Title insurance is a type of insurance policy designed to protect both homeowner and lenders from potential financial losses that could arise from covered defects in the title to real estate.

The following is a quick overview of how it benefits both homeowners and lenders alike, and why it’s worth including as part of your transaction.

Benefits to the homeowner

For home buyers, your home is likely to be the largest investment you ever makes, so it’s important to do everything you can to protect that investment.  Title insurance is just one of the many forms of protection available.  While you might never need to make a claim on the policy, it’s important to have it in place in the event you end up being surprised by liens or other claims on the property you didn’t know existed.

Some of the benefits of title insurance for the homeowner include:

  • Protection from any costs of defending any matters insured by the policy, including legal expenses, attorney’s fees or otherwise;
  • Protection against some types of covered risks that fall under the insurance coverage including defects in the title caused by forgery, fraud, no rights of ingress and egress to/from the land, unpaid mortgages or other liens, unmarketable title, issues with encroachments, easements or rights of way that limit the use of the property, unpaid real estate tax liens or assessments or any other title-related issues that may arise

These protections cover the homeowner for as long as they (or their heirs) own the property, but only for matters occurring prior to the date of the policy.  This offers a significant amount of peace of mind, as the homeowner does not have to worry about being surprised by unpaid liens by previous owners, or other financial losses from covered claims.  In addition, if you decide you’ll sell the property, that insurance policy can also protect you from losses if the sale fails as a result of covered defects in the title.

Benefits to the lender

There are some benefits of title insurance for the lender, as well.  The lender’s title insurance policy protects the lender form financial losses for those types of covered risks as well specifically, against loss resulting from the lender being unable to enforce its mortgage.  Lenders have just as much of an interest in protecting the value of the investment in the property as well, which means they will often insist on title insurance as part of the transaction.

For more information about the benefits of title insurance to the homeowner and the lender and the steps you need to take when adding title insurance policies to your transaction, contact an experienced real estate lawyer in the U.S. Virgin Islands.

Nash Davis is Chair of the Real Estate & Financial Services Practice Group at BoltNagi PC, a full service business law firm on St. Thomas, U.S. Virgin Islands.

Title insurance is a rapidly growing field in the United States.  More people purchasing homes and other real estate properties are choosing title insurance.  If you’re anticipating a real estate transaction in your future, you should do some research into how title insurance could benefit you.  It is estimated that over $9 billion of title related claims are filed in the U.S. each year.

Here’s some information to take into consideration.

What is title insurance and what does it do?

Title insurance differs from other types of insurance in that it protects insured people against claims for past occurrences.  A car insurance policy, for example, protects you if you ever get into an accident, and a homeowner’s insurance policy protects you in the event of a disaster or any sort of damage done to your property in the future.

Title insurance, meanwhile, defends you against any litigation that challenges the legality or validity of a new property owner.

There are two different types of title insurance:  insurance for property owners and insurance for lenders.  Lenders are typically required to have title insurance by mortgagors to secure their interest in the property.  Property owners can elect to purchase title insurance as an additional means of protecting their investment.

Is title insurance necessary?

Many problems protected by claims are unlikely to be detected by most people purchasing a property, which is why title insurance can be helpful.  Some of the most common types of claims that arise on title insurance include omitted heirs, fraud, undiscovered liens, errors in the public record, and matters related to encroachments, restrictions and easements.

With a public record claim, for example, the person who was tasked with inputting your information or the information of a previous owner into the public record may have made a mistake with the date entry.  Title examiners will go through and assess  the title by carefully analyzing previous ownership and how the title passed from owner to owner (by sale, gift, will, etc.).  The examiner will also check to see if there are any legal claims against the house, including liens, mortgages or any other circumstance that would prevent a legal  transfer of the title.

Ultimately, title insurance is valuable for people purchasing homes because it can protect against significant losses and also assures the property owner that their title is absolute.

If you’re interested in learning more about title insurance and whether or not it’s sensible for your real estate transaction, contact an experienced real estate lawyer in the U.S. Virgin Islands.

J. Nash Davis is Chair of the Real Estate & Financial Services Practice Group at BoltNagi PC, a full service business law firm on St. Thomas, U.S. Virgin Islands.

 

 

 

Last-Will-and-Testament-FormThe death of a loved one is almost always going to bring to the surface complicated and potentially long-standing issues within family relationships. This is perhaps never more the case than when the deceased individual’s estate plan takes family members and beneficiaries by surprise, forcing a situation in which those complicated feelings come out in ways no one would prefer but everyone is suddenly forced to engage.

Inheritance disputes can have their roots in all kinds of situations, but the most immediate causes are likely to be the perception that some family members are treated unfairly, or that others are to receive inheritance money or property seemingly disproportionate to their roles in the deceased’s life.

Regardless of grief and emotions, inheritance disputes that happen to arise must be handled in a way that is both mutually agreeable to the surviving family members/beneficiaries as well as keeps with the deceased’s wishes. Unsurprisingly, this can be an extremely complicated process, which is why many families opt to bring in an unbiased outside party in the form of a licensed mediator. The mediator’s job is to help the family remain intact and arrive at a mutually agreeable solution. This helps family members share their concerns in a productive manner, and often leads to disputes being settled much more quickly and at less expense than they would be if the dispute made its way into the legal system.

Perhaps the best way to handle inheritance disputes is by attempting to prevent them before they arise. Although this is not possible in every situation, it’s likely that many inheritance disputes may be prevented through making family members and other beneficiaries aware of your plan while you’re still alive. Since the element of surprise is often such a key factor in disputes, removing it can help your beneficiaries understand your wishes and your plan as well as the reasoning behind them.

If you and your family are having trouble understanding and agreeing to the terms of a loved one’s estate plan, hopefully you can agree to attempt to solve your disputes through mediation. There are potentially many creative resolutions to such disputes than may benefit all interested parties. An experienced estate planning attorney will direct you to a skilled mediator and will also be available in the event that litigation becomes necessary.

Steven K. Hardy is Chair of the Corporate, Tax and Estate Planning Practice Group at BoltNagi PC, a full-service business law firm based on St. Thomas, U.S. Virgin Islands.

If you’re preparing to invest in real property in the U.S. Virgin Islands, chances are you’ve been saving for quite some time to get to the point where you can make your purchase. With the amount of time and effort you’ve put into your savings and into researching the property you’ve purchased, it’s important you take whatever steps you can to protect that investment, as well as the assets you already have.

With this in mind, here are some asset protection tips that can benefit you as a real estate investor whenever you make a new purchase.

Insurance

Property and casualty, as well as general liability insurance is absolutely critical for protecting any investment you make in property. This obviously includes homeowner’s insurance, which is often a prerequisite for the transaction to be able to go through at all. But if you have a larger real estate portfolio, it can also be beneficial for you to look at increased liability insurance coverage. You can also add on specific coverages such as flood insurance or earthquake insurance—these coverages are often not included in standard property insurance policies.

Debt

Asset protection through debt is one of the cheaper forms of asset protection you have available to you. If you do not have much equity in the home, that means there isn’t much for creditors to come after. There are some investors who purposefully put the maximum amount of debt against their property for this purpose—pulling equity out of their properties and then utilizing that money to reinvest in more real estate with almost little to no money down.

This can be a tricky strategy, and if you intend to employ it it’s a good idea to have expert guidance. But doing so can give you access to more tax write-offs from real estate debt and also allow you to maintain liquidity through other assets rather than tying everything up in your real estate portfolio.

LLCs

Some investors choose to form LLCs to hold their properties and limit their own personal liability against potential lawsuits. It is typically not recommended to have multiple properties in one LLC, because should any one property in the LLC be subject to a lawsuit, the other properties could also be at risk by association. Typically investors will place property into a land trust that then gets transferred into an LLC.

Keep in mind that there is an initial cost associated with setting up an LLC, and then ongoing costs associated with maintaining it. LLCs are also a matter of public record. Depending on your goals and your financial circumstances, you might find it a better idea to simply own fewer properties and control them under your name or through a trust instead.

These are just three of the most common asset protection strategies that exist for real estate investors. For more advice, contact a skilled real estate attorney in the U.S. Virgin Islands.

Tom Bolt is Managing Attorney of BoltNagi PC, a full service law firm in St. Thomas U.S. Virgin Islands.

 

 

 

The U.S. Virgin Islands Economic Development Authority has a variety of financing options in place to help entrepreneurs in the Territory start a new business or grow an existing one.

Here’s a quick overview of some of the available loan programs, administered by the VIEDA’s Economic Development Bank.

  • State Small Business Credit Initiative: The State Small Business Credit Initiative Program was established by the 2010 Small Business Jobs Act as a means of supporting financing options for small businesses and encouraging financial institutions to do their part in funding more of these ventures. Proceeds of the loan can be used for start-up costs, working capital, franchise fees, business equipment, inventory, construction, renovation, business procurement, tenant improvements and more.
  • Frederiksted Loan Program: Any businesses located in Frederiksted (on St. Croix) that have the potential to generate new business activity in that city will get first priority for receiving loans through this program. Those loans have very reasonable interest rates to help encourage business owners to apply and keep growing their businesses in the local area.
  • Post-Disaster Relief Loans: There are several post-disaster relief loan programs available that help businesses to re-establish or expand after they’ve been affected by disasters. This is especially useful for those businesses that were affected by Hurricanes Irma and Maria in fall 2017.
  • Micro-Credit Loan Program: The territory’s Micro-Credit Loan Program offers secured loans subject to the creditworthiness of the applicant and/or guarantor. These loans can be for anywhere from $1,000 to $50,000—smaller amounts—with loan terms available for up to five years.
  • Farmers and Fishermen Loan Program: The Farmers and Fishermen Loan Program gives loans to commercial farmers and fishermen, with all loans being secured by “acceptable” collateral.
  • Intermediary Relending Program: This program exists for anyone in need of funding for community development projects, or for creating new businesses/expanding on existing ones. The program looks especially kindly on business owners seeking to hire low-income people or to save existing jobs.
  • Tax Increment Financing:  There is a financing method used as a subsidy for redevelopment, infrastructure, and other community improvement projects by diverting future tax revenue increases toward a development project.

For more information about any of these available loan programs or other options you have to grow your business in the U.S. Virgin Islands, contact an experienced corporate planning attorney.

Tom Bolt is Managing Attorney of BoltNagi PC, a full service law firm in St. Thomas U.S. Virgin Islands.

Estate PlanningEstate planning can be challenging in some circumstances, there may be disagreement between those forming and setting up the plan and the family members, friends, and other beneficiaries involved. Often, these misunderstandings can be cleared up through communication. One particular issue, however, has a way of creating problems for those expecting to be named as beneficiaries in a loved one’s estate plan: undue influence.

Undue influence takes place when a person in a position of power manipulates an elderly or ill person into forming or modifying an estate plan in a way that benefits him or her. Typically, this individual will be a caretaker or someone who has some control over the grantor’s finances or living situation. Whether a health care worker, an accountant or a relative, such individuals likely wouldn’t have been named as a beneficiary had he or she not been in the position to influence the estate planning process.

This is why such an individual is said to have “undue influence,” as his or her role in the grantor’s life normally would not eclipse the role of the deceased’s spouse, children, and/or other family members.

Continue Reading What Constitutes ‘Undue Influence’ in Estate Planning?

One of the crucial elements of starting a new corporation is drafting its bylaws. Bylaws are the rules by which the corporation will be governed on a day-to-day basis and typically cover such matters as what is required of shareholders, directors, and officers.

Bylaws should typically be drafted as early as possible, typically prior to the first meeting of the corporation’s board of directors. Generally, the corporation’s attorney will either draft the bylaws or make sure it’s one of the first actions undertaken by the board of directors.

A key distinction should be made between bylaws and articles of incorporation. The articles of incorporation will cover information related to the organization of the corporation, which are required by state or territorial law and include basic information, such as names and addresses, but not the structure or operations of the corporation. Another key point is that bylaws private to corporation whereas the articles of incorporation must be filed with the Office of the Lt. Governor, Division of Corporations and Trademarks and are available for public inspection.

Some of the information covered in the articles of incorporation is likely to be covered in the bylaws as well. As a general rule of thumb, here are some items that should be addressed in corporate bylaws:

  • Basic information such as the name of the corporation, its address and where it will operate.
  • Information related to the board of directors, generally covering the composition of the board, election of directors, and how vacancies will be filled.
  • A list of officers of the corporation and their respective responsibilities and powers.
  • Information about stocks, including stock types and classes of shares.
  • Rules and procedures related to meetings of shareholders and directors, including when and where such meetings will occur and what will happen when they do.
  • Rules establishing the corporation’s record-keeping procedures.
  • Information guiding the process of amending both the bylaws and the articles of incorporation.

Just like with the initial document, any changes to the articles of incorporation must be filed with the Lt. Governor’s Office whereas changes to bylaws do not require that the public be informed Nevertheless, a corporation’s bylaws should establish a very clear procedure for amending their amendment, including who is responsible for proposing and approving the changes.

As corporations grow and change, making amendments to the bylaws will likely become necessary. It’s a good rule of thumb to plan on revisiting your corporation’s bylaws on a regular basis, perhaps at the annual meeting. Whether you’re in the process of establishing a corporation and need assistance with writing the bylaws, or you’ve come to a stage where the bylaws need to be amended, consulting an experienced and knowledgeable corporate attorney is in your company’s best interests.

Steven K. Hardy is Chair of the Corporate, Tax and Estate Planning Practice Group at BoltNagi PC, a full-service business law firm based on St. Thomas, U.S. Virgin Islands.

 

Residential real estate buyers and sellers often wonder what a real estate closing attorney does other than conduct the actual closing. There is much more than you may think. There may be as many as three or four attorneys at the closing representing the buyer, the seller, the lender and the title company.

Usually, the attorney’s office receives a copy of the contact of sale and a “title order” from the lender which provides additional information concerning the loan including the lender contact and the proposed closing date. The attorney then opens a file, enters into an engagement agreement with the client and conducts a title examination on the subject property.

A title examination involves examining the records at the Recorder of Deeds for forty to sixty years or more and is performed to determine the status of title and any encumbrances and liens on the property so that the attorney can arrive at a “title opinion.” The title opinion is used as the bases for the issuance of a title insurance commitment to the lender. Receipt of the title insurance commitment allows the lender to move forward with processing its closing documents. If there are title issues that result in an exception to title insurance in the commitment, those must be resolved before closing and the closing attorney will take appropriate steps.

Continue Reading Exactly What Do Those Real Estate Attorneys Do at a Closing?

Archive

Among the many challenges of owning a business of any size is the need to keep track of your organization’s activities. This isn’t just important for helping your business operate efficiently—it’s also a legal requirement. Depending on the type of business entity you operate, federal and Virgin Islands laws may apply to your business in different ways, and it’s your responsibility to understand such laws or have a skilled attorney ready to assist you.

For corporations, state or territorial law determines the recordkeeping requirements by which businesses must abide. Among the records a corporation is required to keep on a permanent basis are meeting minutes, corporate bylaws, shareholders’ records/stock ledger and various records related to the corporation’s accounts. To keep these valuable and critical records safe from fire, flood or other disasters, copies should be stored in fireproof safes, electronically, and/or in a secure offsite location.

Partnerships and limited liability companies (LLCs), meanwhile, are expected to retain records of contributions, copies of the certificate/articles of partnership/organization (if applicable) and any amendments. A list of current partners/members should be readily available. As with corporations, partnerships/LLCs must keep these records on a permanent basis and store copies in a safe and secure location. In addition, financial records should be kept for the amount of time required by any applicable laws.

Corporations, partnerships, and LLCs alike should also keep copies of their tax returns, along with sets of books for various tax-related purposes, for varying numbers of years.

In any discussion of corporate recordkeeping, it’s also important to note that internal policy plays a role in determining how long certain records are kept. In addition, regular destruction of non-essential records should be scheduled and carried out accordingly. The reason why keeping to a regular schedule is so important is twofold. First, given the amount of records generated by many businesses, storing non-essential records can be burdensome for reasons of physical and/or digital storage space alone. Second, in the event of a lawsuit, adhering to a regular document destruction schedule can protect a business against charges that documents were destroyed in response to the suit. Always remember, however, that all records/information relevant to pending or reasonably anticipated litigation must be preserved.

In addition to abiding by the specific legal recordkeeping requirements for your type of business as well as your internal policy, it’s generally a good idea to err on the side of caution when it comes to keeping records of your business’s activities. If you have questions or concerns about your recordkeeping and whether you’re protecting your company’s best interests, speak with an experienced and knowledgeable business law attorney. 

Steven K. Hardy is Chair of the Corporate, Tax and Estate Planning Practice Group at BoltNagi PC, a full-service business law firm based on St. Thomas, U.S. Virgin Islands.

 

Business LoansIf you own or operate a business, it will likely be necessary to, at some point, apply for a business loan to cover short-term costs and resolve any cash flow challenges you may have.  In fact, borrowing effectively can represent the difference between a business’s success or failure, especially if your company is young.

The U.S. Small Business Administration (SBA) operates an often-used loan program that essentially covers much of the risk for lenders issuing loans to small businesses. This program aims to help businesses continue to grow when other funding options are not available. Whether or not you go through the SBA, you may seek a loan from a bank, a savings and loan or a credit union.

When it comes to interest, there are laws in place to prevent lenders from charging excessive rates to business owners—something known as a usury law.  Most lenders will avoid charging more than 10% interest to remain safely under this amount. Right now, interest rates are quite low, at just one over prime, but are expected to climb upward soon.

Another issue to consider, especially if a shareholder of your corporation is issuing a loan to the business entity, is to ensure that the interest rate is not too low. If it is, the Internal Revenue Service could consider it not commercially reasonable, instead viewing it as a capital investment from the shareholder. If this happens, the IRS could tax the loan repayments as dividends to the shareholder, something that would likely take both your organization and the lender by surprise.

 Collateral and Co-signers

In addition, most lenders will require that you offer some sort of collateral, known as “security interests,” that they would be able to sell off in the event you are unable to pay back the loan in the future. If this does happen and you cannot make good on the loan, the bank may choose to sue the business or you personally. By suing you as an individual, the lender could possibly take your personal property and assets to make up for the missed payments.

Finally, it might be necessary for you to find a co-signer to your loan if your credit history prevents you from taking it out on your own. In this situation, the bank is looking for another individual from which it could potentially collect money or assets if the loan goes into default. If you need to ask a friend or family member to serve as a co-signer, be sure that person knows the risks involved.

To learn more about your options when it comes to business loans, consider speaking with a skilled corporate law attorney based in the U.S. Virgin Islands.

Nash Davis is Chair of the Real Estate & Financial Services Practice Group at BoltNagi PC, a full service business law firm on St. Thomas, U.S. Virgin Islands.