent inputs data on your house in a multiple listing service web site available solely by other real estate agents (not the general public).

There are two multiple listing services in the Chicago area: MLSNI (the big one) and MAP (the small one– is an acronym for Mt. Prospect, Arlington Heights and Palatine). Some real estate companies have recently dropped MLSNI in favor of the smaller MAP. Several Coldwell Banker offices on the north shore have pulled out of MLSNI and now use MAP exclusively. The reasons for this are cloudy at best (and you probably don’t care anyway). MLSNI does have a public web site that is very good and shows most of what’s on the market. MAP does not have a public site, but relays listings through to the Tribune and realtor.com.

What does this mean to you? If you list your home for sale, make sure your real estate agent puts the listing in BOTH MLSNI and MAP. You pay a lot to list your home and you should get maximum exposure.

Bad Combo: Will and Safe Deposit Box

Estate Planning

I recently had a rather unpleasant experience with a bank in trying to get an original will out of the bank’s safe deposit box. The client’s mother had just passed away and he knew that her will was locked in the safe deposit box. My client was not a signer on the safe deposit box. The box was in his deceased Mom’s own name.

Rule #1: Always put one or two trusted heirs/relatives on your safe deposit box so they can get access to it.
We met and I told my client that we could get access to the safe deposit box because he was an “interested person” as defined in the act (mainly he was “interested” in not being hassled to death by the bank). (The Safety Deposit Box Opening Act is an Illinois law that allows this.)

The law says that if an affidavit is produced saying that an original will may be in the safe deposit box, the bank will send the will directly to the clerk of court for filing. The bank will not allow access to any other things in the box. I put together an affidavit and my client drove to the bank. After 5 or 6 phone calls the bank refused to accept the form. They wanted the affidavit on their form.

Rule #2: Banks are hyper and follow routines set up by someone 50 years ago. Ask them first if they require their own form to be used (even if it reads the same as your form).

We got the will from the safe deposit box and can now open the probate estate.

Rule #3: Never lock an original will in a safe deposit box. Keep it at home and give copies to relatives/heirs with the location of the original marked on the copy.

Better yet sign a living trust, instead of a will. This will bypass the need to hunt down the original will like it was the treasure of the Sierra Madres.

Scan Away

Technology

scannerFor the last five years I used a Canon flatbed scanner that was slow, but reliable. I read some reviews online and decided to upgrade to a faster sheet fed scanner. I narrowed it down to the Fujitsu Snapscan and the Visioneer 450

I picked the Visioneer for about $600 and bought it on amazon.com. It scans directly into PDF format which is essential for me because I use PDF to store documents and to send letters and other things faxed to me on to clients by email.

My only complaint (this may have more to do with my fax machine than the scanner): When I receive documents on my fax it curls them a little at the top. The scanner jammed alot at first when I tried to scan them in top first. The solution was to scan them bottom first, where they were flatter, and I haven’t had a jam up since.

This scanner is a must have. It saves a lot of time (scans 20 pages per minute) and helps us keep documents flowing out to clients and is an incredible aid in the never-ending attempt to stay organized.

Where's My Homeowner's Exemption Packet?

Real Estate-Purchases, Real Estate-Sales

Cook County (unlike every other county) insists on requiring homeowners to apply every year for the homeowner’s exemption on their real estate taxes. This reduces the real estate taxes by about $450.00. For years, the assessor mailed a postcard around February and had to be signed and returned. Then, just to further confuse everyone, they switched to a large 8.5 x 11 packet a few years ago.

The exemption packets have NOT been mailed yet (for the 2003 tax year) as of 4/16/04. According to the Palatine Township Assessor they should be mailed by May 1, 2004. The assessor’s website has a helpful apply online feature, but it doesn’t work until the packets are mailed.

So hang in there a few more weeks and then either download the form from the assessor’s website or fill out the form online. You have not missed the almighty exemption (yet).

Trusts and tax fraud

Estate Planning, Living Trusts

Several Chicago-area people were indicted on tax fraud charges (right before 4/15 tax day) for selling expensive domestic and off-shore trusts to avoid income tax. Aegis Co. sold trusts at $10,000 to $75,000 per package. Clients funneled money through a series of trusts with the promise that the funds would be tax-free on returning to the client. They also deducted personal expenses as business expenses. Homes were written off as “world headquarters” of the business (thereby deducting as an expense everything related to the house including utilities, vacations and kids’ tuition).

For a good summary of why you should ALWAYS avoid any trust that claims to free you from income tax try the quatloos site that does a great job at summarizing tax scams.

Savings Bonds in Living Trust

Estate Planning, Living Trusts

Savings Bonds many times are missed in the living trust “funding” process. Clients forget about them or they think it’s too much of a hassle to transfer the bonds to their trust. If title to the bonds is not properly transferred to the client’s new living trust, and the bonds exceed $50,000 in value at death, a probate will be necessary.

It’s really pretty easy to transfer savings bonds to a living trust. Here’s what you do:

1. Round up all your original bonds;
2. Fill out form 1851 from the Dept. of Treasury;
3. Send the bonds and form by federal express to the Dept. of Treasury.

In about three weeks they will return your bonds registered in the name of your living trust.

Note: Many times the bonds are so old they are not paying interest. You can check the value of the bonds using the online savings bond calculator.

The Next Bucktown?

Real Estate-Purchases

First the boom areas in Chicago were Bucktown and Wicker Park, then Logan Square and Humboldt Park (which is now considered pricey)…now the big, new areas are Englewood and Garfield Park. The Tribune, in an excellent story, reports how these poor areas increasingly are home to 20 and 30 year old real estate bargain hunters. At the same time poorer, longtime residents are being hurt by increasing real estate taxes.

I’m not trying to rain on the parade, but the Chicago Reporter at the beginning of 2003 said that the Harrison, Austin and Marquette police districts on the West Side (that encompass these neghborhoods) represesented less than 1/5 of the city’s population but had 40% of Chicago’s murders.

The Reporter story says jobs and education will change these areas, not extra police (or, for that matter, Costco-trained suburbanites seeking condo bargains).