All Forum Posts by: Paul Choate

@Matthew Paul

 I just want to be very clear. I am saying the district attorney and his office would be protected if they continue to pursue a bad check case. I am also saying I, as a debtor's attorney, would pursue a stay violation against a landlord who initiated a criminal matter after the case has been filed. I am not saying it is an easy win. It would be up to your particular federal judge in how he/she interprets that section of the code. The statue is very clear. Any action to collect is a violation. The exception (criminal cases don't count) may or may not be interpreted to cover the accuser(the landlord) in your jurisdiction. (i.e. walking in a saying you have a bad check is not the same as having a bad check, you are making an allegation.) I had this discussion with 3 different judges at a training session (CLE) and they indicated they did not agree with each other. Everyone thought it was a very interesting question. That just means no one wants to spend the time and money to find out what the judge would actually say. 

A bankruptcy judge can impose sanctions beyond the monetary amounts of the actual loss. I would never advise anyone to pursue a bad check after the filing of a bankruptcy case. This could be different in your area but I would check with your attorney.  The simple fact is any legal action in the bankruptcy court is going to cost so much more than the recovery is ever going to be and this is if you win. If you lose, you may end up in bankruptcy yourself.  

note: edited to clarify what part of the law would be in question.

I am a bankruptcy attorney on the debtor's side generally. I have my own rental units.

It sounds like you have not received the notice. You can go to www.pacer.gov and find out if they have actually filed. There are very specific rules on this matter so I would talk to a bankruptcy attorney instead of a general practice attorney so they can give you the specific advice for your situation. Here are a couple of points to consider:

1. As the attorney, it is my job to deal with creditors for my client. You should try to contact the bankruptcy attorney representing your tenant to offer the cash for keys deal. They may actually come up with all of the money to pay you now that they are not paying their other debts.

2. Never contact a debtor after the filing of a case about debt prior to the filing. Your attorney will be able to file a new eviction for the rent accruing after the filing of the case. Let them (the attorney) work out when that can be done as it is a combination of the federal bankruptcy rules and your local landlord/tenant laws. When in doubt- get a lawyer! Bankruptcy laws are very debtor friendly and your actions can be misinterpreted.

On the criminal charges- As a debtor's attorney, I would happily file a contempt of court citation if someone submitted a bounced check to the DA's office after a bankruptcy case was filed. There are some legal reasons why that may or may not be the case, but you don't want to be the one litigating it. I have had a similar situation happen once before but the criminal case started before we filed the bankruptcy so I did not fight it. Criminal cases are not stayed by the filing of a bankruptcy. Your actions might be. As a landlord this is not great but- remember- if they hang around and rack up a few months of rent, that debt may not be discharged in the bankruptcy and you might be able to collect on them!

If I have not made it clear, this is a situation that requires an attorney to take you through so you can 1. protect yourself and 2. get the property back asap.

http://www.nationalreview.com/article/418907/eliza...

(Disclaimer- I know this is a partisan website) Article about Elizabeth Warren and her husband flipping houses in Oklahoma in the 90's and early 2000's. After spending all day showing a flip and working on turning a rental unit, I am happy to hear about all of the real estate investors making the easy money with no work! 

My two favorite points- 

1. I like how the reporter just used the gross numbers from the county records.

2. The family quotes are awesome. I guess she did not read the grand kids the story of the little red hen when they were growing up.

What part of OK?

@Trevor ZimmermanSoundS good. My brother is a teacher as well and we are working on getting his first one this summer. 

Everyone else, I plan to go over the Oklahoma tax resale coming up in a couple weeks. Please bring your questions, answers and experiences!

This is a bit odd and I think a very teachable moment. Mark has said he is new and is looking for advice on how to deal with someone who wants to do their own thing outside of his rental criteria. It took me years to learn what all of the posters here have said- don't bend your rules for one individual. It has not worked out well for me. 
@Mark Werner

 I hope you are learning all you can while you are here. People are giving you advice from their own experiences. You set the rules and you should stick to them for many reasons but all of them are about protecting you.

@Account Closed

 Welcome to BP! I saw quite a few red flags in your post personally. I don't know you if should throw all that out here. Since you did, I am happy to point out why Mark should not rent to you.

1. His criteria and rules protect him from claims of discrimination. If he regularly goes outside of them, then he can not raise them as a defense when needed.

2. You have said you are leaving at the end of the lease. As a landlord, I want long term tenants because the turnover costs are significant. I understand any tenant could leave at the end of the lease. I hope they will stay for many years. This is not related to the original question. Its just a reason you should not feel the need to put everything out there on this forum. 

3. I am an attorney and I would never give anyone the advice to not give out their social security number to an individual. I might say to be cautious. Multinational corporations get hacked every day. It is part of our daily lives. The likelihood of someone hacking your landlord's wifi is probably much lower. The biggest red flag is you have been provided with a way to enter the data yourself and you still refuse. You have provided old information. Not saying you are trying to do anything wrong.But, If you were trying to hide something, you would do what you are doing.

4. I am all for creative ways to run a business and working all of the tax angles. However, it is more of a reason to get a personal guarantee- not less. I am a bankruptcy attorney and I deal with failure everyday. This transition time is very risky and Mark would have little or no chance of collecting from a failed business as he will be low down the priority list when it comes time to settle up.

5. Renting to a business is different than renting to an individual. I do not know your state laws but I can assume there are statutes in place which may or may not cover this situation. Mark may lose some protections or may gain an advantage. The point is, Mark is not prepared to lease a residential property in a commercial setting. I would advise him to seek legal counsel to make sure he is protected and that is an additional cost which he may have. 

I could keep going. The point is there is a ton of ways this could go wrong. Having standards is not about an individual situation. It is about avoiding all of the mistakes everyone would make if they try to reinvent the wheel.  

@Steven Tawresey

The personal guarantee on a loan is irrelevant to the discussion on tort liability. The personal guarantee only applies to the note holder and only in regards to the note.

Probably and should are the operative terms. As in "probably will not" and "should protect". There are no guarantees in the law. You can have a bad judge or jury. There are always exceptions to every rule. As an attorney, I would rather have an LLC between my client and the plaintiff every time.

@Tom Gunnison

is right in that you should not assume anything is absolute. Just remember- someone loses 50% of the time in a lawsuit.

@Tom Gunnison

I hope everyone understands there is little protection for an individual who commits a fraudulent or negligent act. Those are bad acts and treated accordingly. That is not the issue most investors are going to face. There are many different levels of involvement and levels of fault in any given situation and each state will have its own common law and statutory scheme which spells out who is ultimately liable. Run your business right, be properly insured and always seek legal counsel when needed. A slip and fall as referenced above does not always rise to the level of negligence on a single individual's part yet an LLC can take the brunt of the suit or avoid it all together if the plaintiff ('s attorney) sees there's nothing to get.

Tom, while you might understand the nuances of the distinction you are drawing, it is a bad idea for individuals to think that there is no difference in operating under an LLC and as an individual. There are large differences.

@Tom Gunnison

The point of an LLC is that you are no longer conducting "personal business". LLC's are separate legal entities. An individual can open themselves up to personal liability by not running the LLC (or other corporate form) correctly. LLC's can limit an individual's liability to the extent it is formed and ran correctly. The entire investment in the LLC is at risk but not assets held outside of it. There is always the risk of suit. There are a multitude of ways you can make yourself personally liable. The easiest way is to give permission in the form of a personal guarantee. It does not change the law or the nature of the LLC.

Sorry for the late notice and sporadic nature of these events. I am trying to have these on the fourth Tuesday of each month at noon. 

Where: Casa De Los Milagros Mexican Restaurant and Cantina, 5111 N. Classen Blvd., OKC, 73118 at 12 pm.

Everyone is welcome. The only cost is your lunch if you chose to eat.

This is a networking event. We are having lunch and sharing our current projects, successes and struggles. There is no speaker or expectation of participation on anyone's part. Please come and listen or ask questions. We have had some very good discussions about the local market and activities of the local investing community.

Please let me know if you have any questions. Please let me know if you are coming so I can have a rough head count. Please come anyway if your schedule opens up and you did not tell me!

Feel free to notify anyone who might be interested. I am having trouble with the @ thing so please add more in your comments or other key words that will help get the word out.

Keywords- Oklahoma City, Norman, Midwest City, Yukon, Edmond, Mustang

@Faye Herl

@Tyler Weinrich

@JJ Gritts

@Rhett Tullis

@Brian Marshall