All Forum Posts by: Diana Rdzanek

Hi Cody,

My firm specializes in default servicing and I have practiced foreclosure litigation in Illinois for the last five years. In response to @Jay Hinrichs comments regarding leasing the property prior to completion of the foreclosure:

While the default rule is that the mortgagor has possession of the property until confirmation of the judicial sale, a mortgagee CAN rent the property prior to the end of the foreclosure, but will first need to be deemed a "mortgagee in possession." This is a judicial proceeding (see 735 ILCS 5/15-1701) that requires showing the following to the Court: (1) objecting and showing good cause, i.e. filing a motion and detailing that the property is vacant; etc.; (2) explicit authorization under the terms of the mortgage allowing the mortgagee to possess the property; and (3) reasonable probability that the mortgagee will prevail in the foreclosure. Once the Court grants the motion granting mortgagee in possession status, the mortgagee takes on all the rights and duties of the owner, including collection of rents. Typically, larger institutions do not go this route because they do not want to take on the liabilities of land-lording that go along with possession of the property prior to ownership. 

Cody, if the mortgage specifically allows for it and the facts are as you've described above, you may petition the court to gain possession along with filing a complaint for foreclosure. I would be happy to assist with this and will PM you with more information. Good luck!

Diana

Hi Hannibal, welcome! I've been airbnbing in Chicago for the past three years. If you have any questions feel free to reach out! Have a great day.

Diana

Hi Kumar,

There are many benefits to forming a series LLC, and some drawbacks. It sounds like you've done your homework, but for the benefit of this thread, here is some general info regarding the series LLC relative to real estate investing:

- Unlike a regular LLC that is a single legal entity, a series LLC permits an unlimited number of "mini-LLCs" or series to be created, with the ability of each series to have different assets, purposes, business objectives, members or classes of members, and ownership interests.

The classic use of a series LLC is for a real estate holding company that holds multiple parcels of real estate. Instead of a structure with separate LLCs for each parcel, one series LLC could be used with a separate series for each parcel.

- Series LLCs are cost effective in that there is only one filing fee for the LLC. The cost will vary depending on the number of sub-entities but will be less than registering each entity separately. Likewise, thre is only one tax return filed for the series LLC. On the flip side, each entity must have its own bank account, and its own accounting, which can lead to more complicated (and more expensive) accounting.

- The series LLC is a newer form of entity (it has only been around since the 1990s and was enacted in Illinois in 2006), so there is not as much legal precedent as you would find with a traditional LLC or corporation. Likewise, not every state has adopted the series LLC, so if you have properties in multiple states, the "firewall" protection between sub-LLCs may not be recognized in all states.

My firm practices in real estate transactions and litigation, and I can assist in setting up the series LLC and drafting the operating agreement. I will private message you with more information. Good luck!

Diana

Hi Dan,

I have been an airbnb host in Chicago (Lakeview and Gold Coast) for three years and have found it to be great supplemental income.

The first thing to consider is whether your condo association has rules regarding airbnb hosting. The City of Chicago is currently considering an ordinance that would limit the number of units in any building that can be used for airbnb, and additionally allows individual condo associations to ban the practice all together.

Next you will need to decide how you want to prep/clean for guests. If you are planning on doing it yourself, and you live in the suburbs, you may find it too great of a time commitment. I have used services such as Handy ($40 per cleaning) to turn over between guests with mixed results.

Finally, my best advice is to screen all prospective airbnb guests with similar discretion as you would a long-term tenant. I made the mistake of renting my condo to 5 college-age students who were looking to party exactly once. $1,000 of damage to hardwood floors and marble countertops later, I will never do it again (airbnb was great and fully compensated me for the damages, however dealing with the entitled monsters was a nightmare). I think this advice is especially important in the Wrigleyville area. I currently only host guests who are older, have good reviews, are in town on business, etc. You will get a feel for this when going through messages from prospective guests. There is a setting on airbnb called "instant book" where any guest can book your space without exchanging messages with you first. I strongly advise against this.

It seems that you have the potential to easily cover the expenses for your condo by hosting guests through airbnb. Let me know if you have further questions. Good luck!

Hi Stephanie,

As to the non-disclosure of the code violations, from the information you provided it does seem worth exploring whether you have a claim for breach of contract against the seller. Combing through the contract, addendum, and facts of the case will shed light onto this. Depending on the damages you are seeking, it may or may not be worth the time and expense of pursuing your claim against the seller or making a claim against E&O. My firm practices in the areas of real estate transactions and litigation and may be able to assist. I will PM you with further information.

As a general contribution to this discussion, here is some information about City of Chicago Code violations where a property is purchased while there is an active housing court case:

Code violations run with the property, not with the owner. That means that when a buyer purchases property, it is "subject to" any city code violations. The buyer steps into the shoes of the previous owner and becomes liable for repairs and damages assessed by the housing court.

As for any judgments or fines that have already been issued against the property, the city is usually amenable to working with new owners on a time table for bringing the property up to code. You or your attorney can negotiate with the city attorneys to reduce or vacate any judgments or fees that were levied against the prior owner.

Good luck with your property!

Hi Dan, sorry to hear about your predicament. I do not practice in this area of law, however I can offer some tips below that apply to dealing with various contract disputes:

- Create a record: review emails, paperwork, and call log, making notes if you remember the conversations from those dates. It goes without saying, do not fabricate anything.

- Ask for proof: the GC should be able to provide you with a breakdown of the work they have done, receipts from materials purchased, and time spent on the project. Make it clear that you aren't trying to get out of paying for work and materials, but you need verification for the costs and services provided.

- Write everything down: when you are in any dispute make sure that you put everything in writing. If you speak to the GC or JV partner on the phone, send them a quick email summarizing the content of the conversation and the outcome.

- Verify, verify, verify: Do you know for sure that the GC has received more money than work completed, at inflated pricing? Get quotes from other contractors. Look up prices for materials. Come up with an estimate and see how far apart you are on figures. The more information you are armed with, the easier it will be to negotiate with the GC and JV partner.

Good luck! If you determine that you need an attorney to resolve this dispute, feel free to reach out and I can connect you with someone who can assist.

Hi Sandra, we are a medium sized firm focused on real estate and can assist in drafting the joint venture agreement, setting up a legal entity for the joint venture (if necessary), profit distribution and exit planning. I will private message you with more information. Best wishes on your venture.

If you are seeking to enforce a divorce decree, you need to file an action in the state where the divorce decree was entered, regardless of where the property is located.

If you are talking about a civil action to recover the funds, then Indiana is likely the appropriate venue.

Without knowing the details of the divorce decree or the property/bank account/tenancy, I cannot say which is more appropriate. Your lawyer will be able to assist you in this decision. Good luck!

Hi Nick, I am an attorney and can help. Direct messaging you with some follow up questions.

Hi David, I work with Chris Wilson at Citywide Title Corporation on real estate closings.