As a courtesy to our current and prospective clients, we periodically provide information about legal issues which may be of concern to the community which we serve:
As you may know, the Georgia General Assembly meets for an intensive 40-day legislative session every year. The second session of the most recent 151st Georgia "General Assembly" began in January 2012.
Georgia General Assembly General Statutes (includes coverage of legislation passed in 2012)
Statutes Signed by Govenor Deal (a list of bills approved and signed by Governor Deal)
Some interesting legislation passed during the 2012 session includes the following, pending signature by the Governor (if that has not already occurred):
H.B. 100: Tax Courts: Would create special tax courts to hear disputes between taxpayers and the Georgia Department of Revenue.
H.B. 865: Drug Screening: Would require drug screening tests for recipients of certain types of public assistance.
H.B. 1114: Assisted Suicide: Makes it a felon to assist anyone in committing suicide.
H.B. 386: Tax Code Revisions: Would eliminate sales tax and annual ad valorem taxes on automobiles, replaced by a one-time title fee of 6.5%, beginning in 2013.going up to 7% by 2015. This bill also increases tax exemptions available to married couples, reinstates tax holidays for school supplies, and continues the sales tax exemption on jet fuel purchases (largely benefits Delta Air Lines). Signicant other changes were made in this tax reform package.
H.B. 636: Brookhaven: Authorized the July 31 referendum to determine if the City of Brookhaven will be created.
H.B. 397: Open Records: Prevents disclosure of documents maintaned by the Georgia Department of Economic Development relating to pending project, until binding commitments for such projects have been obtained.
H.B. 347: Unemployment: Reduces unemployment benefits for workers laid off through no fault of their own.
H.B. 954: Abortion: Prohibits abortions after 20 weeks, unless the mother's life is in danger.
S.B. 33: Foreclosures: Requires foreclosure notices to all debtors, even if the property is not a primary residence.
Other recent legal developments
Foreclosures: A recent lawsuit originally filed in Cobb County resulted in a ruling from the Georgia Court of Appeals that could give foreclosed debtors substantial additional rights to sue their lenders, if foreclosures were not properly handled. This case essentially requires that the true owner of a mortgage be disclosed in foreclosure proceedings. As inoccuous as that might sound, it could result in many, many new lawsuits against foreclosing lenders who, in the past, have foreclosed through a third-party entity. Some authorities have commented that as many as 90 to 95% of residential foreclosures in Georgia from 2008 through 2011 might be subject to challenge based on this ruling. The ruling affirms changes that were made to the Georgia foreclosure statutes in 2008. Georgia routinely boasts one of the highest foreclosure rates in the country.
Ongoing Things to Think About
Corporations and Limited Liability Companies: If you own a corporation or a limited liability company, as the end of the calendar year approaches, you need to consider if any changes need to be made to financial and/or legal arrangements which you have made for your company. If your company operates on a calendar year basis, in order to qualify for deductions for the current year, you may need to make certain expenditures by year's end. If your corporation needs to qualify or requalify as a Subchapter-S corporation (so that profits and losses flow through to your individual tax returns) or as C-Corporation (so that the corporation is treated as a separate taxable entity), you may need to make these decisions within 75 days following commencement of your new tax year in order to qualify for that year. If your limited liability company was set up as a single-member LLC, it may be treated as a sole proprietorship for tax purposes; which may or may not suit your particular needs. Please call us to discuss your particular needs further and/or contract your company's accountant.
Remember that you need to file an organizational annual registration renewal with the Georgia Secretary of State between January 1 and April 1 of each year. If you fail to do so, your company may be involuntarily dissolved. You can accomplish this yourself at http://www.sos.ga.gov/corporations. Or, we would be happy to do this for you.
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Landlord-Tenant & Foreclosure Law: In the current real estate environment, more and more clients, both property owners and tenants, lenders and borrowers, are asking advice about leasing issues and about real estate mortgage foreclosures. These are rapidly changing areas of Georgia law. Landlords need to know, especially in residential settings, that they have to comply with the Georgia Residential Landlord-Tenant Act, which places some strict requirements on handling security deposits, making obligatory repairs, etc. Tenants need to know the sorts of defenses which they can, and cannot, assert in dispossessory actions, including in situations where their landlords have been foreclosed upon. Homeowners facing foreclosure need to know what their rights are concerning notice of foreclosure to which they are entitled, and post-foreclosure eviction proceedings. Lenders need to know the pitfalls of foreclosing and evicting mortgagors, including creative ways in which mortgagors can stall or delay such proceedings. We provide services to landlords, tenants, lenders, and borrowers. Let us know how we can help.
Restrictive Covenants: Non-compete agreements have historically been disfavored by the Georgia courts. They must generally be limited in terms of time, territorial scope, and activities prohibited. Previously, Georgia has not followed the "blue pencil" rule of contract severability with regard to such contracts. If any provision of a non-compete agreement was invalid, then the entire non-compete agreement was generally deemed invalid. A new 2009 law, however, proposed to allow Georgia courts to modify a restrictive covenant that is otherwise unenforceable. This was submitted for state-wide constitutional referendum during the November 2010 mid-term elections and, after the 2011 General Assembly session, finally became effective in May 2011. This new law is effective for all employment contracts executed after such effective date.
As a consequence, for better or worse, restrictive covenants contained in employment contracts will now be much more enforceable in Georgia. The "blue pencil" rule of contract severability has been adopted, effective in Georgia contracts signed after the effective date of the new law (May 11, 2011).
Employers, and lawyers representing employers, will likely be happy with the change. Employees, and lawyers representing employees, will likely be unhappy with the change. In either case, Georgia judges now have the ability to limit the enforcement of otherwise overly broad restrictive covenants to provisions reasonably necessary to protect the employer's interests, instead of being forced to invalidate the entire restrictive covenant because of one "bad" clause. This will likely result in more "fact" questions in litigation, generally favoring those parties with enough money to litigate such issues.
For attorneys more adept in such areas, it was previously much easier to review a restrictive covenant and counsel a client that "this contract probably is [or is not] enforceable" in Georgia. Now that advice will be much harder to give, since a judicial review of all attendant facts and circumstances will be more commonly required.
Realtors: If you are a realtor, then you are probably already well aware of most of the statutes and regulations which govern your trade. Non-realtors may not. Many laypersons have misconceptions about what a realtor's role is in any real estate transaction. First of all, there are generally buyer's agents, seller's agents, and dual (including "designated") agents. Unless a specific buyer's agency or some form of a dual agency is agreed between the parties, realtors generally represent the seller, not the buyer. This is true whether the realtor is a listing agent or a selling agent. A realtor may not represent more than one party in a transaction without the express written consent of all parties. If you hire or think you have hired a realtor, know what role they are playing and whose interests they represent. Get it in writing.
Many people believe that realtors act as "fiduciaries," responsible for all aspects of getting a deal closed, from showing the property, putting together the contract, getting it signed, getting the property ready to close, etc. "Fiduciaries" are professionals like lawyers, who are held to considerably high standards concerning the duties of loyalty and fair dealing which they owe their clients. In reality, though, realtors have very limited legal obligations, unless they expressly agree to take on special duties as part of their contracts with their clients. In particular, the Georgia Brokerage Relationships in Real Estate Transactions Act declares that realtors are not fiduciaries. They generally have only those duties described by statute or by contract.
Realtors are generally deemed to have earned their fees when they put a willing seller together with a willing buyer, and a contract is signed. If you have expectations about what you think your realtor is supposed to do beyond that, you need to have clear communication with your realtor. Again, whatever you decide, put it in writing.
One duty that realtors do have is the obligation to make certain disclosures to all parties in any real estate transaction. If a realtor has actual knowledge about property defects which would not reasonably be discovered by a diligent inspection of the property, the realtor must disclose those facts, even to the party(ies) whom the realtor does not represent. This may even include adverse physical conditions in the immediate neighborhood of the subject property.
Sellers' Disclosures: In a similar fashion, sellers of real estate have some disclosure obligations concerning property defects. Historically, the governing rule has been that of caveat emptor, or "let the buyer beware." But, decades of litigation have modified that rule somewhat. First of all, if you are a builder of the property who is also the seller of the property, you have some heightened obligations. Sellers who are builders can be sued for negligent construction. Sellers who are builders can also be sued for failing to disclose latent defects. Sellers who are builders and who have specialized knowledge about the condition of the subject property, must disclose known defects which would not be readily discernible during a diligent inspection of the property by the buyer.
Otherwise, ordinary sellers, however, are generally only responsible for fraud or for active concealment of defects. Sellers property disclosure reports are not required by Georgia law. However, if such a report is provided, sellers may not lie about their answers. Sellers may not intentionally cover up known defects.
Buyers also have obligations, however. They must exercise reasonable diligence to protect themselves. They cannot hold a seller responsible for defects that would have been discovered by a reasonably diligent inspection of the property.
Tax Sales & Foreclosed Properties: Also due to the current state of the economy, more and more investors are considering investing in tax sale and foreclosures properties. DO NOT BUY A PROPERTY AT A TAX OR FORECLOSURE SALE without getting advice from a competent attorney first. Otherwise, at least talk to someone who has done it. Something real estate investment seminars often fail to mention are the costs necessary to "quiet" title to a property purchased at tax sale, so that the buyer can eventually convey marketable and insurable title. Before buying foreclosure properties on the courthouse steps, a wise investor will perform an adequate due diligence investigation, including a title search. The first step is to sit down and talk with a lawyer about what you are planning to do. Call us.
Wills, Trusts and Related Documents: If you have never executed Wills, Trusts, Advance Healthcare Directives or similar documents, you need to consider doing so, in order to protect your family and loved ones, and to make sure your wishes are properly carried out, in the event of your death or incapacity. If you don't make these decisions for yourself, then you leave it to Georgia law to determine how your affairs and medical care may be handled; which may not suit your particular needs. If you have already executed Wills, Trusts, Advance Healthcare directives and similar documents, you should review those documents periodically to make sure they still suit your particular situation.
Effective July 1, 2007, "Advance Healthcare Directives" replaced Georgia Living Wills and Durable Powers of Attorney for Healthcare. The new forms are much more thorough than documents you may have previously signed. Living Wills and Durable Powers of Attorney for Healthcare properly executed prior to July 1, 2007 are still valid. Such documents even executed after July 1, 2007 might still be valid. But, you would be well-advised to have any such documents reviewed by your attorneys to make sure they were properly executed. You should also review whatever documents you have executed to make sure no changes need to be made to the list of persons you may have appointed to make decisions for you in such documents, or to the specific directions you have given. We'd be happy to help. But, even if you don't utilize our services in those regards, please have your documents reviewed by another competent legal adviser.
Whenever we perform estate planning work for our clients, we ask that they first complete an Estate Planning Questionnaire. To download an Estate Planning Questionnaire (in Word format) please click the link below. Please complete this form as fully as possible and then call our office to set up an appointment for a formal consultation in our office. Please bring the completed form with you at the time of your appointment.
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