Second Home Legal Checklist

Legal Considerations for Owning a Second Home

Whether it’s a summer home, an inheritance, or a rental property, owning a second home comes with its share of legal implications. Consider the following tips for your second home.

UNDERSTAND YOUR OPTIONS FOR OWNERSHIP STRUCTURE.

● A one-size-fits-all approach does not work when it comes to ownership structure.
Determining the proper structure is a fact dependent analysis with significant,
long-term consequences. Whether your second home is structured as sole ownership,
joint tenancy, joint tenancy in common, a partnership, or some other ownership
structure, may impact, among other things:
○ Tax liability;
○ Succession;
○ Selling options;
○ The division of property in a divorce proceeding.

DEVELOP A MANAGEMENT SYSTEM.

● If multiple individuals are involved, defining responsibilities and authority is critical. (For example, who has the authority to make financial decisions?) A written agreement can help effectuate smooth operation of the property.
● In certain circumstances, setting up a trust may make sense.

CONSIDER THE IMPLICATIONS AND REQUIREMENTS FOR RENTING THE PROPERTY.

Landlord-Tenant Law – The landlord-tenant relationship is highly regulated. Familiarize yourself with the laws of the state where your property is located.
Insurance – Options may include property insurance, personal liability insurance, and rent insurance. Make sure your policy meets your needs.
Lease Agreement – Being a landlord brings increased liability. Ensure you are using a written lease that properly protects your rights and interests.
Property Management – Consider whether you have the time, knowledge, and desire to manage the property on your own or if hiring an outside property management company is a better fit.
Tax Implications – Whether you are operating your rental property as an
investment or a business is just one of the many factors that will have tax consequences.

Understanding how these decisions will impact your tax liability may greatly affect
your bottom line. A qualified accountant can offer guidance on this and other tax-related concerns.

If you have questions or need assistance with your second home, contact the real estate team at Viviano Law.

Commercial Property Tax Appeal

It’s property tax season.  By now, all commercial property owners should have received their Notice of Assessment for their 2016 property taxes from the Michigan Department of Treasury.  If you’re considering a new tax appeal, here are a few basic tips:
  1. The deadline to appeal your property’s assessment is May 31, 2016.  MCL 205.735a(6).
  2. You can only appeal your 2016 assessment.  MCL 211.2(2) states, “[t]he taxable status of * * * real * * * property for a tax year shall be determined as of each December 31 of the immediately preceding year.”
  3. Generally, you’re required to pay the property taxes when they become due, but this requirement may be waived at tribunal’s discretion.  MCL 205.743(1) states “If the date set by law for the payment of taxes has passed, the tribunal shall not make a final decision on the entire proceeding until the taxes are paid. This requirement may be waived at the tribunal’s discretion.”
It’s important to note that if you miss the May 31, 2016 filing deadline, you will lose your right to appeal the assessment.